Toro 2014 Annual Report Download - page 43

Cash and Cash Equivalents. Cash and cash equivalents as of facilities bear interest at various rates depending on the rates in
the end of fiscal 2014 were higher by $131.9 million compared to their respective countries of operation. As of October 31, 2014, we
the end of fiscal 2013. In late fiscal 2014, our cash increased due had $20.8 million outstanding short-term debt under these lines of
to borrowings under our revolving credit facility, including credit compared to no outstanding short-term debt as of Octo-
$130.0 million additional cash received under a term loan in antici- ber 31, 2013. Our short-term debt outstanding as of October 31,
pation of cash required to close the acquisition of the BOSS busi- 2014 was mainly due to borrowings under our credit facility in
ness early in the first quarter of fiscal 2015. anticipation of cash required to close the acquisition of the BOSS
business early in the first quarter of fiscal 2015. As of October 31,
Liquidity and Capital Resources 2014, we had $13.7 million of outstanding letters of credit and
Our businesses are seasonally working capital intensive and $128.7 million of unutilized availability under our credit agreements.
require funding for purchases of raw materials used in production, Additionally, as of October 31, 2014, we had $354.0 million out-
replacement parts inventory, payroll and other administrative costs, standing in long-term debt that includes $100 million in aggregate
capital expenditures, establishment of new facilities, expansion and principal amount of 7.8% debentures due June 15, 2027 and
renovation of existing facilities, as well as for financing receivables $125.0 million in aggregate principal amount of 6.625% senior
from customers that are not financed with Red Iron. Our accounts notes due May 1, 2037. In late fiscal 2014 as part of our renewed
receivable balances historically increase between January and credit facility, we also obtained a $130.0 million term loan for cash
April as a result of typically higher sales volumes and extended required to close the acquisition of the BOSS business early in
payment terms made available to our customers, and typically fiscal 2015. The term loan bears interest based on a LIBOR rate
decrease between May and December when payments are (or other rates quoted by the Administrative Agent, Bank of
received. We believe that the funds available through existing America, N.A.) plus a basis point spread defined in the credit
financing arrangements and forecasted cash flows will be sufficient agreement. The term loan can be repaid in part or in full at any
to provide the necessary capital resources for our anticipated time without penalty, but in any event must be paid in full by Octo-
working capital needs, capital expenditures, investments, debt ber 2019.
repayments, quarterly cash dividend payments, and stock repur- Our revolving and term loan credit facility contains standard cov-
chases for at least the next twelve months. As of October 31, enants, including, without limitation, financial covenants, such as
2014, cash and short-term investments held by our foreign subsidi- the maintenance of minimum interest coverage and maximum debt
aries that are not available to fund domestic operations unless to earnings ratios; and negative covenants, which among other
repatriated were $56.4 million. We currently do not intend to repa- things, limit loans and investments, disposition of assets, consoli-
triate this cash held by our foreign subsidiaries; however, if circum- dations and mergers, transactions with affiliates, restricted pay-
stances changed and these funds were needed for our U.S. opera- ments, contingent obligations, liens, and other matters customarily
tions, we would be required to accrue and pay U.S. taxes to restricted in such agreements. Most of these restrictions are sub-
repatriate these funds. ject to certain minimum thresholds and exceptions. Under the
Seasonal cash requirements are financed from operations, cash revolving credit facility we recently entered into in October 2014,
on hand, and with short-term financing arrangements, including our we are not limited in the amount for payments of cash dividends
$150.0 million unsecured senior five-year revolving credit facility and stock repurchases as long as our debt to EBITDA ratio from
that expires in October 2019, which replaced our prior revolving the previous quarter compliance certificate is less than or equal to
credit facility that was scheduled to mature in July 2015. Included 3.25, provided that immediately after giving effect of any such pro-
in our $150.0 million revolving credit facility is a $20.0 million sub- posed action, no default or event of default would exist. As of
limit for standby letters of credit and a $20.0 million sublimit for October 31, 2014, we were not limited in the amount for payments
swingline loans. At our election, and with the approval of the of cash dividends and stock repurchases. We were in compliance
named borrowers on the revolving credit facility, the aggregate with all covenants related to our credit agreement for our revolving
maximum principal amount available under the facility may be credit facility as of October 31, 2014, and we expect to be in
increased by an amount up to $100.0 million in aggregate. Funds compliance with all covenants during fiscal 2015. If we were out of
are available under the revolving credit facility for working capital, compliance with any debt covenant required by this credit agree-
capital expenditures, and other lawful purposes, including, but not ment following the applicable cure period, the banks could termi-
limited to, acquisitions and stock repurchases. Interest expense on nate their commitments unless we could negotiate a covenant
this credit line is determined based on a LIBOR rate (or other rates waiver from the banks. In addition, our long-term senior notes,
quoted by the Administrative Agent, Bank of America, N.A.) plus a debentures, term loan, and any amounts outstanding under the
basis point spread defined in the credit agreement. In addition, our revolving credit facility could become due and payable if we were
non-U.S. operations maintain unsecured short-term lines of credit unable to obtain a covenant waiver or refinance our short-term
in the aggregate amount of approximately $13.2 million. These debt under our credit agreement. If our credit rating falls below
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