INTL FCStone 2014 Annual Report Download - page 113

INTL FCSTONE INC.  Form 10K 97
PART II
ITEM 8 Financial Statements and Supplementary Data
e components of deferred income tax assets and liabilities were as follows:
(in millions) September 30, 2014 September 30, 2013
Deferred tax assets:
Share-based compensation $ 2.8 $ 2.7
Pension liability 2.7 3.4
Deferred compensation 2.1 2.3
Foreign net operating loss carryforwards 2.3 1.9
U.S. State and local net operating loss carryforwards 5.1 4.9
U.S. Federal net operating loss carryforwards 14.4 7.3
Intangible assets 5.3 6.9
Capital loss carryforwards 0.6 0.7
Bad debt reserve 0.8 0.2
Foreign tax credit — 0.1
AMT Credit Carryforward 0.5 —
Other compensation 1.9 1.6
Other 1.5 1.4
Total gross deferred tax assets 40.0 33.4
Less valuation allowance (2.8) (2.3)
Deferred tax assets 37.2 31.1
Deferred income tax liabilities:
Unrealized gain on securities 1.3 1.3
Prepaid expenses 1.2 0.9
Fixed assets 2.7 3.4
Deferred income tax liabilities 5.2 5.6
Deferred income taxes, net $ 32.0 $ 25.5
Deferred income tax balances reflect the effects of temporary
differences between the carrying amounts of assets and liabilities
and their tax bases and are stated at enacted tax rates expected to
be in effect when taxes are actually paid or recovered.
As of September 30, 2014 and 2013, the Company has net
operating loss carryforwards for U.S. federal, state, and local and
foreign income tax purposes of $19.0 million and $11.8 million,
net of valuation allowances, respectively, which are available to
offset future taxable income in these jurisdictions. e U.S.
federal net operating loss carryforward of $14.4 million begins
to expire after September 2033. e state and local net operating
loss carryforwards of $4.7 million, net of valuation allowance,
began to expire after September 2020. e Company has an
Alternative Minimum Tax credit carryforward of $0.5 million,
which has an indefinite life.
e valuation allowance for deferred tax assets as of September 30,
2014 was $2.8 million. e net change in the total valuation
allowance for the year ended September 30, 2014 was an increase
of $0.5 million. e valuation allowances as of September 30,
2014 and 2013 were primarily related to U.S. state and local and
foreign net operating loss carryforwards that, in the judgment
of management, are not more likely than not to be realized. In
assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some or all of
the deferred tax assets will not be realized.
e Company incurred U.S. federal, state, and local taxable
losses for the years ended September 30, 2014, 2013 and 2012
of $17.3 million, $24.5 million, and $21.9 million, respectively.
ere are no significant differences between actual levels of past
taxable income and the results of continuing operations, before
income taxes in these jurisdictions. U.S. federal, state, and local
taxable losses incurred during the years ended September 30, 2013
and 2012 were attributable to a decrease in exchange-traded and
OTC derivative transactional volumes and revenue caused by
consecutive droughts in the U.S., as well as losses incurred in the
physical base metals business. During 2013, the Company elected
to pursue an exit of its physical base metals business through
an orderly liquidation of open positions, which was completed
during fiscal 2014. When evaluating if U.S. federal, state, and
local deferred taxes are realizable, the Company considered
deferred tax liabilities of $3.9 million that are scheduled to reverse
from 2015 to 2019 and $1.3 million of deferred tax liabilities
associated with unrealized gains in securities which the Company
could sell, if necessary. Furthermore, the Company considered
its ability to implement business and tax planning strategies
that would allow the remaining U.S. federal, state, and local
deferred tax assets, net of valuation allowances, to be realized
within 8 years. Based on the tax planning strategies that can be
implemented, management believes that it is more likely than
not that the Company will realize the tax benefit of the deferred
tax assets, net of the existing valuation allowance, in the future.