World Fuel Services 2011 Annual Report Download - page 34

other event, and the liability is not adequately covered by insurance and is of sufficient magnitude, our
business, financial condition, results of operations and cash flows will be adversely affected.
Our failure to comply with the restrictions of our Credit Facility and Term Loan Facility could
adversely affect our operating flexibility.
We have the ability to borrow money pursuant to a Credit Facility and Term Loan Facility that impose
certain operating and financial covenants on us, such as limiting or prohibiting our ability to (i) pay
dividends, (ii) incur additional debt, (iii) create liens, (iv) make restricted payments, (v) sell assets or
(vi) engage in mergers or acquisitions. Our failure to comply with obligations under these facilities,
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 these facilities, could
trigger cross-defaults under other agreements to which we are a party, such as certain derivative
contracts and promissory notes issued in connection with acquisitions, and would impair our ability to
obtain working capital advances and letters of credit, any of which could have a material adverse effect
on our business, financial condition, results of operations and cash flows.
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, money market mutual funds and investment grade commercial paper, are subject to
credit, liquidity, market and interest rate risk, which can be exacerbated by volatility in the capital
markets. Adverse changes to these risks could result in the decline of the fair value of our cash
equivalents and investments and could materially affect our business, financial condition, results of
operations and cash flows.
Our business is dependent on the ability to obtain financing to meet our capital
requirements and fund our future growth, which may be particularly difficult to obtain if
there is volatility in the credit and capital markets.
We rely on credit arrangements with banks, suppliers and other parties as a significant source of liquidity
for capital requirements not satisfied by operating cash flow. A substantial tightening of the global credit
markets could affect our ability to obtain credit as and when we need it on commercially reasonable
terms or at all and, consequently, could have a negative impact on our future development and growth. If
we are unable to obtain debt financing and instead raise capital through an equity issuance, existing
shareholders would be diluted. Even if we are able to obtain debt financing, the restrictions creditors
place on our operations and our increased interest expense and leverage could limit our ability to grow.
If we are unable to retain our senior management and key employees, our business and
results of operations could be harmed.
Our ability to maintain our competitive position is largely dependent on the services of our senior
management and key personnel. Although we have employment agreements with certain of our key
executive officers, the employment agreements do not prevent those officers from ceasing their
employment with us at any time. If we are unable to retain existing senior management and key
personnel, or to attract other qualified senior management and key personnel on terms satisfactory to
us, our business will be adversely affected. While we maintain key man life insurance with respect to
certain members of our senior management, our coverage levels may not be sufficient to offset any
losses we may suffer as a result of departing officers, and there is no assurance that we will continue to
maintain key man life insurance in the future.
Businesses we have acquired or may acquire in the future as well as strategic investments
such as joint venture arrangements will expose us to increased operating risks.
As part of our growth strategy, we have been acquisitive and intend to continue to explore acquisition
opportunities of fuel resellers and other related service businesses. For example, we acquired all of the
outstanding stock of Ascent Aviation Group, Inc. (‘‘Ascent’’) and Nordic Camp Supply ApS and certain
affiliates (‘‘NCS’’) in 2011. We cannot provide any assurance that we will find attractive acquisition
candidates in the future, that we will be able to acquire such candidates on economically acceptable
terms or that we will be able to finance acquisitions on economically acceptable terms. Even if we are
able to acquire new businesses in the future, they could result in the incurrence of substantial additional
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