October 8, 2009
VIA EDGAR AND OVERNIGHT COURIER
Mr. H. Roger Schwall
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-5546
Re: World Fuel Services Corporation
Form 10-K for the Fiscal Year Ended December 31, 2008
Filed February 26, 2009
Form 10-Q for the Fiscal Quarter Ended March 31, 2009
Filed May 7, 2009
Form 10-Q for the Fiscal Quarter Ended June 30, 2009
Filed August 6, 2009
File No. 1-09533
Dear Mr. Schwall:
This letter sets forth the responses of World Fuel Services Corporation
(referred to herein, collectively with its subsidiaries, as the "Company") to
the comments of the staff (the "Staff") of the U.S. Securities and Exchange
Commission (the "Commission") in your comment letter dated September 24, 2009.
For your convenience, we have included the text of the Staff's comments
(numbered as in the Comment Letter) followed by our responses.
1. We note your letter to our Office of Global Security Risk dated
August 7, 2009 regarding your contacts with Iran. We also note
your disclosure on page 36 of the Form 10-Q for the quarterly
period ended June 30, 2009 that from time to time, certain of
your subsidiaries have had business dealings in Cuba, Iran, and
Sudan, consisting generally of the purchase of overflight permits
and the provision of flight support and fuel services. As you
know, Cuba, Iran, and Sudan are identified by the State
Department as state sponsors of terrorism, and are subject to
U.S. economic sanctions and export controls. Please explain to us
the purpose of your purchase of overflight permits and the nature
of the flight support and fuel services that you provide in
connection with your business contacts with Cuba, Iran, and
Sudan, including the type of customers for whom you procure or
provide such services and the parties to whom you pay the costs
associated with such services. You should also describe any
agreements, commercial arrangements, or other contacts you have
had with the governments of Cuba, Iran, and Sudan or entities
controlled by those governments.
The Company is a provider of marine, aviation and land fuel products
and related services on a worldwide basis. The Company sells fuel and delivers
services to clients at more than 6,000 locations in more than 190 countries.
With the exception of the marine transaction discussed under Section II below,
the Company has no dealings with Cuba, Iran or Sudan in its marine and land
businesses. In connection with our aviation business, and in accordance with
general or specific licenses issued by the Treasury Department's Office of
Foreign Assets Control ("OFAC") or pursuant to travel exemptions from the
sanctions regulations administered by OFAC, certain of the Company's
subsidiaries obtain overflight permission and pay navigation fees on behalf of
clients when their aircraft are flying over a particular country, including
Cuba, Iran and Sudan, in order for those clients to have complete flight plans.
Additionally, certain of the Company's subsidiaries provide other flight support
and fuel services consisting of arranging for (but not providing) ground
handling services, obtaining landing permits, providing flight plans and
supplying fuel for flights to and from Cuba, Iran and Sudan, which activities
the Company believes are permissible under applicable U.S. sanctions
regulations. The customers for whom the Company's subsidiaries procure such
services are corporate and commercial aviation clients, including commercial air
carriers, air charter companies and flight support companies. Other than these
limited contacts which are more fully described below, the Company has no other
agreements, commercial arrangements or other contacts with the governments of
Cuba, Iran or Sudan or entities controlled by those governments. Further, while
the Company may engage in additional transactions in the future with respect to
Cuba, Iran and Sudan in accordance with applicable sanctions regulations, the
Company does not currently have plans to do so.
I. Cuba
----
The following describes the categories of corporate and commercial
transactions that the Company's subsidiaries conduct with respect to Cuba:
A. Cuban Overflight Permits. Two of the Company's subsidiaries, Baseops
International, Inc. and Kropp Holdings, Inc., have obtained licenses from OFAC
authorizing them to arrange and pay for permits for their clients to overfly
Cuba. Their clients are corporate and commercial aviation companies, including
commercial air carriers, air charter companies and flight support corporations.
Pursuant to the OFAC licenses, payments for the permits to fly over Cuban
airspace are made in U.S. dollars to a Panamanian bank account held on behalf of
Cuba's Civil Aviation Authority.
B. Trips to or from the U.S. Naval Base at Guantanamo Bay, Cuba.
Company subsidiaries perform services in connection with trips to or from the
U.S. Naval Base at Guantanamo Bay, Cuba. The services involved include
communications, coordinating catering, arranging for fuel and the like. While
Guantanamo Bay is geographically on the island of Cuba, the Cuban government
exercises no control over the territory comprising the U.S. military base.
Provision of these services does not require any interaction with the Cuban
government, including its aviation authorities, or any Cuban service providers.
C. OFAC Licensed U.S. Carrier Trips to or from Cuba. Company
subsidiaries perform services necessary and incidental to trips to or from Cuba
by U.S. carriers that have obtained OFAC licenses authorizing such trips. These
services have been limited to transmitting information to the U.S. Department of
Homeland Security, and in one instance providing a flight plan, weather briefing
and ground and communications support. To date, no payments have been made by
the Company or its subsidiaries to other parties in connection with these trips.
D. Other Trips to or from Cuba. In the past, Company subsidiaries have
performed services in connection with trips to or from Cuba by non-U.S.
commercial or corporate carriers. These services principally involved notifying
Cuban ground handlers about the trips and requesting that they arrange ground
handling services, as well as contacting Cuban aviation authorities to determine
when a flight left a particular airport in order to pass that information along
to aviation authorities and ground handlers at later segments of the flight. In
these instances, the Company's subsidiaries would charge the customer a service
fee but would not be charged for or make payments to Cuban authorities or any
Cuban vendor for these communications. As disclosed in the Company's 10-Q for
the fiscal quarter ended June 30, 2009 (the "Second Quarter 2009 10-Q"), these
activities may have constituted inadvertent violations of U.S. sanctions
regulations and, therefore, the Company and its subsidiaries have discontinued
providing these services in connection with landings in Cuba.
II. Iran and Sudan
--------------
Pursuant to licenses issued by OFAC, Company subsidiaries purchase overflight
permits from both Iran and Sudan. Payments for overflight permits are made to
the Iranian Civil Aviation Authority and the Sudanese Civil Aviation Authority
pursuant to the terms of the respective licenses. The Company's subsidiaries
have also provided certain services (e.g., procuring ground handling services
and landing permits and providing flight plans) and supplied fuel in connection
with passenger flights to and from the two countries, which the Company
considers to fall within the scope of the travel exemptions of 31 C.F.R.
560.210(d) (Iranian travel exemption) and 31 C.F.R. 538.212(d) (Sudanese travel
exemption) as activities ordinarily incident to permissible passenger travel.
Additionally, in very limited instances in the past, subsidiaries of the Company
have provided these types of services to carriers traveling to and from these
two countries in connection with other flights that we believe were permissible
under OFAC's sanctions regulations. Finally, with respect to Sudan, the
Company's subsidiaries from time to time provide similar services in connection
with United Nations flights that the Company believes are covered by the general
license issued by OFAC for UN-related activities, 31 C.F.R. 538.531.
As detailed in the Company's letter to the Commission dated August 7,
2009 and reported to OFAC, the Company has also recently discovered one instance
in which one of its subsidiaries arranged for the sale of marine fuel to a
Singapore-owned and operated vessel while it was at port in Bandar Abbas, Iran.
We believe this transaction was an isolated lapse.
III. Other
-----
From time to time the Company's subsidiaries may supply fuel to
aircraft owned by the governments of foreign countries while in the United
States in connection with their missions for international organizations, and
from time to time these aircraft may be owned by Cuba, Iran or Sudan. For
example, the Company recently supplied fuel in the United States to an Iranian
government owned aircraft in connection with the Iranian government's
participation at meetings of the United Nations, which the Company considers to
fall within the general license issued by OFAC in 31 CFR 560.512.
2. Please discuss the materiality of any contacts with Cuba, Iran,
and Sudan, and whether those contacts constitute a material
investment risk for your security holders. You should address
materiality in terms of qualitative factors that a reasonable
investor would deem important in making an investment decision,
including the potential impact of corporate activities upon a
company's reputation and share value. As you know, various state
and municipal governments, universities, and other investors have
proposed or adopted divestment or similar initiatives regarding
investment in companies that do business with U.S.-designated
state sponsors of terrorism. Your materiality analysis should
address the potential impact of the investor sentiment evidenced
by such actions directed toward companies that have operations
associated with Cuba, Iran, and Sudan.
We note that our sanctioned country-related business only accounted for
approximately 0.004% of our consolidated revenues for 2008, and it is not
expected that the sanctioned country-related business will increase in any
meaningful respect from current levels.
The Company's and its subsidiaries' contacts with Cuba, Iran and Sudan
are pursuant to general or specific licenses issued by OFAC or exemptions from
the sanctions regulations that OFAC administers. The Company has established
policies and procedures designed to ensure compliance by it and its subsidiaries
with applicable laws and regulations, including OFAC's sanctions regulations and
licenses. While the overwhelming majority of our transactions related to
sanctioned countries were in accordance with applicable regulations, as
disclosed in the Second Quarter 2009 10-Q, the Company has identified a very
limited number of instances that may have resulted in violations of U.S.
sanctions regulations or our OFAC-issued licenses and has reported these
instances to OFAC. The transactions we identified as potential violations
collectively resulted in very small amounts of revenue to us (under $100,000 in
total).
Given the limited nature of the Company's and its subsidiaries'
contacts with Cuba, Iran and Sudan, the safeguards for regulatory compliance the
Company has in place, the continuing review and enhancement of those safeguards
and the fact that our contacts with these countries generate such an
insignificant percentage of our consolidated revenues, we do not believe that a
reasonable investor would consider such contacts to be quantitatively or
qualitatively material to the Company's reputation or its share value or deem
this information important in affecting the total mix of information available
to investors.
The Company is aware that various state and municipal governments,
universities, and other investors have proposed or adopted divestment or similar
initiatives regarding investment in companies that do business with
U.S.-designated state sponsors of terrorism. However, to date, the Company has
not received any inquiries, complaints or shareholder proposals from its
investors relating to the Company's limited contacts with such countries and has
not, to its knowledge, experienced any negative publicity or reputational damage
associated with such contacts.
3. Please tell us why you include certifications from your chief
operating officer in Exhibits 31.2 and 32.1 to your annual report
on Form 10-K for the fiscal year ended December 31, 2008 and your
quarterly reports on Form 10-Q for the quarters ended March 31,
2009 and June 30, 2009. If your chief operating officer is not
performing the functions of either the principal executive
officer or the principal financial officer, do not include
certifications from your chief operating officer in future
filings. However, if your chief operating officer is performing
the functions of either the principal executive officer or the
principal financial officer, revise all related disclosure to
describe the roles, responsibilities, and functions of each
certifying officer accordingly.
From the inception of the requirement to include officer certifications
in our periodic reports, we have included a certification of our chief operating
officer. However, we confirm that our chief operating officer is not performing
the functions of either the principal executive officer or the principal
financial officer, and, therefore, we will not include certifications from our
chief operating officer in future filings.
Acknowledgement:
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The Company acknowledges that:
(a) the Company is responsible for the adequacy and accuracy of the
disclosure in the Company's filings with the Commission;
(b) Staff comments or changes to disclosure in response to Staff
comments do not foreclose the Commission from taking any action with respect to
the Company's filings with the Commission; and
(c) the Company may not assert Staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
If any member of the Staff has any questions concerning these matters
or needs additional information or clarification, he or she should contact R.
Alexander Lake, General Counsel, or the undersigned at (305) 428-8000.
Very truly yours,
/s/ Ira M. Birns
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Ira M. Birns
Executive Vice President and
Chief Financial Officer