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INTLFCSTONEINC.Form10K 33
PART II
ITEM7Management’s Discussion and Analysis of Financial Condition and Results ofOperations
Financial Overview
e following table shows an overview of our nancial results:
FINANCIAL OVERVIEW UNAUDITED
(in millions)
Year Ended September 30,
2013 % Change 2012 % Change 2011
(As Restated) (As Restated)
Operating revenues $ 478.4 5% $ 454.2 8% $ 419.1
Marked-to-market adjustment (non-GAAP) (11.1n/m 6.8 n/m (8.4
Adjusted operating revenues (non-GAAP) 467.3 1% 461.0 12% 410.7
Transaction-based clearing expenses 110.1 4% 105.4 39% 75.6
Introducing broker commissions 40.5 31% 31.0 29% 24.0
Interest expense 12.5 8% 11.6 3% 11.3
Adjusted net operating revenues (non-GAAP) $ 304.2 (3)% $ 313.0 4% $ 299.8
Compensation and other expenses 292.7 1% 290.4 15% 252.8
Adjusted income from continuing operations,
before tax (non-GAAP) $ 11.5 (49)% $ 22.6 (52)% $ 47.0
Reconciliation of net operating revenues from GAAP
to adjusted, non-GAAP numbers:
Net operating revenues $ 315.3 $ 306.2 $ 308.2
Marked-to-market adjustment (non-GAAP) (11.1 6.8 (8.4
Adjusted net operating revenues (non-GAAP) $ 304.2 $ 313.0 $ 299.8
Reconciliation of income from continuing operations,
before tax from GAAP to adjusted, non-GAAP numbers:
Income from continuing operations before tax $ 22.6 $ 15.8 $ 55.4
Marked-to-market adjustment (non-GAAP) (11.1 6.8 (8.4
Adjusted income from continuing operations,
before tax (non-GAAP) $ 11.5 $ 22.6 $ 47.0
Operating Revenues
Year Ended September 30, 2013 Compared to
Year Ended September 30, 2012
Our operating revenues under U.S. GAAP for scal 2013 and
scal 2012 were $478.4 million and $454.2 million, respectively.
is $24.2 million, or 5% increase in operating revenue primarily
resulted from the $21.2 million increase in the Securities segment.
A $20.8 million decline in C&RM segment operating revenues
was nearly oset by a $7.0 million increase in the CES segment,
a $5.1 million increase in the Other segment, a $4.3 million
increase in the Foreign Exchange segment as well as a $9.2 million
realized gain on the sale of shares of the LME and KCBT in the
rst quarter of scal 2013.
Our adjusted operating revenues were $467.3 million in scal2013
compared with $461.0 million in scal 2012, an increase of
$6.3 million, or 1%. e only dierence between operating
revenues and adjusted operating revenues, a non-GAAP measure,
is the gross marked-to-market adjustment of $(11.1) million and
$6.8 million for scal 2013 and scal 2012, respectively. e
gross marked-to-market adjustment only aects the adjusted
operating revenues in the C&RM and Other segments. Adjusted
operating revenues decreased by $40.2 million in the C&RM
segment, while Other segment adjusted operating revenues
increased $6.6 million as compared to the prior year. Adjusted
operating revenues are identical to operating revenues in all
other segments.
Operating revenues declined in the C&RM segment, primarily
as a result of a 26% decline in OTC contract volumes in the
soft commodities product line, primarily in Brazil, Mexico
and Latin America, which contributed to a $35.8 million
decrease in OTC revenues, while exchange-traded revenues
declined only $0.6 million despite a 9% decrease in exchange-
traded volumes, as the prior year was aected by lost revenues
from customersintroduced to MF Global. is decline in soft
commodities operating revenues was partially oset by increases
in precious metals and physical base metals of $3.8 million and
$4.2 million, respectively, driven by higher metals prices. In
addition, operating revenues in the ongoing LME metals team
increased $7.7 million compared to the prior year.
While operating revenues in the precious metals and physical
base metals businesses increased over the prior year, adjusted
operating revenues in those product lines declined $1.3 million
and $10.1 million, respectively, compared with the prior year.
ere is no dierence between operating revenues and adjusted
operating revenues in the soft commodity and LME metals
product lines.