Toro 2008 Annual Report Download - page 39

Long-term assets as of October 31, 2008 were $288.3 million all of the senior notes at any time at the greater of the full principal
compared to $285.9 million as of October 31, 2007, a slight amount of the senior notes being redeemed, or the present value
increase of 0.8 percent. This increase was due primarily to the of the remaining scheduled payments of principal and interest dis-
addition of intangible assets from acquisitions. counted to the redemption date on a semi-annual basis at the
treasury rate plus 30 basis points, plus, in both cases, accrued and
Capital Structure unpaid interest. In the event of the occurrence of both (i) a change
The following table details the components of our total capitaliza- of control of the company and (ii) a downgrade of the notes below
tion and key ratios. an investment grade rating by both Moody’s Investors Service, Inc.
and Standard & Poor’s Ratings Services within a specified period,
(Dollars in millions) we would be required to make an offer to purchase the senior
October 31 2008 2007 notes at a price equal to 101% of the principal amount of the
Short-term debt $ 2.3 $ 0.4 senior notes plus accrued and unpaid interest to the date of repur-
Long-term debt, including current portion 230.8 229.2 chase. We used the proceeds from the issuance of the senior
Stockholders’ equity 364.7 370.4 notes to repay $75.0 million outstanding principal amount of
Debt-to-capitalization ratio 39.0% 38.3% 7.125% notes that were due on June 15, 2007, as well as for
Our debt-to-capitalization ratio was higher in fiscal 2008 com- general corporate purposes.
pared to fiscal 2007 due mainly to a decrease in stockholders’
equity as we continued to repurchase shares of our common Cash Dividends
stock, as well as a slight increase in debt. Each quarter in fiscal 2008, our Board of Directors declared a cash
dividend of $0.15 per share which was a 25 percent increase over
Liquidity and Capital Resources our cash dividend of $0.12 per share paid each quarter in fiscal
Our businesses are seasonally working capital intensive and 2007.
require funding for purchases of raw materials used in production,
replacement parts inventory, capital expenditures, expansion and Cash Flow
upgrading of existing facilities, as well as for financing receivables Cash flows provided by (used in) operating, investing, and financ-
from customers. We believe that cash generated from operations, ing activities during the past three fiscal years are shown in the
together with our fixed rate long-term debt, bank credit lines, and following table.
cash on hand, will provide us with adequate liquidity to meet our
anticipated operating requirements. We believe that the funds Cash Provided by (Used in)
(Dollars in millions)
available through existing financing arrangements and forecasted Fiscal years ended October 31 2008 2007 2006
cash flows will be sufficient to provide the necessary capital Operating activities $ 215.7 $ 183.6 $ 190.3
resources for our anticipated working capital needs, capital Investing activities (51.5) (50.3) (38.1)
expenditures, investments, debt repayments, quarterly cash divi- Financing activities (124.1) (128.8) (138.2)
dend payments, and stock repurchases for at least the next twelve Effect of exchange rates on cash (2.8) 2.0 0.1
months. Net cash provided $ 37.3 $ 6.5 $ 14.1
On April 26, 2007, we issued $125.0 million in aggregate princi- Cash and cash equivalents as of fiscal year end $ 99.3 $ 62.0 $ 55.5
pal amount of 6.625% senior notes due May 1, 2037. The senior
notes were priced at 98.513% of par value, and the resulting dis- Cash Flows Provided by Operating Activities. Our primary
count of $1.9 million associated with the issuance of these senior source of funds is cash generated from operations. In fiscal 2008,
notes is being amortized over the term of the notes using the cash provided by operating activities increased 17.5 percent from
effective interest rate method. The underwriting fee and direct debt fiscal 2007. This increase was primarily attributable to a decline in
issue costs totaling $1.5 million is also being amortized over the inventory levels and a larger reduction in accounts receivables in
life of the notes. Although the coupon rate of the senior notes is fiscal 2008 compared to fiscal 2007, somewhat offset by a
6.625%, the effective interest rate is 6.741% after taking into decrease in net earnings.
account the issuance discount. Interest on the senior notes is pay- Cash Flows Used in Investing Activities. Capital expenditures
able semi-annually, on May 1 and November 1 of each year. The and acquisitions are our primary uses of capital resources. These
senior notes are unsecured senior obligations of the company and investments have enabled sales growth in diverse and new mar-
rank equally with our other unsecured and unsubordinated indebt- kets, helped us to meet product demand, and increased our manu-
edness from time to time outstanding. The indentures under which facturing efficiencies. Cash used in investing activities increased
the senior notes were issued contain customary covenants and 2.5 percent in fiscal 2008 compared to fiscal 2007 due mainly to
event of default provisions. We have the right to redeem some or
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