Toro 2010 Annual Report Download - page 37

capital expenditures, expansion and upgrading of existing facilities, flows from operations, whereas in fiscal 2009, 25 percent of our
as well as for financing receivables from customers. We believe cash flows from operations was attributable to net earnings.
that cash generated from operations, together with our fixed rate Cash Flows Used in Investing Activities. Capital expenditures
long-term debt, bank credit lines, and cash on hand, will provide us and acquisitions are our primary uses of capital resources. These
with adequate liquidity to meet our anticipated operating require- investments are intended to enable sales growth in new markets
ments. One of the purposes of establishing Red Iron, our previ- and expand existing markets, help us to meet product demand,
ously discussed joint venture with TCFIF is to free up our working and increase our manufacturing efficiencies and capacity. Cash
capital for strategic purposes, which may include, among other used in investing activities was up 32.3 percent in fiscal 2010 com-
things, research and development of innovative new products, pared to fiscal 2009 due mainly to an increase in purchases of
improvements in the quality and performance of existing products, property, plant, and equipment and higher amounts of cash used
strategic acquisitions and investments, and returning value to for acquisitions.
shareholders through share repurchases and cash dividends. We
Cash Flows Used in Financing Activities. Cash used in financ-
believe that the funds available through existing financing arrange-
ing activities increased 17.3 percent in fiscal 2010 compared to
ments and forecasted cash flows will be sufficient to provide the
fiscal 2009. This increase was primarily attributable to higher levels
necessary capital resources for our anticipated working capital
of funds used to repurchase our common stock in fiscal 2010 com-
needs, capital expenditures, investments, debt repayments, quar-
pared to fiscal 2009.
terly cash dividend payments, and stock repurchases for at least
the next twelve months.
Credit Lines and Other Capital Resources
Our businesses are seasonal, with accounts receivable balances
Cash Dividends
historically increasing between January and April, as a result of
Each quarter in fiscal 2010, our Board of Directors declared a cash
higher sales volumes and extended payment terms made available
dividend of $0.18 per share, which was a 20 percent increase over
to our customers and decreasing between May and December
our cash dividend of $0.15 per share paid each quarter in fiscal
when payments are received. The seasonality of production and
2009. Our Board of Directors recently increased our first quarter of
shipments causes our working capital requirements to fluctuate
fiscal 2011 quarterly cash dividend by 11 percent to $0.20 per
during the year. As of October 31, 2010, seasonal cash require-
share from the quarterly cash dividend paid in the first quarter of
ments were financed from operations and with short-term financing
fiscal 2010.
arrangements, including our unsecured senior five-year revolving
Cash Flow credit facility that expires in January 2012. Interest expense on this
Cash flows provided by (used in) operating, investing, and financ- credit facility is determined based on a LIBOR rate plus a basis
ing activities during the past three fiscal years are shown in the point spread defined in the credit agreement. We had no outstand-
following table. ing short-term debt under this revolving credit facility as of Octo-
ber 31, 2010 and 2009. We intend to amend or replace this credit
facility prior to its expiration in January 2012. In addition, our
Cash Provided by (Used in)
(Dollars in millions) non-U.S. operations maintain unsecured short-term lines of credit
Fiscal years ended October 31 2010 2009 2008
in the aggregate amount of approximately $19 million. These facili-
Operating activities $ 193.5 $ 251.5 $ 215.7 ties bear interest at various rates depending on the rates in their
Investing activities (60.8) (46.0) (51.5)
Financing activities (142.3) (121.3) (124.0) respective countries of operation. As of October 31, 2010, we had
Effect of exchange rates on cash (0.8) 4.2 (2.8) $0.8 million outstanding short-term debt under these lines of credit.
Net cash (used) provided $ (10.4) $ 88.4 $ 37.4 We also have a letter of credit subfacility as part of our credit
agreement. As of October 31, 2010, we had $10.4 million of out-
Cash and cash equivalents as of fiscal year end $ 177.4 $ 187.8 $ 99.4
standing standby letters of credit. As of October 31, 2010, we had
Cash Flows Provided by Operating Activities. Our primary $232.6 million of unutilized availability under our credit agreements.
source of funds is cash generated from operations. In fiscal 2010, Significant financial covenants in our credit agreement during fiscal
cash provided by operating activities decreased $58.0 million, or 2010 included interest coverage and debt-to-capitalization ratios.
23.0 percent, from fiscal 2009. This decrease was primarily attribu- On November 9, 2010, we amended the terms of our credit
table to cash received in fiscal 2009 from the initial sale of floor agreement for our revolving credit facility to better match our
plan receivables to Red Iron and an increase in inventory levels, financing needs to our ongoing capital requirements. The amend-
somewhat offset by higher net earnings and an increase in trade ment included the following changes: (i) replace the
payables, all in fiscal 2010 as compared to fiscal 2009. In fiscal debt-to-capitalization covenant with a debt to earnings before inter-
2010, net earnings accounted for nearly 50 percent of our cash est, taxes, depreciation, and amortization (‘‘EBITDA’’) covenant
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