World Fuel Services 2014 Annual Report Download - page 72

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We offer a non-qualified deferred compensation (“NQDC”) plan to certain eligible employees, excluding our named
executive officers, whereby the participants may defer a portion of their compensation. We do not match any participant
deferrals under the NQDC plan. Participants can elect from a variety of investment choices for their deferred compensation
and gains and losses on these investments are credited to their respective accounts. The deferred compensation payable
amount under this NQDC plan is subject to the claims of our general creditors and was $2.3 million and $0.9 million as of
December 31, 2014 and December 31, 2013, respectively, which was included in other long-term liabilities in the
accompanying consolidated balance sheets.
In connection with our acquisition of Watson Petroleum, we assumed their defined benefit pension plan (the “Watson Plan”),
which provides participants benefits based on salary at retirement or an earlier date of leaving service. As part of the
allocation of the estimated purchase price to assets acquired and liabilities assumed for Watson Petroleum, we recorded
an assumed pension exit obligation of £9.8 million ($16.3 million). As of December 31, 2014, we have remaining an
assumed exit pension obligation of £1.0 million ($1.5 million), which is included in accrued expenses and other current
liabilities in the accompanying consolidated balance sheets. We expect to settle this amount in 2015. There are no other
assets or liabilities on our consolidated balance sheet as of December 31, 2014 related to the Watson Plan. Additionally,
the expenses for the Watson Plan recorded in our consolidated statements of income and comprehensive income for 2014
were not significant.
As of December 31, 2014, the Watson Plan, through its Trustee, had assets comprised of a buy-in policy with an insurance
company, which fully matches its estimated benefit obligations of £32.0 million ($49.8 million). The completion of our exit
from the Watson Plan is anticipated to occur in the latter half of 2015 via buy-out policies between the insurance company
and each individual participant.
Environmental and Other Liabilities; Uninsured Risks
We 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 therefore 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 maintain liability insurance for these types of events, such
insurance may be inadequate. If we are held liable for any damages, 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 regulation. In addition, compliance with existing and future environmental laws regulating underground storage
tanks located at the retail gasoline stations that we operate may require significant capital expenditures and increased
operating and maintenance costs. The remediation costs and other costs required to clean up or treat contaminated sites
could be substantial. We pay tank registration fees and other taxes to state trust funds established in our operating areas
and maintain private insurance coverage in support of future remediation obligations. These state trust funds or other
responsible third parties including insurers are expected to pay or reimburse us for remediation expenses less a deductible.
To the extent third parties do not pay for remediation as we anticipate, we will be obligated to make these payments. These
payments could materially adversely affect our financial condition, results of operations and cash flows. Reimbursements
from state trust funds will be dependent on the maintenance and continued solvency of the various funds.
Although we continuously review the adequacy of our insurance coverage, we may lack adequate coverage for various
risks, including environmental claims. Furthermore, our ability to obtain and maintain adequate insurance and the cost of
such insurance may be affected by significant claims, such as the Lac-Mégantic derailment described below, and conditions
in the insurance market over which we have no control. 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, results of operations
and cash flows.
Legal Matters
Lac-Mégantic, Quebec
We, on behalf of DPTS Marketing LLC ("DPM"), a crude oil marketing joint venture in which we owned a 50% membership
interest, purchased crude oil from various producers in the Bakken region of North Dakota. Dakota Petroleum Transport
Solutions, LLC ("DPTS"), a crude oil transloading joint venture in which we also owned a 50% membership interest, arranged
for the transloading of the crude oil for DPM into tank cars at the joint venture's facility in New Town, North Dakota. We
leased the tank cars used in the transloading from a number of third party lessors and subleased these tank cars to DPM.