Toro 2014 Annual Report Download - page 17

chemicals, or ban or restrict the use of certain chemicals; equipment, which secures the indebtedness, is sold to customers
(iv) country of origin laws, rules, or regulations, which require or when payment terms become due, whichever occurs first. Rates
certification of the geographic origin of our finished goods prod- are generally indexed to LIBOR plus a fixed percentage that differs
ucts and/or components used in our products through documen- based on whether the financing is for a distributor or dealer. Rates
tation and/or physical markings, as applicable; (v) energy effi- may also vary based on the product that is financed.
ciency laws, rules, or regulations, which are intended to reduce We continue to provide financing in the form of open account
the use and inefficiencies associated with energy and natural terms directly to home centers and mass retailers; general line
resource consumption and require specified efficiency ratings irrigation dealers; international distributors and dealers other than
and capabilities for certain products, including some of our prod- the Canadian distributors and dealers to whom Red Iron provides
ucts; and (vi) outdoor noise laws, which are intended to reduce financing arrangements; micro-irrigation dealers and distributors;
noise emissions in the environment from outdoor equipment. government customers; rental companies; and distributors and
•
Our products, when used by residential customers, may be sub- dealers in our recently acquired BOSS professional snow and ice
ject to various federal, state, and international laws, rules, and management business until such time as these customers may
regulations that are designed to protect consumers, including transition to our Red Iron financing joint venture. Some indepen-
rules and regulations of the United States Consumer Product dent international dealers continue to finance their products with
Safety Commission. third party sources.
Although we believe that we are in substantial compliance with End-User Financing. We have agreements with third party
currently applicable laws, rules, and regulations, we are unable to financing companies to provide lease-financing options to golf
predict the ultimate impact of adopted or future laws, rules, and course and sports fields and grounds equipment customers in the
regulations on our business. Such laws, rules, or regulations may U.S and select countries in Europe. The purpose of these agree-
cause us to incur significant expenses to achieve or maintain com- ments is to increase sales by giving buyers of our products alter-
pliance, may require us to modify our products, may adversely native financing options when purchasing our products.
affect the price of or demand for some of our products, and may We also have agreements with third party financing companies
ultimately affect the way we conduct our operations. Failure to to provide financing programs under both generic and private label
comply with these current or future laws, rules, or regulations could programs in the U.S. and Canada. These programs, offered prima-
lead to fines and other penalties, including restrictions on the rily to Toro and Exmark dealers, provide end-user customers
importation of our products into, or the sale of our products in, one revolving and installment lines of credit for Toro and Exmark prod-
or more jurisdictions until compliance is achieved. ucts, parts, and services.
We are also involved in the evaluation and clean-up of a limited
Distributor Financing. Occasionally, we enter into long-term
number of properties currently and previously owned. We do not
loan agreements with some distributors. These transactions are
expect that these matters will have a material adverse effect on
used for expansion of the distributors’ businesses, acquisitions,
our consolidated financial position or results of operations.
refinancing working capital agreements, or ownership transitions.
As of October 31, 2014, we had an outstanding note receivable
Customer Financing
from one company in the aggregate amount of $1.1 million.
Wholesale Financing. We are party to a joint venture with TCF
Inventory Finance, Inc. (‘‘TCFIF’’), a subsidiary of TCF National
Employees
Bank, established as Red Iron Acceptance, LLC (‘‘Red Iron’’). The
During fiscal 2014, we employed an average of 5,979 employees.
purpose of Red Iron is to provide inventory financing, including
The total number of employees as of October 31, 2014 was 6,134.
floor plan and open account receivable financing, to distributors
We consider our employee relations to be good. As of October 31,
and dealers of our products in the U.S. and select distributors of
2014, three collective bargaining agreements, each expiring in
our products in Canada. Under a separate arrangement, TCF
October 2016, October 2017, and May 2018, cover approximately
Commercial Finance Canada, Inc. (‘‘TCFCFC’’) provides inventory
15 percent of our total employees. Subsequent to fiscal 2014, as a
financing to dealers of our products in Canada. Under these
result of our acquisition of the BOSS business, we recently negoti-
financing arrangements, down payments are not required, and
ated a collective bargaining agreement for our operations in Iron
depending on the finance program for each product line, finance
Mountain, Michigan that will expire in March 2018. We also retain
charges are incurred by us, shared between us and the distributor
temporary and seasonal workers, mainly at our distribution centers
and/or the dealer, or paid by the distributor or dealer. Red Iron
and manufacturing facilities, as well as part-time workers, indepen-
retains a security interest in the distributors’ and dealers’ financed
dent contractors, and consultants.
inventories, and those inventories are monitored regularly. Floor
plan terms to the distributors and dealers require payment as the
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