INTL FCStone 2014 Annual Report Download - page 78

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INTL FCSTONE INC. Form 10K62
PART II
ITEM 8 Financial Statements and Supplementary Data
Notes to Consolidated Financial Statements
NOTE 1 Description of Business and Significant Accounting Policies
INTL FCStone Inc., a Delaware corporation, and its consolidated
subsidiaries (collectively “INTL” or “the Company”), form
a financial services group focused on domestic and select
international markets. The Company’s services include
comprehensive risk management advisory services for commercial
customers; execution of listed futures and options on futures
contracts on all major commodity exchanges; structured over-
the-counter (“OTC”) products in a wide range of commodities;
physical trading and hedging of precious and base metals and select
other commodities; trading of more than 150 foreign currencies;
market-making in international equities; debt origination and
asset management.
e Company provides these services to a diverse group of
more than 20,000 accounts, representing approximately 11,000
consolidated customers located throughout the world, including
producers, processors and end-users of nearly all widely-traded
physical commodities to manage their risks and enhance margins;
to commercial counterparties who are end-users of the firm’s
products and services; to governmental and non-governmental
organizations; and to commercial banks, brokers, institutional
investors and major investment banks.
Basis of Presentation
e accompanying consolidated financial statements include the
accounts of INTL FCStone Inc. and all other entities in which
the Company has a controlling financial interest. All material
intercompany transactions and balances have been eliminated
in consolidation.
Unless otherwise stated herein, all references to fiscal 2014,
fiscal 2013, and fiscal 2012 refer to the Company’s fiscal years
ended September 30.
Reclassifications
Certain amounts previously reported have been reclassified to
conform to the current period presentation. e reclassifications
were made to the income statement presentation to reflect the
physical base metals activities in the financial statements for all
periods presented as discontinued operations. e reclassifications
had no effect on consolidated net income or consolidated assets
and liabilities. In addition, the Company made reclassifications
to the consolidated statements of comprehensive income to
reflect the amounts on pension costs that were reclassified from
accumulated other comprehensive income and were realized
into earning for the respective periods.e reclassifications had
no effect on consolidated other comprehensive income (loss) or
comprehensive income.
Use of Estimates
e preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United
States of America (“U.S. GAAP”) requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent liabilities as of
the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. e most
significant of these estimates and assumptions relate to fair value
measurements for financial instruments and investments, revenue
recognition, the provision for potential losses from bad debts,
valuation of inventories, valuation of goodwill and intangible
assets, self-insurance liabilities, incomes taxes and contingencies.
ese estimates are based on management’s best knowledge of
current events and actions the Company may undertake in the
future. e Company reviews all significant estimates affecting
the financial statements on a recurring basis and records the effect
of any necessary adjustments prior to their issuance. Although
these and other estimates and assumptions are based on the best
available information, actual results could be materially different
from these estimates.
Foreign Currency Translation
Assets and liabilities recorded in foreign currencies are translated
at the exchange rates prevailing on the balance sheet date. Revenue
and expenses are translated at average rates of exchange prevailing
during the period. Gains or losses on translation of the financial
statements of a non-United States (“U.S.”) operation, when the
functional currency is other than the U.S. dollar, are recorded in
other comprehensive income (“OCI”), net of tax, a component
of stockholders’ equity. Foreign currency remeasurement gains or
losses on transactions in nonfunctional currencies are included
in ‘trading gains, net’ in the consolidated income statements.