World Fuel Services 2011 Annual Report Download - page 32

Economic, political and other risks associated with international sales and operations could
adversely affect our business and future operating results.
Because we offer fuel products and services on a worldwide basis, our business is subject to risks
associated with doing business internationally. Our business and future operating results could be
harmed by a variety of factors, including:
• trade protection measures and import or export licensing requirements, which could increase our
costs of doing business internationally;
• the costs of hiring and retaining senior management for overseas operations;
• difficulty in staffing and managing widespread operations, which could reduce our productivity;
• unexpected changes in regulatory requirements, which may be costly and require significant time
to implement;
• laws restricting us from repatriating profits earned from our activities within foreign countries,
including the payment of distributions;
• governmental actions that may result in the deprivation of our contractual rights or the inability to
obtain or retain authorizations required to conduct our business;
• political risks specific to foreign jurisdictions; and
• terrorism, war, civil unrest and natural disasters.
In particular, we operate in emerging markets, such as Russia and certain countries in Asia and Latin
America, which have been plagued by corruption and have uncertain regulatory environments, both of
which could have a negative impact on our operations there. Many countries in which we operate
historically have been, and may continue to be, susceptible to recessions or currency devaluation.
We also operate in certain high risk locations such as Iraq and Afghanistan that are experiencing military
action or continued unrest which could disrupt the supply of fuel or otherwise disrupt our operations
there. In these high risk locations where we have operations, we may incur substantial costs to maintain
the safety of our personnel. Despite these activities, in these locations, we cannot guarantee the safety
of our personnel, and we may suffer future losses of employees or subcontractors.
Fluctuations in foreign exchange rates could materially affect our reported results.
The majority of our business transactions are denominated in U.S. dollars. However, in certain markets,
payments to some of our fuel suppliers and from some of our customers are denominated in local
currency. We also have certain liabilities primarily for local operations, including income and transactional
taxes, which are denominated in foreign currencies. This subjects us to foreign currency exchange risk.
Although we use hedging strategies to manage and minimize the impact of foreign currency exchange
risk, at any given time, only a portion of such risk may be hedged and such risk may be substantial. As a
result, fluctuations in foreign exchange rates could adversely affect our profitability.
In addition, many of our customers are foreign customers and may be required to purchase U.S. dollars
to pay for our products and services. A rapid depreciation or devaluation in currency affecting our
customers could have an adverse effect on our customers’ operations and their ability to convert local
currency to U.S. dollars to make required payments to us. This could, in turn, increase our credit losses
and adversely affect our business, financial condition, results of operations and cash flows.
Third parties who fail to provide services to us and our customers as agreed could harm our
business.
We use third parties to provide various services to our customers, including into-plane fueling at airports,
fueling of vessels in port and at sea and delivering land-based fuel. The failure of these third parties to
perform these services in accordance with contractual terms for any reason, such as an interruption of
their business because of weather, environmental or labor difficulties or political unrest, could affect our
relationships with our customers and subject us to claims and other liabilities which might have a
material adverse effect on our business, financial condition, results of operations and cash flows.
To the extent that we use third parties in our operations in emerging markets, we are also subject to the
risk that we could be held accountable for the failure of these third parties to comply with the laws and
regulations of the U.S. government and various international jurisdictions.
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