INTL FCStone 2014 Annual Report Download - page 108

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INTL FCSTONE INC. Form 10K92
PART II
ITEM 8 Financial Statements and Supplementary Data
e Company is required to recognize the funded status of its
defined benefit pension plans measured as the difference between
plan assets at fair value and the projected benefit obligation on
the consolidated balance sheets as of September 30, 2014 and
2013, and to recognize changes in the funded status, that arise
during the periods but are not recognized as components of net
periodic pension cost, within accumulated other comprehensive
loss, net of tax. Amounts recognized in the consolidated balance
sheets consist of $0.7 million and $0.5 million included in ‘other
assets’ as of September 30, 2014 and 2013, respectively, and
$7.7 million and $9.1 million included in ‘accounts payable
and other accrued liabilities’ as of September 30, 2014 and
2013, respectively.
Accumulated other comprehensive loss, net of tax, includes
amounts for actuarial losses in the amount of $3.6 million and
$2.9 million as of September 30, 2014 and 2013, respectively.
e estimated net loss for the defined benefit pension plans that
will be amortized from accumulated other comprehensive loss
into net periodic pension cost during fiscal 2015 is $0.3 million.
e following table displays the Company’s defined benefit plans that have accumulated benefit obligations and projected benefit
obligations in excess of the fair value of plans assets (underfunded ABO) as of September 30, 2014 and 2013:
(in millions)
September 30, 2014 September 30, 2013
Accumulated benefit obligations $ 38.2 $ 37.5
Projected benefit obligations $ 38.2 $ 37.5
Plan assets $ 31.2 $ 28.9
e defined benefit obligations were based upon annual measurement dates of September 30, 2014 and 2013. e following
weighted-average assumptions were used to determine benefit obligations in the accompanying consolidated balance sheets as of
September 30, 2014 and 2013:
September 30, 2014 September 30, 2013
Weighted average assumptions:
Discount rate 4.15% 4.60%
Expected return on assets 6.00% 7.00%
e following weighted-average assumptions were used to determine net periodic pension cost for the years ended September 30,
2014, 2013 and 2012:
Year Ended September 30,
2014 2013 2012
Weighted average assumptions:
Discount rate 4.60% 3.80% 4.80%
Expected return on assets 7.00% 7.00% 7.30%
To account for the defined benefit pension plans in accordance
with the guidance in the Compensation – Retirement Benefits
Topic of the ASC the Company makes two main determinations
at the end of each fiscal year. ese determinations are reviewed
annually and updated as necessary, but nevertheless, are subjective
and may vary from actual results.
First, the Company must determine the actuarial assumption
for the discount rate used to reflect the time value of money
in the calculation of the projected benefit obligations for the
end of the current fiscal year and to determine the net periodic
pension cost for the subsequent fiscal year. e objective of the
discount rate assumption is to reflect the interest rate at which
pension benefits could be effectively settled. In making this
determination, the Company considers the timing and amount
of benefits that would be available under the plans. e discount
rates as of September 30, 2014, 2013 and 2012 were based on a
model portfolio of high-quality fixed-income debt instruments
with durations that are consistent with the expected cash flows
of the benefit obligations.
Second, the Company must determine the expected long-term
rate of return on assets assumption that is used to determine the
expected return on plan assets component of the net periodic
pension cost for the subsequent period. e expected long-term
rate of return on asset assumption was determined, with the
assistance of the Company’s investment consultants, based on
a variety of factors. ese factors include, but are not limited to,
the plan’s asset allocations, a review of historical capital market
performance, historical plan performance, current market factors
such as inflation and interest rates, and a forecast of expected future
asset returns. e Company reviews this long-term assumption
on an annual basis.
As a result of the defined benefit plans having a frozen status, no
additional benefits will be accrued for active participants under
the plan, and accordingly no assumption will be made for the
rate of increase in compensation levels in the future.