Toro 2012 Annual Report Download - page 14
Download and view the complete annual report
Please find page 14 of the 2012 Toro annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.working capital levels, which typically increase in the first half of Toro and Exmark landscape contractor products are also sold
our fiscal year and decrease in the second half of our fiscal year. directly to dealers in certain regions of the United States.
Seasonal cash requirements of our business are financed from a Residential products, such as walk power mowers, riding prod-
combination of cash balances, cash flows from operations, and our ucts, and snow throwers, are generally sold directly to home cen-
bank credit lines. ters, dealers, hardware retailers, and mass retailers. In certain
The following table shows total consolidated net sales and net markets, these same products are sold to distributors for resale to
earnings for each fiscal quarter as a percentage of the total fiscal hardware retailers and dealers. Home solutions products are pri-
year. marily sold directly to home centers, mass retailers, and hardware
retailers. We also sell selected residential products over the
Fiscal 2012 Fiscal 2011 Internet. Internationally, residential products are sold directly to
Net Net Net Net dealers and mass merchandisers in Australia, Canada, and select
Quarter Sales Earnings Sales Earnings countries in Europe. In most other countries, residential products
First 22% 16% 20% 15% are mainly sold to distributors for resale to dealers and mass
Second 35 53 33 51 retailers.
Third 26 31 27 30
During fiscal 2012, we owned two domestic distribution compa-
Fourth 17 0 20 4
nies. Our primary purposes in owning domestic distributorships are
to facilitate ownership transfers while improving operations and to
Effects of Weather test and deploy new strategies and business practices that could
From time to time, weather conditions in particular geographic be replicated by our independent distributors.
regions or markets may adversely or positively affect sales of Our distribution systems are intended to assure quality of sales
some of our products and field inventory levels and result in a and market presence, as well as to provide effective after-pur-
negative or positive impact on our future net sales. If the percent- chase service and support. We believe our distribution network
age of our net sales from outside the United States increases, our provides a competitive advantage in marketing and selling our
dependency on weather in any one part of the world decreases. products, in part, because our primary distribution network is
Nonetheless, weather conditions could materially affect our future focused on selling and marketing our products, and because of the
net sales. long-term relationships they have established and experienced per-
sonnel they utilize to deliver high levels of customer satisfaction.
Working Capital Our current marketing strategy is to maintain distinct brands and
We fund our operations through a combination of cash and cash
brand identification for Toro, Exmark, Irritrol, Hayter, Pope,
equivalents, cash flows from operations, short-term borrowings
Unique Lighting Systems, Lawn-Boy, and Lawn Genie
under our credit facilities, and long-term debt. Cash management
products.
is centralized and intercompany financing is used, wherever possi-
We advertise our residential products during appropriate sea-
ble, to provide working capital to wholly owned subsidiaries as
sons throughout the year mainly on television, on the radio, in
needed. In addition, our credit facilities are available for additional
print, and via the Internet. Professional products are advertised
working capital needs, acquisitions, or other investment
mainly in print and through direct mail programs, as well as on the
opportunities.
Internet. Most of our advertising emphasizes our brand names.
Advertising is purchased by us as well as through cooperative pro-
Distribution and Marketing
grams with distributors, dealers, hardware retailers, home centers,
We market the majority of our products through approximately 40
and mass retailers.
domestic and 120 international distributors, as well as a large num-
ber of outdoor power equipment dealers, hardware retailers, home Customers
centers, and mass retailers in more than 90 countries worldwide.
Overall, we believe that in the long-term we are not dependent on
Professional products are sold to distributors primarily for resale
any single customer; however, the residential segment of our busi-
to golf courses, sports fields, industrial facilities, contractors, and
ness is dependent on The Home Depot as a customer, which
government customers, and in some markets for resale to dealers.
accounted for approximately 11 percent of our total consolidated
We also sell some professional segment products directly to gov-
gross sales in both fiscal 2012 and 2011. While the loss of any
ernment customers and rental companies, as well as to end-users
substantial customer, including The Home Depot, could have a
in certain international markets. Select residential/commercial irri-
material adverse short-term impact on our business, we believe
gation and lighting products are sold to professional irrigation and
that our diverse distribution channels and customer base should
lighting distributors, and certain retail irrigation products are sold
reduce the long-term impact of any such loss.
directly to home centers. Products for the rental and construction
market are sold to directly to dealers and large rental companies.
8