INTL FCStone 2012 Annual Report Download - page 29
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Please find page 29 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 13
PART I
ITEM 1A Risk Factors
our ability to use our cash ow to fund working capital, capital
expenditures, acquisitions and general corporate requirements;
•
limiting our ability to obtain additional nancing to fund
future working capital, capital expenditures, acquisitions and
general corporate requirements;
•
limiting our exibility in planning for, or reacting to, changes
in our business and the securities industry; and
•
restricting our ability to pay dividends or make other payments.
We may be able to incur additional indebtedness in the future,
including secured indebtedness. If new indebtedness is added
to our current indebtedness levels, the related risks that we now
face could intensify.
Committed credit facilities currently available
to the Company might not be renewed.
We currently have four committed credit facilities under which
we may borrow up to $385.0 million, consisting of:
•
a $140.0 million facility available to our wholly owned subsidiary,
INTL Commodities, for its commodities trading activities,
committed until January31, 2013;
•
a $95.0 million facility available to INTL FCStone Inc.
and INTL Global Currencies, for general working capital
requirements, committed until October1, 2013;
•
a $75.0 million facility available to our wholly owned subsidiary,
FCStone, LLC, for short-term funding of margin to commodity
exchanges, committed until April11, 2013;
•
a $75.0 million committed facility available to our wholly owned
subsidiary, FCStone Merchant Services, LLC, for nancing
traditional commodity nancing arrangements and commodity
repurchase agreements, committed until May31, 2013.
During scal 2013, or shortly thereafter, $385 million of the
Company’s committed credit facilities are scheduled to expire. We
are currently in discussions with current and potential lenders to
renew, extend or rearrange these facilities. ere is no guarantee
that the Company will be successful in renewing, extending or
rearranging these facilities.
It is possible that these facilities might not be renewed at the
end of their commitment periods and that we will be unable
to replace them with other facilities. If our credit facilities are
unavailable or insu cient to support future levels of business
activities, we may need to raise additional funds externally, either
in the form of debt or equity. If we cannot raise additional funds
on acceptable terms, we may not be able to develop or enhance
our business, take advantage of future opportunities or respond
to competitive pressure or unanticipated requirements, leading
to reduced pro tability.
e failure of the Company to successfully
integrate the operations of businesses acquired
by the Company in the last twelve months could
have a material adverse e ect on the Company’s
business, nancial condition and operating
results.
Since September 30, 2011, the Company has acquired several
businesses, including the Metals Division of MF Global UK
Limited, TRX Futures Limited and Aporte DTVM. Additionally,
subsequent to September 30, 2012 the Company has acquired
Tradewire Securities, LLC. We will need to meet challenges to
realize the expected bene ts and synergies of these acquisitions.
ese challenges include:
•
integrating the management teams, strategies, cultures,
technologies and operations of the acquired companies;
•
retaining and assimilating the key personnel of acquired
companies;
•retaining existing clients of the acquired companies;
•
creating uniform standards, controls, procedures, policies and
information systems; and
•
achieving revenue growth because of risks involving (1) the
ability to retain clients, (2) the ability to sell the services and
products of the acquired companies to the existing clients of
our other business segments, and (3) the ability to sell the
services and products of our other business segments to the
existing clients of the acquired companies.
e accomplishment of these objectives will involve considerable
risk, including:
•
the potential disruption of each company’s ongoing business
and distraction of their respective management teams;
•
unanticipated expenses related to technology integration; and
•potential unknown liabilities associated with the acquisition.
It is possible that the integration process could result in the loss of
the technical skills and management expertise of key employees,
the disruption of the ongoing businesses or inconsistencies in
standards, controls, procedures and policies due to possible cultural
con icts or di erences of opinions on technical decisions and
product road maps that adversely a ect the Company’s ability
to maintain relationships with clients, software developers,
customers and employees or to achieve the anticipated bene ts
of the acquisition.
We face risks associated with our market making
and trading activities.
We conduct our market-making and trading activities
predominantly as a principal, which subjects our capital to
signi cant risks. ese activities involve the purchase, sale or
short sale for customers and for our own account of nancial
instruments, including equity and debt securities, commodities