World Fuel Services 2015 Annual Report Download - page 37

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Contractual Obligations
As of December 31, 2015, our contractual obligations were as follows (in millions):
Total < 1 year 1-3 years 3-5 years > 5 years
Debt and interest obligations $ 831.3 $ 46.8 $ 779.5 $ 3.6 $ 1.4
Operating lease obligations 176.2 42.1 54.7 33.9 45.5
Employment agreement obligations 7.2 6.0 1.2 — —
Derivatives obligations 75.0 69.6 5.4 — —
Purchase commitment obligations 65.8 57.7 8.1 — —
Other obligations 7.6 5.3 2.3 — —
Total $ 1,163.1 227.5 851.2 37.5 46.9
Debt and Interest Obligations. These obligations include principal and interest payments on fixed-rate and variable-rate,
fixed-term debt based on the expected payment dates.
Other Obligations. These obligations primarily consist of deferred compensation arrangements.
Unrecognized Income Tax Liabilities. As of December 31, 2015, our gross liabilities for unrecognized income tax benefits
(“Unrecognized Tax Liabilities”), including penalties and interest, were $56.1 million. The timing of any settlement of our
Unrecognized Tax Liabilities with the respective taxing authority cannot be reasonably estimated.
Off-Balance Sheet Arrangements
Letters of Credit and Bank Guarantees. In the normal course of business, we are required to provide letters of credit to
certain suppliers. A majority of these letters of credit expire within one year from their issuance, and expired letters of credit
are renewed as needed. As of December 31, 2015, we had issued letters of credit and bank guarantees totaling
$213.9 million under our Credit Facility and other uncommitted credit lines. For additional information on our Credit Facility
and other credit lines, see the discussion in “Liquidity and Capital Resources” above.
Surety Bonds. In the normal course of business, we are required to post bid, performance and garnishment bonds, primarily
in our aviation and land segments. As of December 31, 2015, we had $39.1 million in outstanding bonds that were arranged
in order to satisfy various security requirements.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial
statements included elsewhere in this 2015 10-K Report, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these financial statements requires management to
make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related
disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to
unbilled revenue and related costs of sales, bad debt, share-based payment awards, derivatives, goodwill and identifiable
intangible assets and certain accrued liabilities. We base our estimates on historical experience and on other assumptions
that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.
We have identified the policies below as critical to our business operations and the understanding of our results of
operations. For a detailed discussion on the application of these and other significant accounting policies, see Note 1 to the
accompanying consolidated financial statements included in this 2015 10-K Report.
Accounts Receivable and Allowance for Bad Debt
Credit extension, monitoring and collection are performed for each of our business segments. Each segment has a credit
committee that is responsible for approving credit limits above certain amounts, setting and maintaining credit standards,
and managing the overall quality of the credit portfolio. We perform ongoing credit evaluations of our customers and adjust
credit limits based upon payment history and the customer’s current creditworthiness, as determined by our review of our
customer’s credit information. We extend credit on an unsecured basis to most of our customers. Accounts receivable are
deemed past due based on contractual terms agreed to with our customers.
We continuously monitor collections and payments from our customers and maintain a provision for estimated credit losses
based upon our historical experience with our customers, current market and industry conditions affecting our customers
and any specific customer collection issues that we have identified. Historical payment trends may not be a useful indicator