Toro 2009 Annual Report Download - page 65

has repurchased only immaterial amounts of inventory from third
Geographic Data
party financing companies over the last three years.
The following geographic area data includes net sales based on
product shipment destination. Long-lived assets consist of net End-User Financing. The company has agreements with third
property, plant, and equipment, which is determined based on party financing companies to provide lease-financing options to golf
physical location in addition to allocated capital tooling from U.S. course and sports fields and grounds equipment customers in the
plant facilities. U.S. and Europe. During fiscal 2007, the company entered into an
amended agreement with a third party financing company that
United Foreign eliminated the company’s contingent liability for any residual value
Fiscal years ended October 31 States Countries Total risk on the underlying equipment financed under this program. In
2009 addition, under the terms of the amended agreement, the company
Net sales $1,036,253 $487,194 $1,523,447 is only contingently liable for a portion of the credit collection risk
Long-lived assets 142,045 24,671 166,716 for leases entered into prior to the effective date of the amended
2008 agreement. The company’s maximum exposure for credit collection
Net sales $1,269,905 $608,279 $1,878,184 as of October 31, 2009 was $7,916.
Long-lived assets 140,723 28,144 168,867
2007 Purchase Commitments
Net sales $1,333,305 $543,599 $1,876,904 As of October 31, 2009, the company had $4,241 of noncancel-
Long-lived assets 138,594 32,078 170,672
able purchase commitments with some suppliers for materials and
supplies as part of the normal course of business.
COMMITMENTS AND CONTINGENT Letters of Credit
13 LIABILITIES Letters of credit are issued by the company during the normal
course of business, as required by some vendor contracts. As of
Leases
October 31, 2009 and 2008, the company had $12,792 and
Total rental expense for operating leases was $20,108, $20,428,
$11,443, respectively, in outstanding letters of credit.
and $19,677 for the fiscal years ended October 31, 2009, 2008,
and 2007, respectively. As of October 31, 2009, future minimum Customs Duties
lease payments under noncancelable operating leases amounted
The company is liable for customs duties for certain products that
to $41,924 as follows: 2010, $13,325; 2011, $8,756; 2012, $6,572;
are imported and exported between countries. The company has
2013, $5,544; 2014, $3,221 and after 2014, $4,506.
determined that it has a potential liability for unpaid customs duties
on certain products. The company accrued an estimate of this lia-
Customer Financing
bility and is currently working to resolve the matter with the appro-
Wholesale Financing. During October 2009, TCC sold its receiv-
priate governmental officials. Although the ultimate resolution of
able portfolio to Red Iron, the company’s recently established joint
this matter could potentially be different than the original estimate,
venture with TCFIF. See Note 3 for additional information related
the matter is not expected to have a material impact on the con-
to Red Iron. Independent Toro dealers that did not finance through
solidated operating results or financial position of the company.
TCC, as well as Exmark distributors and dealers, financed their
inventories with third party financing sources. Beginning in the first Litigation
quarter of fiscal 2010, Red Iron began financing open account
General. The company is party to litigation in the ordinary course
receivables, as well as floor plan receivables previously financed
of business. Litigation occasionally involves claims for punitive as
by a third party financing company. Some products sold to inde-
well as compensatory damages arising out of use of the com-
pendent dealers in Australia finance their products with third party
pany’s products. Although the company is self-insured to some
sources. Excluding Red Iron, third party financing companies pur-
extent, the company maintains insurance against certain product
chased $221,879 of receivables from the company during fiscal
liability losses. The company is also subject to administrative pro-
2009, of which $69,424 was outstanding as of October 31, 2009.
ceedings with respect to claims involving the discharge of hazard-
The company also enters into limited inventory repurchase
ous substances into the environment. Some of these claims assert
agreements with third party financing companies and Red Iron for
damages and liability for remedial investigations and clean up
receivables sold by the company to third party financing compa-
costs. The company is also typically involved in commercial dis-
nies and Red Iron. As of October 31, 2009, the company was
putes, employment disputes, and patent litigation cases in the ordi-
contingently liable to repurchase up to $12,574 of inventory related
nary course of business. To prevent possible infringement of the
to receivables under these financing arrangements. The company
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