Toro 2009 Annual Report Download - page 39

to our customers and decreasing between May and December
Cash Dividends
when payments are received. The seasonality of production and
Each quarter in fiscal 2009 and 2008, our Board of Directors
shipments causes our working capital requirements to fluctuate
declared a cash dividend of $0.15 per share. Our Board of Direc-
during the year. Our peak borrowing usually occurs between Janu-
tors recently increased our first quarter of fiscal 2010 quarterly
ary and April. Seasonal cash requirements are financed from oper-
cash dividend by 20 percent to $0.18 per share from the quarterly
ations and with short-term financing arrangements, including a
cash dividend paid in the first quarter of fiscal 2009.
$225.0 million unsecured senior five-year revolving credit facility
Cash Flow that expires in January 2012. Interest expense on this credit line is
Cash flows provided by (used in) operating, investing, and financ- determined based on a LIBOR rate plus a basis point spread
ing activities during the past three fiscal years are shown in the defined in the credit agreement. In addition, our non-U.S. opera-
following table. tions maintain unsecured short-term lines of credit of approximately
$21.7 million. These facilities bear interest at various rates depend-
ing on the rates in their respective countries of operation. We also
Cash Provided by (Used in)
(Dollars in millions) have a letter of credit subfacility as part of our credit agreement.
Fiscal years ended October 31 2009 2008 2007
As of October 31, 2009, we had $10.1 million of outstanding
Operating activities $ 251.5 $ 215.7 $ 183.6 standby letters of credit. Average short-term debt was $14.1 million
Investing activities (46.0) (51.5) (50.3)
Financing activities (121.3) (124.0) (128.8) in fiscal 2009 compared to $60.3 million in fiscal 2008, a decrease
Effect of exchange rates on cash 4.2 (2.8) 2.0 of $46.2 million, or 76.5 percent. This decline was primarily attribu-
Net cash provided $ 88.4 $ 37.4 $ 6.5 table to a decrease in our working capital needs in fiscal 2009
compared to fiscal 2008 as a result of lower accounts receivable
Cash and cash equivalents as of fiscal year end $ 187.8 $ 99.4 $ 62.0
and inventory levels, as previously discussed. As of October 31,
Cash Flows Provided by Operating Activities. Our primary 2009, we had $236.5 million of unutilized availability under our
source of funds is cash generated from operations. In fiscal 2009, credit agreements.
cash provided by operating activities increased 16.6 percent from Significant financial covenants in our credit agreement include
fiscal 2008. This increase was primarily attributable to cash interest coverage and debt-to-capitalization ratios. We were in
received from the sale of $72.8 million of floor plan receivables to compliance with all covenants related to our credit agreement as of
Red Iron, as well as a decline in inventory levels in fiscal 2009 October 31, 2009, and we expect to be in compliance with all
compared to fiscal 2008, somewhat offset by a decrease in net covenants during fiscal 2010. Our credit agreement requires com-
earnings. pliance with all of the covenants defined in the agreement. If we
were out of compliance with any debt covenant required by our
Cash Flows Used in Investing Activities. Capital expenditures credit agreement following the applicable cure period, the banks
and acquisitions are our primary uses of capital resources. These could terminate their commitments unless we could negotiate a
investments are intended to enable sales growth in diverse and covenant waiver from the banks. In addition, our long-term senior
new markets and products, help us to meet product demand, and notes and debentures could become due and payable if we were
increase our manufacturing efficiencies. Cash used in investing unable to obtain a covenant waiver or refinance our short-term
activities decreased 10.9 percent in fiscal 2009 compared to fiscal debt under our credit agreement. If our credit rating falls below
2008 due mainly to a decline in purchases of property, plant, and investment grade and/or our average debt to earnings before inter-
equipment, somewhat offset by an increase in investments in affili- est, taxes, depreciation, and amortization (EBITDA) ratio rises
ates and acquisitions. above a certain level, the interest rate we currently pay on our
Cash Flows Used in Financing Activities. Cash used in financ- outstanding short-term debt under the credit agreement would
ing activities decreased 2.2 percent in fiscal 2009 compared to increase. However, the credit commitment could not be cancelled
fiscal 2008. This decrease was primarily attributable to an increase by the banks based solely on a ratings downgrade. Our debt rating
of proceeds and tax benefits from stock-based awards in fiscal for long-term unsecured senior, non-credit enhanced debt was
2009 compared to fiscal 2008, which was somewhat offset by unchanged during fiscal 2009 by Standard and Poor’s Ratings
higher levels of funds used to repurchase our common stock in Group at BBB- and by Moody’s Investors Service at Baa3.
fiscal 2009 compared to fiscal 2008.
Share Repurchase Plan
Credit Lines and Other Capital Resources During fiscal 2009, we continued repurchasing shares of our com-
Our businesses are seasonal, with accounts receivable balances mon stock as a means of using excess cash and reducing our
historically increasing between January and April, as a result of shares outstanding. In addition, our repurchase programs provided
higher sales volumes and extended payment terms made available
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