At this time I would like to welcome everyone to the World Fuel Services second quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions) Thank you. I would now like to turn the call over to Mr. Frank Shea, Chief Risk and Administrative Officer. Mr. Shea, you may begin your conference.

Good evening, everyone, and welcome to the World Fuel Services second quarter conference call. I'm Frank Shea, Executive Vice President, Chief Risk and Administrative Officer, and I'm doing the introductions of this evening's call. This call is also available via webcast. To access this webcast or future webcasts, please visit our website and click on the webcast icon. With me on the call today are Paul Stebbins, Chairman and Chief Executive Officer; Michael Kasbar, President and Chief Operating Officer; Ira Birns, Executive Vice President and Chief Financial Officer; and Paul Nobel, Senior Vice President and Chief Accounting Officer. By now, you should have all received a copy of our earnings release. If not, you can access our release at our website. Before we get started, I would like to review World Fuel's Safe Harbor statement. Some of the comments to be made on this evening's call may include forward-looking statements under the Private Securities Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results or facts to differ materially from such statements. Detailed information about these risks is contained in the company's SEC filings, which are available on the Company's website or from the SEC. We will begin with several minutes of prepared remarks, which will then be followed by a question-and-answer period. At this time, I would like to introduce our Chairman and Chief Executive Officer, Paul Stebbins.

Thank you, Frank. Good afternoon and thank you for joining us. Today we announced record earnings of $20.5 million or $0.71 per diluted share for the second quarter of fiscal 2008. In the quarter we improved our net trade cycle. Equity remains strong, and our return on equity was 16%. In the quarter marked by sharply increasing oil prices and continuing turmoil in the global financial markets, we demonstrated our ability in a difficult operating environment to manage risks, grow margins, invest working capital wisely, and maintain a strong balance sheet. We also successfully completed our Texor acquisition, a best-in-class business in the branded gasoline space, which diversified our land business model while expanding our strategic reach. Given the extensive discussion in the press about the overall state of the aviation industry in Q2, our jet fuel business has, understandably, been the focus of considerable interest on the part of shareholders and suppliers. We are pleased to report that our aviation segment delivered a great result this quarter, in spite of, and to some extent because of, a very difficult operating environment. Our commercial and business aviation divisions, as well as AVCARD delivered strong performance across the board, while reducing our exposure to risk. While this may seem surprising or counter intuitive to some, considering the market conditions, we see that further validation of our business model, which emphasizes aggressive risk management, a disciplined approach to optimizing margins, and a vigorous focus on return on working capital. To be clear it is certainly true that the aviation industry as a whole was challenged by the relentless pressure of high oil prices and a weakening global economy. This created stress fractures in the business model of many airlines, and in some cases lead to default. While we were not and are…

Thank you Paul and good afternoon everybody. Revenue for the second quarter was $5.7 billion, up 26% sequentially and up 73% compared to the second quarter of last year. Our marine segment revenues were $3 billion, up 25% sequentially and 66% year-over-year. The Aviation segment generated revenues at $2.3 billion up 20% sequentially and 74% fro last year's second quarter. And finally the land segment grew to $366 million up 91% sequentially and a 137% from last year's second quarter, including the impact of the Texor acquisition in June. These increases in revenue was significantly impacted by the sharp increases in fuel prices which was the highest in the second quarter of 2008. Before I review our results by segment I would like to point out that our second quarter results also include Texor results of operations for the month of June and a full quarter of AVCARD which also was not included in prior year’s results. Our aviation segment sold 593 million gallons of fuel during the second quarter, down 5% sequentially put up 3% compared to the second quarter of last year. The sequential reduction in volume was principally due to our continuing efforts to reduce exposure to low-margin higher-risk accounts. We expect volume to drop further in the third quarter and such efforts continue, which includes the termination of a single account relationship as of July 1, representing approximately 30 million gallons of quarterly volume. Our marine segment's total business activity was 7.4 million metric tons, up 7% sequentially and up 9% year-over-year. Fuel reselling activities constituted approximately 81% of total marine business activity in the quarter, 5% higher than the first quarter of 2008. Our land segment sold 103 million gallons during the second quarter up 48% sequentially and up 55% compared to the same quarter…

(Operator Instructions). Our first question is from the line of John Chappell with JPMorgan. Please go ahead with your question.

Good afternoon.

Hey John.

Paul the marine business finally broke through a pretty good threshold there, the reselling business as a percentage of the total volumes. Was that a function of less broker business, more reselling and more importantly is this 80% plus figure a good run rate to use going forward or could it get back to the mid 70s?

Yes, I mean accurately reflects the fact that we made a conservative shift to further into the trade and the brokerage was reduced. Its tough to give you with any precision John whether that is going to be ratable in the future, sometimes it is a function of the market conditions, but I would say that we are pleased with an overall increase in volume in this period, most of which reflected in the traded volumes. So brokerage was off slightly but we really had a concerted pick up in the trade volumes. So I would like to tell you that it will be ratable but we just do not have that, on the spot market, it is tough to predict it with any precision.

:

I would say Jonathan, the best number I could give you is approximately half of the sequential increase in gross profit in aviation could be attributed to that.

Okay, that is very helpful. Then finally the current credit conditions out there; from a competitive standpoint and then for an opportunity standpoint are you seeing any competitors who are not able to really compete with the most vigor in this type of market. Does that give you opportunities both in just winning business overall and then potentially from an acquisition standpoint anybody who is looking a lot more vulnerable.

There is no question that the current environment has clearly differentiated our strength in the market. Now, when you had the rapid increase in prices and the tremendous volatility, this has certainly a lot of the less well-capitalized, small privately held companies out there who are really struggling with the Tsunami shock and that caused restrictions on credit lines. They caused tightening pressure on working capital and we were able to take advantage of that and be the strong guy standing in the market. So there is no question from an competitive perspective this market was capable in terms of differentiating us. In terms of, if you were to wound an antelope out there, there is no question that there are some people who are being stressed by this and we clearly believe there are opportunities from the strategic front.

Is there one market in particular whether it is marine, aviation or land where you are seeing potential vulnerabilities?

I would say their opportunities when operate.

Okay great thank you Paul, thank Ira.

Thanks John.

Our next question is from the line Alex Brand of Stephens. Please go ahead with your question.

Hello. This is actually George Pickral for Alex.

Hi George.

I got a few land questions for you actually. Do you know what the land profitability would have been excluding the provision for bad debts? In other words, I am asking what Texor would have added to that?

On a consolidated basis excluding the provision for bad debts, the number would have been about $1 million on the plus side. A good of big chunk of that coming from Texor.

Okay, great. Also within Texor, in your call, the greater Chicago area market in the two months you have had them, have you seen any slowdown in gasoline sales in any other areas?

If we focus on the month of June in particular, the result of operations with Texor was right inline with what we expected. So we did not see meaningful impact in that regards.

Okay great. Let see switching over to marine I know it is a minute part of your business but have you thought about or have you expanded any asset-based supplies anywhere, or have you thought about doing that?

Yes, hi George its Mike Kasbar. we have not expanded that and certainly we are open to those opportunities as they present themselves and as Paul just said with the amount of capital required, a lot of these smaller independent companies, do not necessarily have the appetite to play the game so much that is an opportune time for them to exit then, we are certainly looking there.

Okay great, and lastly, a big picture question how much is the ERP system contributing to this being able to call the low margin business and I do not know if you can call it timely fashion, but being able to quickly identify the low margin business and get rid of it be able to shift pricing and what not around to improved margins.

George, this is Mike Kasbar. Well, we have always had the visibility on that. That is not that difficult to do, we are fortunate in having a pretty good marketing research team that works pretty hard to give us visibility on that. The ERP is an interesting set of scenario because this is really not a whole lot of fun, global initiative and this was really a very interesting quarter for us its a perfect storm in terms of credit crunch, rising oil prices and during, February 6, with our ERP, which is something that takes a good six months to digest and stabilize. So while we are happy that we did not go through the pain, we are not really seeing the full impact of those initiatives just yet. We are on our way and our ambitions for that are quite significant, visibility in any number of different areas is certainly one of the things we are looking for, as well as a number of other products that we hope to be able to produce. And, certainly with the acquisition of AVCARD that gives us greater technological reach. The beauty of acquiring these small companies is, their people are very close to the business. So they are functional people, pretty much stewed in the business activity and we are pretty happy with what we have picked up with that part of the technology side.

Okay. Do you still have all the outside consultants down there helping you and do you still have all of your in-house employees focused on the ERP system and not their main job still?

I am happy to report we have zero outside consultants –wee employ maybe two or three. So we are pretty much down from the 50 to 70 that we had at the peak. I think we have got about handful, Paul what is it? Is it less than..

Five.

Okay. No, our group is really focused on the business side. So, ERP is done and its really now, there has been huge amount of work, I mean one of the benefits by going through this is, you can do it unless you have a superior IT organization. So, we have really upgraded that, to probably at about a level 3 organization on IT and we are on our way up. So, we are very optimistic on what technology can do for us, it is very important to our company.

Great, thanks for your time. Good quarter.

Thanks George.

Thanks.

Our next question is from the line of Steve Ferazani with Sidoti & Company. Please go ahead with your question. Steve Ferazani - Sidoti & Company: Good afternoon. Question on, we are seeing at least a slowdown in growth in Aviation traffics. Certainly we have seen a bit of turnaround in terms of Asia-Pacific freight traffic. Given the slowdown in growth, what do you think that does to transaction volumes in that segment going into the second half of the year?

I think that we are going to have to watch it just like everybody else is watching it. Certainly it is going to have an impact from our perspective as Ira already mentioned we already anticipate and then back with full deliberation of reducing some of our volumes. I would say that we feel pretty good about being able to remain – we have got fairly diverse portfolio. So we active in cargo and charter and military in a lot of different components of the business where, interestingly enough we have not really seen the slowdown yes. Impact, I would say that if you look in this quarter, we actually saw pickup from some our cargo and charter in the government activity. So I think from our point of view I do not think we view that the overall economic conditions are going to be the driver there. Its going to be more of our decisions about what business we landscape and how we manage it. Steve Ferazani - Sidoti & Company: Okay. You touched a little bit on the bunker fuel obviously this that this is consolidation with physical suppliers. Does that affect the price shopping idea, given that there will be fewer suppliers, physical suppliers out there and what is the impact short-term versus long-term?

When you think consolidation is physical as far as what you were referring to? Steve Ferazani - Sidoti & Company: It is a bigger bunker fuel physical suppliers without naming, buying up some of the smaller guys and being few of the bunker fuel, the barge operators out there?

Yes I would say that. I mean I hear you, I think that is the more anomalous I would say to, if we were to characterize the bunker supply market its still extremely fragmented. I do not see that changing time soon. While there has been some examples of what you characterize in terms of consolidation, I would say generally speaking that is not the trend, it is still very fragmented. Steve Ferazani - Sidoti & Company: Fair enough and then on Texor two months under your belt now, given some of the difficulties with the land-based markets, the $0.08 to $0.10 accretive in the first full year. Is that still there?

Yes, that numbers is still an accurate number, somewhat between $0.08 and $0.10. Steve Ferazani - Sidoti & Company: Great, thanks a lot.

Thanks a lot.

Our next question is from the line of Jim Larkins with Wasatch. Please go ahead with your question.

Good afternoon. Just a couple of balance sheet questions. I wanted to make sure I get the detail which might not have been on the press release, but goodwill and intangibles what were those through at the end of the quarter?

Just a sec let me get that.

I also wanted to get that breakup of the number?

Goodwill was $119 million and intangibles were $63 million.

Great. Then on the debt, I saw the short- term debt broke down. On the long term, could you give that as well?

The long term debt was $246 million, principally bank debt and there is a note in there related to the Texor acquisition.

Okay. Should not we think of that as the revolver that is going to ebb and flow with commodity prices and what is going on in your working capital?

Yes that number moves around during the quarter. As we said, we were making significant progress, we brought the trade cycle down in the second quarter. We are very focused on return on working capital and as I also mentioned, we generated cash in the first month of this quarter, which is moving that number further in the nice direction, the right direction. So does that answer the question you had.

Great. Then on the derivative just in terms of the size it seems like the activity is picked up how much is that simply driven by the commodity versus did you get involved doing more derivatives for some of your customers?

We did see a little bit of increase in activity in the derivatives going into Q2, [but it did not stop] and there is also been an impact on the price as well.

Was that material in terms of the gross profit improvement we saw in marine especially?

No not in overall basis, it was not.

Okay very good thank you.

Thanks Jim.

(Operator Instructions) Our next question is from the line of [Kelvin Wilder with Metabin Capital]. Please go ahead with your question.

Thanks to you as well s congratulations on a very good quarter. Three questions, and wanted to quantify the earning per share benefit from the depreciation and the value of the inventory in the second quarter.

Yes I think I mentioned previously that approximately half of the sequential increase in gross profit could be attributed to the inventory evaluation.

Okay, okay.

I am sorry half of the sequential increase in our aviation gross profit which is where we had an impact, which is where most of the inventory is.

Okay. Fair enough and the question about the ERP system, nice to see that is moving on. Looking at the guidance for third quarter operating expense for $54 million to $58 million versus the second quarter actuals of about 56.3, it looks like you are projecting that the operating expense for the third quarter where you have Texor on the books. So should we assume that there is a big drop in ERP spending or what is getting, what is dropping in expense going into the third quarter.

: There is nothing significant in its own right, one of the biggest drivers would be – there was a bit of a catch up in incentive compensation in the second quarter because of the record results and that number would come down a little bit naturally in the third quarter. Aside from that there are a couple of smaller items that bounce around, but on the ERP side there probably was some consulting expense that we still hanging on in the beginning of the second quarter, that is now out completely in the third quarter So that it would be another – that would be another item as well.

Okay and then final question relates to increase in employee compensation expense. Yes there was some leverage you mentioned that looks like in the neighborhood of 20 basis points. Should we be expecting the same bringing leverage on the employee compensation line where that is going, slower than gross profit. Was there anything in the character, for those in enrollment, leveraged in the second quarter. What you really expect to see in terms of leverage on the employee to generate and create and gross profit?

Well I think you have a poor base of compensation expense that that is there, I think the only reason we highlighted the incentive comps of these quarters was the extraordinary increase in profitability in Q2. So its not simple to direct a with a type correlation between the correlation between gross profit. That is not example but there is some leverage on that line but you got to be careful in terms of how you model that.

Okay Lets say, congrats on another quarter.

Thanks

Our next question is from the line of Edward Hemmelgarn with Shaker Investment. Please go ahead with your question.

Sure. Thanks have I had one question regarding the aviation segment. You indicated I think you got rid of a customer there was 30 some million gallons per or something?

Correct. Has quarterly volume.

Its quarterly volume, Okay typically there is an increase so in terms of volumes in the September quarter so should we still assume some pick up in volumes in the September quarter absent to 30, if we ignore the 30 million we could back that out later but historically you can anywhere from almost a 5% to 10% pick up, flights can be just greater in the third quarter.

I mean I would say that the interest, its not just the 30 million remember our needs are also not normal at times, so would say that you cant really model this in front of a conventional picture about what is going on in the business as you can imagine its been a pretty dramatic shock to that industry and we have watched that very carefully so what we have made an effort to do is the price is rising so quickly is that we walked away from business that we just thought, that might have even been good return when it was put together some period ago but given the high prices just does not give us the firm we think merits the investment on the capital side so we are just walking away from it. So I think that, well our objective right now is the rationalized risk which we talked about and I think we have been pretty focused on that. We are looking to reduce some of the higher volumes the thin margin business, which I think that we are also actively doing that 30 million that Ira mentioned that expires on June 30 that was a field management contract. We think that that is consistent with it but there is other business as well and then our real focus is to tighten it all up and focus on smaller the whole volume but better return. So its difficult to give you a statement that says that in the September period were going to see an increase, I just cant tell you that is going to be the case overall, depending if one of the mix shapes up.

Okay.

To be fair we are gaining volume in some segments but we are also shedding volumes. So there is some offsetting penalties, that is certainly true.

Would you expect to see given that you are shedding some low margin business. Is it safe to say that your trend is up in the margin area, absent any inventory pick up?

Yes.

Okay. Thanks. Good quarter.

Thanks.

Our next question is from the line [Lou Allen Banks with Pickers’ Spot]. Please go ahead. Lou Allen Bank - Pickers’ Spot: Hi, this is Lou Allan here. I have a question for you, it is regarding credit terms. You got a – fuel bad debt provision. Just wondering if you like quite a few other people are around the world considering talking in credit terms, may be give some 30 days as normal in bunkering then to maybe 21 days, 14 days or less. Or whether you are just stuck with it and carried on with the 30 days?

No, I think we pretty much stuck to our policy and historically which is depending on –-– we are dealing in fairly substantial blue chip portfolio around the world. I do not think we have made any changes materially in that area. Maybe a couple of exceptions for that depending on special locations, but in general I think we have stayed with our policy and again we are servicing a fairly strong parts of customers, that seems to be the right thing we do in this market. Lou Allen Bank - Pickers’ Spot: Okay. Well thank you very much.

Thank you.

We have no further questions at this time. Mr. Shea do you have any closing comments you would like to make.

No. I think we appreciate everybody joining us this afternoon and we look forward to speaking to you at the end of Q3. Thanks again.