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INTLFCSTONEINC.Form10K36
PART II
ITEM7Management’s Discussion and Analysis of Financial Condition and Results ofOperations
Year Ended September 30, 2013 Compared to Year
Ended September 30, 2012
Net operating revenues increased $9.1 million, or 3%, to
$315.3 million in scal 2013 compared to the prior year.
Adjusted net operating revenues declined $8.8 million, or 3%,
to $304.2million in scal 2013 compared to the prior year.
Year Ended September 30, 2012 Compared to Year
Ended September 30, 2011
Net operating revenues declined $2.0 million, or 1%, to
$306.2million in scal 2012 compared to the prior year.
Adjusted net operating revenues increased $13.2 million, or
4%, to $313.0million in scal 2012 compared to the prior year.
Compensation and Other Expenses
e following table shows a summary of expenses, other than interest and transactional expenses.
(in millions)
Year Ended September 30,
2013 % Change 2012 % Change 2011
COMPENSATION AND BENEFITS:
Fixed compensation and benets $ 113.4 9% $ 104.5 38% $ 75.8
Variable compensation and benets 88.2 (9)% 97.9 (3)% 100.8
201.6 —% 202.4 15% 176.6
OTHER NONCOMPENSATION EXPENSES:
Communication and data services 23.3 3% 22.6 46% 15.5
Occupancy and equipment rental 12.0 9% 11.0 24% 8.9
Professional fees 13.1 2% 12.9 22% 10.6
Travel and business development 10.7 (4)% 11.2 26% 8.9
Depreciation and amortization 8.0 11% 7.2 53% 4.7
Bad debts and impairments 0.8 (47)% 1.5 (76)% 6.2
Other expense 23.2 7% 21.6 1% 21.4
91.1 4% 88.0 15% 76.2
TOTAL COMPENSATION AND OTHER EXPENSES $ 292.7 1% $ 290.4 15% $ 252.8
Year Ended September 30, 2013 Compared to
Year Ended September 30, 2012
Compensation and Other Expenses: Compensation and other
expenses increased by 1% from $290.4 million in scal 2012 to
$292.7 million in scal 2013.
Compensation and Benefits: Total compensation and
benets expenses decreased modestly from $202.4 million to
$201.6 million in scal 2013 compared to scal 2012. Total
compensation and benets were 64% of net operating revenues
and 66% of adjusted net operating revenues in scal 2013
compared to 66% of net operating revenues and 65% of adjusted
net operating revenues in scal 2012. e variable portion of
compensation and benets decreased 9% from $97.9 million in
scal 2012 to $88.2 million in scal 2013, primarily related to a
3% decrease in adjusted net operating revenues. Administrative
and executive incentive compensation was $11.5 million in
scal2013 compared to $14.1 million in scal 2012.
e xed portion of compensation and benets increased
9% from $104.5 million in scal 2012 to $113.4 million in
scal2013, related to increases in non-variable salaries, share-
based compensation and other employee benets. Non-variable
salaries increased $2.9 million, or 4%, primarily related to the
acquisition of the LME metals team, TRX Futures Limited and the
accounts of Tradewire Securities, as well as stang additions across
administrative departments, primarily in compliance, information
technology development and credit and risk departments. Share-
based compensation includes stock option and restricted stock
expense. Stock option expense was $1.9 million in scal2013
compared to $1.4 million in scal 2012. Restricted stock expense
includes a proportion of the current year’s, as well as the previous
years’, bonuses allocated to restricted stock awards, as the awards
are deferred and expensed ratably over their three year vesting
period. Restricted stock expense was $7.4 million in scal
2013 compared to $4.5 million in scal 2012. e increase in
restricted stock expense is primarily related to the acceleration
of expense in the fourth quarter, resulting from the retirement
of an executive of one of our wholly owned subsidiaries. e
number of employees increased 2%, from 1,074 at the end of
scal 2012 to 1,094 at the end of scal 2013.
Other Non-Compensation Expenses: Other non-compensation
expenses increased by 4% from $88.0 million in scal 2012 to
$91.1 million in scal 2013. Communication and data services
expenses increased $0.7 million, primarily due to increases in
market information expenses and trading software costs following
the acquisitions of the LME metals team, TRX Futures Limited