INTL FCStone 2014 Annual Report Download - page 27

INTL FCSTONE INC.  Form 10K 11
PART I
ITEM 1A Risk Factors
Business Risks
We seek to mitigate the market and credit risks arising from our
financial trading activities through an active risk management
program. e principal objective of this program is to limit
trading risk to an acceptable level while maximizing the return
generated on the risk assumed.
We have a defined risk policy administered by our risk management
committee, which reports to the risk committee of our board of
directors. We established specific exposure limits for inventory
positions in every business, as well as specific issuer limits and
counterparty limits. We designed these limits to ensure that
in a situation of unexpectedly large or rapid movements or
disruptions in one or more markets, systemic financial distress, the
failure of a counterparty or the default of an issuer, the potential
estimated loss will remain within acceptable levels. e risk
committee of our board of directors reviews the performance of
the risk management committee on a quarterly basis to monitor
compliance with the established risk policy.
Employees
As of September 30, 2014, we employed 1,141 people globally:
754 in the U.S., 1 in Canada, 64 in Argentina, 84 in Brazil, 10
in Paraguay, 160 in the United Kingdom, 13 in Dubai, 25 in
Singapore, 9 in China, 17 in Australia, and 4 in Hong Kong.
None of our employees operate under a collective bargaining
agreement, and we have not suffered any work stoppages or labor
disputes. Many of our employees are subject to employment
agreements, certain of which contain non-competition provisions.
ITEM 1A Risk Factors
We face a variety of risks that could adversely impact our financial
condition and results of operations, including the following:
Our ability to achieve consistent profitability is
subject to uncertainty due to the nature of our
businesses and the markets in which we operate.
During the fiscal year ended September 30, 2014 we recorded net
income of $19.3 million, compared to net income of $19.3 million
in fiscal 2013, and net income of $12.8 million in fiscal 2012.
Our revenues and operating results may fluctuate significantly
in the future because of the following factors:
•
Market conditions, such as price levels and volatility in the
commodities, securities and foreign exchange markets in
which we operate;
•
Changes in the volume of our market-making and trading
activities;
•
Changes in the value of our financial instruments, currency and
commodities positions and our ability to manage related risks;
•e level and volatility of interest rates;
•e availability and cost of funding and capital;
•
Our ability to manage personnel, overhead and other expenses;
•Changes in execution and clearing fees;
•e addition or loss of sales or trading professionals;
•Changes in legal and regulatory requirements; and
•General economic and political conditions.
Although we continue our efforts to diversify the sources of
our revenues, it is likely that our revenues and operating results
will continue to fluctuate substantially in the future and such
fluctuations could result in losses. ese losses could have a
material adverse effect on our business, financial condition and
operating results.
e manner in which we account for
our commodities inventory and forward
commitments may increase the volatility of our
reported earnings.
Our net income is subject to volatility due to the manner in
which we report our commodities inventory. is inventory is
stated at the lower of cost or fair value. We generally mitigate the
price risk associated with our commodities inventory through the