INTL FCStone 2013 Annual Report Download - page 111

INTLFCSTONEINC.Form10K90
PART II
ITEM 8Financial Statements and Supplementary Data
included in ‘accounts payable and other accrued liabilities’ in
the consolidated balance sheets as of September 30, 2013 and
2012, respectively. e acquisition date fair value of additional
consideration is remeasured to its fair value each reporting
period, with changes in fair value recorded in current earnings.
e change in fair value during the years ended September 30,
2013, 2012 and 2011 were increases of $2.6 million, $2.0 million
and $3.1 million, respectively, and are included in ‘other’ in the
consolidated income statements.
e Company recorded an estimated contingent liability as of the
acquisition date, which was also the estimated total purchase price,
of $5.6 million, relating to the December 2012 acquisition of the
accounts of Tradewire Securities, LLC, as described in Note 19.
e Company expects to make cash payments of $0.9million,
$2.0 million and $5.5 million in scal 2014, 2015, and 2016,
respectively, related to this contingent liability. e change in fair
value during the year ended September 30, 2013 was an increase
of $0.7 million, included in ‘other’ in the consolidated income
statement. e present value of the estimated total purchase
price, including contingent consideration, is $6.3million as
of September 30, 2013, which remains outstanding and is
included in ‘accounts payable and other accrued liabilities’ in
the consolidated balance sheet.
e Company has a contingent liability relating to the November
2011 acquisition of Coffee Network, LLC, subsequently
reorganized as a division of FCStone, LLC, which may result
in the payment of additional purchase price consideration,
see Note 19 for discussion of the acquisition. e acquisition
date fair value of additional consideration was estimated to be
$0.1million. e present value of the estimated contingent liability
recorded of $0.1 million as of September 30, 2013 represents
the fair value of the expected consideration to be paid, based on
the forecasted adjusted pre-tax net earnings for the third scal
year following the closing of the acquisition, plus an additional
nal contingent payment.
e Company has a contingent liability relating to the October 2010
acquisition of Hencorp Becstone Futures, L.C., subsequently
reorganized as a division of FCStone, LLC, (“Hencorp Futures”),
which may result in the payment of additional purchase price
consideration, see Note 19 for discussion of the acquisition.
e acquisition date fair value of additional consideration was
estimated to be $2.3 million. e contingent liability recorded
as of September 30, 2013 represents an estimated contingent
payment of $0.7 million based on adjusted pre-tax net earnings
of Hencorp Futures for scal 2013 and the fair value of the
expected consideration to be paid, based on the forecasted adjusted
pre-tax net earnings during the fourth scal year following the
closing of the acquisition, plus an additional nal estimated
contingent payment and a discount rate being applied to those
future payments. e Company expects to make remaining
cash payments of $0.7 million and $2.8 million in scal 2014
and 2015, respectively, related to this contingent liability.
e change in fair value during the years ended September 30,
2013 and 2012 were increases of $1.0 million and $0.1 million,
respectively, and are included in ‘other’ in the consolidated income
statements. e present value of the estimated total purchase
price, including contingent consideration, is $7.5 million as of
September 30, 2013, of which $3.2 million has not been paid
and is included in ‘accounts payable and other accrued liabilities’
in the consolidated balance sheet.
In July 2013, the Company paid $10.0 million, representing
the nal payment relating to the July 2010 acquisition of the
Hanley Companies, which was reected as a contingent liability in
‘accounts payable and other liabilities’ in the previous consolidated
balance sheet. e change in fair value, related to that contingent
liability, for the years ended September 30, 2013 and 2012 were
increases of $0.7 million and $2.0 million, respectively, and
are included in ‘other’ in the consolidated income statements.
In May 2013, the Company paid $3.1 million, representing the
nal payment relating to the April 2010 acquisition of the RMI
Companies, subsequently reorganized as divisions of FCStone,
LLC, which was reected as a contingent liability in ‘accounts
payable and other liabilities’ in the previous consolidated balance
sheet. e change in fair value, related to that contingent liability,
for the scal years ended September 30, 2013 and 2012 were an
increase of $0.2 million and decrease of $28 thousand, respectively,
and are included in ‘other’ in the consolidated income statements.
e Company had a contingent liability relating to the February 2008
acquisition of Globecot, Inc. Under the terms of the purchase
agreement, the Company had an obligation to pay additional
consideration if specic conditions and earnings targets were
met in the twelve-month period ending January 31, 2013.
As a result of the Company’s acquisition of FCStone Group,
Inc. and subsidiaries (the “FCStone transaction”), eective
September 30, 2009, any additional consideration paid as a
result of this acquisition would be considered an adjustment to a
pre-acquisition contingency, made after the end of the allocation
period, and included in earnings in the current period. e nal
pre-acquisition contingency expense of $0.4 million was recorded
during scal year ended September 30, 2013 and there are no
further contingent payments relating to the Globecot acquisition.
Operating Leases
e Company is obligated under various noncancelable operating
leases for the rental of oce facilities, aircraft, automobiles, service
obligations and certain oce equipment, and accounts for these
lease obligations on a straight line basis. e expense associated
with operating leases amounted to $9.2 million, $8.9 million
and $7.2 million, for scal years ended 2013, 2012 and 2011,
respectively. e expenses associated with the operating leases
and service obligations are reported in the consolidated income
statements in ‘occupancy and equipment rental’, ‘transaction-
based clearing expenses’ and ‘other’ expenses.