World Fuel Services 2002 Annual Report Download - page 18

Item 3. Legal Proceedings
In July 2001, we settled litigation filed in February 2000 relating to a product theft off the coast of Nigeria. The
settlement resulted in a recovery of $1.0 million. In the accompanying Consolidated Statements of Income, the product theft
was included as a non-recurring charge in Other income (expense), net during the year ended March 31, 2000 and the
recovery was included as a non-recurring credit in Other income (expense), net for the year ended March 31, 2002.
In July 2001, we received a Summary Judgment from the United States District Court for the Southern District of
Florida which ordered Donald F. Moorehead, Jr., Chairman of EarthCare Company (“EarthCare”) to pay us compensatory
damages of approximately $5.0 million, plus interest from May 1, 2001. This judgment relates to Mr. Moorehead’s default
on his agreement to purchase all of the EarthCare stock owned by us for approximately $5.0 million. We received the
EarthCare stock as part payment for the sale of our oil-recycling operations in February 2000. From August 2001 to October
2001, we received principal and interest payments totaling $700 thousand from Mr. Moorehead. We had been pursuing
collection of this judgment and, in May 2002, the court appointed a receiver to take possession and control of all nonexempt
assets and property interests of Mr. Moorehead. As a result of the receiver’s activities, we received several offers from Mr.
Moorehead to settle the outstanding balance on our judgment and received $350 thousand of principal and interest payments
from Mr. Moorehead from May 2002 to August 2002, resulting in a total principal and interest collection of approximately
$1.1 million. Lastly, in October 2002, we received $3.0 million as a final payment to settle the remaining balance due on our
judgment. Accordingly, in connection with the settlement, during the nine months ended December 31, 2002, we recorded a
non-recurring charge of $1.6 million, which includes $346 thousand for legal and receiver fees.
In April 2001, Miami-Dade County, Florida (the “County”) filed suit (the “County Suit”) against 17 defendants to seek
reimbursement for the cost of remediating environmental contamination at Miami International Airport (the “Airport”). Page
Avjet Fuel Corporation, now known as PAFCO L.L.C. (“PAFCO”), is a defendant. We acquired a 50% interest in PAFCO
from Signature Flight Support Corporation (“Signature”) in December 2000. Pursuant to the PAFCO acquisition agreement,
Signature agreed to indemnify us for all PAFCO liabilities arising prior to the closing date (“Closing”). Because the Airport
contamination occurred prior to Closing, we believe that the County Suit is covered by Signature’s indemnification
obligation. We have notified Signature of the County Suit, as stipulated in the acquisition agreement. We expect Signature
to defend this claim on behalf of PAFCO and at Signature’s expense.
Also in April 2001, the County sent a letter to approximately 250 potentially responsible parties (“PRP’s”), including
World Fuel Services Corporation and one of our subsidiaries, advising them of their potential liability for the clean-up costs
which are the subject of the County Suit. The County has threatened to add the PRP’s as defendants in the County Suit,
unless they agree to share in the cost of the environmental clean-up at the Airport. In May 2001, we advised the County that:
(1) neither we nor any of our subsidiaries were responsible for any environmental contamination at the Airport, and (2) to the
extent we or any of our subsidiaries were so responsible, our liability was subject to indemnification by the County pursuant
to the indemnity provisions contained in our lease agreement with the County.
We intend to vigorously defend all claims asserted by the County relating to environmental contamination at the Airport.
We believe our liability in these matters (if any) should be adequately covered by the indemnification obligations of
Signature as to PAFCO, and the County as to World Fuel Services Corporation and our other subsidiaries.
There can be no assurance that we will prevail on the above legal proceedings and management cannot estimate the
exposure if we do not prevail. A ruling against us in any of the proceedings described above may have a material adverse
effect on our financial condition and results of operation.
In addition to the matters described above, we are also involved in litigation and administrative proceedings primarily
arising in the normal course of our business. In the opinion of management, except as set forth above, our liability, if any,
under any other pending litigation or administrative proceedings, will not materially affect our financial condition or results
of operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of shareholders, through the solicitation of proxies or otherwise, during the quarter
ended December 31, 2002.
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