Toro 2011 Annual Report Download - page 15

others, climate change; emissions to air and discharges to water; regulations on our business. Such laws, rules, or regulations may
product and associated packaging; import and export compliance, cause us to incur significant expenses to achieve or maintain com-
including country of origin certification requirements; worker and pliance, may require us to modify our products, may adversely
product user health and safety; energy efficiency; product affect the price of or demand for some of our products, and may
life-cycles; and the generation, use, handling, labeling, collection, ultimately affect the way we conduct our operations. Failure to
management, storage, transportation, treatment, and disposal of comply with these current or future regulations could lead to fines
hazardous substances, wastes, and other regulated materials. For and other penalties, including restrictions on the importation of our
example: products into, or the sale of our products in, one or more jurisdic-
•
The United States Environmental Protection Agency (‘‘EPA’’), the tions until compliance is achieved.
California Air Resources Board, and similar regulators in other We are also involved in the evaluation and clean up of a limited
U.S. states and foreign jurisdictions in which we sell our prod- number of properties currently and previously owned. We do not
ucts have phased in, or are phasing in, emission regulations expect that these matters will have a material adverse effect on
setting maximum emission standards for certain equipment. Spe- our consolidated financial position or results of operations.
cifically, the EPA has adopted increasingly stringent engine
Customer Financing
emission regulations, including Tier 4 emission requirements that
Wholesale Financing. In fiscal 2009, we established Red Iron
beginning in 2012 are applicable to diesel engines in a specified
Acceptance, LLC (‘‘Red Iron’’), as a joint venture with TCF Inven-
horsepower range that are used in some of our professional
tory Finance, Inc. (‘‘TCFIF’’), a subsidiary of TCF National Bank.
segment products.
The purpose of Red Iron is to provide inventory financing, including
•
The United States federal government, several U.S. states and
floor plan and open account receivable financing, to distributors
certain foreign jurisdictions in which we sell our products, includ-
and dealers of our products in the U.S. and to select distributors of
ing the European Union (‘‘EU’’) and each of its member states,
our products in Canada. Under a separate arrangement, TCF
have implemented one or more of the following: (i) the Waste
Commercial Finance Canada, Inc. (‘‘TCFCFC’’) provides inventory
Electrical and Electronic Equipment (‘‘WEEE’’) directive or similar
financing to dealers of our products in Canada. Under these
product life-cycle management laws, rules, or regulations, which
financing arrangements, down payments are not required and,
mandate the labeling, collection, and disposal of specified waste
depending on the finance program for each product line, finance
electrical and electronic equipment, including some of our prod-
charges are incurred by us, shared between us and the distributor
ucts; (ii) the Restriction on the use of Hazardous Substances
and/or the dealer, or paid by the distributor or dealer. Red Iron
(‘‘RoHS’’) directive or similar substance level laws, rules, or reg-
retains a security interest in the distributors’ and dealers’ financed
ulations, which restrict the use of several specified hazardous
inventories, and those inventories are monitored regularly. Floor
materials in the manufacture of specific types of electrical and
plan terms to the distributors and dealers require payment as the
electronic equipment, including some of our products;
equipment, which secures the indebtedness, is sold to customers,
(iii) country of origin laws, rules, or regulations, which require
or when payment terms become due, whichever occurs first. Rates
certification of the geographic origin of our finished goods prod-
are generally indexed to LIBOR plus a fixed percentage that differs
ucts and/or components used in our products through documen-
based on whether the financing is for a distributor or dealer. Rates
tation and/or physical markings, as applicable; (iv) energy effi-
may also vary based on the product that is financed.
ciency laws, rules, or regulations, which are intended to reduce
Toro continues to provide financing in the form of open account
the use and inefficiencies associated with energy and natural
terms directly to home centers and mass retailers; general line
resource consumption and require specified efficiency ratings
irrigation dealers; international distributors and dealers, other than
and capabilities for certain products, including some of our prod-
the Canadian distributors and dealers to whom Red Iron provides
ucts; and (v) product life-cycle laws, rules, or regulations, which
financing arrangements; government customers; and rental compa-
are intended to reduce waste and environmental and human
nies. Some independent international dealers continue to finance
health impact and require manufacturers to collect, dispose, and
their products with third party sources.
recycle certain products, including some of our products, at the
end of their useful life. End-User Financing. We have agreements with third party
•
Our residential products are subject to various federal, state, and financing companies to provide lease-financing options to golf
international laws, rules, and regulations that are designed to course and sports fields and grounds equipment customers in the
protect consumers and we are subject to the rules and regula- U.S. The purpose of these agreements is to increase sales by
tions of the Consumer Product Safety Commission. giving buyers of our products alternative financing options when
Although we believe that we are in substantial compliance with purchasing our products.
currently applicable laws, rules, and regulations, we are unable to We also have agreements with third party financing companies
predict the ultimate impact of adopted or future laws, rules, and to provide financing programs under both generic and private label
9