Toro 2012 Annual Report Download - page 59
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Please find page 59 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.On October 29, 2010, the company completed the acquisition of The company owns 45 percent of Red Iron and TCFIF owns
certain assets of, and assumed certain liabilities from, one of its 55 percent of Red Iron. The company accounts for its investment
independent U.S. Western-based distribution companies. On in Red Iron under the equity method of accounting. Each of the
April 30, 2010, the company completed the purchase of certain company and TCFIF contributed a specified amount of the esti-
assets of, and assumed certain liabilities for an equipment line of mated cash required to enable Red Iron to purchase the com-
stump grinders, wood chippers, and log splitters for rental centers pany’s inventory financing receivables and to provide financial sup-
and landscape professionals. On December 1, 2009, the com- port for Red Iron’s inventory financing programs. Red Iron borrows
pany’s wholly owned domestic distribution company completed the the remaining requisite estimated cash utilizing a $450,000
acquisition of certain assets of, and assumed certain liabilities secured revolving credit facility established under a credit agree-
from, one of the company’s independent U.S. Midwestern-based ment between Red Iron and TCFIF. The company’s total invest-
distribution companies. The aggregate net purchase price of these ment in Red Iron as of October 31, 2012 and 2011 was $12,545
acquisitions during fiscal 2010 was $9,137, which included cash and $11,640, respectively. The company has not guaranteed the
payments, the issuance of a long-term note, and an estimated outstanding indebtedness of Red Iron. The company has agreed to
earnout consideration. repurchase products repossessed by Red Iron and the TCFIF
The purchase price of these acquisitions was allocated to the Canadian affiliate, up to a maximum aggregate amount of $7,500
identifiable assets acquired and liabilities assumed based on esti- in a calendar year. In addition, the company has provided recourse
mates of their fair value, with the excess purchase price for acqui- to Red Iron for certain outstanding receivables, which amounted to
sitions recorded as goodwill. Additional purchase accounting dis- a maximum amount of $211 and $190 as of October 31, 2012 and
closures have been omitted given the immateriality of these 2011, respectively.
acquisitions as compared to the company’s consolidated financial Under the repurchase agreement between Red Iron and the
condition and results of operations. See Note 5 for further details company, Red Iron provides financing for certain dealers and dis-
related to the acquired intangible assets. tributors. These transactions are structured as an advance in the
form of a payment by Red Iron to the company on behalf of a
distributor or dealer with respect to invoices financed by Red Iron.
These payments extinguish the obligation of the dealer or distribu-
3INVESTMENT IN JOINT VENTURE tor to make payment to the company under the terms of the appli-
cable invoice. Under separate agreements between Red Iron and
In fiscal 2009, the company and TCFIF, a subsidiary of TCF
the dealers and distributors, Red Iron provides loans to the dealers
National Bank, established Red Iron, a joint venture in the form of
and distributors for the advances paid by Red Iron to the company.
a Delaware limited liability company that provides inventory financ-
The net amount of new receivables financed for dealers and dis-
ing, including floor plan and open account receivable financing, to
tributors under this arrangement during fiscal 2012 and 2011 was
distributors and dealers of the company’s products in the U.S. and
$1,191,343 and $1,111,778, respectively.
to select distributors of the company’s products in Canada. Addi-
Summarized financial information for Red Iron is presented as
tionally, in connection with the joint venture, the company and an
follows:
affiliate of TCFIF entered into an arrangement to provide inventory
financing to dealers of the company’s products in Canada. In con-
For the twelve months ended October 31 2012 2011 2010
nection with the establishment of Red Iron, the company termi-
nated its agreement with a third party financing company that pre- Revenue $19,765 $17,116 $ 12,056
Net income 13,326 11,070 5,552
viously provided floor plan financing to dealers of the company’s
products in the U.S. and Canada. On June 6, 2012, the company
and TCFIF entered into amendments to certain of the agreements As of October 31 2012 2011
pertaining to Red Iron, among other things, to extend the initial Finance receivables, net $239,008 $232,600
term of Red Iron until October 31, 2017, subject to unlimited auto- Other assets 1,274 6,960
matic two-year extensions thereafter. Either the company or TCFIF Total liabilities 212,408 213,693
may elect not to extend the initial term or any subsequent term by
giving one-year notice to the other party of its intention not to
extend the term.
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