Toro 2013 Annual Report Download - page 16

(i) product life-cycle laws, rules, or regulations, which are Commercial Finance Canada, Inc. (‘‘TCFCFC’’) provides inventory
intended to reduce waste and environmental and human health financing to dealers of our products in Canada. Under these
impact, and require manufacturers to collect, dispose, and financing arrangements, down payments are not required and,
recycle certain products, including some of our products, at the depending on the finance program for each product line, finance
end of their useful life, including the Waste Electrical and Elec- charges are incurred by us, shared between us and the distributor
tronic Equipment (‘‘WEEE’’) directive or similar product life-cycle and/or the dealer, or paid by the distributor or dealer. Red Iron
management laws, rules, or regulations, which mandate the retains a security interest in the distributors’ and dealers’ financed
labeling, collection, and disposal of specified waste electrical and inventories, and those inventories are monitored regularly. Floor
electronic equipment, including some of our products; (ii) the plan terms to the distributors and dealers require payment as the
Restriction on the use of Hazardous Substances (‘‘RoHS’’) direc- equipment, which secures the indebtedness, is sold to customers
tive or similar substance level laws, rules, or regulations, which or when payment terms become due, whichever occurs first. Rates
restrict the use of several specified hazardous materials in the are generally indexed to LIBOR plus a fixed percentage that differs
manufacture of specific types of electrical and electronic equip- based on whether the financing is for a distributor or dealer. Rates
ment, including some of our products; (iii) country of origin laws, may also vary based on the product that is financed.
rules, or regulations, which require certification of the geographic We continue to provide financing in the form of open account
origin of our finished goods products and/or components used in terms directly to home centers and mass retailers; general line
our products through documentation and/or physical markings, irrigation dealers; international distributors and dealers, other than
as applicable; and (iv) energy efficiency laws, rules, or regula- the Canadian distributors and dealers to whom Red Iron provides
tions, which are intended to reduce the use and inefficiencies financing arrangements; micro-irrigation dealers and distributors;
associated with energy and natural resource consumption and government customers; and rental companies. Some independent
require specified efficiency ratings and capabilities for certain international dealers continue to finance their products with third
products, including some of our products. party sources.
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Our products, when used by residential customers, may be sub- End-User Financing. We have agreements with third party
ject to various federal, state, and international laws, rules, and financing companies to provide lease-financing options to golf
regulations that are designed to protect consumers, including course and sports fields and grounds equipment customers in the
rules and regulations of the United States Consumer Product U.S and select countries in Europe. The purpose of these agree-
Safety Commission. ments is to increase sales by giving buyers of our products alter-
Although we believe that we are in substantial compliance with native financing options when purchasing our products.
currently applicable laws, rules, and regulations, we are unable to We also have agreements with third party financing companies
predict the ultimate impact of adopted or future laws, rules, and to provide financing programs under both generic and private label
regulations on our business. Such laws, rules, or regulations may programs in the U.S. and Canada. These programs, offered prima-
cause us to incur significant expenses to achieve or maintain com- rily to Toro and Exmark dealers, provide end-user customers
pliance, may require us to modify our products, may adversely revolving and installment lines of credit for Toro and Exmark prod-
affect the price of or demand for some of our products, and may ucts, parts, and services.
ultimately affect the way we conduct our operations. Failure to
Distributor Financing. Occasionally, we enter into long-term
comply with these current or future regulations could lead to fines
loan agreements with some distributors. These transactions are
and other penalties, including restrictions on the importation of our
used for expansion of the distributors’ businesses, acquisitions,
products into, or the sale of our products in, one or more jurisdic-
refinancing working capital agreements, or ownership transitions.
tions until compliance is achieved.
As of October 31, 2013, we had outstanding note receivables from
We are also involved in the evaluation and clean-up of a limited
two companies in the aggregate amount of $1.1 million.
number of properties currently and previously owned. We do not
expect that these matters will have a material adverse effect on
Employees
our consolidated financial position or results of operations.
During fiscal 2013, we employed an average of 5,002 employees.
The total number of employees as of October 31, 2013 was 5,057.
Customer Financing
We consider our employee relations to be good. Three collective
Wholesale Financing. In fiscal 2009, we established Red Iron
bargaining agreements, each expiring in May 2014, October 2014,
Acceptance, LLC (‘‘Red Iron’’), as a joint venture with TCF Inven-
and October 2016, cover approximately 16 percent of our total
tory Finance, Inc. (‘‘TCFIF’’), a subsidiary of TCF National Bank.
employees. We also retain temporary and seasonal workers,
The purpose of Red Iron is to provide inventory financing, including
mainly at our distribution centers and manufacturing facilities, as
floor plan and open account receivable financing, to distributors
well as part-time workers, independent contractors, and
and dealers of our products in the U.S. and select distributors of
our products in Canada. Under a separate arrangement, TCF consultants.
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