INTL FCStone 2012 Annual Report Download - page 117
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Please find page 117 of the 2012 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.INTL FCSTONE INC.Form10K 101
PART II
ITEM 8 Financial Statements and Supplementary Data
of Ambrian Capital Plc. Ambrian was subsequently renamed
INTL FCStone (Europe) Ltd. (“INTL FCStone Europe”). INTL
FCStone Europe, a non-clearing LME member, specializes in
the development and execution of risk-management programs
designed to hedge price uctuations in base metals for a wide
variety of producers, manufacturers and fabricators. INTL
FCStone Europe has a niche focus on smaller industrial clients,
including lead recyclers, brass producers, zinc galvanizers, metal
re neries and copper foil producers that use LME futures and
options for hedging raw material costs or output prices.
At closing, the Company paid $7.1 million, representing the
net asset value of Ambrian less certain intercompany balances
due to Ambrian from its a liates. ere was no contingent
consideration associated with this transaction. e Company has
allocated the purchase costs among tangible assets. ere were
no intangible assets or goodwill recognized in this transaction.
Acquisitions in 2010
During scal year 2010, the Company acquired three separate
business groups, Risk Management Incorporated and RMI
Consulting, Inc, Hanley Group and Provident Group, which were
not considered signi cant on an individual or aggregate basis.
e Company’s consolidated nancial statements include the
operating results of each business from the dates of acquisition.
e total amount of goodwill and intangible assets, in connection
with these acquisitions, that is deductible for tax purposes was
$39.8 million as of September30, 2010.
Risk Management Incorporated and RMI
Consulting, Inc.
In April2010, the Company acquired all of the outstanding capital
stock of Risk Management Incorporated and RMI Consulting,
Inc. (the “RMI Companies”). e RMI Companies provides
execution and consulting services to some of the largest natural
gas consumers in North America, including municipalities and
large manufacturing rms, as well as major utilities. In addition to
the risk-management and brokerage services, the RMI Companies
also o er a wide range of other programs, including a proprietary
on-line energy procurement platform. e acquisition adds
extensive and proven expertise in the natural gas, electricity and
related energy markets where the RMI Companies have a leading
presence, as well as a broad range of long-term relationships with
some major organizations.
e purchase price for the acquisition of the RMI Companies
consisted of an initial payment of $6.0 million, which was paid
during the year ended September30, 2010, a payment of $3.1
million, based on the net income of the RMI Companies for the
twelve-month period ended March31, 2011, which was paid
during the year ended September30, 2011 and two contingent
payments. See Note11 for discussion of the contingent payments.
e present value of the estimated total purchase price, including
contingent consideration, is $15.2 million.
e Company obtained a third-party valuation of the intangible
assets and contingent liabilities, and allocated the purchase
costs among tangible assets, identi ed intangible assets, with
determinable useful lives, intangible assets with inde nite lives
and goodwill. Purchase costs allocated to intangible assets with
determinable useful lives are amortized over the remaining
useful lives of the assets. e intangible assets and goodwill
recognized in this transaction were assigned to the Consulting
and Risk Management (“C&RM”) segment. e intangible assets
recognized included customer relationships of $7.0 million (20
year useful life); software programs and platforms of $0.8 million
( ve year useful life) and trade name of $1.2 million (inde nite
useful life). e goodwill is calculated as the excess of the fair
value of the consideration transferred over the fair value of the
identi ed net assets acquired and liabilities assumed. Purchase
costs allocated to goodwill were $7.7 million. During 2012, the
RMI Companies were reorganized as divisions of FCStone, LLC.
Hanley Companies
In July2010, the Company acquired all of the outstanding
membership interests in HGC Trading, LLC; HGC Asset
Management, LLC; HGC Advisory Services, LLC; Hanley
Alternative Trade Group, LLC and HGC O ce Services, LLC
(the “Hanley Companies”). e Hanley Companies were engaged
in the business of acting as market makers and dealers in exchange
traded options and futures on soft commodities; executing and
trading derivatives on soft commodities in the over the counter
market; and providing related advisory services.
e purchase price for the acquisition of the Hanley Companies
consisted of an initial payment of $7.5 million, which was paid
during the year ended September30, 2010, two payments
equaling $24.3 million, for the adjusted net asset value of the
Hanley Companies as of June30, 2010, of which $18.2 million
and $6.1 million was paid during the year ended September30,
2011 and 2010, respectively, a payment of $6.3 million, based on
speci c results of the Hanley Companies for the twelve-month
period ended June30, 2011, which was paid during the year
ended September30, 2011, two annual contingent payments
and a nal contingent payment. See Note11 for discussion of
the contingent payments. e present value of the estimated
total purchase price, including contingent consideration is
$51.6 million.
At closing, the Company and the sellers of the Hanley Companies
entered into an option agreement (the “Option Agreement”),
pursuant to which the sellers of the Hanley Companies have the
right to elect, in their discretion, to receive up to thirty percent
(30%) of the nal contingent EBIT Payment in the form of
restricted shares of the common stock of the Company. e
Option may be exercised by the sellers of the Hanley Companies
at any time during the twenty day period commencing on
June30, 2013. e option price will be equal to the greater of:
(i) $16.00 per share, or (ii) seventy- ve percent (75%) of the
fair value of the common stock of the Company as of June30,
2013. e maximum number of restricted shares issuable upon