World Fuel Services 2012 Annual Report Download - page 99

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We maintain a 401(k) defined contribution plan which covers all U.S. employees who meet minimum
requirements and elect to participate. Participants may contribute up to 60% of their compensation,
subject to certain limitations. During 2012, 2011 and 2010, we made matching contributions of 50% for
each 1% of the participants’ contributions up to 6% of the participants’ contributions. Annual
contributions by us are made at our sole discretion, as approved by the Compensation Committee. We
recorded expense for our contributions of $1.6 million, $1.5 million and $1.2 million for 2012, 2011 and
2010, respectively.
Certain of our foreign subsidiaries have defined contribution plans, which allow for voluntary
contributions by the employees. The foreign subsidiaries paid all general and administrative expenses of
the plans and in some cases made employer contributions on behalf of the employees. We recorded
expense for our contributions of $2.6 million, $2.0 million and $1.2 million for 2012, 2011 and 2010,
respectively.
Environmental and Other Liabilities; Uninsured Risks
We provide various services to customers, including into-plane fueling at airports, fueling of vessels
in-port and at-sea, and transloading, transportation and storage of fuel and fuel products. We are
therefore subject to possible claims by customers, regulators and others who may be injured by a fuel
spill or other accident. In addition, we may be held liable for damages to the environment arising out of
such events. Although we generally maintain liability insurance for these types of events, such insurance
may be inadequate. If we are held liable for any damages, and the liability is not adequately covered by
insurance and is of sufficient magnitude, our financial position and results of operations will be adversely
affected.
We have exited several businesses which handled hazardous and non-hazardous waste. We treated
and/or transported this waste to various disposal facilities. We may be held liable as a potentially
responsible party for the clean-up of such disposal facilities or be required to clean up facilities previously
operated by us, pursuant to current U.S. federal and state laws and regulation. In addition, compliance
with existing and future environmental laws regulating underground storage tanks located at the retail
gasoline stations that we operate may require significant capital expenditures and increased operating
and maintenance costs. The remediation costs and other costs required to clean up or treat
contaminated sites could be substantial. We pay tank registration fees and other taxes to state trust
funds established in our operating areas and maintain private insurance coverage in support of future
remediation obligations. These state trust funds or other responsible third parties including insurers are
expected to pay or reimburse us for remediation expenses less a deductible. To the extent third parties
do not pay for remediation as we anticipate, we will be obligated to make these payments. These
payments could materially adversely affect our financial condition, results of operations and cash flows.
Reimbursements from state trust funds will be dependent on the maintenance and continued solvency
of the various funds.
Although we continuously review the adequacy of our insurance coverage, we may lack adequate
coverage for various risks, such as environmental claims. An uninsured or under-insured claim arising out
of our activities, if successful and of sufficient magnitude, will have a material adverse effect on our
financial position, results of operations and cash flows.
Legal Matters
Cathay Pacific Litigation
Since April 2012, one of our subsidiaries, World Fuel Services (Singapore) Pte Ltd. (‘‘WFSS’’) has been
involved in litigation with Cathay Pacific Airways Limited (‘‘Cathay’’) arising out of the emergency landing
of a Cathay aircraft in Hong Kong in 2010, which Cathay alleges was caused by contaminated fuel
supplied by WFSS. Cathay claims damages relating to the incident of approximately $34.0 million.
Because the outcome of litigation is inherently uncertain, we cannot estimate the possible loss or range
of loss for this matter. We intend to vigorously defend against this claim, and we believe our liability in
this matter (if any) should be adequately covered by insurance. As of December 31, 2012, we have not
recorded any accruals associated with this claim.
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