Toro 2014 Annual Report Download - page 62

for tax purposes. Due to the timing of the acquisition, the initial the dealers and distributors, Red Iron provides loans to the dealers
valuation and subsequent purchase accounting for this acquisition and distributors for the advances paid by Red Iron to the company.
is incomplete at this time. The net amount of new receivables financed for dealers and dis-
tributors under this arrangement during fiscal 2014, 2013, and
2012 was $1,280,505, $1,211,470, and $1,191,343, respectively.
Summarized financial information for Red Iron is presented as
3INVESTMENT IN JOINT VENTURE follows:
In fiscal 2009, the company and TCFIF, a subsidiary of TCF
For the twelve months ended October 31 2014 2013 2012
National Bank, established Red Iron, a joint venture in the form of
a Delaware limited liability company that provides inventory financ- Revenue $22,678 $22,418 $19,765
Net income 16,139 15,776 13,326
ing, including floor plan and open account receivable financing, to
distributors and dealers of the company’s products in the U.S. and
select distributors of the company’s products in Canada. The initial As of October 31 2014 2013
term will continue until October 31, 2017, subject to unlimited auto- Finance receivables, net $290,927 $260,319
matic two-year extensions thereafter. Either the company or TCFIF Other assets 3,659 4,040
may elect not to extend the initial term or any subsequent term by Total liabilities 261,527 234,804
giving one-year notice to the other party. Additionally, in connec-
tion with the joint venture, the company and an affiliate of TCFIF
entered into an arrangement to provide inventory financing to deal-
ers of the company’s products in Canada. 4OTHER INCOME, NET
The company owns 45 percent of Red Iron and TCFIF owns Other income (expense) is as follows:
55 percent of Red Iron. The company accounts for its investment
in Red Iron under the equity method of accounting. Each of the Fiscal years ended October 31 2014 2013 2012
company and TCFIF contributed a specified amount of the esti- Interest income $ 465 $ 447 $ 786
mated cash required to enable Red Iron to purchase the com- Retail financing revenue 1,077 1,093 1,106
pany’s inventory financing receivables and to provide financial sup- Foreign currency exchange rate loss (1,006) (702) (1,786)
port for Red Iron’s inventory financing programs. Red Iron borrows Income from affiliates 7,262 7,097 5,996
the remaining requisite estimated cash utilizing a $450,000 Litigation recovery (settlements), net 127 3,071 (36)
Miscellaneous 789 1,255 1,489
secured revolving credit facility established under a credit agree-
ment between Red Iron and TCFIF. The company’s total invest- Total other income, net $ 8,714 $12,261 $ 7,555
ment in Red Iron as of October 31, 2014 and 2013 was $14,890
and $13,300, respectively. The company has not guaranteed the
GOODWILL AND OTHER INTANGIBLE
outstanding indebtedness of Red Iron. The company has agreed to
repurchase products repossessed by Red Iron and the TCFIF 5ASSETS
Canadian affiliate, up to a maximum aggregate amount of $7,500 Goodwill – The changes in the net carrying amount of goodwill for
in a calendar year. In addition, the company has provided recourse fiscal 2014 and 2013 were as follows:
to Red Iron for certain outstanding receivables, which amounted to
a maximum amount of $470 and $465 as of October 31, 2014 and Professional Residential
2013, respectively. Segment Segment Total
Under the repurchase agreement between Red Iron and the Balance as of October 31, 2012 $80,984 $11,016 $92,000
company, Red Iron provides financing for certain dealers and dis- Translation adjustments (22) (64) (86)
tributors. These transactions are structured as an advance in the Balance as of October 31, 2013 $80,962 $10,952 $91,914
form of a payment by Red Iron to the company on behalf of a Translation adjustments (16) (47) (63)
distributor or dealer with respect to invoices financed by Red Iron. Balance as of October 31, 2014 $80,946 $10,905 $91,851
These payments extinguish the obligation of the dealer or distribu-
tor to make payment to the company under the terms of the appli-
cable invoice. Under separate agreements between Red Iron and
56