Retirement Plans

Defined Benefit Retirement Plans

As a result of its acquisition of FCStone, the Company has a qualified and a nonqualified noncontributory retirement plan, which are defined benefit plans that cover certain employees. Prior to acquisition, the plans were closed to new employees, and amended to freeze all future benefit accruals, therefore no additional benefits accrue for active participants under the plans. The Company’s funding policy as it relates to these plans is to fund amounts that are intended to provide for benefits attributed to service to date.

The following table presents changes in, and components of, the Company’s net liability for retirement costs as of and for the years ended September 30, 2011 and 2010, based on measurement dates of September 30, 2011 and 2010:



(in millions)	September 30, 2011			September 30, 2010
Changes in benefit obligation:
Benefit obligation, beginning of year	$	37.6		$	35.6
Service cost	—			—
Interest cost	1.9			2.0
Actuarial (gain) loss	2.6			2.8
Benefits paid	(3.1		)	(2.8		)
Benefit obligation, end of year	39.0			37.6
Changes in plan assets:
Fair value, beginning of year	24.2			18.9
Actual return	(0.4		)	1.7
Employer contribution	3.5			6.4
Benefits paid	(3.1		)	(2.8		)
Fair value, end of year	24.2			24.2
Funded status	$	14.8		$	13.4

The Company is required to recognize the funded status of its defined benefit pension plans measured as the difference between plan assets at fair value and the projected benefit obligation on the consolidated balance sheets as of September 30, 2011 and 2010, and to recognize changes in the funded status, that arise during the periods but are not recognized as components of net periodic pension cost, within accumulated other comprehensive income, net of tax. Amounts recognized in the consolidated balance sheets consist of $0.2 million and $0.3 million included within ‘other assets’ as of September 30, 2011 and 2010, respectively, and $15.0 million and $13.7 million included within ‘accounts payable and other accrued liabilities’ as of September 30, 2011 and 2010, respectively.

Accumulated other comprehensive loss, net of tax, includes amounts for actuarial losses in the amount of $4.6 million and $1.7 million as of September 30, 2011 and 2010, respectively. The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost during fiscal 2012 is $0.4 million.

The following table displays the Company’s defined benefit plans that have accumulated benefit obligations and projected benefit obligations in excess of the fair value of plans assets (underfunded ABO) as of September 30, 2011 and 2010:



(in millions)	September 30, 2011		September 30, 2010
Accumulated benefit obligations	$	39.0	$	37.6
Projected benefit obligations	$	39.0	$	37.6
Plan assets	$	24.2	$	24.2

The defined benefit obligations were based upon annual measurement dates of September 30, 2011 and 2010. The following weighted-average assumptions were used to determine benefit obligations in the accompanying consolidated balance sheets as of September 30, 2011 and 2010:



	September 30, 2011	September 30, 2010
Weighted average assumptions:
Discount rate	4.80%	5.30%
Expected return on assets	7.30%	7.30%

The following weighted-average assumptions were used to determine net periodic pension cost for the years ended September 30, 2011 and 2010:



	September 30, 2011	September 30, 2010
Weighted average assumptions:
Discount rate	5.30%	5.90%
Expected return on assets	7.30%	8.25%

To account for the defined benefit pension plans in accordance with the guidance in the Compensation – Retirement Benefits Topic of the ASC the Company makes two main determinations at the end of each fiscal year. These determinations are reviewed annually and updated as necessary, but nevertheless, are subjective and may vary from actual results.

First, the Company must determine the actuarial assumption for the discount rate used to reflect the time value of money in the calculation of the projected benefit obligations for the end of the current fiscal year and to determine the net periodic pension cost for the subsequent fiscal year. The objective of the discount rate assumption is to reflect the interest rate at which pension benefits could be effectively settled. In making this determination, the Company considers the timing and amount of benefits that would be available under the plans. The discount rates as of September 30, 2011 and 2010 were based on a model portfolio of high-quality fixed-income debt instruments with durations that are consistent with the expected cash flows of the benefit obligations.

Second, the Company must determine the expected long-term rate of return on assets assumption that is used to determine the expected return on plan assets component of the net periodic pension cost for the subsequent period. The expected long-term rate of return on asset assumption was determined, with the assistance of the Company’s investment consultants, based on a variety of factors. These factors include, but are not limited to, the plan’s asset allocations, a review of historical capital market performance, historical plan performance, current market factors such as inflation and interest rates, and a forecast of expected future asset returns. The Company reviews this long-term assumption on an annual basis.

As a result of the defined benefit plans having a frozen status, no additional benefits will be accrued for active participants under the plan, and accordingly no assumption will be made for the rate of increase in compensation levels in the future.

The components of net periodic pension cost recognized in the consolidated income statements for the years ended September 30, 2011 and 2010 were as follows:



	Year Ended September 30,
(in millions)	2011			2010
Interest cost	$	1.9		$	2.0
Less expected return on assets	(1.7		)	(1.7		)
Net periodic pension cost	$	0.2		$	0.3

Plan Assets

The following table sets forth the actual asset allocation as of September 30, 2011 and 2010, and the target asset allocation for the Company’s plan assets:



	September 30, 2011	September 30, 2010	Target Asset Allocation
Equity securities	70%	70%	70%
Debt securities	30%	30%	30%
Total	100%	100%

The long-term goal for equity exposure and for fixed income exposure is presented above. The exact allocation at any point in time is at the discretion of the investment manager, but should recognize the need to satisfy both the volatility and the rate of return objectives for equity exposure and satisfy the objective of preserving capital for the fixed income exposure.

The investment philosophy of the Company’s pension plans reflect that over the long-term, the risk of owning equities has been and should continue to be rewarded with a greater return than that available from fixed income investments. The primary objective is for the plan to achieve a rate of return sufficient to fully fund the pension obligation without assuming undue risk.

Investments in the Company’s pension plans include debt and equity securities. The fair value of plan assets is based upon the fair value of the underlying investments, which include cash equivalents, common stock, U.S. government securities and federal agency obligations, municipal and corporate bonds, and equity funds. Cash equivalents consist of short-term money market funds that are stated at cost, which approximates fair value. The shares of common stock, U.S. government securities and federal agency obligations, municipal and corporate bonds are stated at estimated fair value based upon quoted market prices, if available, or dealer quotes. The equity funds are investment vehicles valued using the net asset value (“NAV”) provided by the administrator of the fund. The NAV is based on the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Equity securities did not include any INTL FCStone Inc. common stock as of September 30, 2011 and 2010, respectively.

The following tables summarize the Company’s pension assets, excluding cash held in the plan, by major category of plan assets measured at fair value on a recurring basis (at least annually) as of September 30, 2011 and 2010. For additional information and a detailed description of each level within the fair value hierarchy, see Note 5.



	September 30, 2011
(in millions)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	—	$	0.5	$	—	$	0.5
Fixed income:
Government and agencies	—		0.9		—		0.9
Municipal bonds	—		—		—		—
Corporate bonds and notes	—		—		—		—
Mutual funds	0.2		—		—		0.2
Collective funds:
Fixed income	—		6.0		—		6.0
Equities	—		15.5		—		15.5
Real estate	—		1.7		—		1.7
Total	$	0.2	$	24.6	$	—	$	24.8



	September 30, 2010
(in millions)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	—	$	0.5	$	—	$	0.5
Fixed income:
Government and agencies	—		3.3		—		3.3
Municipal bonds	—		0.6		—		0.6
Corporate bonds and notes	—		2.7		—		2.7
Mutual funds	0.2		—		—		0.2
Collective funds:
Fixed income	—		12.3		—		12.3
Equities	—		3.2		—		3.2
Real estate	—		—		1.3		1.3
Total	$	0.2	$	22.6	$	1.3	$	24.1

Cash equivalents are mostly comprised of short-term money market instruments and the valuation is based on inputs derived from observable market data of related assets.

Fixed Income: These securities primarily include debt issued by the U.S. Department of Treasury and securities issued or backed by U.S. government sponsored entities and municipal bonds. These investments are valued utilizing a market approach that includes various valuation techniques and sources such as, broker quotes in active and non-active markets, benchmark yields and securities, reported trades, issuer spreads, and/or other applicable reference data and are generally classified within Level 2.

Corporate Bonds and Notes: Securities in this category primarily include fixed income securities issued by domestic and foreign corporations. These investments are valued utilizing a market approach that includes various valuation techniques and sources such as value generation models, broker quotes in active and non-active markets, benchmark yields and securities, reported trades, issuer spreads, and/or other applicable reference data, and are generally classified as Level 2.

Mutual Funds: Mutual funds held by the Company’s plans are primarily invested in mutual funds with underlying common stock investments. The fair value of these investments is based on the net asset value of the units held in the respective fund which are determined by obtaining quoted prices on nationally recognized securities exchanges.

Collective Funds: These collective investment funds are unregistered investment vehicles that invest in portfolios of stock, bonds, or other securities. The value of equity collective funds is based upon review of the audited statement of the funds. Substantially all of the underlying investments in the funds were either Level 1 or Level 2 investments. As such, the plan has classified the investment in the funds (which is not exchange traded) as Level 2 investments. As of September 30, 2010, the value of a certain real estate collective fund was based upon review of the audited statement of the specific fund, in which substantially all of the underlying investments in the fund were Level 3 investments. Accordingly, the Company classified the investment in the funds (which was not exchange traded) as Level 3 investments. During fiscal 2011, the plans' assets in the certain real estate collective funds were sold, and no amounts relating to those instruments were held as of September 30, 2011.

The following table summarizes the changes in the Company’s Level 3 pension assets for the years ended September 30, 2011 and 2010:



(in millions)	Real Estate
Balance as of September 30, 2009	$	1.3
Purchases, sales, issuances and settlements, net	—
Unrealized gains/(losses), net, relating to instruments still held at year end	—
Balance as of September 30, 2010	$	1.3
Purchases, sales, issuances and settlements, net	(1.3		)
Unrealized gains/(losses), net, relating to instruments still held at year end	—
Balance as of September 30, 2011	$	—

The Company expects to contribute $2.0 million to the pension plans during fiscal 2011, which represents the minimum funding requirement. However, the Company is currently determining what voluntary pension plan contributions, if any, will be made in fiscal 2012.

The following benefit payments, which reflect expected future service, are expected to be paid:



(in millions)
Year ending September 30,
2012	$	3.4
2013	3.3
2014	2.7
2015	2.4
2016	2.3
2017 - 2021	10.5
	$	24.6

Defined Contribution Retirement Plans

Effective December 31, 2009, the Company discontinued its Savings Incentive Match Plan for Employees IRA (“SIMPLE IRA”), which allowed participating U.S. employees of INTL FCStone to contribute up to 100% of their salary, but not more than statutory limits. The Company contributed a dollar for each dollar of a participant’s contribution to this plan, up to a maximum contribution of 3% of a participant’s earnings. Under the SIMPLE IRA, employees are 100% vested in both the employee and employer contributions at all times.

U.K. based employees of INTL FCStone are eligible to participate in a defined contribution pension plan. The Company contributes double the employee’s contribution up to 10% of total base salary for this plan. For this plan, employees are 100% vested in both the employee and employer contributions at all times.

The Company offers participation in the International Assets Holding Corporation 401(k) Plan (“401(k) Plan”), a defined contribution plan providing retirement benefits, to all domestic employees who have reached 21 years of age, and provided four months of service to the Company. Employees may contribute from 1% to 80% of their annual compensation to the 401(k) Plan, limited to a maximum annual amount as set periodically by the Internal Revenue Service. The Company makes matching contributions to the 401(k) Plan in an amount equal to 62.5% of each participant’s eligible elective deferral contribution to the 401(k) Plan, up to 8%. Matching contributions vest, by participant, based on the following years of service schedule: less than two years – none, two to three years – 20%, three to four years – 40%, four to five years – 60%, and greater than five years – 100%.

For fiscal years ended 2011, 2010 and 2009, the Company’s contribution to these defined contribution plans were $2.8 million, $2.1 million and $0.5 million, respectively.

Employee Stock Ownership Plan

The FCStone Group Employee Stock Ownership Plan ("the Plan") was a defined contribution plan which was available to all full-time employees of FCStone and wholly subsidiaries who met established criteria of age and service, prior to the FCStone transaction. In connection with the FCStone transaction, the Board of Directors of FCStone elected to terminate the Plan as of December 31, 2009 (the "termination date"). As a result of an amendment to the Plan in 2009, no new participants are being admitted to the Plan, and no additional contributions have been made to the Plan for services performed by participants after the termination date. All participant account balances became 100% vested as of the termination date, and are not subject to forfeiture. During fiscal 2011, FCStone, the plan sponsor, received a favorable determination letter from the IRS with respect to the Plan, and has directed the trustee to distribute to the participants all remaining assets of the Plan which are distributable on account of the Plan's termination.