Toro 2012 Annual Report Download - page 34
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In fiscal 2013, we plan to continue to place emphasis on asset of $4.7 million during fiscal 2011 due to costs associated with a
utilization with a focus on minimizing the amount of working cap- rework for a non-safety quality issue that affected a large number
ital in the supply chain. As of the end of fiscal 2012, our inven- of our residential segment walk power mowers. In addition, our net
tory levels were higher compared to inventory levels as of the earnings per diluted share were benefited by approximately $0.09
end of fiscal 2011 as we prebuilt inventory in anticipation of per share in fiscal 2011 compared to fiscal 2010 as a result of
higher demand for our products that will be subject to Tier 4 reduced shares outstanding from repurchases of our common
emission requirements, which go into effect for products manu- stock.
factured after January 1, 2013. Therefore, as we sell through The following table summarizes our results of operations as a
this prebuilt inventory during fiscal 2013, our average inventory percentage of our consolidated net sales.
levels are expected to be higher in fiscal 2013 compared to our
Fiscal years ended October 31 2012 2011 2010
average inventory levels in 2012; but we expect that inventory
levels as of the end of fiscal 2013 will be lower compared to Net sales 100.0% 100.0% 100.0%
Cost of sales (65.6) (66.2) (65.9)
inventory levels as of the end of fiscal 2012. We anticipate our
average net working capital as a percentage of net sales in fis- Gross margin 34.4 33.8 34.1
SG&A expense (23.9) (24.0) (25.1)
cal 2013 to be slightly lower as compared to fiscal 2012. Consis-
tent with our focus on asset management, we believe our Operating earnings 10.5 9.8 9.0
Interest expense (0.9) (0.9) (1.0)
domestic field inventory levels are currently appropriate and we
Other income, net 0.4 0.3 0.4
anticipate field inventory levels to be approximately equivalent as Provision for income taxes (3.4) (3.0) (2.9)
of the end of fiscal 2013 compared to the field inventory levels
Net earnings 6.6% 6.2% 5.5%
as of the end of fiscal 2012.
We will continue to keep a cautionary eye on the global eco-
Fiscal 2012 Compared With Fiscal 2011
nomic environment, particularly in the United States and Europe,
retail demand, field inventory levels, commodity prices, weather Net Sales. Worldwide net sales in fiscal 2012 were $1,958.7 mil-
conditions, competitive actions, expenses, and other factors identi- lion compared to $1,884.0 million in fiscal 2011, an increase of
fied in Part I, Item 1A, ‘‘Risk Factors’’ of this report, which could 4.0 percent. This net sales improvement was attributable to the
cause our actual results to differ from our anticipated outlook. following factors:
•
Increased shipments of professional segment products largely
RESULTS OF OPERATIONS resulting from the successful introduction of new and enhanced
Fiscal 2012 net earnings were $129.5 million compared to products that were well received by customers and resulted in
$117.7 million in fiscal 2011, an increase of 10.1 percent. Fiscal increased sales, strong demand for domestic golf and landscape
2012 diluted net earnings per share were $2.14, an increase of contractor equipment as customers replaced their aged inven-
15.7 percent from $1.85 per share in fiscal 2011. The primary fac- tory, continued acceptance and demand for our drip irrigation
tors contributing to the net earnings improvement were higher net solutions for agricultural markets, and incremental sales of
sales, an increase in gross profit, leveraging of fixed SG&A costs $22.1 million from acquisitions. Additionally, a weaker average
over higher sales volumes, and a pre-tax charge of $4.7 million U.S. dollar compared to other currencies in which we transact
last fiscal year associated with a rework for a non-safety quality business accounted for approximately $2 million of our overall
issue for our walk power mowers that was not duplicated this fiscal net sales increase.
year. However, our tax rate in fiscal 2012 was higher compared to
•
Higher shipments and demand of walk power mowers, zero-turn
our tax rate in fiscal 2011 due to the expiration of the domestic radius riding mowers, and trimmers in our residential segment
research tax credit on December 31, 2011. Our net earnings per due to positive customer response to newly introduced products
diluted share were also benefited by approximately $0.10 per and favorable weather conditions that drove strong demand.
share in fiscal 2012 compared to fiscal 2011 as a result of reduced Additionally, sales of Pope products in Australia were up due to
shares outstanding from repurchases of our common stock. more favorable weather conditions in fiscal 2012 compared to
Fiscal 2011 net earnings were $117.7 million compared to fiscal 2011.
$93.2 million in fiscal 2010, an increase of 26.2 percent. Fiscal
Somewhat offsetting those sales increases were:
2011 diluted net earnings per share were $1.85, an increase of
•
A decline in overall residential segment net sales primarily from
32.1 percent from $1.40 per share in fiscal 2010. The primary fac-
lower shipments of snow thrower products and service parts due
tors contributing to the net earnings improvement were sales
to reduced demand resulting from the lack of snowfall during the
growth in all of our businesses, leveraging of fixed SG&A costs
2011-2012 winter season.
over higher sales volumes, and a lower effective tax rate, some-
what offset by higher commodity and freight expense that nega-
tively impacted our gross margin rate, as well as a pre-tax charge
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