Toro 2009 Annual Report Download - page 41

prices paid for commodities declined, which offset the negative
Contractual Obligations
impact of higher commodity costs on our gross margin rate during
The following table summarizes our contractual obligations as of
the first half of fiscal 2009. We will continue to closely follow the
October 31, 2009.
commodities that affect our product lines, and we anticipate aver-
age prices paid for commodities to be lower in fiscal 2010 as com-
Payments Due By Period
pared to fiscal 2009. We plan to attempt to mitigate the impact of
(Dollars in thousands) Less Than 1-3 3-5 More than
inflationary pressures by engaging in proactive vendor negotia-
Contractual Obligation 1 Year Years Years 5 Years Total
tions, reviewing alternative sourcing options, substituting materials,
Long-term debt
1
$ 3,765 $ 1,750 $ – $225,000 $230,515 engaging in internal cost reduction efforts, and increasing prices on
Short-term debt
1
4,529 – – – 4,529
Interest payments 16,318 32,224 32,163 292,579 373,284 some of our products, as appropriate.
Deferred compensation
arrangements
2
962 1,552 1,381 1,919 5,814 Acquisitions and Divestiture
Purchase obligations 3,534 707 – – 4,241 In fiscal 2009, we completed the purchase of certain assets and
Operating leases
3
13,325 15,328 8,765 4,506 41,924
assumed certain liabilities of Ty-Crop Manufacturing Ltd., a leading
Total $42,433 $51,561 $42,309 $524,004 $660,307 manufacturer of topdressing and material handling equipment for
1
Principal payments and recourse accounts with Red Iron. golf course and sports fields applications. The acquisition of
2
The unfunded deferred compensation arrangements, covering certain current and
Ty-Crop’s topdressing and material handling equipment enhances
retired management employees, consists primarily of salary and bonus deferrals under
our deferred compensation plans. Our estimated distributions in the contractual obliga- our product offering of application and cultivation equipment to
tions table are based upon a number of assumptions including termination dates and help customers achieve improved agronomic conditions of turf.
participant elections. Deferred compensation balances earn interest based on rates of In fiscal 2008, we completed the purchase of certain assets and
return on funds established by the Compensation and Human Resources Committee of assumed certain liabilities of Southern Green, Inc., a leading man-
the Board of Directors, and are payable at the election of the participants.
3
Operating lease obligations do not include payments to landlords covering real estate ufacturer of deep-tine aeration equipment. The acquisition of
taxes and common area maintenance. Southern Green’s versatile line of Soil Reliever姞 aerators increased
As of October 31, 2009, we also had $12.8 million in outstanding our offering of highly-productive turf cultivation equipment and pro-
letters of credit issued during the normal course of business, as vided entry into a new product category for our golf course and
required by some vendor contracts. In addition to the above con- sports field markets.
tractual obligations, we may be obligated for additional cash out- In fiscal 2008, we also completed the purchase of Turf Guard
flows of $6.1 million of unrecognized tax benefits. The payment wireless monitoring technology from JLH Labs, LLC, a leader in
and timing of any such payments is affected by the ultimate resolu- wireless soil monitoring technology. The Turf Guard system is
tion of the tax years that are under audit or remain subject to designed to measure soil moisture, salinity, and temperature
examination by the relevant taxing authorities. through buried wireless sensors that communicate data to an
internet server for processing and presentation to a user through
Market Risk the web.
Due to the nature and scope of our operations, we are subject to In fiscal 2008, we also completed the sale of a portion of the
exposures that arise from fluctuations in interest rates, foreign cur- operations of one of our company-owned distributorships.
rency exchange rates, and commodity prices. We are also In fiscal 2007, we completed the acquisition of Rain Master Irri-
exposed to equity market risk pertaining to the trading price of our gation Systems, Inc. Rain Master manufactures irrigation central
common stock. Additional information is presented in Part II, controllers and other products for the commercial landscape
Item 7A, ‘‘Quantitative and Qualitative Disclosures about Market market.
Risk,’’ and Note 14 of the notes to our consolidated financial In fiscal 2007, we also completed the purchase of certain assets
statements. and assumed certain liabilities of Allen Hover Mower. Allen Hover
Mower sells walk power mowers worldwide for the golf course and
Inflation grounds maintenance markets that are specifically designed to per-
We are subject to the effects of inflation and changing prices. Dur- form well on steep inclines.
ing the first half of fiscal 2009, we experienced higher average
commodity costs compared to the average prices paid for com-
modities in fiscal 2008. During the second half of fiscal 2009,
35