Toro 2011 Annual Report Download - page 35

Selling, General, and Administrative Expense. SG&A expense The following information provides perspective on our business
increased $29.3 million, or 7.4 percent, from fiscal 2009. SG&A segments’ net sales and operating results.
expense rate in fiscal 2010 decreased to 25.1 percent compared to
Professional
26.0 percent in fiscal 2009 due to fixed SG&A costs spread over
Professional segment net sales represented 66 percent of consoli-
higher sales volumes. The following factors increased our SG&A
dated net sales for fiscal 2011, 64 percent for fiscal 2010, and
expense:
63 percent for fiscal 2009. The following table shows the profes-
•
An increase of $21.2 million in employee incentive compensation
sional segment net sales, operating earnings, and operating earn-
expense as a result of improved financial performance in fiscal
ings as a percent of net sales.
2010, as compared to fiscal 2009.
•
Higher marketing and warehousing costs of nearly $9 million as
a result of increased sales volumes. (Dollars in millions)
Fiscal years ended October 31 2011 2010 2009
•
An increase in product liability expense of $2.5 million as a
Net sales $1,239.1 $1,085.5 $965.9
result of unfavorable claims experience.
% change from prior year 14.2% 12.4% (25.9)%
Somewhat offsetting those increases were costs incurred in fiscal Operating earnings $ 205.0 $ 173.8 $127.6
2009 for work force adjustments of $4.3 million that were not dupli- As a percent of net sales 16.5% 16.0% 13.2%
cated in fiscal 2010.
Net Sales. Worldwide net sales for the professional segment in
Interest Expense. Interest expense for fiscal 2010 decreased by
fiscal 2011 were up by 14.2 percent compared to fiscal 2010 pri-
2.6 percent compared to fiscal 2009 as a result of lower average
marily from higher shipments for most domestic and international
debt levels.
products as a result of improved market conditions in our profes-
Other Income (Expense), Net. Other income for fiscal 2010 was sional segment. In addition, professional segment sales increased
$7.1 million compared to other expense of $1.8 million in fiscal due to the following other factors:
2009. This increase in other income, net was due mainly to the
•
Higher shipments and demand of worldwide golf maintenance
following factors: equipment and irrigation systems due to new golf development
•
Expenses incurred in fiscal 2009 for several legal matters in the projects in key international markets, particularly in Asia, and
aggregate of $6.8 million that were not duplicated in fiscal 2010. domestic renovation projects, as well as positive customer
•
An increase in income from affiliates of nearly $3 million. response for new products we introduced.
Somewhat offsetting those increases was a decline in financing
•
Increased sales of landscape contractor equipment and grounds
revenue of $1.8 million. products primarily from the successful introduction of new prod-
ucts that were well received by customers.
Provision for Income Taxes. The effective tax rate for fiscal
•
Increased net sales of micro-irrigation products due to continued
2010 was 34.0 percent compared to 34.4 percent in fiscal 2009.
growing market demand, particularly in Eastern Europe, and
The decrease in the effective tax rate was due to a valuation
additional manufacturing capacity that increased production and
allowance recorded in fiscal 2009 of $1.5 million for foreign subsid-
enabled higher sales of our water conserving products for agri-
iaries’ net operating loss carry-forwards that was not duplicated in
cultural markets.
fiscal 2010 and the favorable resolution of a transfer pricing issue.
•
Strong sales of Sitework Systems products as a result of the
This decrease was somewhat offset by the expiration of the
rebound in the rental market and the successful introduction of
domestic research tax credit on December 31, 2009.
new products.
•
Incremental sales of $12 million from acquisitions.
PERFORMANCE BY BUSINESS SEGMENT
•
A weaker average U.S. dollar compared to most other curren-
As more fully described in Note 12 of the Notes to Consolidated
cies in which we transact business.
Financial Statements, we operate in three reportable business seg-
Worldwide net sales for the professional segment in fiscal 2010
ments: Professional, Residential, and Distribution. Our Distribution
were up by 12.4 percent compared to fiscal 2009 primarily from
segment, which consists of our company-owned domestic distribu-
higher shipments for most domestic and international product cate-
torships, has been combined with our corporate activities and is
gories as a result of improved economic conditions and a signifi-
shown as ‘‘Other.’’ Operating earnings for our Professional and
cant reduction in field inventory levels during fiscal 2009 that was
Residential segments are defined as earnings from operations plus
not duplicated in fiscal 2010. In addition, professional segment
other income (expense), net. Operating loss for the Other segment
sales increased due to higher shipments of worldwide golf mainte-
includes earnings (loss) from wholly owned domestic distribution
nance equipment and irrigation systems as customers increased
companies, corporate activities, other income (expense), and inter-
capital spending after delayed investments during fiscal 2009 and
est expense.
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