Toro 2013 Annual Report Download - page 41

Cash Flows From Operating Activities. Our primary source of the named borrowers on the revolving credit facility, the aggregate
funds is cash generated from operations. In fiscal 2013, cash pro- maximum principal amount available under the facility may be
vided by operating activities increased $36.1 million, or 19.4 per- increased by an amount up to $100.0 million in aggregate. Funds
cent, from fiscal 2012. This improvement was due to a decrease in are available under the revolving credit facility for working capital,
inventory levels and higher net earnings, somewhat offset by an capital expenditures, and other lawful purposes, including, but not
increase in accounts receivable. limited to, acquisitions and stock repurchases. Interest expense on
In fiscal 2012, cash provided by operating activities increased this credit line is determined based on a LIBOR rate (or other rates
$71.9 million, or 63.2 percent, from fiscal 2011. This increase was quoted by the Administrative Agent, Bank of America, N.A.) plus a
due mainly to an increase in accounts payable and accrued liabili- basis point spread defined in the credit agreement. In addition, our
ties as of the end of fiscal 2012 compared to the end of fiscal non-U.S. operations maintain unsecured short-term lines of credit
2011, as well as higher net earnings. in the aggregate amount of approximately $12.5 million. These
facilities bear interest at various rates depending on the rates in
Cash Flows From Investing Activities. Capital expenditures their respective countries of operation. As of October 31, 2013, we
and acquisitions are a significant use of our capital resources. had no outstanding short-term debt under these lines of credit. As
These investments are intended to enable sales growth for of October 31, 2013, we had $14.6 million of outstanding letters of
expanding markets and in new markets, help us to meet product credit and $147.9 million of unutilized availability under our credit
demand, and increase our manufacturing efficiencies and capacity. agreements. Additionally, as of October 31, 2013, we had
Cash used in investing activities in fiscal 2013 decreased $2.6 mil- $223.5 million outstanding in long-term debt that includes $100 mil-
lion, or 5.4 percent, from fiscal 2012 due to lower amounts of cash lion in aggregate principal amount of 7.8% debentures due
utilized for acquisitions, somewhat offset by an increase in June 15, 2027 and $125.0 million in aggregate principal amount of
purchases of property, plant, and equipment. 6.625% senior notes due May 1, 2037.
Cash used in investing activities was down 31.7 percent in fiscal Our revolving credit facility contains standard covenants, includ-
2012 compared to fiscal 2011 due mainly to lower levels of ing, without limitation, financial covenants, such as the mainte-
purchases of property, plant, and equipment and cash used for nance of minimum interest coverage and maximum debt to earn-
acquisitions. ings ratios; and negative covenants, which among other things,
Cash Flows From Financing Activities. Cash used in financing limit loans and investments, disposition of assets, consolidations
activities increased $25.3 million, or 27.1 percent, in fiscal 2013 and mergers, transactions with affiliates, restricted payments, con-
compared to fiscal 2012 due to higher amounts of cash paid for tingent obligations, liens, and other matters customarily restricted
dividends and repurchases of our common stock, as well as lower in such agreements. Most of these restrictions are subject to cer-
amounts of proceeds from exercises of stock options. tain minimum thresholds and exceptions. Under the revolving credit
Cash used in financing activities decreased by 33.6 percent in facility, we are not limited in the amount for payments of cash
fiscal 2012 compared to fiscal 2011. This decrease was primarily dividends and stock repurchases as long as our debt to EBITDA
attributable to lower amounts of cash utilized to repurchase our ratio from the previous quarter compliance certificate is less than
common stock in fiscal 2012 compared to fiscal 2011, plus an or equal to 2.75; however, we are limited to $50 million per fiscal
increase in proceeds from exercises of stock options and tax bene- year if our debt to EBITDA ratio from the previous quarter compli-
fits from stock-based awards. ance certificate is greater than 2.75. As of October 31, 2013, we
are not limited in the amount for payments of cash dividends and
Credit Lines and Other Capital Resources stock repurchases as our debt to EBITDA ratio was below 2.75.
Our businesses are seasonal, with accounts receivable balances We were in compliance with all covenants related to our credit
historically increasing between January and April, as a result of agreement for our revolving credit facility as of October 31, 2013,
typically higher sales volumes and extended payment terms made and we expect to be in compliance with all covenants during fiscal
available to our customers, and typically decreasing between May 2014. If we were out of compliance with any debt covenant
and December when payments are received. The seasonality of required by this credit agreement following the applicable cure
production and shipments causes our working capital requirements period, the banks could terminate their commitments unless we
to fluctuate during the year. Seasonal cash requirements are could negotiate a covenant waiver from the banks. In addition, our
financed from operations, cash on hand, and with short-term long-term senior notes and debentures could become due and
financing arrangements, including our $150.0 million unsecured payable if we were unable to obtain a covenant waiver or refinance
senior four-year revolving credit facility that expires in July 2015. our short-term debt under our credit agreement. If our credit rating
Included in our $150.0 million revolving credit facility is a $20.0 mil- falls below investment grade and/or our average debt to EBITDA
lion sublimit for standby letters of credit and a $20.0 million sub- ratio rises above 2.00, the basis point spread over LIBOR (or other
limit for swingline loans. At our election, and with the approval of rates quoted by the Administrative Agent, Bank of America, N.A.)
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