UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): December 6,
2007
THE
TORO COMPANY
(Exact
name of registrant as specified in its charter)
|
Delaware
|
1-8649
|
41-0580470
|
|
(State
of Incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification Number)
|
|
8111
Lyndale Avenue South
Bloomington,
Minnesota
(Address
of principal executive offices)
|
55420
(Zip
Code)
|
Registrant’s
telephone number, including area code: (952)
888-8801
Not
Applicable
(Former
name or former address, if changed since last report.)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[ ] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[ ] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Section
2 — Financial Information
Item
2.02 Results of Operations and Financial
Condition.
On
December 6, 2007, The Toro Company announced its earnings for the three and
twelve months ended October 31, 2007.
Attached
to this Current Report on Form 8-K as Exhibit 99.1 is a copy of The Toro
Company’s press release in connection with the announcement. The
information in this Item 2.02, including the exhibit attached hereto, is
furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except as shall be expressly set forth by specific
reference in such filing.
Section
9 — Financial Statements and
Exhibits
Item
9.01 Financial
Statements and Exhibits
(d) Exhibits.
|
Exhibit
No.
|
Description
|
|
99.1
|
Press
release dated December 6, 2007 related to the announcement of earnings
(furnished herewith).
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
THE
TORO
COMPANY
(Registrant)
|
Date: December
6, 2007
|
By
/s/ Stephen P. Wolfe
|
|
Stephen
P. Wolfe
|
|
|
Vice
President, Finance
|
|
|
and
Chief Financial Officer
|
|
|
(duly
authorized officer and principal financial
officer)
|
EXHIBIT
INDEX
|
EXHIBIT
NUMBER
|
DESCRIPTION
|
|
99.1
|
Press
release dated December 6, 2007 related to the announcement of earnings
(furnished herewith).
|
Exhibit
99.1
Investor
Relations
John
Wright, Director, Investor Relations
(952)
887-8865, invest@toro.com
Media
Relations
Connie
Kotke, Manager, Corporate Communications
(952)
887-8984, pr@toro.com
www.thetorocompany.com
For
Immediate Release
TORO
REPORTS RECORD FISCAL 2007 EARNINGS
|
•
|
Net
Earnings Per Share Up 16.8 Percent to
$3.40
|
|
•
|
Board
Raises Quarterly Dividend From $0.12 to $0.15 Per Common
Share
|
|
•
|
Company
Announces Acquisition of Turf Guard™
Technology
|
BLOOMINGTON,
Minn. (Dec. 6, 2007) – The Toro Company (NYSE: TTC) today reported record net
sales and net earnings for the fiscal year ended October 31,
2007. Net earnings for the year totaled $142.4 million, or $3.40 per
share, compared with net earnings of $129.1 million, or $2.91 per share,
in
fiscal 2006. Net sales for fiscal 2007 increased 2.2 percent to
$1,876.9 million from $1,836 million last year.
For
the
fourth quarter ended October 31, 2007, Toro reported net earnings of $6.5
million, or $0.16 per share, on net sales of $332.5 million. In the
comparable fiscal 2006 period, the company reported net earnings of $4.5
million, or $0.10 per share, on net sales of $329.5 million.
During
fiscal 2007, continued strong cash flows enabled the company to use $202.3
million for share repurchases and dividend payments. Additionally, the
company’s board of directors increased the quarterly dividend from $0.12 to
$0.15 per common share, payable January 11, 2008 to shareholders of record
on
December 17, 2007.
“In
challenging market conditions, our performance in fiscal 2007 highlights
the
strength and resiliency of our company,” said Michael J. Hoffman, chairman and
chief executive officer. “We completed another record year of
increased net sales and net earnings with solid growth in the worldwide
professional segment. We believe these results indicate that Toro has
outperformed in a soft market.” The company reported worldwide growth
in its professional segment net sales which helped offset softness in the
residential segment worldwide. International net sales increased 9.6
percent over 2006 and accounted for 29 percent of total net sales, an increase
from 27 percent in 2006.
--
more
--
SEGMENT
RESULTS
Professional
|
§
|
Professional
segment net sales for fiscal 2007 increased 3.7 percent to $1,270.5
million. Increases in worldwide net sales of equipment and
irrigation systems to the sports field and grounds and golf markets
were
driven by strong acceptance of new products. Additionally, the
acquisition of Rain Master™ and currency effects contributed to this
increase. Partially offsetting this increase were field
inventory reductions of landscape contractor products resulting
in modest
declines in the sale of these
products.
|
|
§
|
Professional
segment earnings for fiscal 2007 increased 11.6 percent to $254.2
million.
|
|
§
|
For
the fiscal 2007 fourth quarter, professional segment net sales
totaled
$218.2 million compared with $212.3 million in the fiscal 2006
fourth
quarter.
|
|
§
|
Professional
segment earnings for the fiscal 2007 fourth quarter totaled $26.7
million
compared with $20.5 million in the corresponding quarter last
year.
|
Residential
|
§
|
Residential
segment net sales for fiscal 2007 declined 0.6 percent to $563.5
million
from $566.6 million in fiscal 2006. For the year, strong
worldwide acceptance of new zero turn riding products and walk
power
mowers were more than offset by declines in sales of snowthrower
and
electric products.
|
|
§
|
Residential
segment earnings for fiscal 2007 were $41.8 million, a 22.7 percent
increase from $34.1 million in fiscal
2006.
|
|
§
|
For
the fiscal 2007 fourth quarter, residential segment net sales were
$100.8
million compared to $102.9 million in the fiscal 2006 fourth
quarter.
|
|
§
|
Residential
segment earnings for the fiscal 2007 fourth quarter were $1.5 million,
compared to $0.9 million in the 2006 fourth
quarter.
|
REVIEW
OF OPERATIONS
Gross
margin for fiscal 2007 was 36.1 percent compared with 35 percent in fiscal
2006. The improvement resulted from a larger percentage of
professional segment products, selective price increases and cost reductions
from ongoing lean efforts which was somewhat offset by increased commodity
costs. For the fiscal 2007 fourth quarter, gross margin was 34.9
percent, up from 33.6 percent in the fiscal 2006 fourth quarter.
Selling,
general and administrative (SG&A) expenses were 24.2 percent in fiscal 2007,
slightly higher than the 24 percent in the prior year. For the fiscal
2007 fourth quarter, SG&A expenses were 31.9 percent compared to 30.4
percent in the same period last year.
Interest
expense for the year was up $1.8 million or up 10 percent compared to the
prior
year.
The
effective tax rate for 2007 was 33.2 percent compared with 33.0 percent in
fiscal 2006.
Accounts
receivable at year end totaled $283.1 million, down 4 percent or $11.7 million
from the end of fiscal 2006 on a net sales increase of 0.9 percent in the
quarter. Net inventory at fiscal year end increased 5.3 percent, or
$12.7 million, to $251.3 million due to lower-than-anticipated shipments
in the
fourth quarter. The company generated $183.6 million in cash flow
from operations during fiscal 2007 compared to $190.3 million in fiscal
2006.
BUSINESS
OUTLOOK
Today,
Toro announced the acquisition of Turf Guard Wireless Monitoring System
technology to further strengthen its leadership position in the golf irrigation
market. The acquisition is an important addition to the company’s
precision irrigation strategy for the future. Turf Guard is designed
to measure soil moisture, salinity and temperature through buried wireless
sensors that transmit data to a web-based interface for analysis. It
will provide a significant and competitive benefit to assist customers in
the
overall management of water application. Although Toro’s long-term
strategy will benefit from the addition of this technology, revenue
contributions in the short-term are not expected to be material.
Commenting
on the outlook for 2008, Hoffman said, “While the challenging market conditions
of 2007 are likely to continue, we believe we are well-positioned to deliver
a
year of solid returns. We also anticipate another year of share gains
in 2008, supported by continued strong customer acceptance of innovative
new
products and a growing global presence.”
The
company currently expects to deliver a 9 to 11 percent increase in fiscal
2008
net earnings per share, on revenue growth of 3 to 5 percent. For its
fiscal first quarter, typically a small revenue period, Toro expects to report
net earnings of $0.40 to $0.45 per share.
The
Toro
Company is a leading worldwide provider of outdoor maintenance and
beautification products for home, recreation and commercial
landscapes
LIVE
CONFERENCE CALL
December
6, 2007 10:00 a.m. CST
www.thetorocompany.com/invest
TheToro
Company will conduct a conference call and webcast for investors beginning
at
10:00 a.m. Central Time (CST) on December 6, 2007. The
webcast will be available at www.streetevents.com or at
www.thetorocompany.com/invest. Webcast participants
will need to complete a brief registration form and should allocate extra
time
before the webcastbegins to register and, if necessary, download and
install audio software.
SafeHarbor
Statements
made in this news release, which are forward-looking, are made pursuant to
the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995.
Forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those projected or implied. These
uncertainties include factors that affect all businesses operating in a global
market as well as matters specific to Toro. Particular risks and uncertainties
that may affect the company’s operating results or overall financial position at
the present include: slow growth rates in global and domestic economies,
resulting in rising unemployment and weakened consumer confidence; the threat
of
further terrorist acts and war, which may result in contraction of the U.S.
and
worldwide economies; fluctuations in the cost and availability of raw materials,
including steel, resins and other commodities; rising fuel and other costs
of
transportation; the impact of abnormal weather patterns and natural disasters;
the level of growth in our markets, including the golf market; reduced
government spending for grounds maintenance equipment due to reduced tax
revenue
and tighter government budgets; dependence on The Home Depot as a customer
for
the residential segment; elimination of shelf space for our products at
retailers; inventory adjustments or changes in purchasing patterns by our
customers; market acceptance of existing and new products; increased
competition; our ability to achieve the goals for our current three-year
growth,
profit and asset management initiative called “GrowLean” which is intended to
improve our revenue growth, after-tax return on sales and working capital
efficiency; our increased dependence on international sales and the risks
attendant to international operations; interest rates and currency movements
including, in particular, our exposure to foreign currency risk; financial
viability of distributors and dealers; our ability to successfully achieve
our
plans for and integrate acquisitions and manage alliances; the costs and
effects
of complying with changes in tax, fiscal, government and other regulatory
policies, including rules relating to environmental, health and safety matters;
unforeseen product quality problems in the development, production and usage
of
new and existing products; loss of or changes in executive management or
key
employees; ability of management to manage around unplanned events; our reliance
on our intellectual property rights and the absence of infringement of the
intellectual property rights of others; the occurrence of litigation
or claims, including the previously disclosed pending litigation against
the
company and other defendants that challenges the horsepower ratings of
lawnmowers, of which the company is currently unable to assess whether the
litigation would have a material adverse effect on the company’s consolidated
operating results or financial condition, although an adverse result might
be
material to operating results in a particular reporting period. In
addition to the factors set forth in this paragraph, market, economic,
financial, competitive, weather, production and other factors identified
in
Toro's quarterly and annual reports filed with the Securities and Exchange
Commission, could affect the forward-looking statements in this press release.
Toro undertakes no obligation to update forward-looking statements made in
this
release to reflect events or circumstances after the date of this
statement.
(Financial
tables follow)
--
more
--
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Earnings (Unaudited)
(Dollars
and shares in thousands, except per-share data)
|
Three
Months Ended
|
Fiscal
Years Ended
|
|||||||||||||||
|
October
31,
2007
|
October
31,
2006
|
October
31,
2007
|
October
31,
2006
|
|||||||||||||
|
Net
sales
|
$ |
332,456
|
$ |
329,486
|
$ |
1,876,904
|
$ |
1,835,991
|
||||||||
|
Gross
profit
|
116,151
|
110,850
|
678,375
|
643,316
|
||||||||||||
|
Gross
profit percent
|
34.9 | % | 33.6 | % | 36.1 | % | 35.0 | % | ||||||||
|
Selling,
general, and administrative expense
|
106,004
|
100,311
|
454,726
|
440,440
|
||||||||||||
|
Earnings
from operations
|
10,147
|
10,539
|
223,649
|
202,876
|
||||||||||||
|
Interest
expense
|
(4,210 | ) | (3,575 | ) | (19,445 | ) | (17,672 | ) | ||||||||
|
Other
income, net
|
3,202
|
1,462
|
9,023
|
7,550
|
||||||||||||
|
Earnings
before income taxes
|
9,139
|
8,426
|
213,227
|
192,754
|
||||||||||||
|
Provision
for income taxes
|
2,605
|
3,964
|
70,791
|
63,609
|
||||||||||||
|
Net
earnings
|
$ |
6,534
|
$ |
4,462
|
$ |
142,436
|
$ |
129,145
|
||||||||
|
Basic
net earnings per share
|
$ |
.16
|
$ |
.11
|
$ |
3.50
|
$ |
3.01
|
||||||||
|
Diluted
net earnings per share
|
$ |
.16
|
$ |
.10
|
$ |
3.40
|
$ |
2.91
|
||||||||
|
Weighted
average number of shares of common
stock
outstanding – Basic
|
39,900
|
41,654
|
40,682
|
42,887
|
||||||||||||
|
Weighted
average number of shares of common
stock
outstanding – Dilutive
|
41,090
|
43,007
|
41,864
|
44,344
|
||||||||||||
--
more
--
THE
TORO COMPANY AND SUBSIDIARIES
Segment
Data (Unaudited)
(Dollars
in thousands)
|
Three
Months Ended
|
Fiscal
Years Ended
|
|||||||||||||||
|
Segment
Net Sales
|
October
31,
2007
|
October
31,
2006
|
October
31,
2007
|
October
31,
2006
|
||||||||||||
|
Professional
|
$ |
218,159
|
$ |
212,339
|
$ |
1,270,530
|
$ |
1,224,775
|
||||||||
|
Residential
|
100,839
|
102,855
|
563,524
|
566,641
|
||||||||||||
|
Other
|
13,458
|
14,292
|
42,850
|
44,575
|
||||||||||||
|
Total *
|
$ |
332,456
|
$ |
329,486
|
$ |
1,876,904
|
$ |
1,835,991
|
||||||||
|
*
Includes international sales of
|
$ |
101,806
|
$ |
93,993
|
$ |
543,599
|
$ |
495,993
|
||||||||
|
Three
Months Ended
|
Fiscal
Years Ended
|
|||||||||||||||
|
Segment
Earnings (Loss) Before Income Taxes
|
October
31,
2007
|
October
31,
2006
|
October
31,
2007
|
October
31,
2006
|
||||||||||||
|
Professional
|
$ |
26,701
|
$ |
20,512
|
$ |
254,178
|
$ |
227,692
|
||||||||
|
Residential
|
1,513
|
922
|
41,828
|
34,094
|
||||||||||||
|
Other
|
(19,075 | ) | (13,008 | ) | (82,779 | ) | (69,032 | ) | ||||||||
|
Total
|
$ |
9,139
|
$ |
8,426
|
$ |
213,227
|
$ |
192,754
|
||||||||
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets (Unaudited)
(Dollars
in thousands)
|
October
31,
2007
|
October
31,
2006
|
|||||||
|
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ |
62,047
|
$ |
55,523
|
||||
|
Receivables,
net
|
283,115
|
294,833
|
||||||
|
Inventories,
net
|
251,275
|
238,544
|
||||||
|
Prepaid
expenses and other current assets
|
10,677
|
9,437
|
||||||
|
Deferred
income taxes
|
57,814
|
55,846
|
||||||
|
Total
current assets
|
664,928
|
654,183
|
||||||
|
Property,
plant, and equipment, net
|
170,672
|
166,323
|
||||||
|
Goodwill
and other assets
|
115,237
|
98,567
|
||||||
|
Total
assets
|
$ |
950,837
|
$ |
919,073
|
||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current
portion of long-term debt
|
$ |
1,611
|
$ |
-
|
||||
|
Short-term
debt
|
372
|
320
|
||||||
|
Accounts
payable
|
90,966
|
89,673
|
||||||
|
Accrued
liabilities
|
248,521
|
252,636
|
||||||
|
Total
current liabilities
|
341,470
|
342,629
|
||||||
|
Long-term
debt, less current portion
|
227,598
|
175,000
|
||||||
|
Deferred
revenue and other long-term liabilities
|
11,331
|
9,415
|
||||||
|
Stockholders’
equity
|
370,438
|
392,029
|
||||||
|
Total
liabilities and stockholders’ equity
|
$ |
950,837
|
$ |
919,073
|
||||
--
more
--
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(Dollars
in thousands)
|
Fiscal
Years Ended
|
||||||||
|
October
31,
2007
|
October
31,
2006
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
earnings
|
$ |
142,436
|
$ |
129,145
|
||||
|
Adjustments
to reconcile net earnings to net cash
provided
by operating activities:
|
||||||||
|
Equity
losses from investments
|
361
|
1,559
|
||||||
|
Provision
for depreciation and amortization
|
42,105
|
42,564
|
||||||
|
Gain
on disposal of property, plant, and equipment
|
(194 | ) | (110 | ) | ||||
|
Stock-based
compensation
expense
|
7,293
|
6,641
|
||||||
|
Increase
in deferred income
taxes
|
(522 | ) | (1,709 | ) | ||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Receivables
|
9,033
|
75
|
||||||
|
Inventories
|
(1,915 | ) | (522 | ) | ||||
|
Prepaid
expenses and other
assets
|
(977 | ) |
9,390
|
|||||
|
Accounts
payable, accrued
expenses, and deferred revenue
|
(14,046 | ) |
3,238
|
|||||
|
Net
cash provided by operating activities
|
183,574
|
190,271
|
||||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of property, plant, and equipment
|
(42,168 | ) | (39,885 | ) | ||||
|
Proceeds
from asset disposals
|
267
|
1,033
|
||||||
|
Increase
in investment in affiliates
|
-
|
(371 | ) | |||||
|
Decrease
in other assets
|
1,494
|
1,161
|
||||||
|
Acquisitions,
net of cash acquired
|
(9,881 | ) |
-
|
|||||
|
Net
cash used in investing activities
|
(50,288 | ) | (38,062 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Decrease
in short-term debt
|
(10 | ) | (5 | ) | ||||
|
Issuance
of long-term debt, net of costs
|
121,491
|
-
|
||||||
|
Repayments
of long-term debt
|
(75,000 | ) | (46 | ) | ||||
|
Excess
tax benefits from stock-based awards
|
13,775
|
13,131
|
||||||
|
Proceeds
from exercise of stock options
|
13,255
|
10,683
|
||||||
|
Purchases
of Toro common stock
|
(182,843 | ) | (146,543 | ) | ||||
|
Dividends
paid on Toro common stock
|
(19,459 | ) | (15,421 | ) | ||||
|
Net
cash used in financing activities
|
(128,791 | ) | (138,201 | ) | ||||
|
Effect
of exchange rates on cash
|
2,029
|
113
|
||||||
|
Net
increase in cash and cash equivalents
|
6,524
|
14,121
|
||||||
|
Cash
and cash equivalents as of the beginning of the fiscal
year
|
55,523
|
41,402
|
||||||
|
Cash
and cash equivalents as of the end of the fiscal year
|
$ |
62,047
|
$ |
55,523
|
||||