Toro 2011 Annual Report Download - page 39

property, plant, and equipment, mainly for our new manufacturing such agreements. Most of these restrictions are subject to certain
facility in Romania, and higher amounts of cash utilized for acquisi- minimum thresholds and exceptions. Under the revolving credit
tions. Those increases were somewhat offset by distributions we facility, we are not limited to payments of cash dividends and stock
received in fiscal 2011 from our Red Iron joint venture whereas in repurchases as long as our debt to EBITDA ratio from the previous
fiscal 2010, we utilized cash for our investment in our Red Iron quarter compliance certificate is less than or equal to 2.75; how-
joint venture. ever, we are limited to $50 million per fiscal year if our debt to
EBITDA ratio from the previous quarter compliance certificate is
Cash Flows From Financing Activities. Cash used in financing greater than 2.75. As of October 31, 2011, we are not limited to
activities decreased slightly by 1.5 percent in fiscal 2011 compared payments of cash dividends and stock repurchases as our debt to
to fiscal 2010. This decrease was primarily attributable to lower EBITDA ratio was below 2.75. We were also in compliance with all
levels of funds used to repurchase our common stock in fiscal covenants related to our credit agreement for our revolving credit
2011 compared to fiscal 2010. facility as of October 31, 2011, and we expect to be in compliance
with all covenants during fiscal 2012. If we were out of compliance
Credit Lines and Other Capital Resources with any debt covenant required by this credit agreement following
Our businesses are seasonal, with accounts receivable balances the applicable cure period, the banks could terminate their commit-
historically increasing between January and April, as a result of ments unless we could negotiate a covenant waiver from the
higher sales volumes and extended payment terms made available banks. In addition, our long-term senior notes and debentures
to our customers and decreasing between May and December could become due and payable if we were unable to obtain a
when payments are received. The seasonality of production and covenant waiver or refinance our short-term debt under our credit
shipments causes our working capital requirements to fluctuate agreement. If our credit rating falls below investment grade and/or
during the year. Seasonal cash requirements are financed from our average debt to EBITDA ratio rises above 2.00, the basis point
operations, cash on hand, and with short-term financing arrange- spread over LIBOR (or other rates quoted by the Administrative
ments, including our $150.0 million unsecured senior four-year Agent, Bank of America, N.A.) we currently pay on our outstanding
revolving credit facility that expires in July 2015, which replaced short-term debt under the credit agreement would increase. How-
our prior revolving facility that was scheduled to mature in January ever, the credit commitment could not be cancelled by the banks
2012. Included in our $150.0 million revolving credit facility is a based solely on a ratings downgrade. Our debt rating for long-term
sublimit for standby letters of credit and a sublimit for swingline unsecured senior, non-credit enhanced debt was unchanged dur-
loans. At our election and with the approval of the named borrow- ing fiscal 2011 by Standard and Poor’s Ratings Group at BBB- and
ers on the revolving credit facility, the aggregate maximum princi- by Moody’s Investors Service at Baa3.
pal amount available under the facility may be increased by an
amount up to $100.0 million in aggregate. Funds are available Share Repurchase Plan
under the revolving credit facility for working capital, capital During fiscal 2011, we continued repurchasing shares of our com-
expenditures, and other lawful purposes, including, but not limited mon stock in the open market, thereby reducing our shares out-
to, acquisitions and stock repurchases. Interest expense on this standing. In addition, our repurchase programs provided shares for
credit line is determined based on a LIBOR rate (or other rates use in connection with our equity compensation programs. As of
quoted by the Administrative Agent, Bank of America, N.A.) plus a October 31, 2011, 2,032,858 shares remained available for repur-
basis point spread defined in the credit agreement. In addition, our chase under our Board authorization.
non-U.S. operations maintain unsecured short-term lines of credit The following table provides information with respect to repur-
in the aggregate amount of approximately $15 million. These facili- chases of our common stock during the past three fiscal years.
ties bear interest at various rates depending on the rates in their
respective countries of operation. As of October 31, 2011, we had (Dollars in millions, except per share data)
no outstanding short-term debt under these lines of credit. As of Fiscal years ended October 31 2011 2010 2009
October 31, 2011, we also had $16 million of outstanding letters of Shares of common stock purchased 2,296,380 2,678,474 3,316,536
credit. As of October 31, 2011, we had $148.8 million of unutilized Cost to repurchase common stock $ 129.9 $ 135.8 $ 115.3
availability under our credit agreements. Average price paid per share $ 56.59 $ 50.69 $ 34.76
The revolving credit facility contains standard covenants, includ- We expect to continue repurchasing shares of our common
ing, without limitation, financial covenants, such as the mainte- stock in fiscal 2012 depending upon market conditions and our
nance of minimum interest coverage and maximum debt to earn- cash position.
ings ratios; and negative covenants, which among other things,
limit loans and investments, disposition of assets, consolidations
and mergers, transactions with affiliates, restricted payments, con-
tingent obligations, liens and other matters customarily restricted in
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