Toro 2014 Annual Report Download - page 63

Other Intangible Assets – The components of other intangible credit and a sublimit for swingline loans of $20,000. At the election
assets were as follows: of the company, and the approval of the named borrowers on the
revolving credit facility, the aggregate maximum principal amount
available under the facility may be increased by an amount up to
Estimated Gross
Life Carrying Accumulated $100,000 in aggregate. Funds are available under the revolving
October 31, 2014 (Years) Amount Amortization Net credit facility for working capital, capital expenditures, and other
Patents 1.5 - 13 $10,711 $ (8,942) $ 1,769 lawful purposes, including, but not limited to, acquisitions and stock
Non-compete agreements 1.5 - 10 7,039 (5,315) 1,724 repurchases. Interest expense on this credit line is determined
Customer-related 1.5 - 13 8,650 (5,517) 3,133 based on a LIBOR rate (or other rates quoted by the Administra-
Developed technology 1.5 - 10 28,841 (16,869) 11,972 tive Agent, Bank of America, N.A.) plus a basis point spread
Trade names 1.5 - 5 1,515 (1,165) 350
defined in the credit agreement. The company’s non-U.S. opera-
Other 800 (800) –
tions also maintain unsecured short-term lines of credit in the
Total amortizable 57,556 (38,608) 18,948
aggregate amount of $13,257. These facilities bear interest at vari-
Non-amortizable – trade ous rates depending on the rates in their respective countries of
names 4,881 – 4,881
operation. Under all these lines of credit, the company had
Total other intangible $20,818 outstanding as of October 31, 2014. The weighted-aver-
assets, net $62,437 $(38,608) $23,829
age interest rate on outstanding short-term debt as of October 31,
2014 was 1.95%. There was no outstanding debt under the com-
Estimated Gross pany’s lines of credit as of October 31, 2013.
Life Carrying Accumulated The credit agreement that contains the revolving credit facility
October 31, 2013 (Years) Amount Amortization Net and term loan, which is described in more detail in Note 7, con-
Patents 1.5 - 13 $10,213 $ (8,537) $ 1,676 tains standard covenants, including, without limitation, financial
Non-compete agreements 1.5 - 10 6,849 (4,488) 2,361
covenants, such as the maintenance of minimum interest coverage
Customer-related 1.5 - 13 8,654 (4,660) 3,994
Developed technology 1.5 - 10 28,224 (13,478) 14,746 and maximum debt to earnings ratios; and negative covenants,
Trade names 1.5 - 5 1,515 (865) 650 which among other things, limit loans and investments, disposition
Other 800 (800) – of assets, consolidations and mergers, transactions with affiliates,
Total amortizable 56,255 (32,828) 23,427 restricted payments, contingent obligations, liens, and other mat-
Non-amortizable – trade ters customarily restricted in such agreements. Most of these
names 4,881 – 4,881 restrictions are subject to certain minimum thresholds and excep-
Total other intangible tions. Under the revolving credit facility the company entered into
assets, net $61,136 $(32,828) $28,308 in October 2014, the company is not limited in the amount for
payments of cash dividends and stock repurchases as long as the
The change in gross carrying amount of other intangible assets debt to earnings before interest, tax, depreciation, and amortization
of $1,301 from October 31, 2014 compared to October 31, 2013 (‘‘EBITDA’’) ratio from the previous quarter compliance certificate is
was the result of intangible assets acquired from a company, dis- less than or equal to 3.25, provided that immediately after giving
closed in Note 2, and changes in foreign currency exchange rates. effect of any such proposed action, no default or event of default
Amortization expense for intangible assets for the fiscal years would exist. Under the prior revolving credit facility that was sched-
ended October 31, 2014, 2013, and 2012 was $6,002, $5,769, and uled to mature in July 2015, the company was not limited in the
$6,008, respectively. Estimated amortization expense for the suc- amounts for payments of cash dividends and stock repurchases as
ceeding fiscal years is as follows: 2015, $5,610; 2016, $5,091; long as the debt to EBITDA ratio from the previous quarter compli-
2017, $4,196; 2018, $2,168; 2019, $1,191; and after 2019, $692. ance certificate is less than or equal to 2.75; however, the com-
pany was limited to $50,000 per fiscal year if the debt to EBITDA
ratio from the previous quarter compliance certificate was greater
than 2.75. In fiscal 2014, 2013 and 2012, the company was not
6SHORT-TERM CAPITAL RESOURCES limited in the amount for payments of cash dividends and stock
As of October 31, 2014, the company had a $150,000 unsecured repurchases as its debt to EBITDA ratio was below the thresholds.
senior five-year revolving credit facility that expires in Octo- The company was in compliance with all covenants related to the
ber 2019, which replaced the prior revolving credit facility that was lines of credit described above as of October 31, 2014 and 2013.
scheduled to mature in July 2015. Included in this $150,000 revolv-
ing credit facility is a sublimit of $20,000 for standby letters of
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