Toro 2008 Annual Report Download - page 64

End-User Financing. The company has agreements with a third
Geographic Data
party financing company to provide lease-financing options to golf
The following geographic area data includes net sales based on
course and sports fields and grounds equipment customers in the
product shipment destination. Long-lived assets consist of goodwill,
United States and Europe. During fiscal 2007, the company
intangible assets, and net property, plant, and equipment, which is
entered into an amended agreement that eliminated the company’s
determined based on physical location in addition to allocated capi-
contingent liability for any residual value risk on the underlying
tal tooling from U.S. plant facilities.
equipment financed under this program. In addition, under the
terms of the amended agreement, the company is only contin-
United Foreign
Fiscal years ended October 31 States Countries Total gently liable for a portion of the credit collection risk for leases
entered into prior to the effective date of the amended agreement.
2008
Net sales $1,269,905 $608,279 $1,878,184 The company’s maximum exposure for credit collection as of Octo-
Long-lived assets 237,399 36,488 273,887 ber 31, 2008 was $8,128.
2007 The company entered into an agreement to sell certain accounts
Net sales $1,333,305 $543,599 $1,876,904 receivable and notes to a third party. The total amount of receiv-
Long-lived assets 230,246 41,325 271,571 ables and notes outstanding under this agreement may not exceed
2006 $10,000 at any time. During fiscal 2008, the company sold $2,542
Net sales $1,339,998 $495,993 $1,835,991 of receivables and notes under the terms of this agreement.
Long-lived assets 213,896 39,121 253,017
Purchase Commitments
As of October 31, 2008, the company had $3,136 of noncancel-
COMMITMENTS AND CONTINGENT able purchase commitments with some suppliers for materials and
12 LIABILITIES supplies as part of the normal course of business.
Leases Letters of Credit
Total rental expense for operating leases was $20,428, $19,677, Letters of credit are issued by the company during the normal
and $19,448 for the fiscal years ended October 31, 2008, 2007, course of business, as required by some vendor contracts. As of
and 2006, respectively. As of October 31, 2008, future minimum October 31, 2008 and 2007, the company had $11,443 and
lease payments under noncancelable operating leases amounted $11,689, respectively, in outstanding letters of credit.
to $44,917 as follows: 2009, $13,187; 2010, $9,813; 2011, $6,609;
2012, $5,183; 2013, $4,845 and after 2013, $5,280. Customs Duties
The company is liable for customs duties for certain products that
Customer Financing are imported and exported between countries. The company has
Wholesale Financing. Independent Toro dealers that do not determined that it has a potential liability for unpaid customs duties
finance through Toro Credit Company finance their inventories with on certain products. The company accrued an estimate of this lia-
third party financing sources or pay cash. Exmark and international bility and is currently working to resolve the matter with the appro-
products sold to dealers are financed primarily with third party priate governmental officials. Although the ultimate resolution of
financing sources or by the distributor. Third party financing com- this matter could potentially be different than the original estimate,
panies purchased $210,542 of receivables from the company dur- the matter is not expected to have a material impact on the con-
ing fiscal 2008, of which $69,701 was outstanding as of Octo- solidated operating results or financial position of the company.
ber 31, 2008. The company’s maximum exposure for credit
recourse with a third party financing company related to receiv- Litigation
ables under these financing arrangements was $550 as of Octo- General. The company is party to litigation in the ordinary course
ber 31, 2008. of business. Litigation occasionally involves claims for punitive as
Toro also enters into limited inventory repurchase agreements well as compensatory damages arising out of use of the com-
with third party financing companies for receivables sold by the pany’s products. Although the company is self-insured to some
company to third party financing companies. As of October 31, extent, the company maintains insurance against certain product
2008, the company was contingently liable to repurchase up to liability losses. The company is also subject to administrative pro-
$5,593 of inventory related to receivables under these financing ceedings with respect to claims involving the discharge of hazard-
arrangements. Toro has repurchased only immaterial amounts of ous substances into the environment. Some of these claims assert
inventory from third party financing companies over the last three damages and liability for remedial investigations and clean up
years.
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