World Fuel Services 2008 Annual Report Download - page 18

effect on our business. Recently, the aviation industry has experienced a decline in passenger traffic, and the
marine industry has witnessed a slowdown in shipping, in both cases as a result of the deterioration of the global
economy generally. In addition, any political instability, natural disasters (such as Hurricane Katrina), terrorist
activity or military action that disrupts shipping, flight operations or land transportation will adversely affect our
customers and may reduce the demand for our products and services. Our business could also be adversely
affected by increased merger activity in the marine, aviation and land transportation industries, which may
reduce the number of customers that purchase our products and services, as well as the prices we are able to
charge for such products and services.
Insurance coverage for some of our operations may be insufficient to cover losses.
We do not maintain any insurance coverage for various risks, such as certain environmental claims, the acts
or omissions of our subcontractors, and war and terrorism. Even if we are faced with a liability in connection
with which we do maintain insurance, our insurance coverage may be inadequate. Also, if we take, or fail to take,
certain actions, such as, our insurance carriers may refuse to pay particular claims. If the cost of insurance
increases, we may decide to discontinue certain insurance coverage or reduce our level of coverage to offset the
cost increase. In addition, insurance coverage that we currently have could become difficult or impossible to
obtain in the future.
Our failure to comply with the restrictions of our Credit Facility could adversely affect our operating
flexibility.
We borrow money pursuant to a Credit Facility that imposes certain operating and financial covenants on
us, such as limiting or prohibiting our ability to pay dividends incur additional debt, create liens, make restricted
payments, sell assets or engage in mergers or acquisitions. Our failure to comply with obligations under the
Credit Facility, including meeting certain financial ratios, could result in an event of default. An event of default,
if not cured or waived, would permit acceleration of any outstanding indebtedness under the Credit Facility,
could trigger cross-defaults under other agreements to which we are a party, such as certain derivatives contracts
and promissory notes issued in connection with acquisitions, and would impair our ability to obtain working
capital advances and letters of credit, which would have a material adverse effect on our business, financial
condition and results of operations.
Our cash equivalents and investments are subject to risks which may cause illiquidity and losses from
declines in value.
Our cash equivalents, principally consisting of overnight investments, bank money market accounts, bank
time deposits and investment grade commercial paper, and investments are subject to credit, liquidity, market and
interest rate risk, which have all been exacerbated recently due to the unprecedented volatility of the capital
markets. Adverse changes to these risks have resulted, and could further result, in the decline of the fair value in
our cash equivalents and investments, and could materially affect our financial condition, results of operations,
and cash flows.
Increases in interest rates, the failure of our interest rate protection arrangements, if any, 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,
2008, we had no outstanding borrowings under our Credit Facility or outstanding interest rate protection
arrangements. Should we borrow under our Credit Facility, 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.
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