Toro 2011 Annual Report Download - page 14

dealers, hardware retailers, and mass retailers. In certain markets, gross sales in fiscal 2011 and 2010, respectively. The North
these same products are sold to distributors for resale to hardware America residential segment of our business is dependent on The
retailers and dealers. Home solutions products are primarily sold Home Depot as a customer. While the loss of any substantial cus-
directly to home centers, mass retailers, hardware retailers, and tomer, including The Home Depot, could have a material adverse
dealers. We also sell selected residential products over the short-term impact on our business, we believe that our diverse
Internet. Internationally, residential products are sold directly to distribution channels and customer base should reduce the
dealers and mass merchandisers in Australia, Canada, and select long-term impact of any such loss.
countries in Europe. In most other countries, residential products
Backlog of Orders
are mainly sold to distributors for resale to dealers and mass
Our backlog of orders is dependent upon when customers place
retailers.
orders, and is not necessarily an indicator of our expected results
Professional products are sold to distributors for resale to deal-
for the first quarter of fiscal 2012 or our fiscal 2012 net sales. The
ers, sports fields, industrial facilities, contractors, government cus-
approximate backlog of orders as of October 31, 2011 and 2010
tomers, rental stores, and golf courses. We also sell some profes-
was $85.2 million and $96.3 million, respectively, a decrease of
sional segment products directly to government customers and
11.5 percent. This decrease was primarily the result of the timing
rental companies, as well as directly to end-users in certain inter-
of professional segment stocking orders that were placed in early
national markets. Select residential/commercial irrigation and light-
fiscal 2012 instead of late in fiscal 2011, as well as backlog of
ing products are also sold directly to professional irrigation and
orders for international golf projects in fiscal 2011. We expect the
lighting distributors, and certain retail irrigation products are sold
existing backlog of orders will be filled in early fiscal 2012.
directly to home centers. Compact utility loaders and attachments
are sold to dealers and directly to large rental companies. Toro
Competition
and Exmark landscape contractor products are also sold directly to
Our products are sold in highly competitive markets throughout the
dealers in certain regions of the United States.
world. The principal competitive factors in our markets are product
During fiscal 2011, we owned two domestic distribution compa-
innovation, quality and reliability, pricing, product support and cus-
nies. Our primary purposes in owning domestic distributorships are
tomer service, warranty, brand awareness, reputation, distribution,
to facilitate ownership transfers while improving operations and to
shelf space, and financing options. We believe we offer total solu-
test and deploy new strategies and business practices that could
tions and full service packages with high quality products that have
be replicated by our independent distributors.
the latest technology and design innovations. In addition, by selling
Our distribution systems are intended to assure quality of sales
our products through a network of distributors, dealers, hardware
and market presence as well as effective after-purchase service
retailers, home centers, and mass retailers, we offer comprehen-
and support. We believe our distribution network provides a com-
sive service support during and after the warranty period. We com-
petitive advantage in marketing and selling our products, in part,
pete in many product lines with numerous manufacturers, many of
because our primary distribution network is focused on selling and
which have larger operations and financial resources than us. We
marketing our products and because of the long-term relationships
believe that we have a competitive advantage because we manu-
they have established and experienced personnel they utilize to
facture a broad range of product lines, we are committed to prod-
deliver high levels of customer satisfaction.
uct innovation and customer service, we have a strong focus in
Our current marketing strategy is to maintain distinct brands and
maintaining landscapes, and our distribution channels position us
brand identification for Toro姞, Exmark姞, Irritrol姞, Hayter姞, Pope姞,
well to compete in various markets.
Lawn-Boy姞, and Lawn Genie姞 products.
Internationally, residential segment products face more competi-
We advertise our residential products during appropriate sea-
tion where foreign competitors design, manufacture, and market
sons throughout the year mainly on television, on the radio, in
products in their respective countries. We experience this competi-
print, and via the Internet. Professional products are advertised
tion primarily in Europe. In addition, fluctuations in the value of the
mainly in print and through direct mail programs, as well as on the
U.S. dollar may affect the price of our products in foreign markets,
Internet. Most of our advertising emphasizes our brand names.
thereby impacting their competitiveness. We provide pricing sup-
Advertising is purchased by us as well as through cooperative pro-
port, as needed, to foreign customers to remain competitive in
grams with distributors, dealers, hardware retailers, home centers,
international markets.
and mass retailers.
Environmental Matters and
Customers
Other Governmental Regulation
Overall, we believe that in the long-term we are not dependent on
We are subject to numerous federal, international, states, and
any single customer. However, The Home Depot accounted for
other governmental laws, rules, and regulations relating to, among
approximately 11 percent and 13 percent of our total consolidated
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