INTL FCStone 2005 Annual Report Download - page 48

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INTERNATIONAL ASSETS HOLDING CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 2005 and 2004
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements include the accounts of International Assets Holding Corporation and
its subsidiaries (the Company). The Company’s subsidiaries are INTL Trading, Inc. (INTL Trading), INTL
Assets, Inc., INTL Holding (U.K.) Limited, INTL Global Currencies Limited (INTL Global Currencies), INTL
Commodities, Inc. and IAHC (Bermuda) Ltd.
All significant intercompany balances and transactions have been eliminated in consolidation.
INTL Trading, Inc. is registered as a broker-dealer under the Securities Exchange Act of 1934. Most of its
securities transactions are cleared through Pershing LLC on a fully disclosed basis.
INTL Assets, Inc. holds most of the physical assets of the Company. It also holds certain investments owned
by the Company.
INTL Holding (U.K.) Limited is a U.K. holding company that owns 100% of INTL Global Currencies.
INTL Global Currencies operates a foreign exchange trading business. Both INTL Holding (U.K.) Limited and
INTL Global Currencies are designated as U.S. dollar denominated companies under the laws of the United
Kingdom. Accordingly, the functional currency for these companies is the U.S. dollar.
International Assets Holding Corporation engages in precious and base metals trading, foreign exchange
trading, trade finance and financial structured transactions.
INTL Commodities, Inc. was formed in September 2005 to own and operate the Company’s commodities
trading business. International Assets Holding Corporation plans to transfer this business to INTL Commodities,
Inc. during the first half of fiscal 2006.
The Company owns a 50.1% limited liability company interest in INTL Consilium, LLC (INTL Consilium),
an investment advisory firm that focuses on the emerging market asset class. INTL Consilium is accounted for
using the equity method of accounting (see Notes 1(l) and 4 for more information).
(b) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial
statements and the reported revenues and expenses during the period. Actual results could differ from those
estimates.
(c) Cash and Cash Equivalents
“Cash and cash equivalents” consist of cash and cash deposits with brokers, dealers and the Company’s
clearing organization. All cash and cash equivalents deposited with brokers, dealers and clearing organization
support the Company’s trading activities, and related margin lending made available to the Company and are
subject to contractual restrictions. Cash deposits with clearing organization consist of cash, foreign currency and
money market funds stated at cost, which approximates fair value. The money market funds earn interest at
varying rates on a daily basis. For purposes of the consolidated statements of cash flows, the Company considers
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