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): February 19,
2009
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
February 19, 2009, The Toro Company announced its earnings for the three months
ended January 30, 2009.
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 February 19, 2009 (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 hereunto
duly authorized.
THE TORO
COMPANY
(Registrant)
|
Date: February
19, 2009
|
By
/s/ Stephen P.
Wolfe
|
|
Stephen
P. Wolfe
|
|
|
Vice
President, Finance and Chief Financial
Officer
|
EXHIBIT
INDEX
|
EXHIBIT
NUMBER
|
DESCRIPTION
|
|
99.1
|
Press
release dated February 19, 2009 (furnished
herewith).
|
Exhibit 99.1
0; &#
160;
Investor
Relations
John
Wright
Director,
Investor Relations
(952)
887-8865, invest@toro.com
Media
Relations
Branden
Happel
Manager,
Public Relations
(952)
887-8930, pr@toro.com
www.thetorocompany.com
For
Immediate Release
Toro Reports Fiscal 2009
First Quarter Results
|
·
|
Company
delivers net earnings per share of
$0.18
|
|
·
|
Residential
segment sales flat; Professional segment sales down 22
percent
|
|
·
|
Focused
efforts to reduce working capital drive improved balance
sheet
|
BLOOMINGTON,
Minn. (February 19, 2009) – The Toro Company (NYSE: TTC) today reported net
earnings of $6.7 million, or $0.18 per share, on net sales of $340.2 million for
its fiscal first quarter ended January 30, 2009. The company’s first
quarter results were reduced by a pre-tax charge of $1.3 million, or $0.02 per
share on an after-tax basis, to account for workforce adjustments. In
the comparable fiscal 2008 period, the company reported net earnings of $18.6
million, or $0.47 per share, on net sales of $405.8 million.
“We are
operating in an extremely challenging business environment with revenue
uncertainties, as well as overall currency and commodity pressures,“ said
Michael J. Hoffman, Toro’s chairman and chief executive
officer. “Accordingly, we are managing production volumes very
closely and reducing expenses company-wide. As a result of our
continued focus on working capital, we have brought down inventories, lowered
short-term borrowings by $60 million compared to last year’s first quarter, and
strengthened our balance sheet. Additionally, field inventories are down from
last year’s levels.”
SEGMENT
RESULTS
Professional
|
·
|
Professional
segment net sales for the fiscal 2009 first quarter were $229.4 million,
down 22.3 percent from the comparable fiscal 2008
period. Shipments declined across most domestic and
international product categories due to challenging market conditions and
cautious ordering among professional customers. Worldwide sales
of golf maintenance equipment and irrigation systems were down
significantly as existing courses delayed investments in new equipment and
new golf course construction slowed. In addition, orders for
professionally installed residential and commercial irrigation products
declined due to ongoing pressures in housing and commercial
construction.
|
|
·
|
Professional
segment earnings for the fiscal 2009 first quarter were $30.1 million,
down 41.5 percent from last year’s first
quarter.
|
Residential
|
·
|
Residential
segment net sales for the fiscal 2009 first quarter were $107 million, up
slightly from the comparable fiscal 2008 period. Sales benefited from
strong worldwide demand for snowthrower products, and improved product
placement of a new and broader line of walk power mowers that boosted
preseason orders. These gains were somewhat offset by delayed shipments of
riding products as customers shifted orders closer to retail
demand.
|
|
·
|
Residential
segment earnings for the fiscal 2009 first quarter were $4.8 million, up
26.8 percent from last year’s first
quarter.
|
REVIEW OF
OPERATIONS
Gross
margin for the fiscal 2009 first quarter was 34.8 percent compared with 36.8
percent in the comparable fiscal 2008 period. The decline was
primarily due to production cuts from lower sales volumes and efforts to reduce
inventory levels, unfavorable product mix, and increased commodity costs. Some
of the decline was offset by lower freight costs.
Selling,
general and administrative (SG&A) expenses for the fiscal 2009 first quarter
declined $12.6 million, or 10.7 percent, but increased to 30.7 percent of net
sales from 28.9 percent in the same period last year. SG&A
expenses declined as a result of reduced spending and lower profit sharing and
incentive expenses.
Interest
expense for the first quarter was down $0.5 million from the same period last
year. The decline in interest expense resulted from substantially
lower short-term borrowing levels in the fiscal 2009 first quarter.
The
effective tax rate for the fiscal 2009 first quarter was 33.7 percent compared
with 35.4 percent in the comparable fiscal 2008 period primarily due to the
extension of the federal Research & Engineering Tax Credit.
Accounts
receivable at the end of the fiscal 2009 first quarter totaled $298 million,
down $46.7 million or 13.6 percent from last year’s first quarter, on a sales
decline of 16.2 percent. Net inventories were $238.7 million for the
fiscal 2009 first quarter, down $57.2 million or 19.3 percent from the
comparable fiscal 2008 period. The company’s ongoing efforts to reduce working
capital contributed to lower seasonal short-term borrowing needs.
BUSINESS
OUTLOOK
“We
expect the global recessionary conditions to continue for the remainder of our
fiscal year,” said Hoffman. “However, we believe we are well
positioned to manage through a period of reduced volume because of actions we
have taken to improve operating efficiency and asset utilization. Our
focus as we enter the peak selling season is on generating customer demand for
our innovative new products, while keeping production closely aligned with
expected shipment volumes.”
Given the
intensifying global recession, the company cautioned that its outlook for the
year is more uncertain. The company currently expects fiscal 2009
revenues to decline about 15 percent from fiscal 2008, and net earnings per
share to be approximately $1.75 to $2.00. For its fiscal 2009 second quarter,
the company expects to report net earnings per share of $0.85 to
$1.00.
The Toro
Company is a leading worldwide provider of outdoor maintenance equipment and
beautification products to help customers care for golf courses, sports fields,
public green spaces, commercial and residential properties, and agricultural
fields.
LIVE
CONFERENCE CALL
February
19, 10:00 a.m. CST
www.thetorocompany.com/invest
The
Toro Company will conduct a conference call and webcast for investors beginning
at 10:00 a.m. Central Time (CST) on February 19, 2009. 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 webcast begins to register and, if necessary,
download and install audio software.
Safe
Harbor
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 or negative 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; fluctuating fuel
and other costs of transportation; the impact of abnormal weather patterns and
natural disasters; the level of growth or contraction 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; credit availability and terms,
interest rates and currency movements including, in particular, our exposure to
foreign currency risk; our relationships with our distribution channel partners,
including the 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 or other
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, legislative, 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
release.
(Financial
tables follow)
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Earnings (Unaudited)
(Dollars
and shares in thousands, except per-share data)
|
Three
Months Ended
|
||||||||
|
January
30,
2009
|
February
1,
2008
|
|||||||
|
Net
sales
|
$ | 340,172 | $ | 405,799 | ||||
|
Gross
profit
|
118,260 | 149,137 | ||||||
|
Gross
profit percent
|
34.8 | % | 36.8 | % | ||||
|
Selling,
general, and administrative expense
|
104,559 | 117,117 | ||||||
|
Earnings
from operations
|
13,701 | 32,020 | ||||||
|
Interest
expense
|
(4,358 | ) | (4,883 | ) | ||||
|
Other
income, net
|
810 | 1,698 | ||||||
|
Earnings
before income taxes
|
10,153 | 28,835 | ||||||
|
Provision
for income taxes
|
3,422 | 10,208 | ||||||
|
Net
earnings
|
$ | 6,731 | $ | 18,627 | ||||
|
Basic
net earnings per share
|
$ | 0.19 | $ | 0.49 | ||||
|
Diluted
net earnings per share
|
$ | 0.18 | $ | 0.47 | ||||
|
Weighted
average number of shares of common
stock
outstanding – Basic
|
36,366 | 38,386 | ||||||
|
Weighted
average number of shares of common
stock
outstanding – Dilutive
|
36,805 | 39,395 | ||||||
Segment
Data (Unaudited)
(Dollars
in thousands)
|
Three
Months Ended
|
||||||||
|
Segment Net Sales
|
January
30,
2009
|
February
1,
2008
|
||||||
|
Professional
|
$ | 229,369 | $ | 295,047 | ||||
|
Residential
|
107,024 | 106,325 | ||||||
|
Other
|
3,779 | 4,427 | ||||||
|
Total*
|
$ | 340,172 | $ | 405,799 | ||||
|
*
Includes international sales of
|
$ | 130,391 | $ | 158,457 |
|
Three
Months Ended
|
||||||||
|
Segment Earnings (Loss) Before Income
Taxes
|
January
30,
2009
|
February
1,
2008
|
||||||
|
Professional
|
$ | 30,129 | $ | 51,516 | ||||
|
Residential
|
4,840 | 3,818 | ||||||
|
Other
|
(24,816 | ) | (26,499 | ) | ||||
|
Total
|
$ | 10,153 | $ | 28,835 | ||||
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets (Unaudited)
(Dollars
in thousands)
|
January
30,
2009
|
February
1,
2008
|
|||||||
|
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 35,597 | $ | 29,762 | ||||
|
Receivables,
net
|
297,962 | 344,682 | ||||||
|
Inventories,
net
|
238,704 | 295,923 | ||||||
|
Prepaid
expenses and other current assets
|
23,813 | 14,626 | ||||||
|
Deferred
income taxes
|
55,311 | 56,870 | ||||||
|
Total
current assets
|
651,387 | 741,863 | ||||||
|
Property,
plant, and equipment, net
|
167,727 | 170,569 | ||||||
|
Deferred
income taxes
|
6,454 | 6,665 | ||||||
|
Goodwill
and other assets, net
|
112,619 | 112,012 | ||||||
|
Total
assets
|
$ | 938,187 | $ | 1,031,109 | ||||
|
LIABILITIES AND STOCKHOLDERS’
EQUITY
|
||||||||
|
Current
portion of long-term debt
|
$ | 3,377 | $ | 2,241 | ||||
|
Short-term
debt
|
25,000 | 85,800 | ||||||
|
Accounts
payable
|
89,561 | 101,866 | ||||||
|
Accrued
liabilities
|
214,403 | 241,737 | ||||||
|
Total
current liabilities
|
332,341 | 431,644 | ||||||
|
Long-term
debt, less current portion
|
226,396 | 228,241 | ||||||
|
Deferred
revenue and other long-term liabilities
|
15,012 | 17,086 | ||||||
|
Stockholders’
equity
|
364,438 | 354,138 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 938,187 | $ | 1,031,109 | ||||
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(Dollars
in thousands)
|
Three
Months Ended
|
||||||||
|
January
30,
2009
|
February
1,
2008
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
earnings
|
$ | 6,731 | $ | 18,627 | ||||
|
Adjustments
to reconcile net earnings to net cash
used
in operating activities:
|
||||||||
|
Equity
losses from investments
|
32 | 41 | ||||||
|
Provision
for depreciation and amortization
|
10,389 | 10,986 | ||||||
|
Loss
(gain) on disposal of property, plant, and equipment
|
18 | (39 | ) | |||||
|
Gain on sale of a
business
|
- | (123 | ) | |||||
|
Stock-based compensation
expense
|
874 | 1,881 | ||||||
|
Decrease (increase) in deferred
income taxes
|
238 | (1,568 | ) | |||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Receivables
|
(42,970 | ) | (62,267 | ) | ||||
|
Inventories
|
(32,586 | ) | (46,799 | ) | ||||
|
Prepaid
expenses and other assets
|
(4,947 | ) | (3,885 | ) | ||||
|
Accounts
payable, accrued liabilities, deferred revenue, and other
long-term
liabilities
|
(10,306 | ) | 13,116 | |||||
|
Net
cash used in operating activities
|
(72,527 | ) | (70,030 | ) | ||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of property, plant, and equipment
|
(9,499 | ) | (11,027 | ) | ||||
|
Proceeds
from asset disposals
|
6 | 39 | ||||||
|
Increase
in investment in affiliates
|
- | (250 | ) | |||||
|
(Increase)
decrease in other assets
|
(567 | ) | 133 | |||||
|
Proceeds
from sale of a business
|
- | 1,152 | ||||||
|
Acquisition,
net of cash acquired
|
- | (1,000 | ) | |||||
|
Net
cash used in investing activities
|
(10,060 | ) | (10,953 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Increase
in short-term debt
|
22,675 | 85,428 | ||||||
|
Repayments
of long-term debt, net of costs
|
(1,005 | ) | (374 | ) | ||||
|
Excess
tax benefits from stock-based awards
|
2,023 | 243 | ||||||
|
Proceeds
from exercise of stock options
|
2,073 | 1,010 | ||||||
|
Purchases
of Toro common stock
|
(1,579 | ) | (31,835 | ) | ||||
|
Dividends
paid on Toro common stock
|
(5,456 | ) | (5,737 | ) | ||||
|
Net
cash provided by financing activities
|
18,731 | 48,735 | ||||||
|
Effect
of exchange rates on cash
|
94 | (37 | ) | |||||
|
Net
decrease in cash and cash equivalents
|
(63,762 | ) | (32,285 | ) | ||||
|
Cash
and cash equivalents as of the beginning of the fiscal
period
|
99,359 | 62,047 | ||||||
|
Cash
and cash equivalents as of the end of the fiscal period
|
$ | 35,597 | $ | 29,762 | ||||
###