INTL FCStone 2011 Annual Report Download - page 106

INTL FCSTONE INC.Form10K92
PART II
ITEM 8 Consolidated Financial Statements and Supplementary Data
Board of Directors of FCStone elected to terminate the Plan as
of December31,2009 (the “termination date”). As a result of an
amendment to the Plan in 2009, no new participants are being
admitted to the Plan, and no additional contributions have been
made to the Plan for services performed by participants after
the termination date. All participant account balances became
100% vested as of the termination date, and are not subject
to forfeiture. During  scal2011, FCStone, the plan sponsor,
received a favorable determination letter from the IRS with
respect to the Plan, and has directed the trustee to distribute
to the participants all remaining assets of the Plan which are
distributable on account of the Plan’s termination.
NOTE 18 Acquisitions
Acquisitions in 2011
During  scal year2011, the Company acquired two businesses,
Hencorp Futures and Ambrian Commodities Limited, and
certain assets from Hudson Capital Energy,LLC, which were
not considered signi cant on an individual or aggregate basis.
 e Company’s consolidated fi nancial statements include the
operating results of the two businesses and certain purchased
assets from the dates of acquisition.
 e total amount of goodwill and intangible assets that is
expected to be deductible for tax purposes is $47.1million and
$40.9million as of September30,2011 and 2010, respectively.
Hencorp Futures
In October,2010, the Company acquired all of the ownership
interests in Hencorp Futures, the commodity futures operation
of Miami-based Hencorp Group. Hencorp Futures specializes in
the development and execution of risk-management programs
designed to hedge price volatility in a number of widely traded
commodities, including coff ee, sugar, cocoa, grains and energy
products.  e transaction will enable the Company to round out
its portfolio of commodity risk management services to include
a more robust capability in soft commodities, especially coff ee,
where Hencorp Futures has established a substantial presence and
reputation globally, and especially in Central and South America.
 e purchase price of the Hencorp Futures acquisition consisted
of an initial payment of $2.3million, two payments totaling
$1.4million and representing the adjusted tangible equity of
Hencorp Futures as of September30,2010, an amount due
of $0.3million based on the adjusted pre-tax net earnings of
Hencorp Futures for the fi scal year ended September30,2011,
three additional annual contingent payments and a fi nal contingent
payment. See Note14 for discussion of the contingent payments.
 e present value of the estimated total purchase price, including
contingent consideration, is $6.4million.
 e Company obtained a third-party valuation of the intangible
assets and contingent liabilities, and allocated the purchase
costs among tangible assets, identifi ed intangible assets with
determinable useful lives, intangible assets with indefi nite lives
and goodwill.  e intangible assets and goodwill recognized in
this transaction were assigned to the C&RM segment. Purchase
costs allocated to intangible assets with determinable useful lives
are $1.7million, which are being amortized over the remaining
useful lives of the assets, and include customer relationships
of $1.3million (twenty-year weighted-average useful life) and
non-compete agreements of $0.4million (two-year weighted-
average useful life). Purchase costs allocated to intangible assets
with indefi nite lives are $0.8million, and relate to a trade name.
Goodwill of $2.1million was calculated as the excess of the
fair value of the consideration transferred over the fair value of
the identifi ed net assets acquired and liabilities assumed, and
is expected to be deductible for tax purposes.  e Company’s
consolidated fi nancial statements include the operating results
of Hencorp Futures from the date of acquisition.
Certain Asset Purchased from Hudson Capital
Energy, LLC
In April2011, the Company entered into an agreement with
Hudson Capital Energy LLC (“HCEnergy”), a NewYork-based
energy risk-management fi rm, to acquire certain assets from
HCEnergy.  e transaction enables the Company’s energy risk
management services to include a more robust capability in crude
oil and refi ned products. HCEnergy is a specialist in exchange
cleared options, swaps and futures, and has grown its business
to include hedging and trading professionals across the spectrum
of global petroleum products.
 e purchase price of the acquisition of certain assets from
HCEnergy consisted of the aggregate net asset value of certain
commodity futures brokerage accounts and certain proprietary
software, totaling $1.0million.  ere was no contingent
consideration associated with this transaction.
 e Company has made a preliminary allocation of the purchase
costs among tangible assets.  ere were no intangible assets or
goodwill recognized in this transaction.
Ambrian Commodities Limited
In April2011, the Company’s wholly owned subsidiary in the
UnitedKingdom, INTL Global Currencies Limited, agreed
to acquire the issued share capital of Ambrian Commodities
Limited (“Ambrian”), the London Metals Exchange brokerage
subsidiary of Ambrian Capital Plc. In August2011, the Financial