INTL FCStone 2012 Annual Report Download - page 48
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Please find page 48 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.Form10K32
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
in London. Our Foreign Exchange segment showed continued
growth in revenues in both our global payments and customer
hedging product lines. However, some of this growth was o set
by a decrease in arbitrage opportunities. e Securities segment
continued to experience stronger volumes due to increased demand
from retail customers of our institutional clients, our ongoing
expansion into the Latin American markets and growth in the
debt capital markets product line, most notably in Argentina.
e Company has implemented several initiatives that added to
the growth in operating revenues in 2012, but they have not yet
resulted in increased pro tability. Most notable were the acquisition
in August 2011 of Ambrian Commodities Limited, which was
renamed INTL FCStone (Europe) Limited, and the Company’s
subsequent acquisition of the LME metals team discussed above.
ese initiatives included the build out of our C&RM, CES,
foreign exchange prime brokerage, and OTC derivative trading
capabilities in London. While these initiatives were not pro table
in the 2012 scal year as a whole, they were pro table for the
fourth quarter of scal 2012. e Company has also expanded
our investment banking and soft commodities product lines as
well as our global operations sta . We have expanded our internal
information technology development capabilities, which allows
us to deploy OTC product o erings more rapidly.
Results of Operations
Set forth below is the Company’s discussion of the results of its
operations, as viewed by management, for the scal years ended
2012, 2011 and 2010, respectively. is discussion refers to both
U.S. GAAP results and adjusted non-GAAP marked-to-market
information, in accordance with the information presented in
Item 6, Selected Financial Data. For the Foreign Exchange,
Securities, Clearing and Execution Services (“CES”) and Other
segments, there are no di erences between the U.S. 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 re ected net,
within the income (loss) from discontinued operations amounts.
Financial Overview
e following table shows an overview of our nancial results:
FINANCIAL OVERVIEW UNAUDITED
(in millions)
Year Ended September 30,
2012 % Change 2011 % Change 2010
Operating revenues $ 457.7 8% $ 423.2 57% $ 269.0
Marked-to-market adjustment (non-GAAP) 6.8 n/m (8.4) n/m 6.0
Adjusted operating revenues (non-GAAP) 464.5 12% 414.8 51% 275.0
Interest expense 11.6 3% 11.3 14% 9.9
Adjusted net revenues (non-GAAP) 452.9 12% 403.5 52% 265.1
Non-interest expenses 426.8 21% 352.4 46% 241.2
Adjusted income from continuing operations, before tax
(non-GAAP) $ 26.1 (49)% $ 51.1 114% $ 23.9
Reconciliation of net revenues from GAAP to adjusted,
non-GAAP numbers:
Net revenues $ 446.1 $ 411.9 $ 259.1
Marked-to-market adjustment (non-GAAP) 6.8 (8.4) 6.0
Adjusted net revenues (non-GAAP) $ 452.9 $ 403.5 $ 265.1
Reconciliation of income from continuing operations,
before tax from GAAP to adjusted, non-GAAP numbers:
Income from continuing operations before income tax $ 19.3 $ 59.5 $ 17.9
Marked-to-market adjustment (non-GAAP) 6.8 (8.4) 6.0
Adjusted income from continuing operations, before tax
(non-GAAP) $ 26.1 $ 51.1 $ 23.9