Toro 2010 Annual Report Download - page 11

are either self-propelled or push mowers. We also offer a line of States. Our net sales outside the United States were 31.8 percent,
rear roller walk power mowers, a design that provides a striped 32.0 percent, and 32.4 percent of total consolidated net sales for
finish, for the United Kingdom market. In fiscal 2010, we intro- fiscal 2010, 2009, and 2008, respectively.
duced the all new e-Cycler cordless electric mower, featuring the A portion of our cash flow is derived from sales and purchases
same reliability and mulching performance of our gas-powered denominated in foreign currencies. To reduce the uncertainty of
Recycler mowers in an emissions-free platform. foreign currency exchange rate movements on these sales and
purchase commitments, we enter into foreign currency exchange
Riding Products. We manufacture and market riding products contracts for select transactions. For additional information regard-
under the Toro brand name worldwide and under the Hayter brand ing our foreign currency exchange contracts, see Part II, Item 7A,
name in the United Kingdom. We also manufacture riding mower ‘‘Quantitative and Qualitative Disclosures about Market Risk’’ of
products and attachments for a third party under a private label this report. For additional financial information regarding our foreign
agreement. Riding products primarily consist of zero-turn radius operations and each of our three reportable business segments,
mowers that save homeowners time by using superior maneuvera- see Note 12 of the notes to our consolidated financial statements,
bility to cut around obstacles more quickly and easily than tractor in the section entitled ‘‘Segment Data,’’ included in Part II, Item 8,
technology. We also sell lawn and garden tractor models, as well ‘‘Financial Statements and Supplementary Data’’ of this report.
as rear engine and direct-collect riding mowers manufactured and
sold in the European market. Many models are available with a Engineering and Research
variety of engines, decks, transmissions, and accessories. We are committed to an ongoing engineering program dedicated to
Home Solutions Products. We design and market home solu- developing innovative new products and improvements in the qual-
tions products under the Toro and Pope brand names, including ity and performance of existing products. However, a focus on
electric and battery operated flexible line grass trimmers, electric innovation also carries certain risks that new technology could be
blower-vacuums, electric blowers, and electric snow throwers. In slow to be accepted or not accepted by the marketplace. We
Australia, we also design and market underground and hose-end attempt to mitigate these risks through our focus on and commit-
retail irrigation products under the Pope brand name. In fiscal ment to understanding our customers’ needs and requirements.
2010, we introduced the 1800 Power Curve electric snow We have invested more time upfront with customers, using ‘‘Voice
thrower, featuring redesigned handles and chute controls that of the Customer’’ tools, to help us develop innovative products that
enhance operator comfort and convenience. we expect to meet or exceed customer expectations. We use
Design for Manufacturing and Assembly (‘‘DFM/A’’) tools to ensure
Gas Snow Removal Products. We manufacture and market a early manufacturing involvement in new product designs to reduce
range of gas-powered single-stage and two-stage snow thrower production costs. DFM/A focuses on reducing the number of parts
models. Single-stage snow throwers are walk behind units with required to assemble new products, as well as designing products
lightweight two- and four-cycle gasoline engines. Most single-stage to move more efficiently through the manufacturing process. We
snow thrower models include Power Curve snow thrower technol- are also making improvements to our new product development
ogy and some feature our Quick Shoot control system that system as part of our continuing focus on Lean methods to shorten
enable operators to quickly change snow throwing direction. Our development time, reduce costs, and improve quality.
innovative pivoting scraper also keeps the rotor in constant contact Our engineering expenses are primarily incurred in connection
with the pavement. Our two-stage snow throwers are generally with the development of new products that may have additional
designed for relatively large areas of deep, heavy snow and use applications or represent extensions of existing product lines,
four-cycle engines. Our two-stage snow throwers include a line of improvements to existing products, and cost reduction efforts. Our
innovative models featuring the Power Max auger system for expenditures for engineering and research were $53.3 million
enhanced performance and the Quick Stick chute control technol- (3.2 percent of net sales) in fiscal 2010, $52.7 million (3.5 percent
ogy. In early fiscal 2010, we introduced a new line of snow throw- of net sales) in fiscal 2009, and $63.0 million (3.4 percent of net
ers, featuring redesigned single-stage and two-stage models for sales) in fiscal 2008.
residential customers.
Manufacturing and Production
Financial Information about Foreign Operations In some areas of our business we serve as a fully integrated man-
and Business Segments ufacturer, while in others we are primarily an assembler. We have
We manufacture our products in the United States, Mexico, Austra- strategically identified specific core manufacturing competencies for
lia, Italy, and the United Kingdom for sale throughout the world and vertical integration and have chosen outside vendors to provide
maintain sales offices in the United States, Belgium, the United other services. We design component parts in cooperation with our
Kingdom, France, Australia, Singapore, Japan, China, Italy, and vendors, contract with them for the development of tooling, and
Korea. New product development is pursued primarily in the United
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