Toro 2015 Annual Report Download - page 61

in selling, general, and administrative expense. The company also
capitalized $373 of debt issuance costs in other assets related to
2ACQUISITIONS AND DIVESTITURE the $130,000 term loan, which will be amortized over the term of
the loan.
On November 14, 2014, during the first quarter of fiscal 2015, the Operating results for this acquisition have been included in the
company acquired substantially all of the assets (excluding company’s consolidated statements of earnings from the Novem-
accounts receivable) of the BOSS professional snow and ice ber 14, 2014 date of acquisition and are reflected in the Profes-
management business of privately held Northern Star Indus- sional segment. The sale of BOSS products contributed $128,515
tries, Inc. Based in Iron Mountain, Michigan, BOSS designs, manu- of net sales and had an immaterial impact on net earnings for
factures, markets, and sells a broad line of snowplows, salt and fiscal 2015. Proforma results are not presented, as the acquisition
sand spreaders, and related parts and accessories for light and was not considered material to the company’s consolidated results
medium duty trucks, all terrain vehicles, utility terrain vehicles, skid of operations.
steers, and front-end loaders. Through this acquisition, the com- On November 27, 2013, during the first quarter of fiscal 2014,
pany added another professional contractor brand; a portfolio of the company completed the acquisition of certain assets of a qual-
counter-seasonal equipment; manufacturing and distribution facili- ity value-priced line of outdoor lighting fixtures for the landscape
ties located in Iron Mountain, Michigan; and a distribution network lighting market. The purchase price of this acquisition was $1,245,
for these products. Management believes that this acquisition posi- which included cash payments, issuance of a long-term note, and
tions the company to strengthen and grow its relationships with an estimated contingent consideration.
professional contractors, municipalities, and other customers by On September 30, 2013, during the fourth quarter of fiscal 2013,
enabling the company to provide them with innovative, durable the company completed the acquisition of certain assets and
equipment and high-quality service they need each season. assumed certain liabilities for a company in China that manufac-
The purchase price of this acquisition was $229,490, which tures water-efficient drip irrigation products, sprinklers, emitters,
included a cash payment of $198,329 and issuance of a note pay- and filters for agriculture, landscaping, and green house produc-
able at fair value of $31,161. The company funded the acquisition tion. The net purchase price of this acquisition was $3,481, of
with cash on hand, a $130,000 term loan, and short-term debt which $2,101 was paid in cash in fiscal 2013 and $1,380 was paid
under the company’s revolving credit facility. The purchase price of in cash in fiscal 2014.
this acquisition was accounted for as a business combination using The purchase price of all of these acquisitions was allocated to
the acquisition method, which requires that, among other things, the identifiable assets acquired and liabilities assumed based on
assets acquired and liabilities assumed, be recorded at their fair estimates of their fair value, with the excess purchase price for
value as of the acquisition date using independent appraisals and acquisitions recorded as goodwill. Additional purchase accounting
other analyses. The excess of the consideration transferred over disclosures have been omitted given the immateriality of these
those fair values is recorded as goodwill. The following table acquisitions in relation to the company’s consolidated financial con-
presents the allocation of the purchase price to the acquired dition and results of operations. See Note 5 for further details
assets, liabilities, and goodwill. related to the acquired intangible assets.
On November 27, 2015, in the first quarter of fiscal 2016, the
Inventory $ 14,106 company completed the sale of its Northwestern U.S. distribution
Prepaid expenses 266 company.
Property, plant, and equipment 13,689
Intangible assets 107,700
Goodwill 103,028
Current liabilities (9,299) 3INVESTMENT IN JOINT VENTURE
Purchase price $229,490
In fiscal 2009, the company and TCFIF, a subsidiary of TCF
The goodwill recorded as part of the acquisition primarily reflects National Bank, established Red Iron, a joint venture in the form of
the value of the assembled workforce, anticipated cost synergies, a Delaware limited liability company that provides inventory financ-
expected future cash flows, and anticipated sales growth from inte- ing, including floor plan and open account receivable financing, to
grating and expanding existing product lines. The amount of good- distributors and dealers of the company’s products in the U.S. and
will that is expected to be deductible for income tax purposes is select distributors of the company’s products in Canada. The initial
$101,867. The goodwill and intangible assets have been allocated term will continue until October 31, 2017, subject to unlimited auto-
to the Professional segment. matic two-year extensions thereafter. Either the company or TCFIF
During fiscal 2015 and 2014, the company expensed $259 and may elect not to extend the initial term or any subsequent term by
$509, respectively, of acquisition-related costs, which was recorded
55