INTL FCStone 2011 Annual Report Download - page 92

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INTL FCSTONE INC.Form10K78
PART II
ITEM 8 Consolidated Financial Statements and Supplementary Data
nancial instruments are traded. e principal risk components
of fi nancial instruments include, among other things, interest
rate volatility, the duration of the underlying instruments and
changes in foreign exchange rates. e Company attempts to
manage its exposure to market risk through various techniques.
Aggregate market limits have been established and market risk
measures are routinely monitored against these limits.
NOTE 7 Physical Commodities Inventory
Commodities in process include commodities in the process of
being recycled. As of September30,2011 and 2010, $159.4million
and $124.8million, respectively, of physical commodities
inventory served as collateral under one of the Company’s credit
facilities, as detailed further in Note12. e carrying values of
the Company’s inventory as of September30,2011 and 2010
are shown below.
(in millions)
September30,2011 September30,2010
Commodities in process $ 2.4 $ 3.6
Finished commodities 158.2 121.4
PHYSICAL COMMODITIES INVENTORY $ 160.6 $ 125.0
As a result of declining market prices for some commodities, the Company recorded LCM adjustments for physical commodities
inventory of $21.9million and $0.7million as of September30,2011 and 2010, respectively. e adjustments are included within
‘cost of sales of physical commodities’ in the consolidated income statements.
NOTE 8 Property and Equipment, net
Property and equipment are stated at cost, and reported net of
accumulated depreciation on the consolidated balance sheets.
Depreciation on plant and equipment is calculated on the
straight-line method over the estimated useful lives of the
assets. e estimated useful lives of property and equipment
range from 3 to 10 years. During fi scal years 2011,2010, and
2009, depreciation expense was $2.4million, $1.0million and
$0.7million, respectively. A summary of property and equipment,
at cost less accumulated depreciation as of September30,2011
and 2010 is as follows:
(in millions)
September30,2011 September30,2010
Property and equipment:
Furniture and fi xtures $ 4.8 $ 3.7
Software 2.4 0.9
Equipment 6.0 2.4
Leasehold improvements 7.1 3.2
Total property and equipment 20.3 10.2
Less accumulated depreciation (5.3) (2.9)
PROPERTY AND EQUIPMENT, NET $ 15.0 $ 7.3
NOTE 9 Goodwill
During the fi scal years ended September30,2011 and 2010, the Company recognized $2.2million and $27.0million, respectively,
in additional goodwill related to acquisitions. See discussion in Note18 related to the additional goodwill recorded for the Company’s
acquisitions.
Goodwill allocated to the Company’s operating segments as of September30,2011 and 2010 is as follows:
(in millions)
September30, 2011 September30, 2010
Commodity and Risk Management Services $ 30.9 $ 28.7
Foreign Exchange 6.3 6.3
Securities 5.3 5.3
GOODWILL $ 42.5 $ 40.3