INTL FCStone 2013 Annual Report Download - page 72

INTLFCSTONEINC.Form10K 51
PART II
ITEM7Management’s Discussion and Analysis of Financial Condition and Results ofOperations
aggregate purchase price of $3.7 million as part of the announced
plan. During the year ended September 30, 2012, we repurchased
217,507 shares of our outstanding common stock in open
market transactions in the aggregate amount of $4.0 million
as part of the announced plan. Subsequent to September 30,
2013, we repurchased 63,800 shares of our outstanding common
stock in open market transactions in the aggregate amount of
$1.3 million as part of the announced plan.
In July 2013, we completed the oering of $45.5 million
aggregate principal amount of our 8.5% Senior Notes due 2020
(the “Notes”). e net proceeds of the sale of the Notes are
being used for general corporate purposes. e Notes were
issued under an Indenture dated as of July 22, 2013, between us
and e Bank of New York Mellon, as Trustee. e Notes bear
interest at a rate of 8.5% per year (payable quarterly on January
30, April 30, July 30 and October 30 of each year, beginning on
October 30, 2013). e Notes will mature on July 30, 2020. We
may redeem the Notes, in whole or in part, at any time on and
after July 30, 2016, at a redemption price equal to 100% of the
principal amount redeemed plus accrued and unpaid interest
to, but not including, the redemption date.
We incurred debt issuance costs of $1.7 million in connection
with the issuance of the Notes, which are being amortized over
the term of the Notes. Additionally, we paid debt issuance costs
of $1.5 million in connection with the issuance of the new three-
year credit facility, which are being amortized over the thirty-six
month term of the facility.
Apart from what has been disclosed above, there are no known
trends, events or uncertainties that have had or are likely to
have a material impact on our liquidity, nancial condition and
capital resources.
Contractual Obligations
e following table summarizes our cash payment obligations as of September 30, 2013:
(in millions) Total
Payments Due by Period
Less than 1 year 1 - 3 Years 3 - 5 Years After 5 Years
Operating lease obligations $ 34.9 $ 6.7 $ 10.3 $ 7.7 $ 10.2
Purchase obligations(1) 293.0 293.0 — — —
Senior unsecured notes 45.5 — — — 45.5
Contingent acquisition consideration 12.0 1.6 10.4 — —
Other 17.5 5.7 6.8 3.4 1.6
$ 402.9 $ 307.0 $ 27.5 $ 11.1 $ 57.3
(1) Represents an estimate of contractual purchase commitments in the ordinary course of business primarily for the purchase of precious and base metals. Unpriced
contract commitments have been estimated using September 30, 2013 fair values. The purchase commitments for less than one year will be partially offset by
corresponding sales commitments of $216.6 million.
Total contractual obligations exclude dened benet pension
obligations. In scal 2014, we anticipate making contributions
of $2.5 million to dened benet plans. Additional information
on the funded status of these plans can be found in Note 16 of
the Consolidated Financial Statements.
Based upon our current operations, we believe that cash ow from
operations, available cash and available borrowings under our
credit facilities will be adequate to meet our future liquidity needs.
O Balance Sheet Arrangements
We are party to certain nancial instruments with o-balance
sheet risk in the normal course of business as a registered securities
broker-dealer and FCM and from our market-making and
proprietary trading in the foreign exchange and commodities
trading business. As part of these activities, we carry short positions.
For example, we sell nancial instruments that we do not own,
borrow the nancial instruments to make good delivery, and
therefore are obliged to purchase such nancial instruments at a
future date in order to return the borrowed nancial instruments.
We have recorded these obligations in the consolidated nancial
statements at September 30, 2013 and September 30, 2012,
at fair value of the related financial instruments, totaling
$179.9 million and $175.4 million, respectively. ese positions
are held to oset the risks related to nancial assets owned, and
reported in our consolidated balance sheets in ‘nancial instruments
owned, at fair value’, and ‘physical commodities inventory’. We
will incur losses if the fair value of the nancial instruments sold,
not yet purchased, increases subsequent to September 30, 2013,
which might be partially or wholly oset by gains in the value
of assets held as of September 30, 2013. e totals of $179.9
million and $175.4 million include a net liability of $30.7 million
and $44.6 million for derivatives, based on their fair value as
of September 30, 2013 and September 30, 2012, respectively.
In our foreign exchange and commodities trading product lines,
we hold options and futures-on-options contracts resulting
from market-making and proprietary trading activities in these
product lines. We assist customers in our commodities trading
business to protect the value of their future production (precious
or base metals) by selling them put options on an OTC basis.
We also provide our commodities trading business customers
with sophisticated option products, including combinations of