World Fuel Services 2005 Annual Report Download - page 27

significant developments occurred with respect to the County’s claims against us during the year ended
December 31, 2005. We intend to vigorously defend these claims, and we believe our liability in these matters (if
any) should be adequately covered by the indemnification obligations of Signature as to PAFCO, and the County
as to World Fuel Services Corporation and our other subsidiaries.
Action Manufacturing Litigation
In November 2004, World Fuel was served with process in a lawsuit titled Action Manufacturing Co., Inc.
et al. v. Simon Wrecking Company, et al. This action, pending in U.S. Federal District Court for the Eastern
District of Pennsylvania, relates to the environmental clean up of the Malvern TCE Superfund site in Chester
County, Pennsylvania. The plaintiffs are a group of private corporations that entered into a consent decree with
the Environmental Protection Agency in 1999, under the terms of which the plaintiffs agreed to pay for
remediation of the site. In the action, the plaintiffs are seeking contribution from the various defendants toward
the costs of remediating the site. Plaintiffs alleged that World Fuel was a “successor” to Resource Technology
Services, Inc., a Pennsylvania corporation that arranged for disposal of wastes at the site. In 1988, Resource
Recovery Atlantic, Inc., a Delaware corporation that was then an indirect subsidiary of World Fuel, purchased
selected assets from Resource Technology Services, Inc. The plaintiffs claimed that this transaction gave rise to
our successor liability pursuant to the Pennsylvania Hazardous Sites Cleanup Act. World Fuel filed a motion to
dismiss this action for lack of jurisdiction. In June 2005, World Fuel’s motion to dismiss was granted and all
claims against World Fuel relating to this action were dismissed.
Panama Litigation
In July 2005, Atlantic Service Supply, S.A. (“Atlantic”), a Panamanian fuel barge operator, filed suit against
Tramp Oil & Marine Ltd. (“TOM”), one of our subsidiaries, alleging that TOM is jointly and severally liable for
barging fees of approximately $1.0 million owed to Atlantic by Isthmian Petroleum Supply & Services, S.A.
(“Isthmian”). TOM and Isthmian were parties to an agreement pursuant to which Isthmian provided storage,
delivery and other fuel related services to TOM in Panama. In its suit, Atlantic alleges (1) that Isthmian breached
a barge charter agreement entered into between the two parties, (2) that Isthmian entered into the agreement as an
agent on behalf of TOM, and (3) that TOM is liable, as a principal, for Isthmian’s breach of the agreement.
Although TOM utilized the services of Isthmian for storage and delivery of fuel, at no time did TOM request or
authorize Isthmian to enter into any agreement with Atlantic, nor did TOM request that Isthmian utilize Atlantic
to provide services on its behalf. We do not believe that Isthmian acted as TOM’s agent in its dealings with
Atlantic, and we do not believe TOM is responsible for any liabilities of Isthmian. We believe this suit is
completely without merit and we intend to vigorously defend the action.
In August 2005, TOM filed a lawsuit against Isthmian seeking damages of approximately $3.1 for breach of
contract and wrongful conversion of fuel owned by TOM. In September 2005, Isthmian filed a counterclaim
against TOM alleging that TOM is in breach of contract and seeking $5.0 million in damages. These actions are
pending in a Panamanian maritime court. We believe Isthmian’s suit against TOM is completely without merit
and we intend to vigorously defend the action.
We may not prevail in the legal proceedings described above and we cannot estimate our ultimate exposure
if we do not prevail. A ruling against us in certain of the proceedings described above could have a material
adverse effect on our financial condition and results of operations.
In addition to the matters described above, we are also involved in litigation and administrative proceedings
primarily arising in the normal course of our business. In the opinion of management, except as set forth above,
our liability, if any, under any other pending litigation or administrative proceedings, even if determined
adversely, would not materially affect our financial condition or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of shareholders, through the solicitation of proxies or otherwise, during
the quarter ended December 31, 2005.
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