INTL FCStone 2012 Annual Report Download - page 85
Download and view the complete annual report
Please find page 85 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 69
PART II
ITEM 8 Financial Statements and Supplementary Data
e dilutive e ect of share-based awards is re ected in diluted
net income per share by application of the treasury stock
method, which includes consideration of unamortized share-
based compensation expense required under the Compensation
– Stock Compensation Topic of the ASC.
Options to purchase 1,157,601, 386,031 and 815,066 shares
of common stock for scal years ended 2012, 2011 and 2010,
respectively, were excluded from the calculation of diluted
earnings per share because they would have been anti-dilutive.
NOTE 3 Assets and Liabilities, at Fair Value
e Company’s nancial and non nancial assets and liabilities
reported at fair value are included within the following captions
on the consolidated balance sheets:
•Cash and cash equivalents
•Cash, securities and other assets segregated under federal and
other regulations
•
Deposits and receivables from exchange-clearing organizations,
broker-dealers, clearing organizations and counterparties
•Financial instruments owned
•Accounts payable and other accrued liabilities
•Payables to customers
•
Payables to broker-dealers, clearing organizations and
counterparties
•Financial instruments sold, not yet purchased
Fair Value Hierarchy
As required by the Fair Value Measurements and Disclosures Topic
of the ASC, nancial and non nancial assets and liabilities are
classi ed in their entirety based on the lowest level of input that
is signi cant to the fair value measurement. e hierarchy gives
the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements).
A market is active if there are su cient transactions on an
ongoing basis to provide current pricing information for the asset
or liability, pricing information is released publicly, and price
quotations do not vary substantially either over time or among
market makers. Observable inputs re ect the assumptions market
participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the
reporting entity. e guidance requires the Company to consider
counterparty credit risk of all parties to outstanding derivative
instruments that would be considered by a market participant
in the transfer or settlement of such contracts (exit price).
e Company’s exposure to credit risk on derivative nancial
instruments relates to the portfolio of OTC derivative contracts
as all exchange-traded contracts held can be settled on an active
market with the credit guarantee by the respective exchange. e
Company requires each counterparty to deposit margin collateral
for all OTC instruments and is also required to deposit margin
collateral with counterparties. e Company has assessed the
nature of these deposits and used its discretion to adjust each based
on the underlying credit considerations for the counterparty and
determined that the collateral deposits minimize the exposure
to counterparty credit risk in the evaluation of the fair value of
OTC instruments as determined by a market participant.
e majority of nancial assets and liabilities on the consolidated
balance sheets are reported at fair value. Cash is reported at
the balance held at nancial institutions. Cash equivalents
includes money market funds, which are valued at period-end
at the net asset value provided by the fund’s administrator, and
certi cates of deposit, which are stated at cost plus accrued
interest, which approximates fair value. Cash, securities and other
assets segregated under federal and other regulations include
the value of cash collateral as well as the value of other pledged
investments, primarily U.S.Treasury bills and obligations issued
by government sponsored entities and commodities warehouse
receipts. Deposits with and receivables from exchange-clearing
organizations and broker-dealers, clearing organizations and
counterparties and payables to customers and broker-dealers,
clearing organizations and counterparties include the value of cash
collateral as well as the value of money market funds and other
pledged investments, primarily U.S.Treasury bills and obligations
issued by government sponsored entities and mortgage-backed
securities. ese balances also include the fair value of exchange-
traded futures and options-on-futures and exchange-cleared swaps
and options determined by prices on the applicable exchange.
Financial instruments owned and sold, not yet purchased include
the value of U.S. and foreign government obligations, corporate
debt securities, derivative nancial instruments, commodities,
mutual funds and investments in managed funds. e fair value
of exchange common stock is determined by quoted market
prices, and the fair value of exchange memberships is determined
by recent sale transactions. e shares of the LME held by the
Company were valued based on the proposed sale price of the
ordinary shares, in connection with the sale of the LME to the
Hong Kong Exchanges & Clearing Limited. Notes payable
and subordinated debt carry variable rates of interest and thus
approximate fair value.
e fair value estimates presented herein are based on pertinent
information available to management as of September 30, 2012
and 2011. Although management is not aware of any factors
that would signi cantly a ect the estimated fair value amounts,
such amounts have not been comprehensively revalued for
purposes of these nancial statements since that date and current
estimates of fair value may di er signi cantly from the amounts
presented herein.