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Commitments and Contingencies
 12 Months Ended
Dec. 31, 2012
Commitments and Contingencies [Abstract]  
Commitments and Contingencies

Note 17.    Commitments and Contingencies

 

Operating leases

 

The Company has commitments under operating leases primarily for office space, motor vehicles and various items of computer and office equipment. The leases are expected to be renewed and replaced in the normal course of business. Rental expense was $2.9 million in 2012, $2.6 million in 2011 and $2.8 million in 2010. Future commitments under non-cancelable operating leases are as follows:

 

         

(in millions)

      

2013

   $ 2.1  

2014

     1.5  

2015

     1.1  

2016

     1.0  

2017

     0.9  

Thereafter

     0.9  
   

 

 

  
    $ 7.5  
   

 

 

  

 

Environmental remediation obligations

 

Commitments in respect of environmental remediation obligations are disclosed in Note 12.

 

Contingencies

 

Resolution of certain government investigations and other matters

 

As we have previously disclosed, in the first quarter of 2010, 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 December 31, 2012, 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  

Fees and associated expenses

     0.0       3.9       3.9  

Less discounting to fair value

     (0.1 )      0.0       (0.1 ) 
   

 

 

    

 

 

    

 

 

  
      40.1       3.9       44.0  

Amounts paid

     (36.5 )      (2.6 )      (39.1 ) 

Exchange effect

     0.1       0.0       0.1  
   

 

 

    

 

 

    

 

 

  
      3.7       1.3       5.0  

Due within one year

     (3.7 )      (1.3 )      (5.0 ) 
   

 

 

    

 

 

    

 

 

  
    $ 0.0     $ 0.0     $ 0.0  
   

 

 

    

 

 

    

 

 

  

 

For accounting purposes only, we are required under GAAP, in accordance with our accounting policy, to discount elements of the fines, penalties and disgorgements to their fair value.

 

Settlement of NewMarket Corporation civil complaint

 

As we have previously disclosed, the Company and its subsidiaries, Alcor Chemie Vertriebs GmbH and Innospec Limited, were the subject of two civil actions brought by NewMarket Corporation and its subsidiary, Afton Chemical Corporation (collectively, “NewMarket”). NewMarket and the Company agreed to settle these actions pursuant to the terms of a settlement agreement between them signed on September 13, 2011 which provided for mutual releases of the parties and dismissal of the actions with prejudice. Under the settlement agreement, the Company will pay NewMarket an aggregate amount of approximately $45.0 million, payable in a combination of cash, a promissory note and stock, of which $25.0 million was paid in cash in September 2011, $15.0 million is payable in three equal annual installments under the promissory note (carrying simple interest at 1% per annum) the first installment of which was paid on September 7, 2012, and approximately $5.0 million was paid in the form of 195,313 shares of the Company’s common stock transferred to NewMarket in September 2011.

 

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. It is possible however, that an adverse resolution of an unexpectedly large number of such 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 December 31, 2012, such contingent liabilities which are not recognized as liabilities in the consolidated financial statements amounted to $7.7 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.