Toro 2009 Annual Report Download - page 38

improving order replenishment and service levels to end users. In Capital Expenditures and
connection with our recently established joint venture with TCFIF, Other Long-Term Assets
we sold certain receivables, including floor plan and open account Fiscal 2009 capital expenditures of $37.9 million were 22.4 percent
receivables, from most U.S. and Canadian distributors and dealers lower compared to fiscal 2008. This decrease was primarily attribu-
of our products at a purchase price equal to the face value of the table to spending reductions in response to the recessionary eco-
receivables or the purchase price paid for such receivables. The nomic conditions. Capital expenditures for fiscal 2010 are antici-
joint venture began financing floor plan receivables in the fourth pated to be approximately $40 to $45 million as we plan to
quarter of fiscal 2009. The joint venture also began financing open continue to invest in new product tooling, replacement production
account receivables, as well as floor plan receivables previously equipment, and expansion of our vertical integration capabilities.
financed by a third party financing company, during our first quar- Long-term assets as of October 31, 2009 were $290.5 million
ter of fiscal 2010. The sale of these receivables makes our working compared to $288.3 million as of October 31, 2008, a slight
capital available for other strategic purposes, such as strategic increase of 0.8 percent. This increase was due primarily to the
acquisitions, research and development of innovative new prod- addition of intangible assets from an acquisition.
ucts, improvements in the quality and performance of existing
products, and general corporate purposes. Capital Structure
The following table highlights several key measures of our work- The following table details the components of our total capitaliza-
ing capital performance. tion and key ratios.
(Dollars in millions) (Dollars in millions)
Fiscal years ended October 31 2009 2008 October 31 2009 2008
Average cash and cash equivalents $ 86.2 $ 51.4 Short-term debt $ 4.5 $ 2.3
Average receivables, net 273.6 348.6 Long-term debt, including current portion 228.8 230.8
Average inventories, net 213.3 266.7 Stockholders’ equity 315.2 364.7
Average accounts payable 87.2 98.4 Debt-to-capitalization ratio 42.5% 39.0%
Average days outstanding for receivables 66 68 Our debt-to-capitalization ratio was higher in fiscal 2009 com-
Average inventory turnover 4.75x 4.60x pared to fiscal 2008 due to a decrease in stockholders’ equity as
Average receivables, net decreased 21.5 percent in fiscal 2009 we continued to repurchase shares of our common stock, as well
compared to fiscal 2008, and average days outstanding for receiv- as a decline in net earnings.
ables decreased to 66 days in fiscal 2009 compared to 68 days in
fiscal 2008 due in part to lower average field inventory levels as Liquidity and Capital Resources
our customers focused on improving asset management, as well Our businesses are seasonally working capital intensive and
as the sale of our floor plan receivables to Red Iron during the require funding for purchases of raw materials used in production,
fourth quarter of fiscal 2009. Average net inventories decreased replacement parts inventory, payroll and other administrative costs,
20.0 percent in fiscal 2009 compared to fiscal 2008, and average capital expenditures, expansion and upgrading of existing facilities,
inventory turnover improved by 3.3 percent in fiscal 2009 com- as well as for financing receivables from customers. We believe
pared to fiscal 2008 as we curtailed production levels and contin- that cash generated from operations, together with our fixed rate
ued our focus to improve asset management. long-term debt, bank credit lines, and cash on hand, will provide us
We expect average receivables and average days outstanding with adequate liquidity to meet our anticipated operating require-
for receivables in fiscal 2010 to significantly decrease compared to ments. One of the purposes of establishing the joint venture with
fiscal 2009 as a result of the sale of our floor plan receivables and TCFIF, as previously discussed, is to free up our working capital
certain open account receivables to Red Iron. We expect average for other strategic purposes, which may include, among other
inventories to also decline in fiscal 2010 compared to fiscal 2009 things, strategic acquisitions, research and development of innova-
and we anticipate average inventory turnover to improve in fiscal tive new products, improvements in the quality and performance of
2010 compared to fiscal 2009 as we plan to continue our efforts to existing products, and general corporate purposes. We believe that
improve asset utilization. the funds available through existing financing arrangements and
forecasted cash flows will be sufficient to provide the necessary
capital resources for our anticipated working capital needs, capital
expenditures, investments, debt repayments, quarterly cash divi-
dend payments, and stock repurchases for at least the next twelve
months.
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