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As Of Filer Filing For·On·As Docs:Size 12/20/19 Toro Co 10-K 10/31/19 127:16M |
Document/Exhibit Description Pages Size 1: 10-K Annual Report HTML 2.22M 2: EX-4.5 Instrument Defining the Rights of Security Holders HTML 48K 3: EX-10.2 Material Contract HTML 39K 4: EX-21 Subsidiaries List HTML 54K 5: EX-23.1 Consent of Experts or Counsel HTML 38K 6: EX-31.1 Certification -- §302 - SOA'02 HTML 41K 7: EX-31.2 Certification -- §302 - SOA'02 HTML 41K 8: EX-32 Certification -- §906 - SOA'02 HTML 37K 32: R1 Cover Page HTML 97K 86: R2 Consolidated Statements of Earnings HTML 80K 120: R3 Consolidated Statements of Comprehensive Income HTML 59K 50: R4 Consolidated Statements of Comprehensive Income HTML 47K (Parenthetical) 31: R5 Consolidated Balance Sheets HTML 135K 83: R6 Consolidated Balance Sheets (Parenthetical) HTML 63K 119: R7 Consolidated Statements of Cash Flows HTML 127K 46: R8 Consolidated Statements of Stockholders' Equity HTML 69K 34: R9 Consolidated Statements of Stockholders' Equity HTML 43K (Parenthetical) 15: R10 Summary of Significant Accounting Policies and HTML 197K Related Data 64: R11 Business Combinations HTML 111K 106: R12 Segment Data HTML 161K 94: R13 Revenue Revenue HTML 120K 14: R14 Goodwill and Other Intangible Assets HTML 127K 63: R15 Indebtedness HTML 97K 105: R16 Management Actions HTML 43K 93: R17 Income Taxes HTML 152K 16: R18 Stock-Based Compensation Plans HTML 154K 62: R19 Stockholders' Equity HTML 102K 127: R20 Investment in Joint Venture HTML 74K 88: R21 Commitments and Contingent Liabilities HTML 59K 45: R22 Financial Instruments HTML 150K 61: R23 Fair Value HTML 98K 126: R24 Employee Retirement Plans HTML 107K 87: R25 Other Income, Net HTML 60K 44: R26 Subsequent Events HTML 40K 60: R27 Quarterly Financial Data (Unaudited) HTML 80K 125: R28 Schedule Ii HTML 65K 89: R29 Summary of Significant Accounting Policies and HTML 200K Related Data (Policies) 91: R30 (Tables) HTML 108K 102: R31 Business Combinations (Tables) HTML 93K 65: R32 Segment Data (Tables) HTML 163K 17: R33 Revenue (Tables) HTML 97K 92: R34 Goodwill and Other Intangible Assets (Tables) HTML 187K 103: R35 Indebtedness (Tables) HTML 60K 66: R36 Income Taxes (Tables) HTML 148K 18: R37 Stock-Based Compensation Plans (Tables) HTML 157K 90: R38 Stockholders' Equity (Tables) HTML 95K 104: R39 Investment in Joint Venture (Tables) HTML 63K 84: R40 Financial Instruments (Tables) HTML 141K 118: R41 Fair Value (Tables) HTML 88K 51: R42 Employee Retirement Plans (Tables) HTML 103K 30: R43 Other Income, Net (Tables) HTML 59K 85: R44 Quarterly Financial Data (Unaudited) (Tables) HTML 79K 121: R45 Summary of Significant Accounting Policies and HTML 40K Related Data - 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Document |
i Delaware | i 41-0580470 | |
(State
or other jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
i Common
Stock, par value $1.00 per share | i TTC | i New York Stock Exchange |
i Large
accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | i ☐ | Emerging
growth company | i ☐ |
Description | Page Number | |
Fiscal
Years | 2019 | 2018 | ||||||||||
Quarter | Net Sales | Net Earnings | Net Sales | Net Earnings | ||||||||
First | 19 | % | 22 | % | 21 | % | 8 | % | ||||
Second1,2 | 31 | % | 42 | % | 33 | % | 48 | % | ||||
Third1,2 | 27 | % | 22 | % | 25 | % | 29 | % | ||||
Fourth1 | 23 | % | 14 | % | 21 | % | 15 | % |
1 | Fiscal
2019 net sales and net earnings were impacted by our acquisition of CMW. Refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Note 2, Business Combinations, of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information regarding CMW and its impact to our fiscal 2019 Results of Operations. |
2 | During fiscal 2019, CMW's financial position, results of operations, and cash flows were reported on a calendar month end. Accordingly,
April 30, 2019 and July 31, 2019 were the quarterly period end dates closest to our quarterly fiscal periods ended May 3, 2019 and August 2, 2019, respectively. This reporting period difference did not have material impact on our Consolidated Results of Operations during our second and third fiscal quarters. For our fiscal 2019 fourth quarter, the reporting period end for both CMW and Toro was October 31, 2019. |
• | The U.S. EPA, the California Air Resources Board, and similar regulators in other U.S. states and foreign jurisdictions in which we sell our products have phased in, or are phasing in, emission regulations setting maximum
emission standards for certain equipment. Specifically, these agencies from time to time adopt increasingly stringent engine emission regulations. Following the EPA implementation of Tier 4 emission requirements applicable to diesel engines several years ago, China and the European Union ("EU") also have adopted similar regulations, and similar emission regulations are also being considered in other markets in which we sell our products. |
• | The U.S. federal government, several U.S. states, and certain international jurisdictions in which we sell our products, including the EU and each of its member states, have implemented one or more of the following: (i) product life-cycle laws, rules, or regulations, which are intended to reduce waste
and environmental and human health impact, and require manufacturers to label, collect, dispose, and recycle certain products, including some of our products, at the end of their useful life, including the Waste Electrical and Electronic Equipment directive, which mandates the labeling, collection, and disposal of specified waste electrical and electronic equipment; (ii) the Restriction on the use of Hazardous Substances directive or similar substance level laws, rules, or regulations, which restrict the use of several specified hazardous materials in the manufacture of specific types of electrical and electronic equipment; (iii) the Registration, Evaluation, Authorization and Restriction of Chemicals directive or similar substance level laws, rules, or regulations that require notification of use of certain chemicals, or ban or restrict the use of certain chemicals; (iv) country of origin |
• | Our products, when used by residential users, may be subject to various federal, state, and international laws, rules, and regulations that are designed to protect consumers, including rules and regulations of the U.S. Consumer Product Safety Commission. |
• | reduced
levels of investment in golf course renovations and improvements and new golf course development; reduced revenue for golf courses resulting from a decrease in rounds played and/or memberships, as applicable; and increased number of golf course closures; |
• | reduced consumer and business spending on property maintenance, such as lawn care and snow and ice removal activities, and/or unfavorable weather conditions, causing property owners and landscape contractor professionals to forego or postpone purchases of our products; |
• | low
or reduced levels of residential, commercial, and/or municipal construction projects and/or infrastructure improvements; |
• | a decline in acceptance of and demand for ag-irrigation solutions for agricultural production; |
• | availability of cash or credit on acceptable terms to finance new product purchases; and |
• | customer
and/or government budgetary constraints resulting in reduced spending for grounds maintenance or construction equipment. |
• | diversion of management's attention; |
• | disruption
to our existing operations and plans; |
• | inability to effectively manage our expanded operations; |
• | difficulties or delays in integrating and assimilating information and financial systems, operations, manufacturing processes and products of an acquired business or other business venture or in realizing projected efficiencies, growth prospects, cost savings, and synergies; |
• | inability
to successfully integrate or develop a distribution channel for acquired product lines; |
• | potential loss of key employees, customers, distributors, or dealers of the acquired businesses or adverse effects on existing business relationships with suppliers, customers, distributors, and dealers; |
• | write-off of significant amounts of goodwill, other intangible assets, and/or long-lived assets as a result of deterioration in the performance of an acquired business or product line, adverse market conditions, changes in the competitive
landscape, changes in laws or regulations that restrict activities of an acquired business or product line, or as a result of a variety of other circumstances; |
• | delays or challenges in transitioning distributors and dealers of acquired businesses to available floor plan financing arrangements; |
• | violation of confidentiality, intellectual property, and non-compete obligations or agreements by employees of an acquired business or lack of or inadequate formal intellectual property protection mechanisms in place at an acquired
business; |
• | adverse impact on overall profitability if our expanded operations do not achieve the financial results projected in our valuation models; |
• | reallocation of amounts of capital from other operating initiatives and/or an increase in our leverage and debt service requirements to pay acquisition purchase prices or other business venture investment costs, which could in turn restrict our ability to access additional capital when needed or pursue other important elements of our business strategy; |
• | failure
by acquired businesses or other business ventures to comply with applicable international, federal, and state product safety or other regulatory standards; |
• | infringement by acquired businesses or other business ventures of intellectual property rights of others; |
• | inaccurate assessment of additional post-acquisition or business venture investments, undisclosed, contingent or other liabilities or problems, unanticipated costs associated with an acquisition or other business venture, and an inability to recover or manage
such liabilities and costs; and |
• | incorrect estimates made in the accounting for acquisitions and incurrence of non-recurring charges. |
• | diversion of management's attention to manage the CMW businesses and integrate CMW’s operations; |
• | disruption
to our existing operations and plans or inability to effectively manage our expanded operations; |
• | failure, difficulties or delays in securing, integrating and assimilating information, financial systems, internal controls, operations, manufacturing processes and products, or the distribution channel for CMW’s businesses and product lines; |
• | potential loss of key employees, customers, distributors, dealers, or suppliers or other adverse effects on existing business relationships with customers, distributors, dealers, and
suppliers; |
• | adverse impact on overall profitability if our expanded operations do not achieve the growth prospects, net sales, earnings, cost or revenue synergies, or other financial results projected in our valuation models, delays in the realization thereof or costs or charges incurred to achieve any revenue or cost synergies, including as a result of the Toro underground wind down or otherwise; |
• | the increase in our leverage and debt service requirements to fund the purchase price of the acquisition could restrict our
ability to access additional capital when needed, result in a decrease in our credit rating, or limit our ability to pursue other important elements of our business strategy; |
• | inaccurate assessment of undisclosed, contingent or other liabilities, unanticipated costs associated with the acquisition, and despite the existence of representations, warranties and indemnities in the merger agreement and a |
• | impacts as a result of purchase accounting adjustments, incorrect estimates made in the accounting for the acquisition, or the potential future write-off of significant amounts of goodwill, intangible assets and/or other tangible long-lived assets if the CMW business does not perform in the future as expected, or other potential financial accounting or reporting impacts. |
• | increased costs of customizing products for foreign countries; |
• | difficulties
in managing and staffing international operations and increases in infrastructure costs including legal, tax, accounting, and information technology; |
• | the imposition of additional U.S. and foreign governmental controls or regulations; |
• | new or enhanced trade restrictions and restrictions on the activities of foreign agents, representatives, and distribution channel customers; |
• | withdrawal
from or revisions to international trade policies or agreements and the imposition or increases in import and export licensing and other compliance requirements, customs duties and tariffs, import and export quotas and other trade restrictions, license obligations, and other non-tariff barriers to trade; |
• | the imposition of U.S. and/or international sanctions against a country, company, person, or entity with whom we do business that would restrict or prohibit our business with the sanctioned country, company, person, or entity; |
• | international
pricing pressures; |
• | laws and business practices favoring local companies; |
• | adverse currency exchange rate fluctuations; |
• | longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; |
• | higher
tax rates and potentially adverse tax consequences, including restrictions on repatriating cash and/or earnings to the U.S.; |
• | fluctuations in our operating performance based on our geographic mix of sales; |
• | transportation delays and interruptions; |
• | national
and international conflicts, including foreign policy changes, acts of war or terrorist acts; |
• | difficulties in protecting, enforcing or defending intellectual property rights; and |
• | multiple, changing, and often inconsistent enforcement of laws, rules, regulations and standards, including rules relating to taxes, environmental, health and safety matters. |
• | create liens or other encumbrances on our assets; |
• | dispose of assets; |
• | engage
in mergers or consolidations; and |
• | pay dividends that are significantly higher than those currently being paid, make other distributions to our shareholders, or redeem shares of our common stock. |
Location | Ownership | Products Manufactured / Use | ||
Abilene, TX | Leased | Office,
professional products, and service center | ||
Albany, GA | Owned | Professional service area and office | ||
Albis, France | Leased | Professional service area and office | ||
Althengstett, Germany | Owned | Professional
products, distribution facility, and office | ||
Ankeny, IA | Leased | Professional and residential distribution center | ||
Baraboo, WI | Leased | Professional and residential distribution center | ||
Barcelona, Spain | Leased | Professional
products warehouse and office | ||
Beatrice, NE | Owned/Leased | Professional products, test facility, and office | ||
Beijing, China | Leased | Professional products manufacturing, distribution facility, and office | ||
Beverley, Australia | Owned | Professional
products, distribution facility, service area, and office | ||
Bloomington, MN | Owned/Leased | Corporate headquarters, warehouse, and test facility | ||
Boulder, CO | Leased | Professional office | ||
Braeside, Australia | Leased | Distribution
facility, service area, and office | ||
Branchburg, NJ | Owned | Distribution facility, service area, and office | ||
Brooklyn Center, MN | Leased | Distribution facility, service area, and office | ||
Capena, Italy | Leased | Distribution
center | ||
Corpus Christi, TX | Owned | Professional service area and office | ||
El Cajon, CA | Owned/Leased | Professional products, distribution facility, test site, and office | ||
El Paso, TX | Owned/Leased | Residential
component parts and professional products manufacturing, and distribution facility | ||
Fiano Romano, Italy | Owned/Leased | Professional products, distribution facility, and office | ||
Forest Park, GA | Leased | Professional service area and office | ||
Fresno,
CA | Leased | Professional products warehouse | ||
Grandville, MI | Leased | Professional service area and office | ||
Harlingen, TX | Leased | Professional
service area and office | ||
Hertfordshire, United Kingdom | Owned | Professional and residential products, distribution facility, test lab, and office | ||
Howell, MI | Owned | Professional service area and office | ||
Iron Mountain, MI | Owned/Leased | Professional
products, distribution facility, and office | ||
Juarez, Mexico | Leased | Professional and residential products and warehouse | ||
Lake Mills, WI | Owned | Professional products manufacturing and distribution facility and office | ||
Oevel, Belgium | Owned | Distribution
center, service area, and office | ||
Perry, OK | Owned/Leased | Professional products, test facility, warehouse, distribution facility, and office | ||
Petaluma, CA | Leased | Professional products manufacturing and distribution facility, service area, and office | ||
Ploiesti,
Romania | Owned | Professional products, distribution facility, test facility, and office | ||
Plymouth, WI | Owned | Professional and residential parts distribution center | ||
Pune, India | Leased | Corporate
service center | ||
Riverside, CA | Owned/Leased | Professional products, test facility, distribution facility, and office | ||
Ronkonkoma, NY | Owned | Distribution facility, service area, and office | ||
Sanford, FL | Leased | Professional
products and distribution center | ||
Savannah, GA | Leased | Professional service area and office | ||
Shakopee, MN | Owned | Components for professional and residential products | ||
St. Louis, MO | Leased | Distribution
facility, service area, and office | ||
Sterling, KY | Leased | Professional products manufacturing and distribution facility, service area, and office | ||
Tomah, WI | Owned/Leased | Professional products and distribution center | ||
Traverse City, MI | Leased | Professional
and warehouse | ||
Ustron, Poland | Owned | Professional products, distribution facility, and office | ||
Weatherford, TX | Owned | Professional products manufacturing and distribution facility and office | ||
West Salem, OH | Owned | Professional
products manufacturing and distribution facility and office | ||
Windom, MN | Owned/Leased | Residential and professional products and warehouses | ||
Xiamen City, China | Leased | Professional and residential products and related components, distribution facility, and office |
Name, Age, and Position | Business Experience during the Last Five or More Years | |
55, Chairman of the Board, President and Chief Executive Officer | Chairman
of the Board since November 2017 and President and Chief Executive Officer since November 2016. From September 2015 through October 2016, he served as President and Chief Operating Officer. From June 2014 through August 2015, he served as Group Vice President, International Business, Global Ag-Irrigation Business, and Distributor Development. From March 2013 through May 2014, he served as Vice President, International Business. From March 2012 to February 2013, he served as Vice President, Exmark. | |
Jody M. Christy 51, Vice President, BOSS | Vice President, BOSS since December 2018. From June 2016 to November 2018, he served as General Manager, BOSS. At the time of the acquisition of BOSS in November 2014 to May 2016, he served
as Director, Engineering for BOSS. Prior to the acquisition of BOSS in November 2014, from January 2012 to October 2014, he served as the Head of Engineering for BOSS. | |
Amy E. Dahl 45, Vice President, Human Resources and Distributor Development | Vice President, Human Resources since April 2015, and in December 2016 she assumed responsibility for our distributor development activity. From June 2013 through March 2015, she served as Managing Director, Corporate Communications and Investor Relations. From July 2012 to May 2013, she served as Assistant General Counsel and Assistant Secretary. Effective January 10, 2020, she will become the
company's Vice President, Human Resources, Distributor Development and General Counsel, as well as its Corporate Secretary. | |
Timothy P. Dordell 57, Vice President, Secretary and General Counsel | Vice President, Secretary and General Counsel since May 2007. On November 8, 2019, Mr. Dordell notified the company of his decision to retire, which is effective January 10, 2020. | |
Blake M. Grams 52, Vice President, Global Operations | Vice
President, Global Operations since June 2013. From December 2008 to May 2013, he served as Vice President, Corporate Controller. | |
Bradley A. Hamilton 55, Group Vice President, Commercial, International, and Irrigation Businesses | Group Vice President, Commercial, International, and Irrigation Businesses since October 2018. From November 2017 to September 2018, he served as Group Vice President, Commercial and International Businesses. From October 2016 to November 2017, he served as Vice President, Commercial Business. From April 2015 to October 2016, he served as General Manager, Commercial Business. From June 2014 through March 2015, he served as Managing Director, Distributor Development and Financial Services. From March 2012
through May 2014, he served as Director, Distributor Development. | |
Gregory S. Janey 41, Vice President, Residential and Landscape Contractor Businesses | Vice President, Residential and Landscape Contractor Businesses since November 2019. From November 2017 to October 2019, he served as General Manager, Residential and Landscape Contractor Businesses. From April 2015 to October 2017, he served as Director, Marketing International Business. From January 2013 through March 2015, he served as Director, Residential Mass Sales and National Accounts in our Residential Business. | |
Peter D. Moeller 42, Vice President, Sitework
Systems Business | Vice President, Sitework Systems Business since November 2019. From November 2017 to October 2019, he served as General Manager, Sitework Systems Business. From April 2015 to October 2017, he served as Managing Director, Business Development and Strategic Planning. From September 2010 to March 2015, he served as Director, Marketing for Irrigation Business. | |
58, Vice President, Treasurer and Chief Financial Officer | Vice President, Treasurer and Chief Financial Officer since July 2013.
From August 2011 to July 2013, she served as Vice President, Finance and Chief Financial Officer. | |
Darren L. Redetzke 55, Vice President, International Business | Vice President, International Business since April 2015. From August 2010 to April 2015, he served as Vice President, Commercial Business. | |
Richard W. Rodier 59, Group Vice President, Construction Businesses | Group Vice President, Construction Businesses since April 2019. From November 2017 to April 2019, he served as Vice President,
Commercial Business. From October 2016 to November 2017, he served as Vice President, Sitework Systems. From February 2009 to October 2016, he served as General Manager, Sitework Systems. | |
Kurt D. Svendsen 53, Vice President, Information Services | Vice President, Information Services since June 2013. From September 2011 to June 2013, he served as Managing Director, Corporate Communications and Investor Relations. |
Period | Total
Number of Shares (or Units) Purchased1, 2 | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased As Part of Publicly Announced Plans or Programs1 | Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs1 | |||||||||
August 3, 2019 through August
30, 2019 | — | $ | — | — | 7,042,256 | ||||||||
August
31, 2019 through September 27, 2019 | — | — | — | 7,042,256 | |||||||||
September 28,
2019 through October 31, 2019 | 1,172 | 73.93 | — | 7,042,256 | |||||||||
Total | 1,172 | $ | 73.93 | — |
1 | On
December 3, 2015, the company's Board of Directors authorized the repurchase of 8,000,000 shares of the company's common stock in open-market or in privately negotiated transactions. On December 4, 2018, the company’s Board of Directors authorized the repurchase of up to an additional 5,000,000 shares of the company’s common stock in open-market or privately negotiated transactions. This authorized stock repurchase program has no expiration date but may be terminated by the
company's Board of Directors at any time. No shares were repurchased under this authorized stock repurchase program during the fourth quarter of fiscal 2019 and 7,042,256 shares remained available to repurchase under this authorized stock repurchase program as of October 31, 2019. |
2 | Includes 1,172 units ("shares") of the company's common stock purchased in open-market transactions at an
average price of $73.93 per share on behalf of a rabbi trust formed to pay benefit obligations of the company to participants in deferred compensation plans. These 1,172 shares were not repurchased under the company's repurchase programs described in footnote 1 above. |
Fiscal
Years Ended October 31 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | ||||||||||||||||||
The Toro Company | $ | 100.00 | $ | 123.75 | $ | 159.70 | $ | 212.00 | $ | 192.49 | $ | 267.18 | ||||||||||||
S&P 500 | 100.00 | 105.20 | 109.94 | 135.93 | 145.91 | 166.81 | ||||||||||||||||||
Peer
Group | $ | 100.00 | $ | 87.42 | $ | 102.45 | $ | 149.67 | $ | 137.51 | $ | 169.20 |
(Dollars
in thousands, except per share data) Fiscal Years Ended October 31 | 2019 3 | 2018 2 | 2017 | 2016 | 2015 1 | |||||||||||||||
Consolidated
Statements of Earnings data: | ||||||||||||||||||||
Net sales | $ | 3,138,084 | $ | 2,618,650 | $ | 2,505,176 | $ | 2,392,175 | $ | 2,390,875 | ||||||||||
Net
earnings | 273,983 | 271,939 | 267,717 | 230,994 | 201,591 | |||||||||||||||
Basic
net earnings per share | 2.57 | 2.56 | 2.47 | 2.10 | 1.81 | |||||||||||||||
Diluted
net earnings per share | $ | 2.53 | $ | 2.50 | $ | 2.41 | $ | 2.06 | $ | 1.78 | ||||||||||
Consolidated
Balance Sheets data: | ||||||||||||||||||||
Total
assets | $ | 2,330,547 | $ | 1,570,984 | $ | 1,493,787 | $ | 1,384,572 | $ | 1,300,429 | ||||||||||
Long-term
debt, including current portion | $ | 700,813 | $ | 312,549 | $ | 331,887 | $ | 350,961 | $ | 374,723 | ||||||||||
Consolidated
Statements of Cash Flows data: | ||||||||||||||||||||
Cash
dividends per share of Toro common stock | $ | 0.90 | $ | 0.80 | $ | 0.70 | $ | 0.60 | $ | 0.50 |
1 | Basic
and diluted net earnings per share have been adjusted for prior periods presented to reflect the impact of our two-for-one stock split effective September 16, 2016. |
2 | Net earnings and basic and diluted net earnings per share were significantly impacted by the enactment of Public Law No. 115-97 ("Tax Act" or "U.S. Tax Reform"), originally introduced as the Tax Cuts and Jobs Act, during fiscal 2018. Refer to the section entitled "Results of Operations" included in Part I, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 8, Income
Taxes, of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K, as well as our Annual Report on Form 10-K for the fiscal year ended October 31, 2018, for additional information regarding U.S. Tax Reform and its impact to our fiscal 2018 Results of Operations. |
3 | The company's Consolidated Financial Statements include results of the CMW business from April 1, 2019,
the date of acquisition, including charges incurred for acquisition-related purchase accounting adjustments and transaction and integration costs. Refer to the section entitled "Results of Operations" included in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Note 2, Business Combinations, of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information regarding our acquisition of CMW and its impact to our fiscal 2019 Results of Operations. |
• | Company
Overview |
• | Results of Operations |
• | Business Segments |
• | Financial Position |
• | Non-GAAP
Financial Measures |
• | Critical Accounting Policies and Estimates |
• | Net
sales for fiscal 2019 increased by 19.8 percent to $3,138.1 million when compared to fiscal 2018. The sales increase was primarily driven by incremental sales as a result of our acquisition of CMW, the year-over-year impact of price increases across our Professional and Residential segment product lines, strong channel demand for our Professional segment snow and ice management products and Residential snow thrower products, incremental sales as a result of our acquisition of a Northeastern U.S. distribution company, as well as the successful introduction of innovative new products in the Professional and Residential segments. |
• | Professional
segment net sales grew 25.5 percent in fiscal 2019 compared to fiscal 2018. |
• | Residential segment net sales increased 1.0 percent in fiscal 2019 compared to fiscal 2018. |
• | International net sales for fiscal 2019
increased by 12.7 percent compared to fiscal 2018, primarily driven by incremental sales as a result of our acquisition of CMW. Foreign currency exchange rates unfavorably impacted our international net sales by approximately $14.1 million in fiscal 2019. International net sales comprised 23.1 percent of our total consolidated net sales in fiscal 2019 compared to 24.6 percent and 24.4 percent in fiscal 2018 and 2017, respectively. |
• | Gross
margin was 33.4 percent in fiscal 2019, a decrease of 250 basis points from 35.9 percent in fiscal 2018. Non-GAAP adjusted gross margin was 35.1 percent in fiscal 2019, a decrease of 80 basis points from 35.9 percent in fiscal 2018. |
• | Selling,
general, and administrative ("SG&A") expense was 23.0 percent as a percentage of net sales in fiscal 2019, |
• | Fiscal 2019 net earnings of $274.0 million increased 0.8 percent
compared to fiscal 2018, and diluted net earnings per share increased 1.2 percent to $2.53 in fiscal 2019 compared to $2.50 in fiscal 2018. Fiscal 2019 non-GAAP adjusted net earnings were $324.3 million, an increase of 11.8 percent compared to fiscal 2018, and non-GAAP adjusted diluted net earnings per share increased 12.4 percent to $3.00
in fiscal 2019 compared to $2.67 in fiscal 2018. |
• | Our receivables and inventories increased by 39.1 percent and 81.9 percent, respectively, as of the end of fiscal 2019 compared to the end of fiscal 2018, primarily due to incremental receivables and inventories as a result of our acquisition of CMW. |
• | Our
field inventory levels were up as of the end of fiscal 2019 compared to the end of fiscal 2018, primarily as a result of higher Professional segment field inventory that was primarily due to incremental field inventory as a result of our acquisition of CMW and higher field inventory for our Professional segment zero-turn riding mowers due to soft retail demand. |
• | We continued our history of paying quarterly cash dividends in fiscal 2019. We increased our fiscal 2019 quarterly cash dividend by 12.5 percent to $0.225
per share compared to our quarterly cash dividend in fiscal 2018 of $0.20 per share. |
Fiscal
Years Ended October 31 | 2019 | 2018 | 2017 | ||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | |||
Cost
of sales | (66.6 | ) | (64.1 | ) | (63.2 | ) | |||
Gross margin | 33.4 | 35.9 | 36.8 | ||||||
SG&A
expense | (23.0 | ) | (21.7 | ) | (22.6 | ) | |||
Operating earnings | 10.4 | 14.2 | 14.2 | ||||||
Interest
expense | (0.9 | ) | (0.7 | ) | (0.8 | ) | |||
Other income, net | 0.8 | 0.7 | 0.7 | ||||||
Provision
for income taxes | (1.6 | ) | (3.8 | ) | (3.4 | ) | |||
Net earnings | 8.7 | % | 10.4 | % | 10.7 | % |
• | Increased worldwide sales of Professional segment products, which were primarily driven by incremental sales as a result of our acquisition of CMW, the year-over-year impact of price increases
across our Professional segment product lines, and strong channel demand for our snow and ice management, landscape contractor, and Toro-branded rental and specialty construction equipment, partially offset by fewer shipments of our irrigation products due to unfavorable weather in key regions. |
• | Increased sales for our Other activities were primarily due to increased shipments of our golf and grounds equipment through our wholly-owned domestic distribution companies driven by our acquisition of a Northeastern U.S. distribution company. |
• | Increased
worldwide sales of Residential segment products were primarily due to the year-over-year impact of price increases across our Residential segment product lines, strong retail demand for snow throwers, the successful introduction of new products, and increased parts sales, partially offset by soft retail demand for zero-turn riding mowers and reduced sales of our Pope-branded irrigation products by unfavorable weather conditions. |
• | incremental
sales as a result of our acquisition of CMW, |
• | strong channel demand for our golf and grounds equipment, and |
• | strong retail demand for Residential snow thrower products. |
• | decreased
sales of Residential and Professional segment zero-turn riding mowers due to soft retail demand, |
• | lower sales of Pope-branded products due to unfavorable weather in key regions, and |
• | changes in foreign currency exchange rates unfavorably impacted our international net sales by approximately $14.1 million in fiscal 2019. |
• | the unfavorable impact of higher commodity and tariff costs on purchased raw materials and component parts, |
• | the impact of purchase accounting adjustments related to our acquisition of CMW, |
• | unfavorable product mix, |
• | charges
related to the Toro underground wind down, and |
• | supply chain challenges and inclement weather resulting in manufacturing inefficiencies within our Professional segment. |
• | improved net price realization driven by price increases across our product lines, |
• | productivity
initiatives related to commodities, components, parts, and accessories sourcing, and |
• | lower freight costs due to cost reduction initiatives. |
• | the
unfavorable impact of higher commodity and tariff costs on purchased raw materials and component parts, |
• | unfavorable product mix, and |
• | supply chain challenges and inclement weather resulting in manufacturing inefficiencies within our Professional segment. |
• | improved
net price realization driven by price increases across our product lines, |
• | productivity initiatives related to commodities, components, parts, and accessories sourcing, and |
• | lower freight costs due to cost reduction initiatives. |
• | the acquisition of CMW, which resulted in incremental administrative, indirect sales and marketing, engineering, warranty, and service expense; integration and acquisition-related expenditures, and higher amortization of other intangible assets; |
• | increased warranty costs in certain
of our legacy businesses; and |
• | increased engineering expense for new product development in our legacy businesses. |
• | realized gain on actuarial valuation changes for our pension and post-retirement plans of $6.8
million and |
• | higher earnings from our equity investment in Red Iron of $0.8 million. |
• | increased legal expense, net of litigation recoveries, of $1.0 million and |
• | the
loss on the sale of a used underground construction equipment business of $0.9 million. |
• | the significant impact of the one-time charges as a result of the Tax Act on our fiscal 2018 net earnings, |
• | incremental earnings as a result of our acquisition of CMW, |
• | improved net price realization driven by price increases across our product
lines, |
• | the reduction in the U.S federal corporate tax rate from a blended rate of 23.3 percent in fiscal 2018 to a rate of 21.0 percent in fiscal 2019, |
• | productivity initiatives related to commodities and component parts sourcing, and |
• | the realized gain on actuarial valuation changes for our
pension and post-retirement plans. |
• | the unfavorable impact of purchase accounting adjustments and integration and acquisition-related expenditures from our CMW acquisition, |
• | higher commodity and tariff costs on purchased raw materials and component parts, |
• | unfavorable
product mix, |
• | charges related to the Toro underground wind down, |
• | higher interest expense incurred on outstanding indebtedness, and |
• | charges related to our corporate restructuring event. |
• | incremental earnings as a result of our acquisition of CMW, |
• | improved
net price realization driven by price increases across our product lines, |
• | the reduction in the U.S federal corporate tax rate from blended rate of 23.3 percent in fiscal 2018 to a rate of 21.0 percent in fiscal 2019, |
• | productivity initiatives related to commodities and component parts sourcing, and |
• | the
realized gain on actuarial valuation changes for our pension and post-retirement plans. |
• | higher commodity and tariff costs on purchased raw materials and component parts, |
• | unfavorable product mix, and |
• | higher
interest expense incurred on outstanding indebtedness. |
(Dollars
in millions) | ||||||||||||
Fiscal Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Net
sales | $ | 2,443.4 | $ | 1,947.0 | $ | 1,811.7 | ||||||
% change from prior year | 25.5 | % | 7.5 | % | 6.2 | % | ||||||
Operating
earnings | $ | 380.9 | $ | 399.8 | $ | 379.5 | ||||||
As a percent of net sales | 15.6 | % | 20.5 | % | 20.9 | % |
• | incremental sales as a result of our acquisition of CMW; |
• | the year-over-year impact of price increases across our Professional segment product
lines; |
• | higher shipments of our snow and ice management products due to strong channel and retail demand driven by late snowfalls in key regions during the Spring of 2019, as well as strong sales of the redesigned stand-on Snowrator; |
• | continued growth in our landscape contractor business driven by the successful introduction of the new eXmark-branded Staris stand-on zero-turn riding mower, incremental sales of lawn solution products as a result of our acquisition of L.T. Rich Products, Inc. ("L.T. Rich"), higher
parts sales, and strong channel demand for walk-behind and walk-power mowers; and |
• | increased shipments of our rental and specialty construction equipment due to the successful new product |
• | our
acquisition of CMW resulting in charges incurred for purchase accounting adjustments and acquisition-related and integration expenditures; incremental administrative, indirect sales and marketing, engineering, warranty, and service expense; and higher amortization of other intangible assets; |
• | the unfavorable impact of higher commodity and tariff costs on purchased raw materials and component parts; |
• | supply chain challenges and inclement weather resulting in manufacturing inefficiencies; |
• | charges
related to the Toro underground wind down; |
• | unfavorable product mix; |
• | increased warranty costs in certain of our legacy businesses; and |
• | increased engineering expense for new product development. |
• | improved net price realization driven by pricing increases across our Professional segment product lines, |
• | productivity initiatives related to commodities and component parts sourcing, |
• | lower freight costs due to cost reduction initiatives, and |
• | decreased
direct marketing expense in our legacy businesses. |
(Dollars
in millions) | ||||||||||||
Fiscal Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Net
sales | $ | 661.3 | $ | 654.4 | $ | 673.2 | ||||||
% change from prior year | 1.0 | % | (2.8 | )% | 0.6 | % | ||||||
Operating
earnings | $ | 65.2 | $ | 64.8 | $ | 74.7 | ||||||
As a percent of net sales | 9.9 | % | 9.9 | % | 11.1 | % |
• | the year-over-year impact of price increases across our Residential segment product lines, |
• | strong
retail demand for our snow throwers, including the successful introduction of our line of 60V lithium-ion powered single-stage snow thrower products, |
• | higher shipments of walk power mowers driven by the launch of our 60V lithium-ion powered walk power mowers, and |
• | increased parts sales driven by channel demand. |
• | fewer
shipments of zero-turn riding mowers driven by soft retail demand and |
• | reduced sales of our Pope-branded irrigation products driven by unfavorable weather conditions in key regions. |
• | improved net price realization as a result of pricing increases across our Residential segment product lines, |
• | favorable manufacturing variance, and |
• | lower
direct marketing costs. |
• | the unfavorable impact of higher commodity and tariff costs on purchased raw materials and component parts, |
• | unfavorable product mix, |
• | increased warranty cost, and |
• | higher
engineering expense for new product development. |
(Dollars
in millions) | ||||||||||||
Fiscal Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Net
sales | $ | 33.4 | $ | 17.2 | $ | 20.2 | ||||||
% change from prior year | 93.5 | % | (14.8 | )% | 14.1 | % | ||||||
Operating
losses | $ | (123.9 | ) | $ | (92.2 | ) | $ | (101.0 | ) |
(Dollars in millions) | ||||||||
Fiscal Years Ended October 31 | 2019 | 2018 | ||||||
Average
cash and cash equivalents | $ | 180.0 | $ | 237.6 | ||||
Average receivables, net | $ | 265.4 | $ | 214.7 | ||||
Average
inventories, net | $ | 560.5 | $ | 404.5 | ||||
Average accounts payable | $ | 315.5 | $ | 259.3 | ||||
Average
days outstanding for receivables | 30.9 | 29.9 | ||||||
Average inventory turnover (times) | 3.7 | 4.2 |
• | Average net receivables increased by 23.6 percent in fiscal 2019 compared to fiscal 2018, primarily due to incremental net receivables as a result of our acquisition of CMW. Our average days outstanding for receivables increased to 30.9 days in fiscal 2019
compared to 29.9 days in fiscal 2018. |
• | Average net inventories increased by 38.6 percent in fiscal 2019 compared to fiscal 2018. Inventory levels as of the end of fiscal 2019 compared to the end of fiscal 2018 were up by $293.4 million, or 81.9 percent,
primarily due to incremental net inventory as a result of our acquisition of CMW, as well as higher net inventory balances in our legacy businesses due to lower than forecasted sales in our Professional segment driven by soft retail demand and build-ahead for fiscal 2020 new product introductions in our Residential segment. |
• | Average accounts payable increased by 21.7 percent in fiscal 2019 compared to fiscal 2018, mainly due to incremental accounts payable as a result of our acquisition of CMW and negotiating more favorable payment terms with suppliers as a component
of our working capital initiatives. |
(Dollars in millions) | Cash Provided by/(Used in) | |||||||||||
Fiscal
Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Operating activities | $ | 337.4 | $ | 364.8 | $ | 360.7 | ||||||
Investing
activities | (772.9 | ) | (127.9 | ) | (83.8 | ) | ||||||
Financing activities | 299.5 | (252.1 | ) | (245.3 | ) | |||||||
Effect
of exchange rates on cash | (1.2 | ) | (5.9 | ) | 5.0 | |||||||
Net increase/(decrease) in cash and cash equivalents | (137.3 | ) | (21.1 | ) | 36.7 | |||||||
Cash
and cash equivalents as of fiscal year end | $ | 151.8 | $ | 289.1 | $ | 310.3 |
(Dollars in millions) | ||||||||
Fiscal Years Ended October 31 | 2019 | 2018 | ||||||
Long-term
debt, including current portion | $ | 700.8 | $ | 312.5 | ||||
Stockholders' equity | $ | 859.6 | $ | 668.9 | ||||
Debt-to-capitalization
ratio | 44.9 | % | 31.8 | % |
(Dollars in millions, except share and per share data) | ||||||||||||
Fiscal
Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Shares of Board authorized common stock purchased | 359,758 | 2,579,864 | 2,710,837 | |||||||||
Cost
to repurchase common stock | $ | 20.0 | $ | 160.4 | $ | 159.4 | ||||||
Average price paid per share | $ | 55.71 | $ | 62.19 | $ | 58.78 |
(Dollars in millions) | Payments Due by Period | |||||||||||||||||||
Contractual
Obligations | Total | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | |||||||||||||||
Long-term debt1 | $ | 705.0 | $ | — | $ | 115.0 | $ | 165.0 | $ | 425.0 | ||||||||||
Interest
payments2 | 309.2 | 31.9 | 62.6 | 53.8 | 160.9 | |||||||||||||||
Purchase
obligations3 | 24.8 | 24.5 | 0.3 | — | — | |||||||||||||||
Operating
leases4 | 83.0 | 17.1 | 28.6 | 18.6 | 18.7 | |||||||||||||||
Other5 | 15.3 | 6.0 | 8.1 | 0.6 | 0.6 | |||||||||||||||
Total | $ | 1,137.3 | $ | 79.5 | $ | 214.6 | $ | 238.0 | $ | 605.2 |
1 | Principal
payments based on the maturity dates defined in our long-term debt agreements. |
2 | Interest payments for outstanding long-term debt obligations. Interest on variable rate debt was calculated using the interest rate as of October 31, 2019. |
3 |
4 | Operating lease obligations represent contracts that convey our right to use certain property, plant, or equipment assets in exchange for consideration and do not include payments to property owners covering real estate taxes and common area maintenance. |
5 | Payment
obligations for corporate information technology software and services, as well as other miscellaneous contractual obligations. |
(Dollars in thousands, except per share data) Fiscal Years Ended | ||||||||
Gross profit | $ | 1,047,963 | $ | 941,011 | ||||
Acquisition-related costs1 | 42,958 | — | ||||||
Management
actions2 | 10,316 | — | ||||||
Adjusted non-GAAP gross profit | $ | 1,101,237 | $ | 941,011 | ||||
Operating
earnings | $ | 325,029 | $ | 373,085 | ||||
Acquisition-related costs1 | 62,333 | — | ||||||
Management
actions2 | 16,311 | — | ||||||
Adjusted non-GAAP operating earnings | $ | 403,673 | $ | 373,085 | ||||
Earnings
before income taxes | $ | 322,133 | $ | 372,397 | ||||
Acquisition-related costs1 | 62,333 | — | ||||||
Management
actions2 | 17,167 | — | ||||||
Adjusted non-GAAP earnings before income taxes | $ | 401,633 | $ | 372,397 | ||||
Net
earnings | $ | 273,983 | $ | 271,939 | ||||
Acquisition-related costs1 | 51,149 | — | ||||||
Management
actions2 | 13,817 | — | ||||||
Tax impact of share-based compensation3 | (13,677 | ) | (14,555 | ) | ||||
U.S.
Tax Reform4 | (1,012 | ) | 32,702 | |||||
Adjusted non-GAAP net earnings | $ | 324,260 | $ | 290,086 | ||||
Diluted
EPS | $ | 2.53 | $ | 2.50 | ||||
Acquisition-related costs1 | 0.47 | — | ||||||
Management
actions2 | 0.13 | — | ||||||
Tax impact of share-based compensation3 | (0.12 | ) | (0.13 | ) | ||||
U.S.
Tax Reform4 | (0.01 | ) | 0.30 | |||||
Adjusted non-GAAP diluted EPS | $ | 3.00 | $ | 2.67 |
Fiscal Years Ended | ||||||
Effective tax rate | 14.9 | % | 27.0 | % | ||
Acquisition-related
costs1 | (0.3 | )% | — | % | ||
Management actions2 | 0.1 | % | — | % | ||
Tax
impact of share-based compensation3 | 4.3 | % | 3.9 | % | ||
U.S. Tax Reform4 | 0.3 | % | (8.8 | )% | ||
Adjusted
non-GAAP effective tax rate | 19.3 | % | 22.1 | % |
1 | During the second quarter of fiscal 2019, we acquired CMW. Acquisition-related costs represent integration and transaction costs incurred, as well as charges incurred for the take-down of the inventory fair value step-up amount and amortization of the backlog intangible asset
resulting from purchase accounting adjustments, related to our acquisition of CMW during the fiscal year ended October 31, 2019. Refer to Note 2, Business Combinations, of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information regarding our acquisition of CMW. |
2 | During the third quarter of fiscal 2019, we announced the wind down our Toro-branded large horizontal directional drill and riding trencher
product line. Additionally, during the fourth quarter of fiscal 2019, we incurred charges for a corporate restructuring event and a loss on the divestiture of a used underground construction equipment business. Management actions represent charges incurred during the fiscal year ended October 31, 2019 for the Toro underground wind down, including charges related to the write-down of inventory, anticipated inventory retail support activities, and accelerated depreciation on fixed assets; the corporate restructuring event, including employee severance charges; and the divestiture of a used underground construction equipment business, including the loss on the sale of the business. Refer to Note 7, Management Actions, of the Notes to Consolidated Financial Statements included in
Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information regarding our these management actions. |
3 | In the first quarter of fiscal 2017, we adopted Accounting Standards Update No. 2016-09, Stock-based Compensation: Improvements to Employee Share-based Payment Accounting, which requires that any excess tax deduction for share-based compensation be immediately recorded within income tax expense. These amounts represent the discrete tax benefits recorded as excess tax deductions for share-based compensation during the fiscal years ended October 31,
2019 and October 31, 2018. |
4 | Signed into law on December 22, 2017, the Tax Act, reduced the U.S. federal corporate tax rate from 35.0 percent to 21.0 percent, effective January 1, 2018, resulting in a blended U.S. federal statutory tax rate of 23.3 percent for the fiscal year ended October 31, 2018. This reduction in rate required the re-measurement of our net deferred taxes as of the date of enactment. The Tax Act also imposed a one-time deemed repatriation
tax on our historical undistributed earnings and profits of foreign affiliates. During the fiscal year ended October 31, 2019, we recorded a tax benefit of $1.0 million related to a prior year true-up of the Tax Act. During the fiscal year ended October 31, 2018, the remeasurement of our net deferred taxes and the one-time deemed repatriation tax resulted in a combined charge of $32.7 million. |
• | Off-Invoice
Discounts: Our costs for off-invoice discounts represent a reduction in the selling price of our products given at the time of sale. |
• | Rebate Programs: Our rebate programs are generally based on claims submitted from either our direct customers or end-users of our products, depending upon the program. The amount of the rebate varies based on the specific program and is either a dollar amount or a percentage of the purchase price and can also be based on actual retail price as compared to our selling price. |
• | Incentive
Discounts: Our costs for incentive discount programs are based on our customers’ purchase or retail sales goals of certain quantities or mixes of product during a specified time period, which are tracked on an annual or quarterly basis depending on the program. |
• | Financing Programs: Our financing programs, consist of wholesale floor plan financing and end-user retail financing. Costs incurred for wholesale floor plan financing programs represent financing costs associated with programs under which we pay a portion of the interest cost to finance distributor and dealer inventories through third-party financing arrangements for a specific period of time. End-user retail financing is similar to floor
planning with the difference being that retail financing programs are offered to end-user customers under which we pay a portion of interest costs on behalf of end-users for financing purchases of our equipment. |
• | Commissions Paid to Service Home Centers: We pay commissions to representative agencies to service home centers to ensure appropriate store sets for all Toro product. This estimated expense is recorded at point of sale. In addition, Toro dealers are paid a commission to set up and deliver riding product purchased at certain home centers. |
• | Commissions Paid to Distributors and Dealers: For certain products, we use a distribution network of dealers and distributors that purchase and take possession of products for sale to the end customer. In addition, we have dealers and distributors that act as sales agents for us on certain products using a direct-selling type model. Under this direct-selling type model, our network of distributors and dealers facilitates a sale directly to the
dealer or end-user customer on our behalf. Commissions to distributors and dealers in these instances represent commission payments to sales agents that are also our customers. |
• | Cooperative Advertising: Cooperative advertising programs are based on advertising costs incurred by distributors and dealers for promoting our products. We support a portion of those advertising costs in which claims are submitted by the distributor or dealer along with evidence of the advertising material procured/produced and evidence of the cost incurred in the form of third-party invoices or receipts. |
Average
Contracted Rate | Notional Amount | Fair Value | Gain (Loss) at Fair Value | ||||||||||||
Buy U.S. dollar/Sell Australian dollar | 0.7208 | $ | 95,937.9 | $ | 99,559.6 | $ | 3,621.7 | ||||||||
Buy
U.S. dollar/Sell Canadian dollar | 1.3136 | 32,026.1 | 32,099.1 | 73.0 | |||||||||||
Buy U.S. dollar/Sell
Euro | 1.2025 | 119,825.0 | 125,997.1 | 6,172.1 | |||||||||||
Buy U.S. dollar/Sell British pound | 1.3376 | 43,925.5 | 44,957.1 | 1,031.6 | |||||||||||
Buy
Mexican peso/Sell U.S. dollar | 20.1367 | $ | 1,489.8 | $ | 1,480.3 | $ | (9.5 | ) |
/s/
Richard M. Olson | ||
Chairman of the Board, President and Chief Executive Officer | ||
Vice President, Treasurer and Chief Financial Officer | ||
• | Evaluating the Company’s discount rates, by comparing them against a discount rate range that was independently developed using publicly available market data for comparable entities; and |
• | Developing
an estimate of the fair values of the customer-related and trade name intangible assets acquired using the Company’s cash flow and revenue forecasts, respectively, and an independently developed discount rate and compared the results of our estimates to the Company’s fair value estimates. |
Fiscal Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Net
sales | $ | i 3,138,084 | $ | i 2,618,650 | $ | i 2,505,176 | ||||||
Cost
of sales | i 2,090,121 | i 1,677,639 | i 1,584,339 | |||||||||
Gross
profit | i 1,047,963 | i 941,011 | i 920,837 | |||||||||
Selling,
general and administrative expense | i 722,934 | i 567,926 | i 565,727 | |||||||||
Operating
earnings | i 325,029 | i 373,085 | i 355,110 | |||||||||
Interest
expense | ( i 28,835 | ) | ( i 19,096 | ) | ( i 19,113 | ) | ||||||
Other
income, net | i 25,939 | i 18,408 | i 17,187 | |||||||||
Earnings
before income taxes | i 322,133 | i 372,397 | i 353,184 | |||||||||
Provision
for income taxes | i 48,150 | i 100,458 | i 85,467 | |||||||||
Net
earnings | $ | i 273,983 | $ | i 271,939 | $ | i 267,717 | ||||||
Basic
net earnings per share of common stock | $ | i 2.57 | $ | i 2.56 | $ | i 2.47 | ||||||
Diluted
net earnings per share of common stock | $ | i 2.53 | $ | i 2.50 | $ | i 2.41 | ||||||
Weighted-average
number of shares of common stock outstanding – Basic | i 106,773 | i 106,369 | i 108,312 | |||||||||
Weighted-average
number of shares of common stock outstanding – Diluted | i 108,090 | i 108,657 | i 111,252 |
Fiscal
Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Net earnings | $ | i 273,983 | $ | i 271,939 | $ | i 267,717 | ||||||
Other
comprehensive income (loss), net of tax: | ||||||||||||
Foreign currency translation adjustments, net of tax of $(16), $(222), and $0, respectively | ( i 1,314 | ) | ( i 8,408 | ) | i 10,127 | |||||||
Derivative
instruments, net of tax of $(862), $2,899, and $(1,123), respectively | ( i 2,498 | ) | i 7,415 | ( i 158 | ) | |||||||
Pension
and retiree medical benefits, net of tax of $(1,305), $254, and $2,536, respectively | ( i 4,300 | ) | i 1,035 | i 4,347 | ||||||||
Other
comprehensive income (loss), net of tax | ( i 8,112 | ) | i 42 | i 14,316 | ||||||||
Comprehensive
income | $ | i 265,871 | $ | i 271,981 | $ | i 282,033 |
October
31 | 2019 | 2018 | ||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | i 151,828 | $ | i 289,124 | ||||
Receivables,
net: | ||||||||
Customers, net of allowances (2019 - $3,270; 2018 - $2,228) | i 242,196 | i 185,128 | ||||||
Other | i 26,572 | i 8,050 | ||||||
Total
receivables, net | i 268,768 | i 193,178 | ||||||
Inventories,
net | i 651,663 | i 358,259 | ||||||
Prepaid
expenses and other current assets | i 50,632 | i 54,076 | ||||||
Total
current assets | i 1,122,891 | i 894,637 | ||||||
Property,
plant and equipment, net | i 437,317 | i 271,459 | ||||||
Deferred
income taxes | i 6,251 | i 38,252 | ||||||
Goodwill | i 362,253 | i 225,290 | ||||||
Other
intangible assets, net | i 352,374 | i 105,649 | ||||||
Other
assets | i 49,461 | i 35,697 | ||||||
Total
assets | $ | i 2,330,547 | $ | i 1,570,984 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY | ||||||||
Current portion of long-term debt | $ | i 79,914 | $ | i — | ||||
Accounts
payable | i 319,230 | i 256,575 | ||||||
Accrued
liabilities: | ||||||||
Warranty | i 96,604 | i 76,214 | ||||||
Advertising
and marketing programs | i 103,417 | i 89,450 | ||||||
Compensation
and benefit costs | i 76,862 | i 50,850 | ||||||
Insurance | i 11,164 | i 7,909 | ||||||
Interest | i 9,903 | i 7,249 | ||||||
Other | i 59,876 | i 44,388 | ||||||
Total
current liabilities | i 756,970 | i 532,635 | ||||||
Long-term
debt, less current portion | i 620,899 | i 312,549 | ||||||
Deferred
income taxes | i 50,579 | i 1,397 | ||||||
Other
long-term liabilities | i 42,521 | i 55,487 | ||||||
Stockholders'
equity: | ||||||||
Preferred stock, par value $1.00 per share, authorized 1,000,000 voting and 850,000 non-voting shares, none issued and outstanding | i — | i — | ||||||
Common
stock, par value $1.00 per share, authorized 175,000,000 shares; issued and outstanding 106,742,082 shares as of October 31, 2019 and 105,600,652 shares as of October 31, 2018 | i 106,742 | i 105,601 | ||||||
Retained
earnings | i 784,885 | i 587,252 | ||||||
Accumulated
other comprehensive loss | ( i 32,049 | ) | ( i 23,937 | ) | ||||
Total
stockholders' equity | i 859,578 | i 668,916 | ||||||
Total
liabilities and stockholders' equity | $ | i 2,330,547 | $ | i 1,570,984 |
Fiscal
Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net
earnings | $ | i 273,983 | $ | i 271,939 | $ | i 267,717 | ||||||
Adjustments
to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
Non-cash income from finance affiliate | ( i 11,948 | ) | ( i 11,143 | ) | ( i 9,960 | ) | ||||||
Distributions
from finance affiliate, net | i 10,343 | i 9,228 | i 8,050 | |||||||||
Depreciation
of property, plant and equipment | i 69,314 | i 53,484 | i 54,679 | |||||||||
Amortization
of other intangible assets | i 18,384 | i 7,793 | i 10,307 | |||||||||
Fair
value step-up adjustment to acquired inventory | i 39,368 | i — | i — | |||||||||
Stock-based
compensation expense | i 13,429 | i 12,161 | i 13,517 | |||||||||
Deferred
income taxes | ( i 6,190 | ) | i 25,255 | ( i 6,887 | ) | |||||||
Other | i 6,357 | i 507 | i 202 | |||||||||
Changes
in operating assets and liabilities, net of effect of acquisitions: | ||||||||||||
Receivables, net | ( i 11,042 | ) | ( i 10,365 | ) | ( i 17,701 | ) | ||||||
Inventories,
net | ( i 104,832 | ) | ( i 29,770 | ) | ( i 15,611 | ) | ||||||
Prepaid
expenses and other assets | i 9,747 | ( i 11,744 | ) | ( i 3,424 | ) | |||||||
Accounts
payable, accrued liabilities, deferred revenue and other long-term liabilities | i 30,458 | i 47,460 | i 59,859 | |||||||||
Net
cash provided by operating activities | i 337,371 | i 364,805 | i 360,748 | |||||||||
Cash
flows from investing activities: | ||||||||||||
Purchases of property, plant and equipment | ( i 92,881 | ) | ( i 90,124 | ) | ( i 58,276 | ) | ||||||
Proceeds
from asset disposals | i 4,669 | i 151 | i 199 | |||||||||
Proceeds
from sale of a business | i 12,941 | i — | i — | |||||||||
Investments
in unconsolidated entities | ( i 200 | ) | ( i 6,750 | ) | ( i 1,500 | ) | ||||||
Acquisitions,
net of cash acquired | ( i 697,471 | ) | ( i 31,202 | ) | ( i 24,181 | ) | ||||||
Net
cash used in investing activities | ( i 772,942 | ) | ( i 127,925 | ) | ( i 83,758 | ) | ||||||
Cash
flows from financing activities: | ||||||||||||
Borrowings under debt arrangements | i 900,000 | i — | i — | |||||||||
Repayments
under debt arrangements | ( i 511,000 | ) | ( i 19,757 | ) | ( i 19,136 | ) | ||||||
Proceeds
from exercise of stock options | i 29,336 | i 17,243 | i 10,274 | |||||||||
Payments
of withholding taxes for stock awards | ( i 2,662 | ) | ( i 4,095 | ) | ( i 1,294 | ) | ||||||
Purchases
of Toro common stock | ( i 20,043 | ) | ( i 160,435 | ) | ( i 159,354 | ) | ||||||
Dividends
paid on Toro common stock | ( i 96,133 | ) | ( i 85,031 | ) | ( i 75,758 | ) | ||||||
Net
cash provided by (used in) financing activities | i 299,498 | ( i 252,075 | ) | ( i 245,268 | ) | |||||||
Effect
of exchange rates on cash and cash equivalents | ( i 1,223 | ) | ( i 5,937 | ) | i 4,979 | |||||||
Net
(decrease) increase in cash and cash equivalents | ( i 137,296 | ) | ( i 21,132 | ) | i 36,701 | |||||||
Cash
and cash equivalents as of the beginning of the fiscal period | i 289,124 | i 310,256 | i 273,555 | |||||||||
Cash
and cash equivalents as of the end of the fiscal period | $ | i 151,828 | $ | i 289,124 | $ | i 310,256 | ||||||
Supplemental
disclosures of cash flow information: | ||||||||||||
Cash paid during the fiscal year for: | ||||||||||||
Interest | $ | i 30,167 | $ | i 19,979 | $ | i 19,457 | ||||||
Income
taxes | $ | i 54,738 | $ | i 75,805 | $ | i 97,057 |
Common Stock | Retained Earnings | Accumulated
Other Comprehensive Loss | Total Stockholders' Equity | |||||||||||||
Balance as of October 31, 2016 | $ | i 108,427 | $ | i 480,044 | $ | ( i 38,436 | ) | $ | i 550,035 | |||||||
Cash
dividends paid on common stock - $0.70 per share | — | ( i 75,758 | ) | — | ( i 75,758 | ) | ||||||||||
Issuance
of 1,185,601 shares for stock options exercised and restricted stock units vested | i 1,186 | i 8,268 | — | i 9,454 | ||||||||||||
Stock-based
compensation expense | — | i 13,517 | — | i 13,517 | ||||||||||||
Contribution
of stock to a deferred compensation trust | — | i 820 | — | i 820 | ||||||||||||
Purchase
of 2,730,022 shares of common stock | ( i 2,730 | ) | ( i 157,918 | ) | — | ( i 160,648 | ) | |||||||||
Cumulative
effect adjustment ASU 2016-16 | — | ( i 2,361 | ) | — | ( i 2,361 | ) | ||||||||||
Other
comprehensive income | — | — | i 14,316 | i 14,316 | ||||||||||||
Net
earnings | — | i 267,717 | — | i 267,717 | ||||||||||||
Balance
as of October 31, 2017 | i 106,883 | i 534,329 | ( i 24,120 | ) | i 617,092 | |||||||||||
Cash
dividends paid on common stock - $0.80 per share | — | ( i 85,031 | ) | — | ( i 85,031 | ) | ||||||||||
Issuance
of 1,495,367 shares for stock options exercised and restricted stock units vested | i 1,496 | i 14,310 | — | i 15,806 | ||||||||||||
Stock-based
compensation expense | — | i 12,161 | — | i 12,161 | ||||||||||||
Contribution
of stock to a deferred compensation trust | — | i 1,437 | — | i 1,437 | ||||||||||||
Purchase
of 2,777,687 shares of common stock | ( i 2,778 | ) | ( i 161,752 | ) | — | ( i 164,530 | ) | |||||||||
Reclassification
due to the adoption of ASU 2018-02 | — | ( i 141 | ) | i 141 | i — | |||||||||||
Other
comprehensive income | — | — | i 42 | i 42 | ||||||||||||
Net
earnings | — | i 271,939 | — | i 271,939 | ||||||||||||
Balance
as of October 31, 2018 | i 105,601 | i 587,252 | ( i 23,937 | ) | i 668,916 | |||||||||||
Cash
dividends paid on common stock - $0.90 per share | — | ( i 96,133 | ) | — | ( i 96,133 | ) | ||||||||||
Issuance
of 1,544,962 shares for stock options exercised and restricted stock units vested | i 1,545 | i 26,387 | — | i 27,932 | ||||||||||||
Stock-based
compensation expense | — | i 13,429 | — | i 13,429 | ||||||||||||
Contribution
of stock to a deferred compensation trust | — | i 1,404 | — | i 1,404 | ||||||||||||
Purchase
of 403,532 shares of common stock | ( i 404 | ) | ( i 22,301 | ) | — | ( i 22,705 | ) | |||||||||
Cumulative
transition adjustment due to the adoption of ASU 2014-09 | — | i 864 | — | i 864 | ||||||||||||
Other
comprehensive loss | — | — | ( i 8,112 | ) | ( i 8,112 | ) | ||||||||||
Net
earnings | — | i 273,983 | — | i 273,983 | ||||||||||||
Balance
as of October 31, 2019 | $ | i 106,742 | $ | i 784,885 | $ | ( i 32,049 | ) | $ | i 859,578 |
1 | Summary
of Significant Accounting Policies and Related Data |
October 31 | 2019 | 2018 | ||||||
Raw materials and work in process | $ | i 179,967 | $ | i 115,280 | ||||
Finished
goods and service parts | i 553,767 | i 315,179 | ||||||
Total
FIFO value | i 733,734 | i 430,459 | ||||||
Less:
adjustment to LIFO value | i 82,071 | i 72,200 | ||||||
Total
inventories, net | $ | i 651,663 | $ | i 358,259 |
October 31 | 2019 | 2018 | ||||||
Land
and land improvements | $ | i 55,613 | $ | i 39,607 | ||||
Buildings
and leasehold improvements | i 276,556 | i 209,686 | ||||||
Machinery
and equipment | i 453,314 | i 349,550 | ||||||
Tooling | i 226,870 | i 211,756 | ||||||
Computer
hardware and software | i 94,409 | i 83,338 | ||||||
Construction
in process | i 34,937 | i 35,044 | ||||||
Subtotal | i 1,141,699 | i 928,981 | ||||||
Less:
accumulated depreciation | i 704,382 | i 657,522 | ||||||
Total
property, plant, and equipment, net | $ | i 437,317 | $ | i 271,459 |
Fiscal Years Ended October 31 | 2019 | 2018 | ||||||
Beginning balance | $ | i 76,214 | $ | i 74,155 | ||||
Warranty
provisions | i 57,277 | i 49,160 | ||||||
Acquisitions | i 18,418 | i — | ||||||
Warranty
claims | ( i 58,878 | ) | ( i 45,662 | ) | ||||
Changes
in estimates | i 3,573 | ( i 1,439 | ) | |||||
Ending
balance | $ | i 96,604 | $ | i 76,214 |
• | Off-Invoice Discounts: The company's costs for off-invoice discounts represent a reduction in the selling price of its products given at the time of sale. |
• | Rebate
Programs: The company's rebate programs are generally based on claims submitted from either its direct customers or end-users of its products, depending upon the |
• | Incentive Discounts: The
company's costs for incentive discount programs are based on its customers’ purchase or retail sales goals of certain quantities or mixes of product during a specified time period, which are tracked on an annual or quarterly basis depending on the program. |
• | Financing Programs: The company's financing programs, consist of wholesale floor plan financing and end-user retail financing. Costs incurred for wholesale floor plan financing programs represent financing costs associated with programs under which the company pays a portion of the interest cost
to finance distributor and dealer inventories through third-party financing arrangements for a specific period of time. End-user retail financing is similar to floor planning with the difference being that retail financing programs are offered to end-user customers under which the company pays a portion of interest costs on behalf of end-users for financing purchases of the company's equipment. |
• | Commissions Paid to Service Home Centers: The company pays commissions to representative
agencies to service home center customers to ensure appropriate store sets for all Toro product. This estimated expense is recorded at point of sale. In addition, Toro dealers are paid a commission to set up and deliver riding product purchased at certain home centers. |
• | Commissions Paid to Distributors and Dealers: For certain products, the company uses a distribution network of dealers and distributors that purchase
and take possession of products for sale to the end customer. In addition, the company has dealers and distributors that act as sales agents for it on certain products using a direct-selling type model. Under this direct-selling type model, the company's network of distributors and dealers facilitates a sale directly to the dealer or end-user customer on its behalf. Commissions to distributors and dealers in these instances represent commission payments to sales agents that are also its customers. |
• | Cooperative Advertising: Cooperative advertising programs
are based on advertising costs incurred by distributors and dealers for promoting the company's products. The company supports a portion of those advertising costs in which claims are submitted by the distributor or dealer along with evidence of the advertising material procured/produced and evidence of the cost incurred in the form of third-party invoices or receipts. |
2019 | 2018 | 2017 | |||||||
Basic | |||||||||
Weighted-average
number of shares of common stock | i 106,762 | i 106,356 | i 108,299 | ||||||
Assumed
issuance of contingent shares | i 11 | i 13 | i 13 | ||||||
Weighted-average
number of shares of common stock and assumed issuance of contingent shares | i 106,773 | i 106,369 | i 108,312 | ||||||
Diluted | |||||||||
Weighted-average
number of shares of common stock and assumed issuance of contingent shares | i 106,773 | i 106,369 | i 108,312 | ||||||
Effect
of dilutive securities | i 1,317 | i 2,288 | i 2,940 | ||||||
Weighted-average
number of shares of common stock, assumed issuance of contingent shares, and effect of dilutive securities | i 108,090 | i 108,657 | i 111,252 |
• | Portfolio approach practical expedient relative to the estimation of variable consideration. |
• | Shipping and handling practical expedient to account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities. |
• |
• | Immaterial goods or services practical expedient to not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the
customer. |
• | Sales taxes practical expedient to exclude sales taxes and other similar taxes from the transaction price. |
• | Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less. |
2 | Business Combinations |
Cash and cash equivalents | $ | i 16,341 | ||
Receivables | i 65,674 | |||
Inventories | i 241,429 | |||
Prepaid
expenses and other current assets | i 9,218 | |||
Property,
plant and equipment | i 142,779 | |||
Goodwill | i 135,521 | |||
Other
intangible assets | i 264,190 | |||
Other long-term assets | i 7,971 | |||
Accounts
payable | ( i 36,655 | ) | ||
Accrued liabilities | ( i 52,258 | ) | ||
Deferred
income tax liabilities | ( i 86,231 | ) | ||
Other long-term liabilities | ( i 6,665 | ) | ||
Total
fair value of net assets acquired | i 701,314 | |||
Less: cash and cash equivalents acquired | ( i 16,341 | ) | ||
Total
purchase price | $ | i 684,973 |
Weighted-Average Useful Life | Gross
Carrying Amount | Accumulated Amortization | Net | |||||||||||
Customer-related | i 18.3 | $ | i 130,800 | $ | ( i 4,981 | ) | $ | i 125,819 | ||||||
Developed
technology | i 7.8 | i 20,900 | ( i 2,019 | ) | i 18,881 | |||||||||
Trade
names | i 20.0 | i 5,200 | ( i 152 | ) | i 5,048 | |||||||||
Backlog | i 0.5 | i 3,590 | ( i 3,590 | ) | i — | |||||||||
Total
amortizable | i 16.6 | i 160,490 | ( i 10,742 | ) | i 149,748 | |||||||||
Non-amortizable
- trade names | i 103,700 | — | i 103,700 | |||||||||||
Total
other intangible assets, net | $ | i 264,190 | $ | ( i 10,742 | ) | $ | i 253,448 |
Net sales | $ | i 3,437,335 | $ | i 3,332,636 | ||||
Net
earnings1 | i 363,452 | i 276,722 | ||||||
Basic
net earnings per share of common stock | i 3.40 | i 2.60 | ||||||
Diluted
net earnings per share of common stock1 | $ | i 3.36 | $ | i 2.55 |
1 | On
January 1, 2019, CMW amended its retiree medical plans so that no employee hired, or rehired, after that date would be eligible for such retiree medical plans. CMW further amended its retiree medical plans on February 14, 2019 so that no employee who terminates employment after February 14, 2019 is eligible to participate in the retiree medical plans and to terminate its retiree medical plans effective December 31, 2019. The amendments and resulting termination of CMW's retiree medical plans resulted in a gain of approximately $ i 45.8
million. This gain is reflected within net earnings in the unaudited pro forma financial information for the fiscal year ended October 31, 2019. The impact on diluted net earnings per share of common stock for the fiscal year ended October 31, 2019 was $ i 0.42
per diluted share of common stock. |
3 | Segment
Data |
Fiscal Year Ended October 31, 2019 | Professional | Residential | Other | Total | ||||||||||||
Net
sales | $ | i 2,443,448 | $ | i 661,274 | $ | i 33,362 | $ | i 3,138,084 | ||||||||
Intersegment
gross sales (eliminations) | i 59,453 | i 310 | ( i 59,763 | ) | — | |||||||||||
Earnings
(loss) before income taxes | i 380,914 | i 65,151 | ( i 123,932 | ) | i 322,133 | |||||||||||
Total
assets | i 1,592,065 | i 430,495 | i 307,987 | i 2,330,547 | ||||||||||||
Capital
expenditures | i 57,246 | i 16,970 | i 18,665 | i 92,881 | ||||||||||||
Depreciation
and amortization | $ | i 63,885 | $ | i 11,897 | $ | i 11,916 | $ | i 87,698 |
Fiscal
Year Ended October 31, 2018 | Professional | Residential | Other | Total | ||||||||||||
Net sales | $ | i 1,946,999 | $ | i 654,413 | $ | i 17,238 | $ | i 2,618,650 | ||||||||
Intersegment
gross sales (eliminations) | i 29,798 | i 312 | ( i 30,110 | ) | — | |||||||||||
Earnings
(loss) before income taxes | i 399,806 | i 64,807 | ( i 92,216 | ) | i 372,397 | |||||||||||
Total
assets | i 916,106 | i 199,273 | i 455,605 | i 1,570,984 | ||||||||||||
Capital
expenditures | i 58,109 | i 16,014 | i 16,001 | i 90,124 | ||||||||||||
Depreciation
and amortization | $ | i 38,585 | $ | i 9,999 | $ | i 12,693 | $ | i 61,277 |
Fiscal Year Ended October 31, 2017 | Professional | Residential | Other | Total | ||||||||||||
Net
sales | $ | i 1,811,705 | $ | i 673,247 | $ | i 20,224 | $ | i 2,505,176 | ||||||||
Intersegment
gross sales (eliminations) | i 27,893 | i 332 | ( i 28,225 | ) | — | |||||||||||
Earnings
(loss) before income taxes | i 379,496 | i 74,704 | ( i 101,016 | ) | i 353,184 | |||||||||||
Total
assets | i 836,600 | i 189,578 | i 467,609 | i 1,493,787 | ||||||||||||
Capital
expenditures | i 29,786 | i 10,605 | i 17,885 | i 58,276 | ||||||||||||
Depreciation
and amortization | $ | i 41,313 | $ | i 10,308 | $ | i 13,365 | $ | i 64,986 |
Fiscal
Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Corporate expenses | $ | ( i 124,422 | ) | $ | ( i 92,541 | ) | $ | ( i 100,928 | ) | |||
Interest
expense | ( i 28,835 | ) | ( i 19,096 | ) | ( i 19,113 | ) | ||||||
Other
income | i 29,325 | i 19,421 | i 19,025 | |||||||||
Total
operating loss | $ | ( i 123,932 | ) | $ | ( i 92,216 | ) | $ | ( i 101,016 | ) |
Fiscal Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Equipment | $ | i 2,747,935 | $ | i 2,210,047 | $ | i 2,060,354 | ||||||
Irrigation
and lighting | i 390,149 | i 408,603 | i 444,822 | |||||||||
Total
net sales | $ | i 3,138,084 | $ | i 2,618,650 | $ | i 2,505,176 |
Fiscal Years Ended October 31 | United States | Foreign Countries | Total | |||||||||
2019 | ||||||||||||
Net
sales | $ | i 2,413,153 | $ | i 724,931 | $ | i 3,138,084 | ||||||
Long-lived
assets | $ | i 395,937 | $ | i 41,380 | $ | i 437,317 | ||||||
2018 | ||||||||||||
Net
sales | $ | i 1,975,562 | $ | i 643,088 | $ | i 2,618,650 | ||||||
Long-lived
assets | $ | i 230,246 | $ | i 41,213 | $ | i 271,459 | ||||||
2017 | ||||||||||||
Net
sales | $ | i 1,893,249 | $ | i 611,927 | $ | i 2,505,176 | ||||||
Long-lived
assets | $ | i 194,338 | $ | i 40,892 | $ | i 235,230 |
4 | Revenue
|
Fiscal Year Ended October 31, 2019 | Professional | Residential | Other | Total | ||||||||||||
Revenue
by product type: | ||||||||||||||||
Equipment | $ | i 2,097,965 | $ | i 628,521 | $ | i 21,449 | $ | i 2,747,935 | ||||||||
Irrigation | i 345,483 | i 32,753 | i 11,913 | i 390,149 | ||||||||||||
Total
net sales | $ | i 2,443,448 | $ | i 661,274 | $ | i 33,362 | $ | i 3,138,084 | ||||||||
Revenue
by geographic market: | ||||||||||||||||
United States | $ | i 1,853,054 | $ | i 526,737 | $ | i 33,362 | $ | i 2,413,153 | ||||||||
Foreign
Countries | i 590,394 | i 134,537 | i — | i 724,931 | ||||||||||||
Total
net sales | $ | i 2,443,448 | $ | i 661,274 | $ | i 33,362 | $ | i 3,138,084 |
Fiscal
Year Ended October 31, 2018 | Professional | Residential | Other | Total | ||||||||||||
Revenue by product type: | ||||||||||||||||
Equipment | $ | i 1,582,024 | $ | i 617,827 | $ | i 10,196 | $ | i 2,210,047 | ||||||||
Irrigation | i 364,975 | i 36,586 | i 7,042 | i 408,603 | ||||||||||||
Total
net sales | $ | i 1,946,999 | $ | i 654,413 | $ | i 17,238 | $ | i 2,618,650 | ||||||||
Revenue
by geographic market: | ||||||||||||||||
United States | $ | i 1,441,815 | $ | i 516,509 | $ | i 17,238 | $ | i 1,975,562 | ||||||||
Foreign
Countries | i 505,184 | i 137,904 | i — | i 643,088 | ||||||||||||
Total
net sales | $ | i 1,946,999 | $ | i 654,413 | $ | i 17,238 | $ | i 2,618,650 |
5 | Goodwill and Other Intangible Assets |
Professional | Residential | Other | Total | |||||||||||||
Balance
as of October 31, 2017 | $ | i 194,464 | $ | i 10,565 | $ | i — | $ | i 205,029 | ||||||||
Goodwill
acquired | i 20,739 | i — | i — | i 20,739 | ||||||||||||
Translation
adjustments | ( i 376 | ) | ( i 102 | ) | i — | ( i 478 | ) | |||||||||
Balance
as of October 31, 2018 | i 214,827 | i 10,463 | i — | i 225,290 | ||||||||||||
Goodwill
acquired | i 135,524 | i — | i 1,534 | i 137,058 | ||||||||||||
Translation
adjustments | ( i 101 | ) | i 6 | i — | ( i 95 | ) | ||||||||||
Balance
as of October 31, 2019 | $ | i 350,250 | $ | i 10,469 | $ | i 1,534 | $ | i 362,253 |
Weighted-Average Useful Life | Gross Carrying Amount | Accumulated
Amortization | Net | |||||||||||
Patents | i 9.9 | $ | i 18,230 | $ | ( i 13,102 | ) | $ | i 5,128 | ||||||
Non-compete
agreements | i 5.5 | i 6,868 | ( i 6,786 | ) | i 82 | |||||||||
Customer-related | i 18.4 | i 220,390 | ( i 33,547 | ) | i 186,843 | |||||||||
Developed
technology | i 7.6 | i 51,911 | ( i 31,289 | ) | i 20,622 | |||||||||
Trade
names | i 15.4 | i 7,496 | ( i 2,109 | ) | i 5,387 | |||||||||
Backlog
and other | i 0.6 | i 4,390 | ( i 4,390 | ) | i — | |||||||||
Total
amortizable | i 15.5 | i 309,285 | ( i 91,223 | ) | i 218,062 | |||||||||
Non-amortizable -
trade names | i 134,312 | — | i 134,312 | |||||||||||
Total
other intangible assets, net | $ | i 443,597 | $ | ( i 91,223 | ) | $ | i 352,374 |
Weighted-Average Useful Life | Gross Carrying Amount | Accumulated
Amortization | Net | |||||||||||
Patents | i 9.9 | $ | i 18,235 | $ | ( i 12,297 | ) | $ | i 5,938 | ||||||
Non-compete
agreements | i 5.5 | i 6,872 | ( i 6,771 | ) | i 101 | |||||||||
Customer-related | i 18.5 | i 89,622 | ( i 23,653 | ) | i 65,969 | |||||||||
Developed
technology | i 7.6 | i 31,029 | ( i 28,471 | ) | i 2,558 | |||||||||
Trade
names | i 5.0 | i 2,307 | ( i 1,805 | ) | i 502 | |||||||||
Other | i 1.0 | i 800 | ( i 800 | ) | i — | |||||||||
Total
amortizable | i 14.3 | i 148,865 | ( i 73,797 | ) | i 75,068 | |||||||||
Non-amortizable -
trade names | i 30,581 | — | i 30,581 | |||||||||||
Total
other intangible assets, net | $ | i 179,446 | $ | ( i 73,797 | ) | $ | i 105,649 |
6 | Indebtedness |
October 31 | 2019 | 2018 | ||||||
Revolving credit facility | $ | i — | $ | i 91,000 | ||||
$200
million term loan | i 100,000 | — | ||||||
$300
million term loan | i 180,000 | — | ||||||
3.81%
series A senior notes | i 100,000 | — | ||||||
3.91%
series B senior notes | i 100,000 | — | ||||||
7.800%
debentures | i 100,000 | i 100,000 | ||||||
6.625%
senior notes | i 123,916 | i 123,854 | ||||||
Less:
unamortized discounts, debt issuance costs, and deferred charges | ( i 3,103 | ) | ( i 2,305 | ) | ||||
Total
long-term debt | i 700,813 | i 312,549 | ||||||
Less:
current portion of long-term debt | i 79,914 | i — | ||||||
Long-term
debt, less current portion | $ | i 620,899 | $ | i 312,549 |
7 | Management Actions |
8 | Income
Taxes |
Fiscal
Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Earnings before income taxes: | ||||||||||||
U.S. | $ | i 283,730 | $ | i 333,136 | $ | i 307,136 | ||||||
Foreign | i 38,403 | i 39,261 | i 46,048 | |||||||||
Total
earnings before income taxes | $ | i 322,133 | $ | i 372,397 | $ | i 353,184 |
Fiscal Years Ended October 31 | 2019 | 2018 | 2017 | ||||||
Statutory
federal income tax rate | i 21.0 | % | i 23.3 | % | i 35.0 | % | |||
Excess
deduction for stock compensation | ( i 3.7 | ) | ( i 3.5 | ) | ( i 5.3 | ) | |||
Domestic
manufacturer's deduction | i 0.1 | ( i 0.9 | ) | ( i 1.2 | ) | ||||
State
and local income taxes, net of federal benefit | i 1.1 | i 1.3 | i 0.5 | ||||||
Foreign
operations | ( i 0.3 | ) | ( i 0.5 | ) | ( i 2.3 | ) | |||
Federal
research tax credit | ( i 1.5 | ) | ( i 1.2 | ) | ( i 1.5 | ) | |||
Foreign-derived
intangible income | ( i 1.3 | ) | i — | i — | |||||
Remeasurement
of deferred tax assets and liabilities | ( i 0.1 | ) | i 5.2 | i — | |||||
Deemed
repatriation tax | ( i 0.2 | ) | i 3.6 | i — | |||||
Other,
net | ( i 0.2 | ) | ( i 0.3 | ) | ( i 1.0 | ) | |||
Consolidated
effective tax rate | i 14.9 | % | i 27.0 | % | i 24.2 | % |
Fiscal Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Current
provision: | ||||||||||||
Federal | $ | i 37,415 | $ | i 64,375 | $ | i 83,091 | ||||||
State | i 7,495 | i 6,192 | i 3,036 | |||||||||
Foreign | i 6,846 | i 7,087 | i 8,166 | |||||||||
Total
current provision | $ | i 51,756 | $ | i 77,654 | $ | i 94,293 | ||||||
Deferred
provision (benefit): | ||||||||||||
Federal | $ | ( i 37 | ) | $ | i 22,074 | $ | ( i 8,774 | ) | ||||
State | ( i 3,205 | ) | i 308 | ( i 101 | ) | |||||||
Foreign | ( i 364 | ) | i 422 | i 49 | ||||||||
Total
deferred provision (benefit) | ( i 3,606 | ) | i 22,804 | ( i 8,826 | ) | |||||||
Total
provision for income taxes | $ | i 48,150 | $ | i 100,458 | $ | i 85,467 |
October 31 | 2019 | 2018 | ||||||
Deferred income tax assets: | ||||||||
Compensation
and benefits | $ | i 27,969 | $ | i 24,315 | ||||
Warranty
and insurance | i 25,788 | i 19,037 | ||||||
Advertising
and sales allowance | i 8,866 | i 7,650 | ||||||
Inventory | i 4,005 | i 2,742 | ||||||
Other | i 8,745 | i 5,047 | ||||||
Valuation
allowance | ( i 3,199 | ) | ( i 1,178 | ) | ||||
Total
deferred income tax assets | $ | i 72,174 | $ | i 57,613 | ||||
Deferred
income tax liabilities: | ||||||||
Depreciation | $ | ( i 40,964 | ) | $ | ( i 12,381 | ) | ||
Amortization | ( i 75,538 | ) | ( i 8,377 | ) | ||||
Total
deferred income tax liabilities | ( i 116,502 | ) | ( i 20,758 | ) | ||||
Deferred
income tax (liabilities) assets, net | $ | ( i 44,328 | ) | $ | i 36,855 |
Unrecognized tax benefits as of October 31, 2018 | $ | i 2,345 | ||
Increase
as a result of tax positions taken during a prior period | i 149 | |||
Increase as a result of tax positions taken during the current period | i 467 | |||
Decrease
relating to settlements with taxing authorities | ( i 215 | ) | ||
Reductions as a result of statute of limitations lapses | ( i 73 | ) | ||
Unrecognized
tax benefits as of October 31, 2019 | $ | i 2,673 |
9 | Stock-Based
Compensation Plans |
Fiscal
Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Unrestricted common stock awards | $ | i 592 | $ | i 530 | $ | i 538 | ||||||
Stock
option awards | i 6,537 | i 5,006 | i 5,496 | |||||||||
Restricted
stock units | i 3,230 | i 2,997 | i 2,300 | |||||||||
Performance
share awards | i 3,070 | i 3,628 | i 5,183 | |||||||||
Total
compensation cost for stock-based awards | $ | i 13,429 | $ | i 12,161 | $ | i 13,517 | ||||||
Related
tax benefit from stock-based awards | $ | i 3,200 | $ | i 2,905 | $ | i 5,001 |
Fiscal Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Expected
life of option in years | i 6.31 | i 6.04 | i 6.02 | |||||||||
Expected
stock price volatility | i 19.83 | % | i 20.58 | % | i 22.15 | % | ||||||
Risk-free
interest rate | i 2.77 | % | i 2.21 | % | i 2.03 | % | ||||||
Expected
dividend yield | i 1.18 | % | i 0.97 | % | i 1.01 | % | ||||||
Per
share weighted-average fair value at date of grant | $ | i 12.83 | $ | i 14.25 | $ | i 12.55 |
Stock
Option Awards | Weighted-Average Exercise Price | Weighted-Average Contractual Life (years) | Aggregate Intrinsic Value (in thousands) | ||||||||||
Outstanding as of October 31, 2018 | i 3,738,604 | $ | i 34.01 | i 5.0 | $ | i 87,470 | |||||||
Granted | i 507,028 | i 58.62 | |||||||||||
Exercised | ( i 1,388,044 | ) | i 21.66 | | |||||||||
Canceled/forfeited | ( i 9,468 | ) | i 55.24 | ||||||||||
Outstanding
as of October 31, 2019 | i 2,848,120 | $ | i 44.34 | i 5.7 | $ | i 93,392 | |||||||
Exercisable
as of October 31, 2019 | i 1,861,173 | $ | i 35.98 | i 4.4 | $ | i 76,592 |
Fiscal Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Market
value of stock options exercised | $ | i 92,352 | $ | i 70,775 | $ | i 58,976 | ||||||
Intrinsic
value of options exercised1 | $ | i 62,288 | $ | i 53,778 | $ | i 48,017 |
1 | Intrinsic
value is calculated as the amount by which the stock price at exercise date exceeded the option exercise price. |
Fiscal
Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Weighted-average per award fair value at date of grant | $ | i 66.26 | $ | i 63.24 | $ | i 66.09 | ||||||
Fair
value of restricted stock units vested | $ | i 3,083 | $ | i 4,888 | $ | i 3,604 |
Restricted Stock Units | Weighted-Average Fair Value at Date of Grant | ||||||
Unvested as of October 31,
2018 | i 99,554 | $ | i 59.15 | ||||
Granted | i 76,496 | i 66.26 | |||||
Vested | ( i 47,357 | ) | i 54.38 | ||||
Forfeited | ( i 4,226 | ) | i 58.94 | ||||
Unvested
as of October 31, 2019 | i 124,467 | $ | i 65.30 |
Fiscal
Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Weighted-average per award fair value at date of grant | $ | i 59.58 | $ | i 65.40 | $ | i 54.52 | ||||||
Fair
value of performance share awards vested | $ | i 6,300 | $ | i 8,419 | $ | i 7,018 |
Performance Shares | Weighted-Average Fair Value at Date of Grant | ||||||
Unvested as of October 31,
2018 | i 221,392 | $ | i 50.96 | ||||
Granted | i 69,600 | i 59.58 | |||||
Vested | ( i 91,803 | ) | i 38.89 | ||||
Canceled/forfeited | ( i 6,335 | ) | i 61.34 | ||||
Unvested
as of October 31, 2019 | i 192,854 | $ | i 59.47 |
10 | Stockholders' Equity |
As of October 31 | 2019 | 2018 | 2017 | |||||||||
Foreign
currency translation adjustments | $ | i 31,025 | $ | i 29,711 | $ | i 21,303 | ||||||
Pension
and post-retirement benefits | i 4,861 | i 561 | i 2,012 | |||||||||
Cash
flow derivative instruments | ( i 3,837 | ) | ( i 6,335 | ) | i 805 | |||||||
Total
accumulated other comprehensive loss | $ | i 32,049 | $ | i 23,937 | $ | i 24,120 |
Foreign Currency Translation Adjustments | Pension and Post-Retirement Benefits | Cash
Flow Derivative Instruments | Total | |||||||||||||
Balance as of October 31, 2018 | $ | i 29,711 | $ | i 561 | $ | ( i 6,335 | ) | $ | i 23,937 | |||||||
Other
comprehensive (income) loss before reclassifications | i 1,314 | i 4,300 | ( i 4,048 | ) | i 1,566 | |||||||||||
Amounts
reclassified from AOCL | — | — | i 6,546 | i 6,546 | ||||||||||||
Net
current period other comprehensive loss | i 1,314 | i 4,300 | i 2,498 | i 8,112 | ||||||||||||
Balance
as of October 31, 2019 | $ | i 31,025 | $ | i 4,861 | $ | ( i 3,837 | ) | $ | i 32,049 |
Foreign
Currency Translation Adjustments | Pension and Post-Retirement Benefits | Cash Flow Derivative Instruments | Total | |||||||||||||
Balance as of October 31, 2017 | $ | i 21,303 | $ | i 2,012 | $ | i 805 | $ | i 24,120 | ||||||||
Other
comprehensive (income) loss before reclassifications | i 8,408 | ( i 1,035 | ) | ( i 5,489 | ) | i 1,884 | ||||||||||
Amounts
reclassified from AOCL | — | — | ( i 1,926 | ) | ( i 1,926 | ) | ||||||||||
Net
current period other comprehensive (income) loss | i 8,408 | ( i 1,035 | ) | ( i 7,415 | ) | ( i 42 | ) | |||||||||
Reclassification
due to the adoption of ASU 2018-02 | — | ( i 416 | ) | i 275 | ( i 141 | ) | ||||||||||
Balance
as of October 31, 2018 | $ | i 29,711 | $ | i 561 | $ | ( i 6,335 | ) | $ | i 23,937 |
11 | Investment
in Joint Venture |
For the Twelve Months Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Revenue | $ | i 47,569 | $ | i 42,051 | $ | i 35,158 | ||||||
Interest
and operating expenses, net | ( i 21,011 | ) | ( i 17,288 | ) | ( i 13,030 | ) | ||||||
Net
income | $ | i 26,558 | $ | i 24,763 | $ | i 22,128 |
As
of October 31 | 2019 | 2018 | ||||||
Finance receivables, net | $ | i 486,834 | $ | i 446,138 | ||||
Other
assets | i 3,733 | i 3,449 | ||||||
Total
assets | $ | i 490,567 | $ | i 449,587 | ||||
Notes
payable | $ | i 419,308 | $ | i 378,128 | ||||
Other
liabilities | i 17,594 | i 21,366 | ||||||
Partners'
capital | i 53,665 | i 50,093 | ||||||
Total
liabilities and partners' capital | $ | i 490,567 | $ | i 449,587 |
12 | Commitments
and Contingent Liabilities |
13 | Financial
Instruments |
Fair
Value as of October 31 | 2019 | 2018 | ||||||
Derivative assets: | ||||||||
Derivatives designated as cash flow hedging instruments: | ||||||||
Prepaid
expenses and other current assets | ||||||||
Forward currency contracts | $ | i 8,642 | $ | i 8,596 | ||||
Derivatives
not designated as cash flow hedging instruments: | ||||||||
Prepaid expenses and other current assets | ||||||||
Forward
currency contracts | i 2,256 | i 2,305 | ||||||
Total
assets | $ | i 10,898 | $ | i 10,901 | ||||
Derivative
liabilities: | ||||||||
Derivatives not designated as cash flow hedging instruments: | ||||||||
Accrued
liabilities | ||||||||
Forward currency contracts | $ | i 9 | $ | i 13 | ||||
Total
liabilities | $ | i 9 | $ | i 13 |
Fair Value as of October 31 | 2019 | 2018 | ||||||
Derivative assets: | ||||||||
Forward
currency contracts: | ||||||||
Gross amounts of recognized assets | $ | i 11,056 | $ | i 10,901 | ||||
Gross
liabilities offset in the Consolidated Balance Sheets | ( i 158 | ) | i — | |||||
Net
amounts of assets presented in the Consolidated Balance Sheets | $ | i 10,898 | $ | i 10,901 | ||||
Derivative
liabilities: | ||||||||
Forward currency contracts: | ||||||||
Gross
amounts of recognized liabilities | $ | ( i 9 | ) | $ | ( i 13 | ) | ||
Gross
assets offset in the Consolidated Balance Sheets | i — | i — | ||||||
Net
amounts of liabilities presented in the Consolidated Balance Sheets | $ | ( i 9 | ) | $ | ( i 13 | ) |
Gain
(Loss) Reclassified from AOCL into Income | Gain (Loss) Recognized in OCI on Derivatives | |||||||||||||||
Fiscal Years Ended October 31 | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Derivatives
designated as cash flow hedging instruments: | ||||||||||||||||
Forward currency contracts: | ||||||||||||||||
Net
sales | $ | i 5,732 | $ | ( i 2,914 | ) | $ | ( i 2,268 | ) | $ | i 7,008 | ||||||
Cost
of sales | i 814 | i 988 | ( i 230 | ) | i 132 | |||||||||||
Total
derivatives designated as cash flow hedging instruments | $ | i 6,546 | $ | ( i 1,926 | ) | $ | ( i 2,498 | ) | $ | i 7,140 |
Gain
Recognized in Earnings on Cash Flow Hedging Instruments | ||||||||
Fiscal Year Ended October 31, 2019 | Net Sales | Cost of Sales | ||||||
Total Consolidated Statements of Earnings income (expense) amounts in which the effects of cash flow hedging instruments are recorded | $ | i 3,138,084 | $ | ( i 2,090,121 | ) | |||
Gain
on derivatives designated as cash flow hedging instruments: | ||||||||
Forward currency contracts: | ||||||||
Amount of gain reclassified from AOCL into earnings | i 5,732 | i 814 | ||||||
Gain
on components excluded from effectiveness testing recognized in earnings based on changes in fair value | $ | i 5,358 | $ | i 135 |
Gain
(Loss) Recognized in Earnings on Cash Flow Hedging Instruments | ||||||||
Fiscal Year Ended October 31, 2018 | Net Sales | Cost of Sales | ||||||
Total Consolidated Statements of Earnings income (expense) amounts in which the effects of cash flow hedging instruments are recorded | $ | i 2,618,650 | $ | ( i 1,677,639 | ) | |||
Gain
(loss) on derivatives designated as cash flow hedging instruments: | ||||||||
Forward currency contracts: | ||||||||
Amount of gain (loss) reclassified from AOCL into earnings | ( i 2,914 | ) | i 988 | |||||
Gain
(loss) on components excluded from effectiveness testing recognized in earnings based on changes in fair value | $ | i 490 | $ | ( i 369 | ) |
Fiscal Years Ended October 31 | 2019 | 2018 | ||||||
Gain
(loss) on derivative instruments not designated as cash flow hedging instruments: | ||||||||
Forward currency contracts: | ||||||||
Other income, net | $ | ( i 2,087 | ) | $ | i 2,930 | |||
Total
gain (loss) on derivatives not designated as cash flow hedging instruments | $ | ( i 2,087 | ) | $ | i 2,930 |
14 | Fair
Value |
Fair
Value Measurements Using Inputs Considered as: | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Forward
currency contracts | $ | i 10,898 | $ | i — | $ | i 10,898 | $ | i — | ||||||||
Total
assets | $ | i 10,898 | $ | i — | $ | i 10,898 | $ | i — | ||||||||
Liabilities: | ||||||||||||||||
Forward
currency contracts | $ | i 9 | $ | i — | $ | i 9 | $ | i — | ||||||||
Total
liabilities | $ | i 9 | $ | i — | $ | i 9 | $ | i — |
Fair Value Measurements Using Inputs Considered as: | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets: | ||||||||||||||||
Forward
currency contracts | $ | i 10,901 | $ | i — | $ | i 10,901 | $ | i — | ||||||||
Total
assets | $ | i 10,901 | $ | i — | $ | i 10,901 | $ | i — | ||||||||
Liabilities: | ||||||||||||||||
Forward
currency contracts | $ | i 13 | $ | i — | $ | i 13 | $ | i — | ||||||||
Total
liabilities | $ | i 13 | $ | i — | $ | i 13 | $ | i — |
15 | Employee
Retirement Plans |
Fiscal Years Ended October 31 | Defined Benefit Pension Plans | Post-Retirement Benefit Plan | Total | |||||||||
2019 | ||||||||||||
Net
actuarial loss | $ | i 4,861 | $ | i — | $ | i 4,861 | ||||||
Accumulated
other comprehensive loss | $ | i 4,861 | $ | i — | $ | i 4,861 | ||||||
2018 | ||||||||||||
Net
actuarial loss (gain) | $ | i 4,632 | $ | ( i 4,071 | ) | $ | i 561 | |||||
Accumulated
other comprehensive loss (income) | $ | i 4,632 | $ | ( i 4,071 | ) | $ | i 561 |
Defined
Benefit Pension Plans | Post-Retirement Benefit Plan | Total | ||||||||||
Net actuarial gain | $ | ( i 139 | ) | $ | i — | $ | ( i 139 | ) | ||||
Total
net periodic benefit income | $ | ( i 139 | ) | $ | i — | $ | ( i 139 | ) |
Fiscal
Year Ended October 31 | Defined Benefit Pension Plans | Post-Retirement Benefit Plan | Total | |||||||||
2019 | ||||||||||||
Net
actuarial loss (gain) | $ | i 154 | $ | ( i 1,138 | ) | $ | ( i 984 | ) | ||||
Amortization
of unrecognized actuarial gain | i 71 | i 5,213 | i 5,284 | |||||||||
Total
recognized in other comprehensive income | $ | i 225 | $ | i 4,075 | $ | i 4,300 | ||||||
Total
recognized in net periodic benefit cost (income) and other comprehensive loss (income) | $ | i 396 | $ | ( i 2,653 | ) | $ | ( i 2,257 | ) |
Fiscal
Year Ended October 31 | Defined Benefit Pension Plans | Post-Retirement Benefit Plan | Total | |||||||||
2018 | ||||||||||||
Net
actuarial (gain) | $ | ( i 277 | ) | $ | ( i 745 | ) | $ | ( i 1,022 | ) | |||
Amortization
of unrecognized actuarial gain (loss) | ( i 300 | ) | i 287 | ( i 13 | ) | |||||||
Total
recognized in other comprehensive income | $ | ( i 577 | ) | $ | ( i 458 | ) | $ | ( i 1,035 | ) | |||
Total
recognized in net periodic benefit cost (income) and other comprehensive loss (income) | $ | i 106 | $ | ( i 1,322 | ) | $ | ( i 1,216 | ) |
16 | Other
Income, Net |
Fiscal Years Ended October 31 | 2019 | 2018 | 2017 | |||||||||
Interest
income | $ | i 2,753 | $ | i 2,463 | $ | i 1,359 | ||||||
Retail
financing revenue | i 1,178 | i 1,232 | i 1,097 | |||||||||
Foreign
currency exchange rate gain | i 1,558 | i 1,127 | i 1,543 | |||||||||
Loss
on asset disposals | ( i 484 | ) | i — | i — | ||||||||
Non-cash
income from finance affiliate | i 11,948 | i 11,143 | i 9,960 | |||||||||
Litigation
settlements, net of recoveries | ( i 1,659 | ) | ( i 700 | ) | ( i 65 | ) | ||||||
Net
periodic benefit income on defined benefit pension and post-retirement plans | i 6,822 | i — | i — | |||||||||
Miscellaneous | i 3,823 | i 3,143 | i 3,293 | |||||||||
Total
other income, net | $ | i 25,939 | $ | i 18,408 | $ | i 17,187 |
17 | Subsequent
Events |
18 | Quarterly
Financial Data (Unaudited) |
Quarter | ||||||||||||||||
Fiscal
Year Ended October 31, 2019 | First | Second2 | Third2 | Fourth | ||||||||||||
Net sales | $ | i 602,956 | $ | i 962,036 | $ | i 838,713 | $ | i 734,379 | ||||||||
Gross
profit | i 215,617 | i 321,298 | i 265,981 | i 245,067 | ||||||||||||
Net
earnings | i 59,540 | i 115,570 | i 60,607 | i 38,266 | ||||||||||||
Basic
net earnings per share1 | i 0.56 | i 1.08 | i 0.57 | i 0.36 | ||||||||||||
Diluted
net earnings per share1 | $ | i 0.55 | $ | i 1.07 | $ | i 0.56 | $ | i 0.35 |
Quarter | ||||||||||||||||
Fiscal
Year Ended October 31, 2018 | First | Second | Third | Fourth | ||||||||||||
Net sales | $ | i 548,246 | $ | i 875,280 | $ | i 655,821 | $ | i 539,303 | ||||||||
Gross
profit | i 204,239 | i 324,056 | i 233,653 | i 179,063 | ||||||||||||
Net
earnings | i 22,604 | i 131,289 | i 79,009 | i 39,037 | ||||||||||||
Basic
net earnings per share1 | i 0.21 | i 1.23 | i 0.75 | i 0.37 | ||||||||||||
Diluted
net earnings per share1 | $ | i 0.21 | $ | i 1.21 | $ | i 0.73 | $ | i 0.36 |
1 | Basic
and diluted net earnings per share amounts may not equal the full year total due to changes in the number of weighted-average shares of common stock outstanding during the periods and rounding. |
2 | During fiscal 2019, CMW's financial position, results of operations, and cash flows were reported on a calendar month end. Accordingly, April 30, 2019 and July
31, 2019 were the calendar quarterly period end dates closest to the company's quarterly fiscal periods ended May 3, 2019 and August 2, 2019, respectively. This reporting period difference did not have material impact on the company's Consolidated Results of Operations during the company's second and third fiscal quarters. For the company's fiscal 2019 fourth quarter, the reporting period end for both CMW and the company was October
31, 2019. |
1. | Financial Statements |
Management's Report
on Internal Control over Financial Reporting | |
Report of Independent Registered Public Accounting Firm | |
Consolidated Statements of Earnings for the fiscal years ended October 31, 2019, 2018, and 2017 | |
Consolidated
Statements of Comprehensive Income for the fiscal years ended October 31, 2019, 2018, and 2017 | |
Consolidated Balance Sheets as of October 31, 2019 and 2018 | |
Consolidated Statements of Cash Flows for the fiscal years ended October 31, 2019, 2018,
and 2017 | |
Consolidated Statements of Stockholders' Equity for the fiscal years ended October 31, 2019, 2018, and 2017 | |
Notes to Consolidated Financial Statements |
2. | List
of Financial Statement Schedules |
Schedule II — Valuation and Qualifying Accounts |
3. | List
of Exhibits |
Exhibit Number | Description | |
2.1 (1) | ||
2.2 (2) | ||
2.3
(3) | ||
2.4 (1) | ||
2.5 | ||
2.6
(2) | ||
2.7 (3) | ||
2.8 | ||
2.9
(3) |
2.10 | ||
2.11 | ||
3.1
and 4.1 | ||
3.2 and 4.2 | ||
3.3 and 4.3 | ||
4.4 | ||
4.5 | ||
4.6 | Indenture dated as of January 31, 1997 between
Registrant and First National Trust Association, as Trustee, relating to The Toro Company's 7.80% Debentures due June 15, 2027 (incorporated by reference to Exhibit 4(a) to Registrant's Current Report on Form 8-K dated June 24, 1997, Commission File No. 1-8649). (Filed on paper - hyperlink not required pursuant to Rule 105 of Regulation S-T) | |
4.7 | ||
4.8 | ||
4.9 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
10.11 |
10.12 | ||
10.13 | ||
10.14 | ||
10.15 | ||
10.16 | ||
10.17 | ||
10.18 | ||
10.19 | ||
10.20 | ||
10.21 | ||
10.22 | ||
10.23 | ||
10.24 | ||
10.25 (1) | ||
10.26 (2) | ||
10.27 | ||
10.28 | ||
10.29 | ||
21 | ||
23.1 | ||
31.1 |
31.2 | ||
32 | ||
101 | The following financial information from The Toro Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2019, filed with the SEC on December 20, 2019, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Statements of Earnings for each of the fiscal years in the three-year period ended October 31, 2019, (ii) Consolidated Statements of Comprehensive Income for each of the fiscal years in the
three-year period ended October 31, 2019, (iii) Consolidated Balance Sheets as of October 31, 2019 and 2018, (iv) Consolidated Statements of Cash Flows for each of the fiscal years in the three-year period ended October 31, 2019, (v) Consolidated Statements of Stockholders' Equity each of the fiscal years in the three-year period ended October 31, 2019, and (vi) Notes to Consolidated Financial Statements (filed herewith). | |
104 | Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101). |
(Dollars in thousands) | Balance
as of the Beginning of the Fiscal Year | Charged to Costs and Expenses1 | Acquisitions | Deductions2 | Balance as of the End of the Fiscal Year | |||||||||||||||
Fiscal year ended October 31, 2019 | ||||||||||||||||||||
Accrued
advertising and marketing programs | $ | i 89,450 | $ | i 402,087 | $ | i 6,669 | $ | i 394,789 | $ | i 103,417 | ||||||||||
Fiscal
year ended October 31, 2018 | ||||||||||||||||||||
Accrued
advertising and marketing programs | i 85,934 | i 387,774 | i — | i 384,258 | i 89,450 | |||||||||||||||
Fiscal
year ended October 31, 2017 | ||||||||||||||||||||
Accrued
advertising and marketing programs | $ | i 81,315 | $ | i 377,989 | $ | i — | $ | i 373,370 | $ | i 85,934 |
1 | Provision
consists of off-invoice discounts, rebate programs, incentive discounts, financing programs, various commissions, and cooperative advertising. The expense of each program is classified either as a reduction from gross sales or as a component of selling, general, and administrative expense as explained in more detail in the section entitled "Sales Promotions and Incentives" included in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this report and in Note 1, Summary of Significant Accounting Policies and Related Data of the Notes to Consolidated Financial Statements, in the section entitled "Sales Promotions and Incentives" included in Part II, Item 8, "Financial Statements and Supplementary Data" of this report. |
2 | Claims
paid. |
THE
TORO COMPANY | ||||
(Registrant) | ||||
By: | Dated: | |||
Vice President, Treasurer and Chief Financial Officer |
Signature | Title | Date | ||
/s/
Richard M. Olson | Chairman of the Board, President and Chief Executive Officer and Director (principal executive officer) | |||
Vice President, Treasurer and Chief Financial Officer (principal financial and accounting officer) | ||||
/s/
Janet K. Cooper | Director | |||
/s/ Gary
L. Ellis | Director | |||
Director | ||||
Director | ||||
Director | ||||
Director | ||||
/s/ Joyce
A. Mullen | Director | |||
Director | ||||
Director | ||||
/s/ Michael G. Vale | Director | |||
This ‘10-K’ Filing | Date | Other Filings | ||
---|---|---|---|---|
5/1/37 | ||||
6/15/31 | ||||
6/15/29 | ||||
6/15/27 | ||||
10/31/26 | ||||
10/31/24 | ||||
4/1/24 | ||||
4/1/22 | ||||
3/17/20 | 8-K | |||
1/31/20 | 10-Q | |||
1/10/20 | ||||
12/31/19 | 11-K, SD | |||
Filed on: | 12/20/19 | 4 | ||
12/15/19 | ||||
12/13/19 | ||||
12/3/19 | 3 | |||
11/8/19 | 8-K | |||
11/1/19 | 4 | |||
For Period end: | 10/31/19 | DEF 14A | ||
9/28/19 | ||||
9/27/19 | ||||
8/31/19 | ||||
8/30/19 | 4 | |||
8/3/19 | ||||
8/2/19 | 10-Q | |||
8/1/19 | 8-K | |||
7/31/19 | ||||
6/27/19 | 11-K, 8-K | |||
5/3/19 | 10-Q | |||
4/30/19 | 8-K | |||
4/1/19 | 4, 8-K, 8-K/A | |||
2/14/19 | 8-K, SC 13G/A | |||
1/1/19 | ||||
12/4/18 | 3, 4 | |||
11/30/18 | ||||
11/1/18 | 4 | |||
10/31/18 | 10-K | |||
3/19/18 | ||||
1/1/18 | 3 | |||
12/22/17 | 10-K | |||
11/1/17 | 4 | |||
10/31/17 | 10-K | |||
1/1/17 | ||||
11/29/16 | 8-K | |||
10/31/16 | 10-K | |||
9/16/16 | ||||
12/3/15 | 4, 8-K | |||
10/31/14 | 10-K, ARS | |||
4/26/07 | 8-K | |||
6/24/97 | 8-K | |||
1/31/97 | 10-Q, S-3 | |||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 12/20/23 Toro Co. 10-K 10/31/23 133:14M 12/22/22 Toro Co. 10-K 10/31/22 119:14M 12/17/21 Toro Co. 10-K 10/31/21 120:14M 12/18/20 Toro Co. 10-K 10/31/20 133:15M |