INTL FCStone 2012 Annual Report Download - page 75
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Please find page 75 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 59
PART II
ITEM 8 Financial Statements and Supplementary Data
Notes to Consolidated Financial Statements
NOTE 1 Description of Business and Signifi cant Accounting Policies
INTL FCStone Inc., a Delaware corporation, and its consolidated
subsidiaries (collectively “INTL” or “the Company”), form
a nancial services group focused on domestic and select
international markets. The Company’s services include
comprehensive risk management advisory services for commercial
customers; execution of listed futures and options-on-futures
contracts on all major commodity exchanges; structured over-
the-counter (“OTC”) products in a wide range of commodities;
physical trading and hedging of precious and base metals and select
other commodities; trading of more than 130 foreign currencies;
market-making in international equities; debt origination and
asset management.
e Company provides these services to a diverse group of more
than 20,000 customers located throughout the world, including
producers, processors and end-users of nearly all widely-traded
physical commodities to manage their risks and enhance margins;
to commercial counterparties who are end-users of the rm’s
products and services; to governmental and non-governmental
organizations; and to commercial banks, brokers, institutional
investors and major investment banks.
Basis of Presentation
e accompanying consolidated nancial statements include the
accounts of INTL FCStone Inc. and all other entities in which
the Company has a controlling nancial interest. All material
intercompany transactions and balances have been eliminated
in consolidation.
Unless otherwise stated herein, all references to 2012, 2011, and
2010 refer to the Company’s scal years ended September 30.
Use of Estimates
e preparation of consolidated nancial statements in conformity
with accounting principles generally accepted in the United
States of America (“U.S. GAAP”) requires management to make
estimates and assumptions that a ect the reported amounts of
assets and liabilities, disclosure of contingent liabilities as of
the date of the nancial statements and the reported amounts
of revenue and expenses during the reporting period. e most
signi cant of these estimates and assumptions relate to fair value
measurements for nancial instruments and investments, revenue
recognition, the provision for potential losses from bad debts,
valuation of inventories, valuation of goodwill and intangible
assets, incomes taxes and contingencies. ese estimates are based
on management’s best knowledge of current events and actions
the Company may undertake in the future. e Company reviews
all signi cant estimates a ecting the nancial statements on a
recurring basis and records the e ect of any necessary adjustments
prior to their issuance. Although these and other estimates and
assumptions are based on the best available information, actual
results could be materially di erent from these estimates.
Foreign Currency Translation
Assets and liabilities recorded in foreign currencies are translated
at the exchange rates prevailing on the balance sheet date. Revenue
and expenses are translated at average rates of exchange prevailing
during the period. Gains or losses on translation of the nancial
statements of a non-United States (“U.S.”) operation, when the
functional currency is other than the U.S. dollar, are recorded in
other comprehensive income (“OCI”), net of tax, a component
of stockholders’ equity. Foreign currency remeasurement gains or
losses on transactions in nonfunctional currencies are included
within ‘trading gains, net’ in the consolidated income statements.
Cash and Cash Equivalents
e Company considers cash held at banks and all highly liquid
investments, including certi cates of deposit, which may be
withdrawn at any time at the discretion of the Company without
penalty, to be cash and cash equivalents. Cash and cash equivalents
consist of cash, foreign currency, money market funds and
certi cates of deposit not deposited with or pledged to an
exchange-clearing organization. e money market funds are
valued at period-end at the net asset value provided by the fund’s
administrator, which approximates fair value. Certi cates of
deposit are stated at cost plus accrued interest, which approximates
fair value. All cash and cash equivalents that are deposited with
brokers, dealers and clearing organizations support the Company’s
trading activities, and are subject to contractual restrictions. e
Company has an investment policy, which limits the maximum
amount placed in any one fund and with any one institution in
order to reduce credit risk. e Company does not believe that
it is exposed to signi cant risk on cash and cash equivalents.