INTL FCStone 2014 Annual Report Download - page 103

INTL FCSTONE INC.  Form 10K 87
PART II
ITEM 8 Financial Statements and Supplementary Data
Operating Leases
e Company is obligated under various noncancelable operating
leases for the rental of office facilities, aircraft, automobiles, service
obligations and certain office equipment, and accounts for these
lease obligations on a straight line basis. e expense associated
with operating leases amounted to $9.5 million, $9.2 million
and $8.9 million, for fiscal years ended September 30, 2014,
2013 and 2012, 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.
Future aggregate minimum lease payments under noncancelable operating leases as of September 30, 2014 are as follows:
(in millions)
Year ending September 30,
2015 $ 8.2
2016 7.0
2017 6.0
2018 5.2
2019 5.1
ereafter 12.5
$ 44.0
Purchase Commitments
e Company determines an estimate of contractual purchase
commitments in the ordinary course of business primarily for
the purchase of precious metals. Unpriced contract commitments
have been estimated using September 30, 2014 fair values. e
purchase commitments and other obligations as of September 30,
2014 for less than one year, one to three years and three to
five years were $257.5 million, $4.1 million and $2.2 million,
respectively. ere were $1.2 million purchase commitments and
other obligations after five years as of September 30, 2014. e
purchase commitments for less than one year will be partially
offset by corresponding sales commitments of $267.3 million.
Exchange Member Guarantees
e Company is a member of various exchanges that trade and
clear futures and option contracts. Associated with its memberships,
the Company may be required to pay a proportionate share of the
financial obligations of another member who may default on its
obligations to the exchanges. While the rules governing different
exchange memberships vary, in general the Company’s guarantee
obligations would arise only if the exchange had previously
exhausted its resources. In addition, any such guarantee obligation
would be apportioned among the other non-defaulting members
of the exchange. Any potential contingent liability under these
membership agreements cannot be estimated. e Company has
not recorded any contingent liability in the consolidated financial
statements for these agreements and believes that any potential
requirement to make payments under these agreements is remote.
Self-Insurance
On January 1, 2014, the Company entered into a program to
self-insure its costs related to medical and dental claims. e
Company is self-insured, up to a stop loss amount, for eligible
participating employees and retirees, and for qualified dependent
medical and dental claims, subject to deductibles and limitations.
Liabilities are recognized based on claims filed and an estimate of
claims incurred but not reported. e Company has purchased
stop-loss coverage to limit its exposure on a per claim basis and in
aggregate in the event that aggregated actual claims would exceed
120% of actuarially estimated claims. e Company is insured
for covered costs in excess of these limits. Although the ultimate
outcome of these matters may exceed the amounts recorded
and additional losses may be incurred, the Company does not
believe that any additional potential exposure for such liabilities
will have a material adverse effect on the Company’s condensed
consolidated financial position or results of operations. As of
September 30, 2014, the Company had $0.9 million accrued
for self-insured medical and dental claims included in ‘accounts
payable and other liabilities’ in the consolidated balance sheet.
NOTE 12 Regulatory Requirements and Subsidiary Dividend Restrictions
e Company’s subsidiary FCStone, LLC is a commodity futures
commission merchant registered with the CFTC servicing
customers primarily in grain, energy and food service-related
businesses. Pursuant to the rules, regulations, and requirements
of the CFTC and other regulatory agencies, FCStone, LLC is
required to maintain certain minimum net capital as defined in
such rules, regulations, and requirements. Net capital and the
related net capital requirement may fluctuate on a daily basis.
FCStone, LLC also has restriction on dividends, which restricts
the withdrawal of equity capital if the planned withdrawal would
reduce net capital, subsequent to haircuts and charges, to an
amount less than 120% of the greatest minimum requirement.