INTL FCStone 2011 Annual Report Download - page 110

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INTL FCSTONE INC.Form10K96
PART II
ITEM 8 Consolidated Financial Statements and Supplementary Data
(in millions)
September30,2010 September30,2009
Book value of net assets acquired $ 146.8 $ 153.8
Adjusted for:
FCStone mark-up of exchange memberships and stock, net of deferred income tax 2.6 2.6
FCStone write-down of non-current assets, net of deferred income tax (4.2) (4.2)
FCStone pension actuarial loss (0.5) (0.5)
FCStone adjustment to Agora-X,LLC minority interest 4.4 4.4
Adjusted book value of net assets acquired 149.1 156.1
Adjusted for:
Excess net assets over purchase price (negative goodwill) (11.5) (18.5)
TOTAL PURCHASE PRICE $ 137.6 $ 137.6
During scal2010, the Company revised the estimate of state
tax allocations resulting in a reduction in the consolidated
e ective state tax rate. As a result, the net deferred tax assets
decreased by $2.2million, including a change in estimate related
to the valuation of state net operating loss carryforwards. e
Company’s change in estimate was the result of revised revenue
apportionment factors in certain jurisdictions due to analysis and
activities completed subsequent to the fi ling of the fi scal year
ended September30,2009 fi nancial statements. Typically, changes
within the measurement period that result from new information
about facts and circumstances that existed at the acquisition date
are recognized through a corresponding adjustment to goodwill.
However, in the absence of goodwill recorded in connection
with this transaction, the $2.2million decrease in net deferred
tax assets has been reported as an extraordinary loss in the
consolidated income statement for fi scal2010. Additionally,
during January2010, the Company paid $1.2million in additional
consideration related to a pre-acquisition contingency that has
been reported as a $0.8million extraordinary loss, net of taxes,
in the consolidated income statement for fi scal2010.
During the three months ended September30,2010, the Company
identifi ed accounting errors related to the recording of deferred
tax assets by FCStone in the amount of $4.0million that occurred
prior to the acquisition. e Company has evaluated materiality
under the guidance of SEC Staff Accounting Bulletin No. 99,
Materiality, and considered relevant qualitative and quantitative
factors. Based on this analysis and the belief that these errors
would not have changed the purchase price at acquisition, the
Company has corrected the errors through the recognition of a
purchase price adjustments in the amount of $4.0million reported
as an extraordinary loss in the consolidated income statement
for fi scal2010, and a corresponding $4.0million decrease in
deferred tax assets reported on the consolidated balance sheet
as of September30,2010. e Company’s analysis supports
the conclusion that these errors are not material to the fourth
quarter of fi scal2010 or any prior periods impacted by the errors.
e following table presents the unaudited pro forma condensed
consolidated results of continuing operations of the Company
as if the acquisition were completed as of the beginning of the
fi scal year ended September30,2009.
UNAUDITED, PRO FORMA
(in millions, except share and per share numbers)
Year Ended
September30,2009
Income Statement
Operating revenues $ 320.6
Interest expense 12.5
Non-interest expenses 391.6
Loss before income tax benefi t and minority interest (83.5)
Income tax benefi t (37.1)
Minority interest (0.4)
LOSS FROM CONTINUING OPERATIONS $ (46.0)
Loss from continuing operations per share:
Basic $ (2.69)
Diluted $ (2.69)
Weighted-average number of commonshares outstanding:
Basic 17,116,639
Diluted 17,116,639
e unaudited pro forma amounts are presented for illustrative
purposes only and are not necessarily indicative of expected future
consolidated results of continuing operations. FCStone’s results
have been included using the results from their August31,2009
fiscal year. Pro forma adjustments were made to exclude
$9.9million from FCStone’s expenses for the fi scal year ended