World Fuel Services 2007 Annual Report Download - page 17

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64435 TX 9WORLD FUEL SERVICES
ANNUAL REPORT
26-Feb-2008 22:14 EST
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Increases in interest rates, the failure of our interest rate protection arrangements to reduce our interest
rate volatility or both may increase our interest expense and adversely affect our cash flow and our ability
to service our indebtedness.
Borrowings under our Credit Facility are subject to variable interest rates. However, from time to time, we
may enter into interest rate protection arrangements that, in effect, fix the rate of interest on our debt. The amount
of debt covered by such arrangements may change depending on our working capital needs. As of December 31,
2007, we had two interest rate protection arrangements in the form of interest rate swaps in the amount of $10.0
million each to reduce our exposure to increases in interest rates. These interest rate protection arrangements
expire in March and April 2008. As of December 31, 2007, our total borrowing under our Credit Facility was
$40.0 million and our weighted average interest rate on borrowings under the Credit Facility, adjusting for the
interest rate swaps, was 5.6% per annum. An increase in interest rates, our failure to maintain adequate interest
rate protection arrangements or both would increase our interest expense and could adversely affect our cash
flow and our ability to service our indebtedness.
If we are unable to retain our senior management and key employees, our business and results of
operations could be harmed.
Our ability to maintain our competitive position is dependent largely on the services of our senior
management and professional team. If we are unable to retain the existing senior management and professional
personnel, or to attract other qualified senior management and professional personnel, our business will be
adversely affected.
Businesses we have acquired or may acquire in the future as well as strategic investments will expose us to
increased operating risks.
As part of our growth strategy, we have been acquisitive and intend to continue to explore acquisition
opportunities of fuel resellers and other related service businesses.
These investments could expose us to additional business and operating risks and uncertainties, including:
• the ability to effectively integrate and manage acquired businesses or strategic investments;
• the ability to realize our investment in the acquired businesses or strategic investments;
• the diversion of management’s time and attention from other business concerns;
• the risk of entering markets in which we may have no or limited direct prior experience;
• the potential loss of key employees of the acquired businesses;
• the risk that an acquisition or strategic investment could reduce our future earnings; and
• exposure to unknown liabilities.
We cannot assure you that we will properly ascertain all the risks inherent in any particular transaction. In
addition, prior acquisitions have resulted, and future acquisitions could result, in the incurrence of substantial
additional indebtedness and other expenses. Future acquisitions may also result in potentially dilutive issuances
of equity securities and may affect the market price of our common stock. Difficulties encountered with
acquisitions may have a material adverse effect on our business, financial condition and results of operations.
Changes in U.S. or foreign tax laws could adversely affect our business and future operating results.
We are affected by various U.S. and foreign taxes imposed on the purchase and sale of marine, aviation and
land fuel products. These taxes include sales, excise, GST, VAT, and other taxes. Changes in U.S. and foreign
tax laws or our failure to comply with those tax laws could adversely affect our business and operating results.
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