Toro 2009 Annual Report Download - page 68

change in fair value of specific assets and liabilities on the consoli- to pay or receive foreign currencies other than the functional cur-
dated balance sheet. These contracts are not designated as hedg- rency, are recognized immediately in other (expense) income, net,
ing instruments. Accordingly, changes in the fair value of hedges on the consolidated statements of earnings together with the trans-
of recorded balance sheet positions, such as cash, receivables, action gain or loss from the hedged balance sheet position.
payables, intercompany notes, and other various contractual claims
The following table presents the fair value of the company’s derivatives and consolidated balance sheet location.
Asset Derivatives Liability Derivatives
October 31, 2009 October 31, 2008 October 31, 2009 October 31, 2008
Balance Balance Balance Balance
Sheet Fair Sheet Fair Sheet Fair Sheet Fair
(Dollars in thousands) Location Value Location Value Location Value Location Value
Derivatives Designated as Hedging Instruments
Foreign exchange contracts Prepaid expenses $ – Prepaid expenses $17,450 Accrued liabilities $4,311 Accrued liabilities $3,685
Derivatives Not Designated as Hedging Instruments
Foreign exchange contracts Prepaid expenses – Prepaid expenses 524 Accrued liabilities 2,468 Accrued liabilities –
Total Derivatives $ – $17,974 $6,779 $3,685
The following table presents the impact of derivative instruments on the consolidated statements of earnings for the company’s derivatives
designed as cash flow hedging instruments for the fiscal years ended October 31, 2009 and 2008, respectively.
Gain (Loss) Recognized
Gain (Loss) Location of Gain (Loss) Recognized in in Income on Derivatives
Recognized in OCI on Location of Gain (Loss) Reclassified Gain (Loss) Reclassified Income on Derivatives (Ineffective (Ineffective Portion and
Derivatives from AOCL into Income from AOCL into Income Portion and Excluded from Excluded from
(Effective Portion) (Effective Portion) (Effective Portion) Effectiveness Testing) Effectiveness Testing)
(Dollars in thousands) October 31, October 31, October 31, October 31, October 31, October 31,
For the fiscal year ended 2009 2008 2009 2008 2009 2008
Foreign exchange contracts $ 7,371 $ (6,792) Net sales $11,777 $ (8,035) Other (expense) income, net $183 $(1,896)
Foreign exchange contracts (4,444) 1,774 Cost of sales (4,205) 698
Total $ 2,927 $ (5,018) $ 7,572 $ (7,337)
As of October 31, 2009, the company anticipates to reclassify treasury security. These agreements were designated as cash flow
approximately $4,301 of losses from AOCL to earnings during the hedges and resulted in a net settlement of $182, which was
next twelve months. recorded in accumulated other comprehensive loss, and will be
The following table presents the impact of derivative instruments amortized to interest expense over the 30-year term of the senior
on the consolidated statements of earnings for the company’s notes. The unrecognized loss portion of the fair value of these
derivatives not designated as hedging instruments. agreements in accumulated other comprehensive loss as of Octo-
ber 31, 2009 and 2008 was $167 and $173, respectively.
Gain (Loss) Recognized
in Net Earnings Fair Value
Fiscal Year Ended
Location of Gain (Loss) The company categorizes its assets and liabilities into one of three
Recognized in October 31, October 31,
(Dollars in thousands) Net Earnings 2009 2008 levels based on the assumptions (inputs) used in valuing the asset
or liability. Level 1 provides the most reliable measure of fair value,
Foreign exchange contracts Other (expense) income, net $(10,282) $5,120
while Level 3 generally requires significant management judgment.
During the second quarter of fiscal 2007, the company entered The three levels are defined as follows:
into three treasury lock agreements based on a 30-year U.S. Trea- Level 1 – Unadjusted quoted prices in active markets for identi-
sury security with a principal balance of $30,000 for two of the cal assets or liabilities.
agreements and $40,000 for the third agreement. These treasury Level 2 – Observable inputs other than Level 1 prices, such as
lock agreements provided for a single payment at maturity, which quoted prices for similar assets or liabilities in active markets;
was April 23, 2007, based on the change in value of the reference quoted prices for identical assets or liabilities in markets that are
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