Toro 2010 Annual Report Download - page 35

Net Sales. Worldwide net sales for the residential segment in administration, and warehousing costs as a result of budget
fiscal 2010 were up by 10.7 percent compared to fiscal 2009 pri- reductions.
marily as a result of the following factors:
Other
•
Strong shipments of zero-turn radius riding mowers attributable
to continued strong demand, resulting in part from customer (Dollars in millions)
acceptance of new products and additional product placement. Fiscal years ended October 31 2010 2009 2008
•
An increase in sales of snow thrower products due to increased Net sales $ 15.2 $ 24.8 $ 31.2
demand from heavy snow falls during the winter season of % change from prior year (38.5)% (20.5)% (27.2)%
2009-2010 and the timing of the introduction for our redesigned Operating loss $(90.4) $(78.2) $(87.4)
offering of snow thrower products that shipped to customers in
Net Sales. Net sales for the Other segment includes sales from
the first quarter of fiscal 2010 instead of the fourth quarter of
our wholly owned domestic distribution companies less sales from
fiscal 2009.
the Professional and Residential segments to those distribution
•
A weaker average U.S. dollar compared to most other curren-
companies. In fiscal 2009, the Other segment also included elimi-
cies in which we transact business.
nation of the professional and residential segments’ floor plan
Worldwide net sales for the residential segment in fiscal 2009
interest costs from TCC. With the establishment of Red Iron begin-
were slightly down by 1.9 percent compared to fiscal 2008. This
ning in fiscal 2010, net sales for the Other segment no longer
decrease was due primarily to decreased demand primarily result-
includes corporate financing activities, including the elimination of
ing from the global recessionary economic conditions, as well as a
floor plan costs from TCC, which results in lower net sales for the
stronger U.S. dollar compared to most other currencies in which
other segment. The other segment net sales in fiscal 2010
we transact business. Electric blower product sales were also
decreased 38.5 percent compared to fiscal 2009 as a result of the
down as a result of lost product placement at a mass retailer, and
elimination of TCC floor plan interest costs, as well as lower net
sales of snow thrower products were lower as a result of the timing
sales at our wholly owned Midwestern distributorship.
of the introduction for our redesigned offering of snow thrower
The other segment net sales in fiscal 2009 decreased 20.5 per-
products that shipped to customers in the first quarter of fiscal
cent compared to fiscal 2008 due to reduced demand largely
2010. Somewhat offsetting those positive factors were increased
resulting from the domestic economic recession, as well as a
shipments of walk power mowers as a result of additional product
reduction in the elimination of floor plan interest costs as a result
placement at a key retailer and a new and broader line of walk
of lower receivables with TCC and a reduction in interest rates.
power mowers, as well as positive customer response for our new
line of zero-turn radius riding mowers. Operating Loss. Operating loss for the other segment in fiscal
2010 increased by 15.7 percent compared to fiscal 2009. This loss
Operating Earnings. Operating earnings for the residential seg-
increase was primarily attributable to an increase in employee
ment in fiscal 2010 increased 25.0 percent compared to fiscal
incentive compensation expense due to improved financial per-
2009. Expressed as a percentage of net sales, residential segment
formance in fiscal 2010, as compared to fiscal 2009, and the elimi-
operating margins improved to 9.8 percent in fiscal 2010 compared
nation of TCC floor plan costs. Somewhat offsetting those factors
to 8.7 percent in fiscal 2009. The following factors impacted resi-
was a decline in expenses incurred in fiscal 2009 for several legal
dential segment operating earnings:
matters that were not duplicated in fiscal 2010, income from our
•
An improvement in gross margins primarily from increased sales
investment in Red Iron, overall reduced spending from our leaner
volumes of higher-margin products and the resulting effects of
cost structure as a result of actions we implemented in fiscal 2009,
cost reduction efforts. These favorable benefits were somewhat
as well as elimination of costs incurred in fiscal 2009 for workforce
offset by higher commodity costs, an increase in freight
adjustments.
expense, and higher manufacturing costs due to operating ineffi-
Operating loss for the other segment in fiscal 2009 decreased by
ciencies as a result of higher than anticipated customer demand.
10.5 percent compared to fiscal 2008. This loss decrease was pri-
•
An increase in SG&A expense from higher spending for market-
marily attributable to overall reduced spending in response to the
ing, product liability, incentive compensation, and warehousing
economic downturn, foreign currency exchange rate gains in fiscal
costs.
2009 compared to foreign currency exchange rate losses in fiscal
Operating earnings for the residential segment in fiscal 2009
2008, a decrease in incentive compensation expense, and a
increased 31.3 percent compared to fiscal 2008. Expressed as a
decline in interest expense, somewhat offset by expenses for sev-
percentage of net sales, residential segment operating margins
eral legal matters, an increase in bad debt expense, and higher
improved to 8.7 percent compared to 6.5 percent in fiscal 2008
costs for distributor changes.
due to a slight improvement in gross margins and a decline in
SG&A expense from lower spending for marketing, engineering,
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