Toro 2008 Annual Report Download - page 58

securities. As of the date the swaps were terminated, this deferred
income totaled $18,710. The excess termination fees over the
6LONG-TERM DEBT deferred income recorded has been deferred and is being recog-
nized as an adjustment to interest expense over the term of the
A summary of long-term debt as of October 31 is as follows: debt securities issued.
Principal payments required on long-term debt in each of the
2008 2007 next five fiscal years ending October 31 are as follows: 2009,
7.800% Debentures, due June 15, 2027 $100,000 $100,000 $3,276; 2010, $3,277; 2011, $1,003; 2012, $0; 2013, $0; and after
6.625% Senior Notes, due May 1, 2037 123,234 123,172 2013, $225,000.
Other 7,557 6,037
230,791 229,209
Less current portion 3,276 1,611
Long-term debt, less current portion $227,515 $227,598 7STOCKHOLDERS’ EQUITY
Stock repurchase program. The company’s Board of Directors
On April 26, 2007, the company issued $125,000 in aggregate
authorized the repurchase of shares of the company’s common
principal amount of 6.625% senior notes due May 1, 2037. The
stock as follows:
senior notes were priced at 98.513% of par value, and the result-
•
In July 2005, 2,000,000 shares
ing discount of $1,859 associated with the issuance of these senior
•
In July 2006, 3,000,000 shares
notes is being amortized over the term of the notes using the
•
In May 2007, 3,000,000 shares
effective interest rate method. The underwriting fee and direct debt
•
In May 2008, 4,000,000 shares
issue costs totaling $1,524 will be amortized over the life of the
During fiscal 2008, 2007, and 2006, the company paid $110,355,
notes. Although the coupon rate of the senior notes is 6.625%, the
$182,843, and $146,543 to repurchase an aggregate of 2,809,927,
effective interest rate is 6.741% after taking into account the issu-
3,342,729 shares, and 3,369,285 shares, respectively. As of Octo-
ance discount. Interest on the senior notes is payable
ber 31, 2008, 2,324,248 shares remained authorized for
semi-annually on May 1 and November 1 of each year. The senior
repurchase.
notes are unsecured senior obligations of the company and rank
equally with our other unsecured and unsubordinated indebtedness Shareholder rights plan. On June 14, 2008, the Rights Agree-
from time to time outstanding. The indentures under which the ment, dated as of May 20, 1998, as amended (Rights Agreement),
senior notes were issued contain customary covenants and event between Toro and Wells Fargo Bank, National Association, and
of default provisions. The company may redeem some or all of the the related preferred share purchase rights, expired by their terms.
senior notes at any time at the greater of the full principal amount During the term of the Rights Agreement, these rights would have
of the senior notes being redeemed or the present value of the become exercisable only if a person or group acquired, or
remaining scheduled payments of principal and interest discounted announced a tender offer that would have resulted in, ownership of
to the redemption date on a semi-annual basis at the treasury rate 15 percent or more of Toro’s common stock. Each right would
plus 30 basis points, plus, in both cases, accrued and unpaid inter- have entitled the holder to buy a one four-hundredth interest in a
est. In the event of the occurrence of both (i) a change of control share of a series of preferred stock at a price of $180 per one
of the company and (ii) a downgrade of the notes below an invest- one-hundredth of a preferred share. Among other things under the
ment grade rating by both Moody’s Investors Service, Inc. and Rights Agreement, if a person or group acquired 15 percent or
Standard & Poor’s Ratings Services within a specified period, the more of Toro’s outstanding common stock, each right would have
company would be required to make an offer to purchase the entitled its holder (other than the acquiring person or group) to
senior notes at a price equal to 101% of the principal amount of purchase the number of shares of common stock of Toro having a
the senior notes plus accrued and unpaid interest to the date of market value of twice the exercise price of the right. During the
repurchase. term of the Rights Agreement, the Board of Directors was permit-
In connection with the issuance in June 1997 of $175,000 in ted to redeem the rights for $0.0025 per right at any time before a
long-term debt securities, the company paid $23,688 to terminate person or group acquired beneficial ownership of 15 percent or
three forward-starting interest rate swap agreements with notional more of the common stock.
amounts totaling $125,000. These swap agreements had been
Treasury shares. As of October 31, 2008, the company had
entered into to reduce exposure to interest rate risk prior to the
18,547,454 treasury shares at a cost of $688,015. As of Octo-
issuance of the new long-term debt securities. As of the inception
ber 31, 2007, the company had 16,081,389 treasury shares at a
of one of the swap agreements, the company had received pay-
cost of $593,290.
ments that were recorded as deferred income to be recognized as
an adjustment to interest expense over the term of the new debt
50