INTL FCStone 2011 Annual Report Download - page 45

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INTL FCSTONE INC.Form10K 31
PARTII
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
GAAP results and the adjusted non-GAAP marked-to-market
results. Only the Commodity and Risk Management Services
(“C&RM”) segment has di erences between the U.S. GAAP
results and the adjusted non-GAAP marked-to-market results.
However, this means that there are di erences between the U.S.
GAAP basis and the non-GAAP marked-to-market basis total
operating revenues, total contribution and net income. Please
note that any term below that contains the word ‘adjusted’ refers
to non-GAAP, marked-to-market information.
e discussion below relates only to continuing operations. All
revenues and expenses, including income tax expense, relating to
discontinued operations have been removed from disclosures of
total revenues and expenses in all periods and are refl ected net,
within the income (loss) from discontinued operations amounts.
Financial Overview
e following table shows an overview of our fi nancial results:
FINANCIAL OVERVIEW UNAUDITED
(in millions)
Year Ended September30,
2011
%
Change 2010
%
Change 2009
Operating revenues $ 423.2 57% $ 269.0 197% $ 90.6
Marked-to-market adjustment (non-GAAP) (8.4) n/m 6.0 (13)% 6.9
Adjusted operating revenues (non-GAAP) 414.8 51% 275.0 182% 97.5
Interest expense 11.3 14% 9.9 24% 8.0
Adjusted net revenues (non-GAAP) 403.5 52% 265.1 196% 89.5
Non-interest expenses 352.4 46% 241.2 248% 69.3
ADJUSTED INCOME FROM CONTINUING
OPERATIONS, BEFORE TAX (NON-GAAP)$ 51.1 114% $ 23.9 18% $ 20.2
Reconciliation of net revenues from GAAP to adjusted,
non-GAAP numbers:
Net revenues $ 411.9 $ 259.1 $ 82.6
Marked-to-market adjustment (non-GAAP) (8.4) 6.0 6.9
ADJUSTED NET REVENUES (NON-GAAP)$403.5 $ 265.1 $ 89.5
Reconciliation of income from continuing operations,
before tax from GAAP to adjusted, non-GAAP numbers:
Income from continuing operations before income tax $ 59.5 $ 17.9 $ 13.3
Marked-to-market adjustment (non-GAAP) (8.4) 6.0 6.9
ADJUSTED INCOME FROM CONTINUING
OPERATIONS, BEFORE TAX (NON-GAAP)$ 51.1 $ 23.9 $ 20.2
2011 Operating Revenues vs. 2010
Operating Revenues
e Company’s operating revenues under U.S. GAAP for 2011
and 2010 were $423.2million and $269.0million, respectively.
is 57% increase in operating revenue was primarily driven by a
95% increase in the operating revenues in the C&RM segment.
In addition, there were increases in operating revenues of 25% in
the Foreign Exchange segment, 47% in the Securities segment,
7% in the CES segment and 61% in the Other segment over
the prior year.
Operating revenues increased signifi cantly in the C&RM segment in
2011, due to increases in exchange-traded and OTC volumes in our
soft commodities product line of 4% and 126%, respectively over
the prior year, resulting from an increase in volatility in agricultural
commodities, as well as an expanded customer base, a benefi t of
recent acquisitions and geographic expansion. e acquisition of
the Hanley Companies in Q42010 led to an increased off ering
of structured OTC products to our commercial customers,
contributing to the signifi cant increase in operating revenues,
primarily refl ected within ‘trading gains’ in our consolidated
income statements, in 2011 as compared to the prior year.
In addition, our precious metals product line revenues grew
due to a signifi cant increase in trading activity as a result of
increased global economic demand, while base metal product
line revenues expanded with widening spreads driven by market
volatility and rising prices. Operating revenues in the Foreign
Exchange segment in 2011 increased primarily as a result of
higher volumes in the global payments business and higher
commercial hedging activity, most notably in Brazil, as well
as increased trading activity in both our speculative customer