Toro 2013 Annual Report Download - page 58

price of these acquisitions during fiscal 2011 was $24,150, which
New Accounting Pronouncement Adopted
included cash payments, the issuance of long-term notes, and esti-
In February 2013, the Financial Accounting Standards Board
mated contingent consideration. The contingent consideration is
issued Accounting Standards Update (‘‘ASU’’) No. 2013-02,
based on annual financial results over certain thresholds as
Reporting of Amounts Reclassified Out of Accumulated Other
defined in the acquisition agreements.
Comprehensive Income. ASU No. 2013-02 requires entities to dis-
The purchase price of these acquisitions was allocated to the
close, for items reclassified out of accumulated other comprehen-
identifiable assets acquired and liabilities assumed based on esti-
sive income (loss) and into net income in their entirety, the effect
mates of their fair value, with the excess purchase price for acqui-
of the reclassification on each affected net income line item. ASU
sitions recorded as goodwill. Additional purchase accounting dis-
No. 2013-02 also requires a cross reference to other required
closures have been omitted given the immateriality of these
U.S. GAAP disclosures for accumulated other comprehensive
acquisitions in relation to the company’s consolidated financial con-
income (loss) reclassification items that are not reclassified in their
dition and results of operations. See Note 5 for further details
entirety into net income. The effective date of ASU No. 2013-02 is
related to the acquired intangible assets.
for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2012, and early adoption is permit-
ted. The company adopted this guidance in its fiscal 2013 fourth
quarter. The adoption of this guidance did not have an impact on 3INVESTMENT IN JOINT VENTURE
the company’s consolidated financial statements.
In fiscal 2009, the company and TCFIF, a subsidiary of TCF
National Bank, established Red Iron, a joint venture in the form of
a Delaware limited liability company that provides inventory financ-
2ACQUISITIONS ing, including floor plan and open account receivable financing, to
distributors and dealers of the company’s products in the U.S. and
On September 30, 2013, during the fourth quarter of fiscal 2013,
select distributors of the company’s products in Canada. Addition-
the company completed the acquisition of certain assets and
ally, in connection with the joint venture, the company and an affili-
assumed certain liabilities for a company in China that manufac-
ate of TCFIF entered into an arrangement to provide inventory
tures water-efficient drip irrigation products, sprinklers, emitters,
financing to dealers of the company’s products in Canada. In fiscal
and filters for agriculture, landscaping, and green house produc-
2012, the company and TCFIF entered into amendments to certain
tion. The net purchase price of this acquisition was $3,496, of
of the agreements pertaining to Red Iron, among other things, to
which $2,101 was paid in cash and the remaining balance of
extend the initial term of Red Iron until October 31, 2017, subject
$1,395 will be paid in cash in fiscal 2014.
to unlimited automatic two-year extensions thereafter. Either the
On April 25, 2012, during the second quarter of fiscal 2012, the
company or TCFIF may elect not to extend the initial term or any
company completed the acquisition of certain assets for an equip-
subsequent term by giving one-year notice to the other party of its
ment line of concrete and mortar mixers, material handlers, com-
intention not to extend the term.
paction equipment, and other concrete power tools for the rental
The company owns 45 percent of Red Iron and TCFIF owns
and construction market. On February 10, 2012, also during the
55 percent of Red Iron. The company accounts for its investment
second quarter of fiscal 2012, the company completed the acquisi-
in Red Iron under the equity method of accounting. Each of the
tion of certain assets and assumed certain liabilities for an equip-
company and TCFIF contributed a specified amount of the esti-
ment line of vibratory plows, trenchers, and horizontal directional
mated cash required to enable Red Iron to purchase the com-
drills for the underground utilities market. On December 9, 2011,
pany’s inventory financing receivables and to provide financial sup-
during the first quarter of fiscal 2012, the company completed the
port for Red Iron’s inventory financing programs. Red Iron borrows
acquisition of certain assets and assumed certain liabilities for a
the remaining requisite estimated cash utilizing a $450,000
greens roller product line for the golf course market. The aggre-
secured revolving credit facility established under a credit agree-
gate purchase price of these acquisitions was $11,112, which
ment between Red Iron and TCFIF. The company’s total invest-
included cash payments and issuance of long-term notes.
ment in Red Iron as of October 31, 2013 and 2012 was $13,300
On June 24, 2011, the company completed the acquisition of
and $12,545, respectively. The company has not guaranteed the
certain assets of, and assumed certain liabilities for an equipment
outstanding indebtedness of Red Iron. The company has agreed to
line of turf renovation equipment, including aerators, seeders, and
repurchase products repossessed by Red Iron and the TCFIF
power rakes, for the landscape, rental, municipal, and golf mar-
Canadian affiliate, up to a maximum aggregate amount of $7,500
kets. On January 17, 2011, the company completed the acquisition
in a calendar year. In addition, the company has provided recourse
of certain assets of, and assumed certain liabilities for a line of
to Red Iron for certain outstanding receivables, which amounted to
professionally installed landscape lighting fixtures and transformers
for residential and commercial use. The aggregate net purchase
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