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Commitments And Contingencies
 6 Months Ended
Jun. 30, 2011
Commitments And Contingencies  
Commitments And Contingencies

NOTE 13—COMMITMENTS AND CONTINGENCIES

Resolution of certain government investigations and other matters

As we have previously disclosed, the Company reached a $40.2 million settlement to resolve all matters in respect of investigations by U.S. and United Kingdom government authorities into certain legacy transactions conducted by the Company and its subsidiaries under the United Nations Oil for Food Program ("OFFP"), the U.S. Foreign Corrupt Practices Act ("FCPA"), the U.S. Cuban Assets Control Regulations ("CACR") and United Kingdom anti-bribery laws. The settlement consists of fines, penalties and disgorgements which are payable over a period of four years commencing 2010. As at June 30, 2011, the expected schedule of payments was as follows:

 

(in millions)

    Government
Authorities		     Compliance
Monitor		     Total  

Fines, penalties and disgorgements

    $ 40.2      $ 0.0      $ 40.2   

Probable future expenses

      0.0        3.9        3.9   

Less discounting to net present value

      (0.5 )      0.0        (0.5 ) 
  

 

 

    

 

 

    

 

 

  
     39.7        3.9        43.6   

Amounts paid:

       

- fixed

      (16.7 )      (0.3 )      (17.0 ) 

- contingent on future trading

      (2.5 )      0.0        (2.5 ) 

Exchange effect

      0.4        0.0        0.4   
  

 

 

    

 

 

    

 

 

  
     20.9        3.6        24.5   

Due within one year

      (9.7 )      (1.3 )      (11.0 ) 
  

 

 

    

 

 

    

 

 

  
   $ 11.2      $ 2.3      $ 13.5   
  

 

 

    

 

 

    

 

 

  

For accounting purposes only, we are required under GAAP to discount elements of the fines, penalties and disgorgements to their net present value.

For additional details regarding the settlement, see the Legal Proceedings section in our Annual Report on Form 10-K for the year ended December 31, 2010.

NewMarket Corporation complaint

On July 23, 2010, NewMarket Corporation and its subsidiary, Afton Chemical Corporation (collectively, "NewMarket"), filed a civil complaint against the Company and its subsidiary, Alcor Chemie Vertriebs GmbH ("Alcor"), in the U.S. District Court for the Eastern District of Virginia. The complaint makes certain claims against the Company and Alcor with respect to alleged violations of provisions of the Robinson-Patman Act, the Virginia Antitrust Act and the Virginia Business Conspiracy Act as a result of alleged actions involving officials in Iraq and Indonesia pertaining to securing sales of the Company's tetra ethyl lead fuel additive, to the apparent detriment of the plaintiffs and their sales of a competing non-lead based fuel additive. The complaint seeks treble damages of an unspecified amount, plus attorneys' fees, costs and expenses. The Company believes the complaint is without merit and intends to defend it vigorously, but because of uncertainties associated with the ultimate outcome of the complaint and the costs to the Company of responding to it, we cannot assure you that the ultimate costs and damages, if any, that may be imposed upon us will not have a material adverse effect on our results of operations, financial position and cash flows. On the facts available to us it is not yet possible to form any reasonable estimate of the potential costs and damages that may be imposed upon us, if any, either by reference to a range of possible outcomes or by reference to the lower end of such a range of outcomes. As at June 30, 2011 we had a provision remaining of $2.0 million in respect of probable future legal expenses and provided no additional accruals in respect of this matter.

 

Other legal matters

While we are involved from time to time in claims and legal proceedings that result from, and are incidental to, the conduct of our business including business and commercial litigation, employee and product liability claims, there are no other material pending legal proceedings to which the Company or any of its subsidiaries is a party, or of which any of their property is subject, although an adverse resolution of an unexpectedly large number of these individual items could in the aggregate have a material adverse effect on results of operations for a particular year or quarter.

Guarantees

The Company and certain of the Company's consolidated subsidiaries are contingently liable for certain obligations of affiliated companies primarily in the form of guarantees of debt and performance under contracts entered into as a normal business practice. This includes guarantees of non-U.S. excise taxes and customs duties. As at June 30, 2011, such contingent liabilities amounted to $4.9 million.

Under the terms of the guarantee arrangements, generally the Company would be required to perform should the affiliated company fail to fulfill its obligations under the arrangements. In some cases, the guarantee arrangements have recourse provisions that would enable the Company to recover any payments made under the terms of the guarantees from securities held of the guaranteed parties' assets.

The Company and its affiliates have numerous long-term sales and purchase commitments in their various business activities, which are expected to be fulfilled with no adverse consequences material to the Company.