Toro 2012 Annual Report Download - page 41
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Please find page 41 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.repurchase authorization has no expiration date but may be termi- We also enter into limited inventory repurchase agreements with
nated by our Board of Directors at any time. We expect to con- third party financing companies and Red Iron for receivables
tinue repurchasing shares of our common stock in fiscal 2013 financed by them. As of October 31, 2012, we were contingently
depending upon market conditions and our cash position. liable to repurchase up to a maximum amount of $10.1 million of
The following table provides information with respect to repur- inventory related to receivables under these financing arrange-
chases of our common stock during the past three fiscal years. ments. We have repurchased immaterial amounts of inventory from
third party financing companies and Red Iron over the past three
fiscal years. However, a decline in retail sales or financial difficul-
(Dollars in millions, except per share data) ties of our distributors or dealers could cause this situation to
Fiscal years ended October 31 2012 2011 2010 change and thereby require us to repurchase financed product up
Shares of common stock purchased
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2,591,039 4,592,760 5,356,948 to but not exceeding our limited obligation, which could have an
Cost to repurchase common stock $ 92.7 $ 129.9 $ 135.8 adverse effect on our operating results.
Average price paid per share $ 35.78 $ 28.30 $ 25.35 We continue to provide financing in the form of open account
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Does not include shares of our common stock surrendered by employees to terms to home centers and mass retailers; general line irrigation
satisfy minimum tax withholding obligations upon vesting of restricted stock dealers; international distributors and dealers other than the Cana-
granted under our stock-based compensation plans. dian distributors and dealers to whom Red Iron provides financing
arrangements; government customers; and rental companies.
Customer Financing Arrangements
End-User Financing. We have agreements with third party
Wholesale Financing. In fiscal 2009, we established our Red financing companies to provide lease-financing options to golf
Iron joint venture with TCFIF. The purpose of Red Iron is to pro- course and sports fields and grounds equipment customers in the
vide inventory financing, including floor plan and open account U.S. and Europe. The purpose of these agreements is to increase
receivable financing, to distributors and dealers of our products in sales by giving buyers of our products alternative financing options
the U.S. and to select distributors of our products in Canada to when purchasing our products. We have no contingent liabilities for
enable our distributors and dealers to carry representative invento- residual value or credit collection risk under these agreements with
ries of our products. Under a separate arrangement, TCFCFC pro- third party financing companies.
vides inventory financing to dealers of our products in Canada. From time to time, we enter into agreements where we provide
Under these financing arrangements, down payments are not recourse to third party finance companies in the event of default by
required and, depending on the finance program for each product the customer for lease payments to the third party finance com-
line, finance charges are incurred by us, shared between us and pany. Our maximum exposure for credit collection under those
the distributor and/or the dealer, or paid by the distributor or arrangements as of October 31, 2012 was $2.9 million.
dealer. Red Iron retains a security interest in the distributors’ and Termination or any material change to the terms of our end-user
dealers’ financed inventories, and those inventories are monitored financing arrangements, availability of credit for our customers,
regularly. Floor plan terms to the distributors and dealers require including any delay in securing replacement credit sources, or sig-
payment as the equipment, which secures the indebtedness, is nificant financed product repurchase requirements could have a
sold to customers, or when payment terms become due, whichever material adverse impact on our future operating results.
occurs first. Rates are generally indexed to LIBOR plus a fixed
percentage that differs based on whether the financing is for a Distributor Financing. From time to time, we enter into
distributor or dealer. Rates may also vary based on the product long-term loan agreements with some distributors. These transac-
that is financed. Red Iron financed $1,191.3 million of new receiv- tions are used for expansion of the distributors’ businesses, acqui-
ables for dealers and distributors during fiscal 2012, of which sitions, refinancing working capital agreements, or facilitation of
$239.8 million was outstanding as of October 31, 2012. ownership changes. As of October 31, 2012, we had an outstand-
Some independent international dealers continue to finance their ing note receivable in the aggregate of $1.1 million from one distri-
products with a third party financing company. This third party bution company, which is included in other current and long-term
financing company purchased $23.7 million of receivables from us assets on our consolidated balance sheets.
during fiscal 2012, of which $9.7 million was outstanding as of
October 31, 2012.
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