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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Surety Bonds In the normal course of business, we are required to post bid, performance and garnishment bonds. The majority of the surety bonds posted relate to our aviation and land segments. As of December 31, 2016 and 2015, we had outstanding bonds that were arranged in order to satisfy various security requirements of $52.8 million and $39.1 million, respectively. Most of these bonds provide financial security for obligations which have already been recorded as liabilities. Lease Commitments As of December 31, 2016, our future minimum lease payments under non-cancelable operating leases were as follows (in millions):
Year Ended December 31, |
2017 | $ | 38.4 |
2018 | 25.9 |
2019 | 20.9 |
2020 | 17.0 |
2021 | 12.8 |
Thereafter | 34.7 |
| $ | 149.8 |
We incurred rental expense for all properties and equipment of $36.9 million, $31.6 million and $29.2 million for 2016, 2015 and 2014, respectively. Minimum payments have not been reduced by minimum sublease rentals of $44.1 million due in the future under non-cancelable subleases. Sales and Purchase Commitments As of December 31, 2016, fixed sales and purchase commitments under our derivative programs amounted to $369.6 million and $143.5 million, respectively. Additionally, in connection with the ExxonMobil transaction, we have certain purchase contracts, under which we agreed to purchase between 1.69 million barrels and 2.02 million barrels of aviation fuel at future market prices. The term of those agreement are for 10 years and have a 5-year renewal option, exercisable by mutual agreement. Agreements with Executive Officers and Key Employees We have an agreement with our Chairman, President and Chief Executive Officer, Michael J. Kasbar, for his continued employment with the Company which provides for an annual base salary as determined by our Compensation Committee in its sole discretion (currently $900,000), termination severance benefits, and such incentives and other compensation and amounts as our Compensation Committee may determine from time to time in its sole discretion. The current term of the Kasbar agreement, as amended, expires on December 31, 2017, and automatically extends for successive one-year terms unless either party provides written notice to the other at least one year prior to the expiration of the term that such party does not want to extend the term. Pursuant to his amended agreement, Mr. Kasbar is entitled to receive cash severance payments if: (a) we terminate his employment without cause following a change of control or for any reason other than death, disability or cause; (b) he resigns for good reason (generally a reduction in his responsibilities or compensation, or a breach by us), or resigns following a change of control; or (c) either he elects or we elect not to extend the term of the agreement, as amended. The severance payments are equal to $5.0 million for a termination following a change of control and $3.0 million in the other scenarios described above, a portion of which will be payable two years after the termination of Mr. Kasbar’s employment. All of Mr. Kasbar’s outstanding SSAR Awards, restricted stock and RSUs (collectively, “outstanding equity awards”) will immediately vest in each scenario described in (a) and (b) above following a change of control, except for awards assumed or substituted by a successor company, in which case, such awards shall continue to vest in accordance with their applicable terms. In each scenario described in (a), (b) or (c) above where there has not been a change of control, Mr. Kasbar’s outstanding equity awards will generally vest over a two year period following termination of his employment, with any remaining unvested awards vesting on the last day of such two year period. For each scenario described above, awards with multiple annual performance conditions must satisfy certain other requirements in order to have their vesting terms accelerated. We have also entered into employment agreements or separation agreements with certain of our other executive officers and key employees. These agreements provide for minimum salary levels, and, in most cases, bonuses which are payable if specified performance goals are attained. Some executive officers and key employees are also entitled to severance benefits upon termination or non-renewal of their contracts under certain circumstances. As of December 31, 2016, the approximate future minimum commitments under these agreements, excluding discretionary and performance bonuses, are as follows (in millions):
Year Ended December 31, |
2017 | $ | 1.3 |
Termination of Employment Agreement Effective March 16, 2015, we entered into an employment termination agreement with the former Aviation Segment President. In connection with the agreement, we recorded a charge totaling $3.8 million in March 2015, which included non-cash expenses of $0.8 million related to previously awarded stock compensation. Deferred Compensation Plans We maintain a 401(k) defined contribution plan which covers all U.S. employees who meet minimum requirements and elect to participate. We are currently making a match contribution 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. Additionally, certain of our foreign subsidiaries have defined contribution plans, which allow for voluntary contributions by the employees. In some cases, we make employer contributions on behalf of the employees. The expenses for our contributions under these plans were not significant during each of the years presented on the consolidated statements of income and comprehensive income. We offer a non-qualified deferred compensation (“NQDC”) plan to certain eligible employees, excluding our named executive officers, whereby the participants may defer a portion of their compensation. We do not match any participant deferrals under the NQDC plan. Participants can elect from a variety of investment choices for their deferred compensation and gains and losses on these investments are credited to their respective accounts. The deferred compensation payable amount under this NQDC plan is subject to the claims of our general creditors and was $4.3 million and $3.3 million as of December 31, 2016 and December 31, 2015, respectively, which was included in other long-term liabilities in the accompanying consolidated balance sheets. 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 transportation, delivery and storage of fuel and fuel products. We are therefore subject to possible claims by customers, regulators and others who may suffer a loss arising from a fuel spill or other incident. In addition, we may be held liable for damage to the environment arising out of such events. Although we generally maintain liability insurance for these types of events, such insurance may be insufficient to cover certain losses which may be in excess of coverage limits or outside the scope of the coverage. 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. Compliance with existing and future environmental laws regulating underground storage tanks 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. Where available, we pay tank registration fees and other taxes to state trust funds established in our operating areas, and we also 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 in excess of a deductible. To the extent third parties do not pay for remediation as we anticipate, we will be obligated to make these payments, which 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, including environmental claims. Furthermore, our ability to obtain and maintain adequate insurance and the cost of such insurance may be affected by significant claims and conditions in the insurance market over which we have no control. If we are uninsured or under‑insured for a claim or claims of sufficient magnitude arising out of our activities, it will have a material adverse effect on our financial position, results of operations and cash flows. Legal Matters In connection with a theft of fuel product valued at approximately $18.0 million, we recorded an insurance receivable for the full amount of the loss, which is included in other current assets in the accompanying consolidated balance sheets. On July 31, 2014, our insurer, AGCS Marine Insurance Company (“AGCS”), filed a declaratory judgment action against us in the United States District Court for the Southern District of New York (“District Court”) seeking a court ruling that the loss is not covered under our policy. In May 2016, the District Court entered an order granting summary judgment in our favor holding that the loss is covered under the AGCS policy and entered a final order and judgment in November 2016, requiring AGCS to pay us damages and interest in the amount of approximately $24.5 million (the "Judgment"). In June 2016, AGCS took an appeal from the order granting summary judgment to the United States Court of Appeals for the Second Circuit (the "Appellate Court") and we filed a protective cross-appeal, which was stayed pending the entry of the Judgment in the District Court. In December 2016, AGCS filed a notice of appeal from the Judgment in the Appellate Court. In January 2017, the Appellate Court consolidated the appeal from the Judgment with the earlier appeals from the summary judgment order. The Appellate Court has not yet set a briefing schedule or hearing for the appeals. We believe AGCS’ position is without merit and we intend to continue vigorously pursuing our rights. However, due to the complexities and uncertainties inherent in litigation, we can provide no assurance that we will recover the full amount of the loss. Tax Matters From time to time, we are under review by various domestic and foreign tax authorities with regards to indirect tax matters and are involved in various challenges and litigation in a number of countries, including, in particular, Brazil and South Korea, where the amounts under controversy may be significant. During the quarter ended December 31, 2016, the Korean branch (“WFSK”) of one of our subsidiaries received assessments of approximately $10.4 million (KRW 11.9 billion) and a pre-assessment notice for an additional $17.6 million (KRW 20.1 billion) from the regional tax authorities of Seoul, South Korea (“SRTO”). The assessments primarily consist of fines and penalties for allegedly failing to issue VAT invoices and report certain transactions during the period 2011-2014. These assessments do not involve failure to pay or collect VAT. We believe that these assessments are without merit and are currently appealing the actions. In addition to these assessments, in November 2016, the SRTO referred the case to the Seoul Central District Prosecutors Office (“SCDPO”) for investigation and determination as to whether the alleged invoicing and reporting violations should be subject to criminal action under Korean law, which may result in additional penalties being assessed against us. We believe any such criminal action is without merit and we intend to defend any such action to the extent pursued by the SCDPO. We are also involved in a number of tax disputes with federal, state and municipal tax authorities in Brazil, relating primarily to VAT (ICMS) tax matters. These disputes are at various stages of the legal process, including the administrative review phase and the collection action phase, and include assessments of fixed amounts of principal and penalties, plus interest. When we deem it appropriate and the amounts are reasonably estimable, we establish reserves for potential adjustments to our provision for the accrual of indirect taxes that may result from examinations or other actions by tax authorities. If events occur which indicate payment of these amounts is unnecessary, the reversal of the liabilities would result in the recognition of benefits in the period we determine the liabilities are no longer necessary. If our estimates of any of our federal, state, and foreign indirect tax liabilities are less than the ultimate assessment, it could result in a further charge to expense. Except with respect to the matters described above, we believe that the final outcome of any pending examinations, agreements, administrative or judicial proceedings will not have a material effect on our results of operations or cash flows. Other Matters On August 31, 2016, Hanjin Shipping Co., Ltd. (“Hanjin”), one of our customers in our marine segment, filed for bankruptcy protection in South Korea and on September 1, 2016, the Korean Rehabilitation Court accepted Hanjin’s application for rehabilitation. On February 2, 2017, the Korean Rehabilitation Court terminated Hanjin’s rehabilitation process. It is expected that Hanjin will declare bankruptcy on or about, February 17, 2017 and commence liquidation proceedings. During the quarter ended December 31, 2016, we wrote off approximately $5.8 million of Hanjin receivables associated with specific vessels against which enforcement of our maritime liens is unlikely to be successful. As of December 31, 2016, we had outstanding receivables of approximately $7.0 million, net of anticipated insurance recoveries. While we believe we will recover all or substantially all of the outstanding receivables, there can be no assurance that we will be able to recover all of the remaining amounts owed or fully mitigate all losses. We are also a party to various claims, complaints and proceedings arising in the ordinary course of our business including, but not limited to, environmental claims, commercial and governmental contract claims, such as property damage, demurrage, personal injury, billing and fuel quality claims, as well as bankruptcy preference claims and tax and administrative claims. We have established loss provisions for these ordinary course claims as well as other matters in which losses are probable and can be reasonably estimated. As of December 31, 2016, we had recorded certain reserves which were not significant. For those matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well as for matters where a reserve has been recorded but for which an exposure to loss in excess of the amount accrued is reasonably possible, we believe that such losses will not have a material adverse effect on our consolidated financial statements. However, any adverse resolution of one or more such claims, complaints or proceedings during a particular period could have a material adverse effect on our consolidated financial statements or disclosures for that period. Our estimates regarding potential losses and materiality are based on our judgment and assessment of the claims utilizing currently available information. Although we will continue to reassess our reserves and estimates based on future developments, our objective assessment of the legal merits of such claims may not always be predictive of the outcome and actual results may vary from our current estimates.

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