INTL FCStone 2014 Annual Report Download - page 53

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INTL FCSTONE INC. Form 10K 37
PART II
ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
All segment information has been revised to reflect the operating segment reorganization retroactive to October 1, 2011.
Commercial Hedging
Components:
- Financial Ag’s
& Energy
- LME metals
Global Payments
Components:
- Global Payments
Securities
Components:
- Equity market-
making
- Debt Trading
- Investment Banking
- Asset Management
Physical
Commodities
Components:
- Precious metals
- Physical Ag’s &
Energy
Clearing and
Execution Services
Components:
- Clearing and
Execution Services
- FX Prime Brokerage
INTL FCStone Inc.
We report our operating segments based on services provided
to customers. Net contribution is one of the key measures used
by management to assess the performance of each segment
and for decisions regarding the allocation of our resources.
Net contribution is calculated as revenues less direct cost of
sales, interest expense, transaction-based clearing expenses,
introducing broker commissions and variable compensation.
Variable compensation paid to risk management consultants and
traders generally represents a fixed percentage of an amount equal
to revenues generated, and in some cases, revenues produced
less transaction-based clearing expense and related charges, base
salaries and an overhead allocation.
Segment income is calculated as net contribution less non-
variable direct expenses of the segment. ese non-variable
direct expenses include trader base compensation and benefits,
operational employee compensation and benefits, communication
and data services, business development, professional fees, bad
debt expense, trade errors and direct marketing expenses.
Total Segment Results
e following table shows summary information concerning all of our business segments combined.
(in millions)
Year Ended September 30,
2014
% of
Operating
Revenues 2013
% of
Operating
Revenues 2012
% of
Operating
Revenues
Operating revenues $ 494.0 100% $ 461.0 100% $ 448.3 100%
Transaction-based clearing expenses 107.8 22% 109.7 24% 104.3 23%
Introducing broker commissions 49.9 10% 40.5 9% 31.0 7%
Interest expense 5.4 1% 5.6 1% 4.1 1%
Net operating revenues 330.9 305.2 308.9
Variable direct compensation and benefits 81.7 17% 76.5 17% 82.4 18%
Net contribution 249.2 228.7 226.5
Non-variable direct expenses 120.4 24% 115.7 25% 113.3 25%
Segment income $ 128.8 $ 113.0 $ 113.2
Year Ended September 30, 2014 Compared to
Year Ended September 30, 2013
e net contribution of all our business segments increased 9%
to $249.2 million in fiscal 2014 compared to $228.7 million in
fiscal 2013. Segment income increased 14% to $128.8 million
in fiscal 2014 compared to $113.0 million in fiscal 2013.
Year Ended September 30, 2013 Compared to
Year Ended September 30, 2012
e net contribution of all our business segments increased 1%
to $228.7 million in fiscal 2013 compared to $226.5 million
in fiscal 2012. Segment income decreased slightly to $113.0
million in fiscal 2013 compared to $113.2 million in fiscal 2012.