INTL FCStone 2011 Annual Report Download - page 98

Download and view the complete annual report

Please find page 98 of the 2011 INTL FCStone annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 142

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142

INTL FCSTONE INC.Form10K84
PART II
ITEM 8 Consolidated Financial Statements and Supplementary Data
Adjusted EBIT of the Derivatives Division for the three year
period commencing on July1,2010, with a discount rate being
applied to those future payments. e change in fair value for the
year ended September30,2011 was an increase of $4.2million,
included within ‘other expense’ in the consolidated income
statements. e present value of the estimated total purchase
price, including contingent consideration, is $51.6million as of
September30,2011, of which $13.5million has not been paid
and is included within ‘accounts payable and other liabilities’
in the consolidated balance sheets.
The Company has a contingent liability relating to the
April2010 acquisition of the RMI Companies, which may
result in the payment of additional consideration, see Note18
for discussion of the acquisition. e acquisition date fair value of
additional consideration was estimated to be $10.7million. e
contingent liability recorded represents the fair value of expected
consideration to be paid based on the forecasted sales during the
two-twelve month periods ending March31,2012 and 2013,
and a discount rate being applied to those future payments. e
change in fair value for the year ended September30,2011 was
a decrease of $1.5million, included within ‘other expense’ in
the consolidated income statements. e present value of the
estimated total purchase price, including contingent consideration,
is $15.2million as of September30,2011, of which $6.1million
has not been paid and is included within ‘accounts payable and
other liabilities’ in the consolidated balance sheets.
The Company has a contingent liability relating to the
February,2008 acquisition of Globecot,Inc. Under the terms
of the purchase agreement, the Company has an obligation
to pay additional consideration if specifi c conditions and
earnings targets are met in each of the two twelve-month periods
ending January31,2012 and 2013. As a result of the FCStone
transactions, any additional consideration would be considered an
adjustment to a pre-acquisition contingency, made after the end
of the allocation period, and included in earnings in the current
period. e additional consideration is limited to $0.4million
for each of the two twelve-month periods.
Operating Leases
e Company is obligated under various noncancelable operating
leases for the rental of offi ce facilities, aircraft, automobiles, service
obligations and certain offi ce equipment, and accounts for these
lease obligations on a straight line basis. e expense associated
with operating leases amounted to $7.2million, $5.5million
and $1.9million, for fi scal years ended 2011,2010 and 2009,
respectively. e expenses associated with the operating leases
and service obligations are reported in the consolidated income
statements within occupancy and equipment rental, clearing and
related and other expenses.
Future aggregate minimum lease payments under noncancelable operating leases as of September30,2011 are as follows:
(in millions)
Year ending September30,
2012 $ 7.3
2013 6.8
2014 5.7
2015 4.8
2016 5.6
ereafter 13.4
$ 43.6
Exchange Member Guarantees
e Company is a member of various exchanges that trade and
clear futures and option contracts. Associated with its memberships,
the Company may be required to pay a proportionate share of the
fi nancial obligations of another member who may default on its
obligations to the exchanges. While the rules governing diff erent
exchange memberships vary, in general the Company’s guarantee
obligations would arise only if the exchange had previously
exhausted its resources. In addition, any such guarantee obligation
would be apportioned among the other non-defaulting members
of the exchange. Any potential contingent liability under these
membership agreements cannot be estimated. e Company has
not recorded any contingent liability in the consolidated fi nancial
statements for these agreements and believes that any potential
requirement to make payments under these agreements is remote.
Impairment
e Company recorded an impairment charge of $1.1million
for the year ended September30,2010 in connection with
INTL Sieramet LLC, a corporation in which it holds a 55%
equity interest. is amount is recorded within ‘bad debts and
impairments’ in the consolidated income statement for the year
ended September30,2010. e impairment charge recognizes the
pending liquidation of INTL Sieramet and the probability that
there may be incomplete recovery of the full value of its assets.