World Fuel Services 2007 Annual Report Download - page 86

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64435 TX 78WORLD FUEL SERVICES
ANNUAL REPORT
28-Feb-2008 11:39 EST
CLN PSTAM
RR Donnelley ProFile SER carrp0da 6*
PMT 2C
TX8724AC350610
9.9.26
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Executive Severance Costs
In June 2006, we recorded executive severance costs totaling $1.5 million in accordance with the terms of
the separation agreement between us and our former Chief Financial Officer. Included in the executive severance
costs are non-cash expenses of $0.1 million related to stock award compensation, net of the reversal of certain
previously recognized compensation costs associated with forfeited stock awards. The payment of the $1.4
million cash severance costs will be made at various specified times over a period of two years. As of
December 31, 2007, approximately $0.5 million of the cash severance remained unpaid and the accrual was
included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.
Deferred Compensation Plans
We maintain long-term service programs under which certain key employees receive cash awards for long-
term service. Our liabilities under these programs were $0.4 million at December 31, 2007 and 2006.
As of December 31, 2007 and 2006, deferred sales bonus of $2.6 million and $2.7 million, respectively, was
accrued in deferred compensation and other long-term liabilities in the accompanying balance sheets.
We maintain a 401(k) defined contribution plan which covers all U.S. employees who meet minimum
requirements and elect to participate. Participants may contribute up to 15% of their compensation, subject to
certain limitations. During each of the years presented, we have made matching contributions of 25% for each
1% of the participants’ contributions up to 4% of the participants’ contributions. Annual contributions by us are
made at our sole discretion, as approved by the Compensation Committee. We recorded expenses for our
contributions of approximately $0.2 million for 2007, 2006 and 2005.
Certain of our foreign subsidiaries have defined contribution plans, which allow for voluntary contributions
by the employees. The foreign subsidiaries paid all general and administrative expenses of the plans and in some
cases made employer contributions on behalf of the employees. We recorded expenses for our contributions of
approximately $0.8 million, $0.5 million and $0.6 million for 2007, 2006 and 2005, respectively.
Environmental and Other Liabilities; Uninsured Risks
We utilize subcontractors to provide various services to customers, including into-plane fueling at airports,
fueling of vessels in-port and at-sea, and transportation and storage of fuel and fuel products. We are subject to
possible claims by customers, regulators and others who may be injured by a fuel spill or other accident. In
addition, we may be held liable for damages to the environment arising out of such events. Although we
generally require our subcontractors to carry liability insurance, not all subcontractors carry adequate insurance.
Our marine and land businesses do not have liability insurance to cover the acts or omissions of our
subcontractors. None of our liability insurance covers acts of war and terrorism. If we are held responsible for
any acts of war or terrorism, accident or other event, and the liability is not adequately covered by insurance and
is of sufficient magnitude, our financial position and results of operations will be adversely affected.
We have exited several businesses which handled hazardous and non-hazardous waste. We treated and/or
transported this waste to various disposal facilities. We may be held liable as a potentially responsible party for
the clean-up of such disposal facilities, or be required to clean up facilities previously operated by us, pursuant to
current U.S. federal and state laws and regulations.
Although we continuously review the adequacy of our insurance coverage, we may lack adequate coverage
for various risks, such as environmental claims. An uninsured or under-insured claim arising out of our activities,
if successful and of sufficient magnitude, will have a material adverse effect on our financial position and results
of operations.
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