Toro 2015 Annual Report Download - page 41

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Operating Loss. Operating loss for the other segment in fiscal working capital as a percentage of net sales in fiscal 2016 to
2015 increased by 5.3 percent compared to fiscal 2014. This loss decrease as compared to fiscal 2015 as we continue to transition
increase was primarily attributable to an increase in interest certain receivables to our Red Iron joint venture. Additionally, we
expense and higher administrative expenses. also anticipate average inventory levels to be lower in fiscal 2016
Operating loss for the other segment in fiscal 2014 increased by compared to fiscal 2015 due to expected improvements in our sup-
7.8 percent compared to fiscal 2013. This loss increase was prima- ply chain from increased focus and efforts on reducing working
rily attributable to higher incentive compensation expense, higher capital.
foreign currency exchange rate losses, and recovery for a litigation
settlement in fiscal 2013 that was not duplicated in fiscal 2014. Capital Expenditures and
Other Long-Term Assets
FINANCIAL CONDITION Fiscal 2015 capital expenditures of $56.4 million were lower by
$14.8 million compared to fiscal 2014. This decrease was primarily
Working Capital attributable to the construction in fiscal 2014 for our expanded new
During fiscal 2015, our average net working capital (accounts corporate facility located in Bloomington, Minnesota, partially offset
receivable plus inventory less trade payables) as a percentage of by capital expenditures in fiscal 2015 for the renovation of our
net sales increased primarily from higher average inventory levels. original corporate facility to accommodate additional expansion
As of the end of fiscal 2015, our average net working capital needs for our product development and test capacities. Capital
increased to 16.0 percent compared to 15.1 percent as of the end expenditures for fiscal 2016 are planned to be approximately
of fiscal 2014. $70 million as we expect to continue the renovation of our original
The following table highlights several key measures of our work- corporate facility to accommodate additional expansion needs for
ing capital performance. our product development and test capacities. During fiscal 2016,
we also plan to invest in new product tooling, new technology in
(Dollars in millions) production processes and equipment, replacement production
Fiscal years ended October 31 2015 2014 equipment, and investments in new and existing facilities.
Average cash and cash equivalents $108.7 $156.9 Long-term assets as of October 31, 2015 were $593.0 million
Average receivables, net 219.9 208.1
Average inventories, net 356.2 306.2 compared to $368.4 million as of October 31, 2014, an increase of
Average accounts payable 193.9 185.2 $224.6 million. This increase was mainly attributable to the addition
Average days outstanding for receivables 33.6 35.0 of intangible assets and goodwill from the acquisition of the BOSS
Average inventory turnover (times) 4.36 4.57 business. Included in long-term assets as of October 31, 2015 was
goodwill in the amount of $195.5 million. Based on our annual
The following factors impacted our working capital: impairment analysis, we determined there was no goodwill impair-
•
Average net receivables increased by 5.7 percent in fiscal 2015 ment for any of our reporting units as their related fair values were
compared to fiscal 2014 as a result of higher sales volumes and substantially in excess of their carrying values.
incremental receivables from the acquisition of the BOSS busi-
ness. Our average days outstanding for receivables decreased Cash Flow
to 33.6 days in fiscal 2015 compared to 35.0 days in fiscal 2014. Cash flows provided by (used in) operating, investing, and financ-
•
Average inventories increased by 16.3 percent in fiscal 2015 ing activities during the past three fiscal years are shown in the
compared to fiscal 2014. Inventory levels as of the end of fiscal following table.
2015 compared to the end of fiscal 2014 were up by $59.9 mil-
lion, or 21.8 percent, due to incremental inventory of $17.2 mil- Cash Provided by
lion from the acquisition of the BOSS business, higher inventory (Used in)
(Dollars in millions)
levels of snow thrower products in anticipation of strong sea- Fiscal years ended October 31 2015 2014 2013
sonal demand, and increased inventory of certain residential Operating activities $ 236.9 $182.4 $ 221.9
segment mowers and landscape contractor equipment as we Investing activities (250.3) (65.7) (44.8)
Financing activities (173.4) 17.0 (118.3)
built product earlier compared to last fiscal year.
Effect of exchange rates on cash (1.8) (1.8) (1.7)
•
Average accounts payable increased by 4.7 percent in fiscal
Net cash (decrease) increase $(188.6) $131.9 $ 57.1
2015 compared to fiscal 2014 mainly due to higher volume of
purchases from increased sales and demand in fiscal 2015 com- Cash and cash equivalents as of fiscal year end $ 126.3 $314.9 $ 183.0
pared to fiscal 2014.
In fiscal 2016, we plan to place increased emphasis on improv-
ing asset utilization with a focus on reducing the amount of work-
ing capital in the supply chain. We anticipate our average net
35