EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Investor Inquiries:

Bill Dunaway, 816-457-6246

billd@fcstone.com

FCStone Group, Inc. Reports Record Second Quarter Revenues

Kansas City, Mo, April 10, 2008 – FCStone Group, Inc. (NASDAQ: FCSX), a commodity risk management firm, today announced record quarterly revenues and net income from continuing operations for its second fiscal quarter ending February 29, 2008.

Second Quarter Results

Revenues, net of cost of commodities sold, a non-GAAP financial measure, were $91.2 million in the three months ended February 29, 2008, compared to $60.1 million in the prior year quarter, an increase of 52%. Net income increased to $12.1 million, or $0.42 per diluted share, for the second quarter, compared to $6.9 million, or $0.32 per diluted share, in the prior year quarter.

Net income from continuing operations increased to $17.8 million, or $0.61 per diluted share for the second quarter, compared to $7.0 million, or $0.32 per diluted share, in the prior year quarter.

The following table presents results on a total and per share basis.

Financial Highlights

(In thousands, except per share amounts)

 

     Three Months Ended     Six Months Ended  
     Feb. 28,
2007
   Feb. 29,
2008
    Feb. 28,
2007
   Feb. 29,
2008
 

NON GAAP-Revenues, net of cost of commodities sold (1)

   $ 60,157    $ 91,212     $ 117,534    $ 164,846  

Income from continuing operations before income tax expense (1)

   $ 11,104    $ 28,489     $ 21,247    $ 49,570  

Net income from continuing operations (2)

   $ 6,979    $ 17,789     $ 13,322    $ 30,920  

Loss from discontinued operations, net of tax

   $ 59    $ 5,673     $ 88    $ 5,719  

Net income (2)

   $ 6,920    $ 12,116     $ 13,234    $ 25,201  

Diluted weighted average shares outstanding (1)

     21,800      29,104       21,800      28,940  

Diluted earnings per share, continuing operations

   $ 0.32    $ 0.61     $ 0.61    $ 1.07  

Diluted earnings (loss) per share, discontinued operations

     —        (0.19 )     —        (0.20 )

Diluted earnings per share

   $ 0.32    $ 0.42     $ 0.61    $ 0.87  

 

(1) Amounts for the six months ended February 29, 2008 include a net amount of $2.9 million for special or one-time items, which include a $0.5 million gain on the sale of Chicago Board Option Exchange (CBOE) trading rights and a $2.4 million gain on the sale of CME common stock.
(2) Amounts for the six months ended February 29, 2008 include after tax effect of the items noted in (1) above of approximately $1.8 million.


The increase in second quarter revenues, net of cost of commodities sold, from the prior year second quarter, was driven by significantly higher exchange traded and over-the-counter (OTC) volumes. This growth was primarily related to continued volatility in the grain, energy, metals, and soft commodity markets and higher OTC volumes from our energy, renewable fuels and Brazilian customers. Additionally, these volumes along with increased margin requirements have driven higher interest income from additional investable segregated and OTC customer margin funds.

Costs and expenses, exclusive of cost of commodities sold, were higher compared to the prior year primarily due to higher volume-related costs of broker commissions and pit brokerage and clearing fees.

During the three months ended February 29, 2008, the Company undertook extensive engineering design and production tests related to the manufacturing of biodiesel at Green Diesel’s developmental stage plant in Houston, Texas. Based on the testing results, current industry economic conditions and additional capital required to complete the project, it was decided to cease construction and development of the biodiesel facility and pursue an immediate sale of the plant assets and inventory. In connection with the plan of disposal, it was determined that the carrying value of the underlying plant asset exceeded its fair value. Consequently, an impairment loss of $10.8 million was recorded, of which $2.2 million was allocated to the unaffiliated third party minority interest holder. The impairment loss is included in loss on discontinued operations, net of tax, reflected during the three months ended February 29, 2008.

“Despite a tough macroeconomic environment, FCStone continued along the path of steady revenue and earnings growth during our second fiscal quarter,” said Pete Anderson, President and Chief Executive Officer of FCStone. “This growth across all market segments of the Company is being driven by unprecedented volatility in virtually every commodity and financial market around the world. During a period of tightening credit access, this has fostered an atmosphere which has increased the necessity to manage volatility through conservative risk management services, products, platforms and structures offered by FCStone.”

Year-To-Date Results

Revenues, net of cost of commodities sold, a non-GAAP financial measure, were $164.8 million for the first six months of fiscal year 2008, compared to $117.5 million during the same period of fiscal year 2007, an increase of 40%. Net income increased 90% to $25.2 million for the first six months of fiscal year 2008, or $0.87 per diluted share, compared to $13.2 million, or $0.61 per diluted share during the same period of fiscal year 2007.

Net income from continuing operations increased to $30.9 million, or $1.07 per diluted share for the first six months of fiscal year 2008, compared to $13.3 million, or $0.61 per diluted share during the same period of fiscal year 2007.

“In addition to driving strong growth in our traditional market segments of agriculture and energy, FCStone continues to address new and developing products as well as additional industries that have growth potential,” said Bill Dunaway, Chief Financial Officer. “We have created a new Cotton and Textile Division through the acquisition of Globecot, Inc. and The Jernigan Group, LLC. This is a highly complementary business which will provide expertise in the global cotton and textile segment for both current and potential FCStone customers around the world. This deal, along with the recently completed Downes O’Neill LLC acquisition, exemplifies a continued commitment to our stated acquisition growth strategy.”

Operating Segments

FCStone’s income (loss) from continuing operations before minority interest and income tax expense by segment and certain other data are outlined below for the periods noted.


     Three Months Ended     Six Months Ended  
     Feb. 28,
2007
    Feb. 29,
2008
    Feb. 28,
2007
    Feb. 29,
2008
 
     ($ in thousands)  

Segment Data:

        

Income (loss) from continuing operations before minority interest and income tax expense:

        

Commodity and Risk Management Services (1).

   $ 9,153     $ 21,764     $ 16,717     $ 38,927  

Clearing and Execution Services

     3,431       8,656       7,040       13,812  

Financial Services

     419       471       447       527  

Grain Merchandising

     340       —         1,460       —    

Corporate

     (2,137 )     (2,402 )     (3,979 )     (3,696 )
                                
   $ 11,206     $ 28,489     $ 21,685     $ 49,570  
                                

Other Data:

        

EBITDA (1)

   $ 15,798     $ 30,674     $ 28,616     $ 53,312  

Exchange contract trading volume (in millions)

     12.9       27.2       26.3       50.5  

Customer Segregated Assets, end of period

   $ 861,780     $ 1,452,861     $ 861,780     $ 1,452,861  

 

(1) Amounts for the six months ended February 29, 2008 include the special or one-time items of a $2.4 million gain from the sale of CME stock and a $0.5 million gain on the sale of CBOE trading rights included in the Commodity and Risk Management Services segment.

In the Commodity and Risk Management Services segment, revenues, net of cost of commodities sold, were $46.5 million in the second quarter ended February 29, 2008, compared to $27.3 million in the prior year quarter, an increase of 70%. Segment income before minority interest and income tax for the second quarter 2008 increased to $21.8 million, compared to $9.2 million in the prior year quarter.

For the Clearing and Execution Services segment, revenues, net of cost of commodities sold, were $40.9 million in the second quarter ended February 29, 2008, compared to $24.3 million in the prior year quarter, an increase of 69%. The segment made $8.7 million in the second quarter, compared to a net income of $3.4 million in the prior year quarter.

The Financial Services segment reported revenues, net of cost of commodities sold, of $3.5 million in the second quarter ended February 29, 2008, compared to $3.4 million in the prior year quarter, an increase of 3%. Segment income increased to $471 thousand for the second quarter, compared to $419 thousand in the prior year quarter.

As previously announced on June 1, 2007, the Company sold a portion of its stake in the Grain Merchandising segment business and retains a 25% minority interest in this business instead of the previous 70% majority interest. Therefore, such business is no longer consolidated in our financial statements. Our 25% share of FGDI’s income is accounted for under the equity method, and included in the Corporate and Other segment and amounted to $0.6 million for the three months ended February 29, 2008 and $1.9 million for the six months ended February 29, 2008.

Business Outlook

Commenting on the Company’s year to date results and expectations, Anderson said, “FCStone historically has prided itself in being an innovator in the risk management industry, making substantial investments to develop specific programs, products and market segments for the benefit of our clientele and the Company. The most recent example of this innovation is our direct investment in Agora-X, in which we are partnering with NASDAQ to create a new electronic communications platform to provide liquidity, transparency and trading efficiency for FCStone, our clients, and other qualified institutional participants. We believe that this traditional commitment to our clients’ best interest, combined with the strength of the FCStone consultants’ experience and expertise, our alternative platforms to manage our clients’ risk, and the unprecedented volatility in the agriculture and energy markets will continue to drive the growth and development of FCStone.”


Conference Call & Web Cast

A conference call will be held today, Thursday, April 10, 2008 at 11:00 a.m. (ET). A live web cast of the conference call as well as a replay will be available online on the Company’s corporate web site at http://www.fcstone.com. Participants can also access the call by dialing 800-257-7087 (within the United States and Canada), or 303-262-2053 (international callers). A replay of the call will be available approximately two hours after the call has ended and will be available until 11:59 p.m. (CT) on Monday, April 28, 2008. To access the replay, dial 800-405-2236 (within the United States and Canada), or 303-590-3000 (international callers) and enter the conference ID number: 11111811#.

About FCStone Group, Inc.

FCStone Group, Inc., along with its affiliates, is an integrated commodity risk management company providing risk management consulting and transaction execution services to commercial commodity intermediaries, end-users and producers. The firm assists primarily middle market customers in optimizing their profit margins and mitigating exposure to commodity price risk. In addition to risk management consulting services, FCStone, LLC, operates one of the leading independent clearing and execution platforms for exchange-traded futures and options contracts. FCStone Group, Inc., serves more than 7,500 customers and in the 12 months ended February 29, 2008, executed 86.3 million derivative contracts in the exchange-traded and over-the-counter markets. The FCStone Group companies work in all the major commodity areas including agriculture, energy, renewable fuels, foods, forestry, cotton and textile, dairy and currency exchange. Headquartered in the Midwest, it has offices located throughout the world and is a clearing member of all major North American Futures exchanges. FCStone Group, Inc., trades on the NASDAQ Global Select Market under the symbol “FCSX.”

Forward Looking Statements

This press release may include forward-looking statements regarding, among other things, our plans, strategies and prospects, both business and financial. All statements other than statements of current or historical fact contained in this press release are forward-looking statements. The words “believe,” “expect,” “anticipate,” “should,” “plan,” “will,” “may,” “could,” “intend,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms and similar expressions, as they relate to FCStone Group, Inc., are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. They can be affected by inaccurate assumptions, including the risks, uncertainties and assumptions described in the Company’s filings with the Securities and Exchange Commission. In light of these risks, uncertainties and assumptions, the forward-looking statements in this press release may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. When you consider these forward-looking statements, you should keep in mind these risk factors and other cautionary statements in this press release.

Our forward-looking statements speak only as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of NON-GAAP Financial Information

In this press release we disclose “revenues, net of cost of commodities sold”, and “EBITDA”, both of which are non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure, calculated and prepared in accordance with generally accepted accounting principles in the United Sates (GAAP). Revenues, net of cost of commodities sold, is not a substitute for the GAAP measure of total revenues. EBITDA is not a substitute for the GAAP measure of net income or cash flows. Such non-GAAP financial measures are reconciled to its closest


GAAP measure, in accordance with the Securities and Exchange Commission rules, and are included in the attached supplemental data. Management believes that these non-GAAP financial measures are useful to both management and its stockholders in their analysis of the company’s business and operating performance.

Financial Statements to Follow


FCSTONE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

 

     Three Months Ended    Six Months Ended
     February 28,
2007
   February 29,
2008
   February 28,
2007
   February 29,
2008

Revenues:

           

Commissions and clearing fees

   $ 33,353    $ 46,068    $ 66,256    $ 85,450

Service, consulting and brokerage fees

     9,314      23,728      18,409      40,002

Interest

     10,729      18,858      19,127      32,239

Other

     1,013      2,038      1,534      6,635

Sales of commodities

     349,098      1,350      797,886      1,350
                           

Total revenues

     403,507      92,042      903,212      165,676
                           

Costs and expenses:

        

Cost of commodities sold

     343,350      830      785,678      830

Employee compensation and broker commissions

     11,364      15,197      23,155      28,444

Pit brokerage and clearing fees

     14,678      25,392      29,542      46,177

Introducing broker commissions

     9,007      8,747      16.376      16,075

Employee benefits and payroll taxes

     2,722      2,913      5,369      5,930

Interest

     4,251      1,809      6,490      3,010

Depreciation

     443      376      879      732

Bad debt expense

     120      109      1,540      184

Other expenses

     6,366      8,180      12,498      14,724
                           

Total costs and expenses

     392,301      63,553      881,527      116,106
                           

Income from continuing operations before income tax expense and minority interest

     11,206      28,489      21,685      49,570

Minority interest

     102      —        438      —  
                           

Income from continuing operations before income tax expense

     11,104      28,489      21,247      49,570

Income tax expense

     4,125      10,700      7,925      18,650
                           

Net income from continuing operations

     6,979      17,789      13,322      30,920

Loss from discontinued operations, net of tax

     59      5,673      88      5,719
                           

Net income

   $ 6,920    $ 12,116    $ 13,234    $ 25,201
                           


     Three Months Ended     Six Months Ended  
     February 28,
2007
   February 29,
2008
    February 28,
2007
   February 29,
2008
 

Basic shares outstanding

     21,800      27,709       21,800      27,565  

Diluted shares outstanding

     21,800      29,104       21,800      28,940  

Basic earnings (loss) per share:

          

Continuing operations

   $ 0.32    $ 0.64     $ 0.61    $ 1.12  

Discontinued operations

     —        (0.20 )     —        (0.21 )
                              

Net income

   $ 0.32    $ 0.44     $ 0.61    $ 0.91  
                              

Diluted earnings (loss) per share:

          

Continuing operations

   $ 0.32    $ 0.61     $ 0.61    $ 1.07  

Discontinued operations

     —        (0.19 )     —        (0.20 )
                              

Net income

   $ 0.32    $ 0.42     $ 0.61    $ 0.87  
                              

 

(1) On June 1, 2007 the Company sold a majority interest in FGDI, LLC, which represented our entire Grain Merchandising segment. Subsequent to such sale, the company retained a 25% interest in FGDI, LLC which is now accounted for on the equity method and included in other revenues. In the six months ended February 28, 2007, sales of commodities, included $779.2 million from FGDI, LLC.


FCSTONE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except share amounts)

 

     August 31,
2007
   February 29,
2008
          (Unaudited)
ASSETS      

Cash and cash equivalents:

     

Unrestricted

   $ 90,053    $ 60,774

Segregated

     14,250      56,109

Commodity deposits and receivables:

     

Commodity exchanges and clearing organizations—customer segregated

     686, 441      1,198,933

Proprietary commodity accounts

     77,690      159,013

Receivables from customers, net of allowance for doubtful accounts

     16,868      26,396
             

Total commodity deposits and receivables

     780,999      1,384,342
             

Marketable securities, at fair value—customer segregated and other

     307,828      265,931

Counterparty deposits and trade accounts receivable, net of allowance for doubtful accounts

     20,746      83,886

Open contracts receivable

     120,219      393,375

Notes receivable and advances

     49,291      149,698

Exchange memberships and stock

     10,366      7,410

Plant, equipment, furniture, software and improvements, net of accumulated depreciation

     4,763      6,819

Assets held for sale

     —        7,836

Other assets

     21,679      41,749
             

Total assets

   $ 1,420,194    $ 2,457,929
             
LIABILITIES AND STOCKHOLDERS’ EQUITY      

Liabilities:

     

Commodity and customer regulated accounts payable

   $ 935,515    $ 1,412,721

Trade accounts payable and advances

     115,145      255,921

Open contracts payable

     121,101      396,686

Accrued expenses

     38,632      44,085

Notes payable and repurchase obligations

     35,133      142,173

Subordinated debt

     1,000      1,000
             


     August 31,
2007
    February 29,
2008
 
           (Unaudited)  

Total liabilities

     1,246,526       2,252,586  
                

Minority interest

     —         —    

Stockholders’ equity:

    

Common stock, $0.0001 par value, authorized 40,000,000 at August 31, 2007 and February 29, 2008, respectively; issued and outstanding 27,416,567 and 27,792,140 shares at August 31, 2007 and February 29, 2008, respectively

     104,267       106,332  

Additional paid-in capital

     1,115       7,249  

Treasury stock

     (376 )     (387 )

Accumulated other comprehensive loss

     (3,620 )     (5,042 )

Retained earnings

     72,282       97,191  
                

Total stockholders’ equity

     173,668       205,343  
                

Commitments and contingencies

    

Total liabilities and stockholders’ equity

   $ 1,420,194     $ 2,457,929  
                


FCSTONE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

     Six Months Ended  
     February 28,
2007
    February 29,
2008
 

Cash flows from operating activities:

    

Net income

   $ 13,234     $ 25,201  

Plus: Loss from discontinued operations

     88       5,719  
                

Income from continuing operations

     13,322       30,920  

Adjustments to reconcile net income to net cash flows from operating activities:

    

Depreciation

     879       732  

Amortization of discount on note receivable

     (28 )     (9 )

Loss on cancellation of warrants

     —         110  

Gain on sale of exchange memberships and stock

     (100 )     (2,930 )

Gain on sale of other assets

     —         (520 )

Stock compensation

     —         753  

Equity in earnings of affiliates, net of distributions

     45       (1,398 )

Minority interest

     438       —    

Excess tax benefit of stock option exercises

     —         (5,381 )

Change in commodity accounts receivable/payable, marketable securities and customer segregated funds, net

     6,231       (126,099 )

Change in open contracts receivable/payable, net

     (43,513 )     2,429  

(Increase) decrease in trade accounts receivable and advances on grain

     (3,028 )     525  

Increase in counterparty deposits and accounts receivable

     (9,875 )     (63,665 )

Increase in other assets

     (32,452 )     (7,511 )

(Decrease) increase in trade accounts payable and advances

     (10,722 )     141,196  

(Decrease) increase in accrued expenses

     (2,522 )     7,753  
                

Net cash used in operating activities

   $ (81,325 )     (23,095 )
                

Cash flows from investing activities:

    

Additions to furniture, equipment, software and improvements

     (1,054 )     (2,788 )

Acquisitions of businesses

     —         (6,725 )

Issuance of notes receivable, net

     (79,760 )     (93,390 )

Proceeds from the sale of exchange memberships and stock

     378       3,498  


     Six Months Ended  
     February 28,
2007
    February 29,
2008
 

Purchase of exchange memberships and stock

     (1,430 )     —    

Proceeds from the sale of other intangible assets

     —         1,350  

Purchase of other intangible assets

     —         (1,049 )
                

Net cash used in investing activities

     (81,866 )     (99,104 )
                

Cash flows from financing activities:

    

Increase in checks written in excess of bank balance

     (866 )     —    

Proceeds from note payable, net

     151,162       86,018  

Proceeds from exercises of stock options

     —         2,065  

Excess tax benefit of stock option exercises

     —         5,381  

Treasury stock acquired

     —         (11 )

Dividends paid

     (6,057 )     —    

Payments under capital lease

     (275 )     —    

Proceeds from subordinated debt

     8,000       —    

Monies released from escrow

     2,526       —    

Monies deposited in escrow

     (33 )     —    
                

Net cash provided by financing activities

     154,457       93,453  
                

Cash flows used for discontinued operations:

    

Net cash from operating activities

     —         1,178  

Net cash used in investing activities

     —         (1,711 )

Net cash provided by financing activities

     —         —    
                

Net cash used for discontinued operations

     —         (533 )
                

Net decrease in cash and cash equivalents – unrestricted

     (8,734 )     (29,279 )

Cash and cash equivalents – unrestricted – beginning of period

     59,726       90,053  
                

Cash and cash equivalents – unrestricted – end of period

   $ 50,992     $ 60,774  
                

Supplemental disclosures of cash flow information:

    

Interest paid

   $ 5,473     $ 2,985  

Income taxes paid

   $ 8,594     $ 13,614  
                


Non-GAAP Financial Measures

The following table reconciles revenues, net of cost of commodities sold, with our total revenues.

 

     Three Months Ended    Six Months Ended
     February 28,
2007
   February 29,
2008
   February 28,
2007
   February 29,
2008
     ($ in thousands)

Revenues:

           

Commissions and clearing fees

   $ 33,353    $ 46,068    $ 66,256    $ 85,450

Service, consulting and brokerage fees

     9,314      23,728      18,409      40,002

Interest

     10,729      18,858      19,127      32,239

Other

     1,013      2,038      1,534      6,635

Sales of commodities

     349,098      1,350      797,886      1,350
                           

Total revenues

     403,507      92,042      903,212      165,676

Less: Cost of commodities sold

     343,350      830      785,678      830
                           

Revenues, net of cost of commodities sold

   $ 60,157    $ 91,212    $ 117,534    $ 164,846
                           

The following table reconciles EBITDA with our net income.

 

     Three Months Ended    Six Months Ended
     February 28,
2007
   February 29,
2008
   February 28,
2007
   February 29,
2008
     ($ in thousands)

Net income:

   $ 6,920    $ 12,116    $ 13,234    $ 25,201

Plus: interest expense

     4,251      1,809      6,490      3,010

Plus: depreciation and amortization

     443      376      879      732

Plus: income tax expense

     4,125      10,700      7,925      18,650

Plus: loss on discontinued operations, net of tax

     59      5,673      88      5,719
                           

EBITDA

   $ 15,798    $ 30,674    $ 28,616    $ 53,312
                           


Commodity and Risk Management Services Segment:

The following table provides the financial performance for this segment.

 

     Three Months Ended
February 29,
   Six Months Ended
February 29,
     2007    2008    2007    2008
     ($ in thousands)

Sales of commodities

   $ —      $ 1,350    $ 2,542    $ 1,350

Cost of commodities sold

     —        830      2,460      830
                           

Gross profit on commodities sold

     —        520      82      520

Commissions and clearing fees

     13,021      14,420      25,939      26,317

Service, consulting and brokerage fees

     9,458      23,857      18,675      40,207

Interest

     4,742      7,532      8,388      13,648

Other revenues (1)

     51      166      106      3,079
                           

Revenues, net of cost of commodities sold

     27,272      46,495      53,190      83,771

Other costs and expenses:

           

Expenses (excluding interest expense)

     18,051      24,677      36,276      44,787

Interest expense

     68      54      197      57
                           

Total costs and expenses (excluding cost of commodities sold)

     18,119      24,731      36,473      44,844
                           

Segment income before minority interest and income taxes (1)

   $ 9,153    $ 21,764    $ 16,717    $ 38,927
                           

Exchange contract trading volume (millions)

     0.6      0.9      1.5      1.6

OTC Contract volume

     160,839      370,337      286,244      671,595

 

(1) Amounts for the six months ended February 29, 2008, includes $2.9 million from the combined gain on the sale of CME stock and CBOE trading rights.

Clearing and Execution Segment:

The following table provides the financial performance for this segment.

 

     Three Months Ended
February 29,
   Six Months Ended
February 29,
     2007    2008    2007    2008
     ($ in thousands)

Sales of commodities

   $ —      $ —      $ —      $ —  

Cost of commodities sold

     —        —        —        —  
                           

Gross profit on commodities sold

     —        —        —        —  

Commissions and clearing fees

     20,509      31,984      40,699      59,652

Service, consulting and brokerage fees

     —        —        —        —  

Interest

     3,654      8,964      7,485      14,334

Other revenues (1)

     100      —        100      —  
                           

Revenues, net of cost of commodities sold

     24,263      40,948      48,284      73,986

Other costs and expenses:

           

Expenses (excluding interest expense)

     20,506      32,272      40,780      60,133

Interest expense

     326      20      464      41
                           

Total costs and expenses (excluding cost of commodities sold)

     20,832      32,292      41,244      60,174
                           

Segment income before minority interest and income taxes (1)

   $ 3,431    $ 8,656    $ 7,040    $ 13,812
                           

Exchange contract trading volume (millions)

     12.3      26.3      24.8      48.9


Financial Services Segment:

The following table provides the financial performance for this segment.

 

     Three Months Ended
February 29,
   Six Months Ended
February 29,
     2007    2008    2007    2008
     ($ in thousands)

Sales of commodities

   $ 9,599    $ —      $ 16,157    $ —  

Cost of commodities sold

     9,539      —        16,069      —  
                           

Gross profit on commodities sold

     60      —        88      —  

Commissions and clearing fees

     —        —        —        —  

Service, consulting and brokerage fees

     —        —        —        —  

Interest

     2,971      2,318      4,158      3,900

Other revenues

     360      1,184      682      1,566
                           

Revenues, net of cost of commodities sold

     3,391      3,502      4,928      5,466

Other costs and expenses:

           

Expenses (excluding interest expense)

     546      1,255      1,079      1,904

Interest expense

     2,426      1,776      3,402      3,035
                           

Total costs and expenses (excluding cost of commodities sold)

     2,972      3,031      4,481      4,939
                           

Segment income (loss) before minority interest

and income taxes

   $ 419    $ 471    $ 447    $ 527
                           

Grain Merchandising Segment:

The following table provides the financial performance for this segment.

 

     Three Months Ended
February 29,
   Six Months Ended
February 29,
     2007    2008    2007    2008
     ($ in thousands)

Sales of commodities

   $ 339,499    $ —      $ 779,187    $ —  

Cost of commodities sold

     333,950      —        767,462      —  
                           

Gross profit on commodities sold

     5,549      —        11,725      —  

Commissions and clearing fees

     —        —        —        —  

Service, consulting and brokerage fees

     —        —        —        —  

Interest

     29      —        64      —  

Other revenues

     467      —        612      —  
                           

Revenues, net of cost of commodities sold

     6,045      —        12,401      —  

Other costs and expenses:

           

Expenses (excluding interest expense)

     3,765      —        7,795      —  

Interest expense

     1,940      —        3,146      —  
                           

Total costs and expenses (excluding cost of commodities sold)

     5,705      —        10,941      —  
                           

Segment income before minority interest and income taxes

   $ 340    $ —      $ 1,460    $ —  
                           

 

(1) On June 1, 2007 the Company sold a majority interest in FGDI, LLC, which represented our entire Grain Merchandising segment. Subsequent to such sale, the company retained a 25% interest in FGDI, LLC which is now accounted for under the equity method and included in the Corporate and Other segment.


Quarterly Financial Highlights:

The following table provides summary financial highlights

by quarter for fiscal year 2008.

 

     Three Months Ended
     November 30,
2007
   February 29,
2008
     ($ in thousands)

NON GAAP-Revenues, net of cost of commodities sold

   $ 73,634    $ 91,212

Income from continuing operations before income tax expense (1)

   $ 21,081    $ 28,489

Net income from continuing operations (1)

   $ 13,131    $ 17,789

Loss from discontinued operations, net of tax

   $ 46    $ 5,673

Net income (1)

   $ 13,085    $ 12,116

 

(1) The three months ended November 30, 2007 included a pre-tax gain on the sale of CME stock of $2.4 million and a pre-tax gain of $0.5 million on the sale of CBOE trading rights. Without these items our first quarter income from continuing operations before income tax expense would have been $18.2 million, net income from continuing operations would have been $11.5 million and net income would have been $11.4 million.