World Fuel Services 2012 Annual Report Download - page 34

Our operations may be adversely affected by legislation as well as competition from other
energy sources and new or advanced technology, which could result in increased operating
costs and reduced demand for our products and services.
Fuel competes with other sources of energy, some of which are less costly on an equivalent energy
basis. There are presently significant governmental incentives and consumer pressures to increase the
use of alternative fuels in the United States. A number of automotive, industrial and power generation
manufacturers are developing more fuel efficient engines, hybrid engines and alternative clean power
systems using fuel cells or clean burning gaseous fuels. The more successful these alternatives become
as a result of governmental incentives or regulations, technological advances, consumer demand,
improved pricing or otherwise, the greater the potential negative impact on pricing and demand for our
products and services and accordingly, our profitability.
In addition, federal and/or state governments may enact legislation or regulations that attempt to control
or limit greenhouse gas emissions such as carbon dioxide. Such laws or regulations could impose costs
tied to carbon emissions, operational requirements or restrictions, or additional charges to fund energy
efficiency activities. They could also provide a cost advantage to alternative energy sources, impose
costs or restrictions on end users of fuel, or result in other costs or requirements, such as costs
associated with the adoption of new infrastructure and technology to respond to new mandates. The
focus on climate change could negatively impact the reputation of fuel products or services such as
those we offer. The occurrence of the foregoing events could put upward pressure on the cost of fuel
relative to other energy sources, increase our costs and the prices we charge to customers, reduce the
demand for our products, and therefore adversely affect our business, financial condition, results of
operations and cash flows.
Current and future litigation could have an adverse effect on us.
We are currently involved in legal proceedings that have arisen in the ordinary course of our business.
Lawsuits and other administrative or legal proceedings can involve substantial costs, including the costs
associated with investigation, litigation and possible settlement, judgment, penalty or fine. Although we
maintain insurance to mitigate certain costs, there can be no assurance that costs associated with
lawsuits or other legal proceedings will not exceed the limits of insurance policies. Our business,
financial condition, results of operations and cash flows could be adversely affected if a judgment,
penalty or fine is not fully covered by insurance.
We are exposed to risks from legislation requiring companies to have adequate internal
controls over financial reporting and to evaluate those internal controls.
Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to assess, and our
independent registered public accounting firm to attest to, the effectiveness of our internal control
structure and procedures for financial reporting. We completed an evaluation of the effectiveness of our
internal control over financial reporting as of December 31, 2012, and we have an ongoing program to
perform the system and process evaluation and testing necessary to continue to comply with these
requirements. Our expansive international operations and integration of acquired companies exacerbate
the risks associated with the need to maintain effective internal controls. Accordingly, we expect to
continue to incur significant expense and to devote management resources to Section 404 compliance.
In the event that our chief executive officer, chief financial officer or independent registered public
accounting firm determines that our internal control over financial reporting is not effective as defined
under Section 404, investor perceptions and our reputation may be adversely affected and the market
price of our stock could decline. Moreover, even if we and our auditors do not identify any deficiencies in
our internal control system, it may not prevent all potential errors or fraud.
Item 1B. Unresolved Staff Comments
None.
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