Toro 2011 Annual Report Download - page 33

percentage of net sales in fiscal 2012 to decrease compared to The following table summarizes our results of operations as a
fiscal 2011. Consistent with our focus on asset management, we percentage of our consolidated net sales.
believe our domestic field inventory levels are currently appropri-
ate and we anticipate field inventory levels to be approximately Fiscal years ended October 31 2011 2010 2009
equivalent as of the end of fiscal 2012 compared to the field Net sales 100.0% 100.0% 100.0%
Cost of sales (66.2) (65.9) (66.5)
inventory levels as of the end of fiscal 2011.
Gross margin 33.8 34.1 33.5
We will continue to keep a cautionary eye on the global eco-
SG&A expense (24.0) (25.1) (26.0)
nomic environment, retail demand, field inventory levels, commod-
Operating earnings 9.8 9.0 7.5
ity prices, weather conditions, competitive actions, expenses, and Interest expense (0.9) (1.0) (1.1)
other factors identified in Part I, Item 1A, ‘‘Risk Factors’’ of this Other income (expense), net 0.3 0.4 (0.1)
report, which could cause our actual results to differ from our antic- Provision for income taxes (3.0) (2.9) (2.2)
ipated outlook. Net earnings 6.2% 5.5% 4.1%
RESULTS OF OPERATIONS Fiscal 2011 Compared With Fiscal 2010
Fiscal 2011 net earnings were $117.7 million compared to Net Sales. Worldwide net sales in fiscal 2011 were $1,884.0 mil-
$93.2 million in fiscal 2010, an increase of 26.2 percent. Fiscal 2011 lion compared to $1,690.4 million in fiscal 2010, an increase of
diluted net earnings per share were $3.70, an increase of 32.6 per- 11.5 percent. This net sales improvement was primarily driven by:
cent from $2.79 per share in fiscal 2010. The primary factors con-
•
Higher shipments of worldwide professional segment products
tributing to the net earnings improvement were sales growth in all of largely resulting from the successful introduction of new products
our businesses, leveraging of fixed SG&A costs over higher sales that were well received by customers and resulted in increased
volumes, and a lower effective tax rate, somewhat offset by higher sales, strong worldwide demand for golf equipment and irrigation
commodity and freight expense that negatively impacted our gross systems, additional manufacturing capacity that increased pro-
margin rate, as well as a pre-tax charge of $4.7 million due to costs duction and enabled higher sales of our water conserving prod-
associated with a rework for a non-safety quality issue that affected ucts for agricultural markets to meet growing worldwide demand,
a large number of our residential segment walk power mowers. In particularly in Eastern Europe, and incremental sales of $19 mil-
addition, our net earnings per diluted share were benefited by lion from acquisitions.
approximately $0.18 per share in fiscal 2011 compared to fiscal
•
An increase in residential segment net sales attributable to
2010 as a result of reduced shares outstanding from repurchases of strong demand for snow thrower products as our channel part-
our common stock. ners purchased product to fill depleted field inventory levels for
Fiscal 2010 net earnings were $93.2 million compared to the 2011-2012 snow season following strong sales from heavy
$62.8 million in fiscal 2009, an increase of 48.4 percent. Fiscal snow falls during the 2010-2011 snow season, as well as addi-
2010 diluted net earnings per share were $2.79, an increase of tional product placement. In addition, riding product sales
61.3 percent from $1.73 per share in fiscal 2009. The primary fac- increased primarily from positive customer acceptance for our
tors contributing to the net earnings improvement were higher new line of zero-turn radius riding mowers. However, sales of
sales volumes, an increase in gross margin, leveraging of fixed walk power mowers and electric blowers were down due mainly
SG&A costs, and an increase in other income. In addition, our net to unfavorable weather conditions.
earnings per diluted share were benefited by approximately $0.22
•
International net sales were also up for both our professional
per share in fiscal 2010 compared to fiscal 2009 as a result of and residential segments due to increased demand primarily
reduced shares outstanding from repurchases of our common from improved market conditions in our key international regions
stock. and the successful introduction of new products that were well
received by customers. Additionally, a weaker average U.S. dol-
lar compared to other currencies in which we transact business
accounted for approximately $21 million of our net sales
increase.
Gross Margin. Gross margin represents gross profit (net sales
less cost of sales) as a percentage of net sales. See Note 1 of the
Notes to Consolidated Financial Statements, in the section entitled
‘‘Cost of Sales,’’ for a description of expenses included in cost of
sales. Gross margin decreased by 30 basis points to 33.8 percent
27