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 21,
2008
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 21, 2008, The Toro Company announced its earnings for the three months
ended February 1, 2008.
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 21, 2008 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: February
21, 2008
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By
/s/ Stephen P.
Wolfe
|
|
Stephen
P. Wolfe
|
|
|
Vice
President, Finance
|
|
|
and
Chief Financial Officer
|
|
|
(duly
authorized officer and principal financial
officer)
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EXHIBIT
INDEX
|
EXHIBIT
NUMBER
|
DESCRIPTION
|
|
99.1
|
Press
release dated February 21, 2008 related to the announcement of earnings
(furnished herewith).
|
Investor
Relations
John
Wright
Director,
Investor Relations
(952)
887-8865, invest@toro.com
Media
Relations
Branden
Happel
(952)
887-8930, pr@toro.com
www.thetorocompany.com
For
Immediate Release
TORO REPORTS RECORD FIRST
QUARTER SALES AND NET EARNINGS
|
·
|
Net
sales up 7 percent to $405.8
million
|
|
·
|
International
sales up 19.5 percent
|
|
·
|
Earnings
from operations up 15.2 percent
|
|
·
|
Net
earnings per share up 6.8 percent to
$0.47
|
BLOOMINGTON,
Minn. (Feb. 21, 2008) – The Toro Company (NYSE: TTC) today reported record net
sales and net earnings for its fiscal 2008 first quarter ended February 1,
2008.
Net
earnings for the quarter totaled $18.6 million, or $0.47 per share, on net sales
of $405.8 million. In the comparable fiscal 2007 period, Toro
reported net earnings of $18.5 million, or $0.44 per share, on net sales of
$379.1 million.
“Sales
grew in both our professional and residential segments due to strong
contributions from our international business,” said Michael J. Hoffman,
chairman and chief executive officer. “In addition, with our
continued focus on asset management, we reduced both accounts receivable and
inventory. While we’re concerned about the increasing domestic
economic uncertainty, we believe our competitive position is strong and we are
well-positioned for the upcoming season.”
SEGMENT
RESULTS
Professional
|
·
|
Professional
segment net sales for the fiscal 2008 first quarter increased 7.7 percent
to $293.2 million. International sales growth continued in most
professional businesses including strong demand from golf and grounds
equipment customers. Also contributing to the increase were
favorable currency effects and the acquisition of Rain
Master™. Partially offsetting this increase was a decline in
domestic landscape equipment sales, mainly due to reductions in field
inventory.
|
|
·
|
Professional
segment earnings for the fiscal 2008 first quarter were $52.5 million, up
$4.2 million compared with the fiscal 2007 first quarter. The
increase was mainly due to higher revenues, favorable currency changes and
product mix.
|
Residential
|
·
|
Residential
segment net sales for the fiscal 2008 first quarter increased 6.2 percent
to $108.2 million. The increase resulted primarily from strong
sales of snowthrowers and continued demand for the new and innovative
Toro® TimeCutter® zero-turning-radius mowers, which were somewhat offset
by a decline in walk power mowers due to timing of
shipments.
|
|
· |
Residential
segment earnings for the fiscal 2008 first quarter were $2.8 million, down
$1.6 million compared with the fiscal 2007 first quarter. The
decrease was primarily due to lower gross margin as a result of increased
freight expense and higher tooling associated with new product
investments.
|
REVIEW OF
OPERATIONS
Gross
margin for the fiscal 2008 first quarter was 36.8 percent compared with 36.9
percent in the comparable fiscal 2007 period. The slight decline in
fiscal 2008 first quarter gross margin reflects mainly higher freight costs
compared with the prior year’s first quarter.
SG&A
expenses for the fiscal 2008 first quarter improved to 28.9 percent of net sales
from 29.6 percent in last year’s first quarter. The improvement
resulted primarily from last year’s one-time retirement plan contribution
expense and leveraging of fixed costs over higher sales. This was somewhat
offset by higher marketing spending and additional investments in
engineering.
Interest
expense for the quarter was up $0.4 million, or an increase of 8.8 percent,
compared to the prior year’s first quarter.
The
effective tax rate for the first quarter of fiscal 2008 was 35.4 percent
compared with 28.2 percent in the fiscal 2007 first quarter. Last
year’s tax rate reflected the retroactive reinstatement of the federal research
and engineering tax credit.
Accounts
receivable at the end of the fiscal 2008 first quarter totaled $344.7 million,
down $12.5 million or 3.5 percent, on a sales increase of $26.7 million, or 7
percent. Net inventories at the end of the fiscal 2008 first quarter
totaled $295.9 million, down $11.5 million or 3.7 percent compared with the end
of the fiscal 2007 first quarter. Trade payables at the end of the
fiscal 2008 quarter were down $5 million, or 4.7 percent, compared with the
prior year’s first quarter.
BUSINESS
OUTLOOK
“We’re
off to a strong start in the new fiscal year, but remain mindful that our peak
selling season is still ahead of us,” said Hoffman. “Given the
uncertainty in the economic environment and regional weather patterns, we are
paying close attention to sales trends and field inventory, and are focusing on
helping our retail partners drive demand for our strong brands and innovative
new products.”
The
company now expects to report an 8 to 10 percent increase in fiscal 2008 net
earnings per share on revenue growth of 2 to 4 percent.
For its
fiscal second quarter, Toro currently expects to report net earnings per share
of $1.87 to $1.93.
The Toro
Company is a leading worldwide provider of outdoor maintenance and
beautification products for home, recreation and commercial
landscapes.
LIVE
CONFERENCE CALL
February
21, 2008 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 21, 2008. 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 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; 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 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)
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Earnings (Unaudited)
(Dollars
and shares in thousands, except per-share data)
|
Three
Months Ended
|
||||||||
|
February
1,
2008
|
February
2,
2007
|
|||||||
|
Net
sales
|
$ | 405,799 | $ | 379,088 | ||||
|
Gross
profit
|
149,137 | 140,065 | ||||||
|
Gross
profit percent
|
36.8 | % | 36.9 | % | ||||
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Selling,
general, and administrative expense
|
117,117 | 112,281 | ||||||
|
Earnings
from operations
|
32,020 | 27,784 | ||||||
|
Interest
expense
|
(4,883 | ) | (4,487 | ) | ||||
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Other
income, net
|
1,698 | 2,391 | ||||||
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Earnings
before income taxes
|
28,835 | 25,688 | ||||||
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Provision
for income taxes
|
10,208 | 7,238 | ||||||
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Net
earnings
|
$ | 18,627 | $ | 18,450 | ||||
|
Basic
net earnings per share
|
$ | 0.49 | $ | 0.45 | ||||
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Diluted
net earnings per share
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$ | 0.47 | $ | 0.44 | ||||
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Weighted
average number of shares of common
stock
outstanding – Basic
|
38,386 | 41,139 | ||||||
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Weighted
average number of shares of common
stock
outstanding – Dilutive
|
39,395 | 42,253 | ||||||
Segment
Data (Unaudited)
(Dollars
in thousands)
|
Three
Months Ended
|
||||||||
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Segment Net
Sales
|
February
1,
2008
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February
2,
2007
|
||||||
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Professional
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$ | 293,196 | $ | 272,142 | ||||
|
Residential
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108,176 | 101,858 | ||||||
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Other
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4,427 | 5,088 | ||||||
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Total*
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$ | 405,799 | $ | 379,088 | ||||
|
*
Includes international sales of
|
$ | 158,457 | $ | 132,613 |
|
Three
Months Ended
|
||||||||
|
Segment Earnings
(Loss) Before Income Taxes
|
February
1,
2008
|
February
2,
2007
|
||||||
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Professional
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$ | 52,510 | $ | 48,360 | ||||
|
Residential
|
2,824 | 4,379 | ||||||
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Other
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(26,499 | ) | (27,051 | ) | ||||
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Total
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$ | 28,835 | $ | 25,688 | ||||
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets (Unaudited)
(Dollars
in thousands)
|
February
1,
2008
|
February
2,
2007
|
|||||||
|
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 29,762 | $ | 30,051 | ||||
|
Receivables,
net
|
344,682 | 357,165 | ||||||
|
Inventories,
net
|
295,923 | 307,415 | ||||||
|
Prepaid
expenses and other current assets
|
14,626 | 14,905 | ||||||
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Deferred
income taxes
|
56,870 | 55,801 | ||||||
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Total
current assets
|
741,863 | 765,337 | ||||||
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Property,
plant, and equipment, net
|
170,569 | 169,304 | ||||||
|
Deferred
income taxes
|
6,665 | 1,862 | ||||||
|
Goodwill
and other assets, net
|
112,012 | 97,933 | ||||||
|
Total
assets
|
$ | 1,031,109 | $ | 1,034,436 | ||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current
portion of long-term debt
|
$ | 2,241 | $ | 75,000 | ||||
|
Short-term
debt
|
85,800 | 127,100 | ||||||
|
Accounts
payable
|
101,866 | 106,881 | ||||||
|
Accrued
liabilities
|
241,737 | 230,485 | ||||||
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Total
current liabilities
|
431,644 | 539,466 | ||||||
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Long-term
debt, less current portion
|
228,241 | 100,000 | ||||||
|
Deferred
revenue and other long-term liabilities
|
17,086 | 9,142 | ||||||
|
Stockholders’
equity
|
354,138 | 385,828 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 1,031,109 | $ | 1,034,436 | ||||
THE
TORO COMPANY AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(Dollars
in thousands)
|
Three
Months Ended
|
||||||||
|
February
1,
2008
|
February
2,
2007
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
earnings
|
$ | 18,627 | $ | 18,450 | ||||
|
Adjustments
to reconcile net earnings to net cash
used
in operating activities:
|
||||||||
|
Equity
losses from investments
|
41 | 59 | ||||||
|
Provision
for depreciation and amortization
|
10,986 | 10,334 | ||||||
|
Gain
on disposal of property, plant, and equipment
|
(39 | ) | (46 | ) | ||||
|
Gain on sale of a
business
|
(123 | ) | - | |||||
|
Stock-based compensation
expense
|
1,881 | 1,944 | ||||||
|
(Increase) decrease in deferred
income taxes
|
(1,568 | ) | 90 | |||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Receivables
|
(62,267 | ) | (62,588 | ) | ||||
|
Inventories
|
(46,799 | ) | (67,261 | ) | ||||
|
Prepaid
expenses and other assets
|
(3,885 | ) | (5,737 | ) | ||||
|
Accounts
payable, accrued liabilities, and deferred revenue and other
long-term liabilities
|
13,116 | (6,099 | ) | |||||
|
Net
cash used in operating activities
|
(70,030 | ) | (110,854 | ) | ||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of property, plant, and equipment
|
(11,027 | ) | (12,478 | ) | ||||
|
Proceeds
from asset disposals
|
39 | 47 | ||||||
|
Increase
in investment in affiliates
|
(250 | ) | - | |||||
|
Decrease
(increase) in other assets
|
133 | (754 | ) | |||||
|
Proceeds
from sale of a business
|
1,152 | - | ||||||
|
Acquisitions,
net of cash acquired
|
(1,000 | ) | (1,088 | ) | ||||
|
Net
cash used in investing activities
|
(10,953 | ) | (14,273 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Increase
in short-term debt
|
85,428 | 126,780 | ||||||
|
Repayments
of long-term debt, net of costs
|
(374 | ) | - | |||||
|
Excess
tax benefits from stock-based awards
|
243 | 2,758 | ||||||
|
Proceeds
from exercise of stock options
|
1,010 | 4,145 | ||||||
|
Purchases
of Toro common stock
|
(31,835 | ) | (29,029 | ) | ||||
|
Dividends
paid on Toro common stock
|
(5,737 | ) | (4,929 | ) | ||||
|
Net
cash provided by financing activities
|
48,735 | 99,725 | ||||||
|
Effect
of exchange rates on cash
|
(37 | ) | (70 | ) | ||||
|
Net
decrease in cash and cash equivalents
|
(32,285 | ) | (25,472 | ) | ||||
|
Cash
and cash equivalents as of the beginning of the fiscal
period
|
62,047 | 55,523 | ||||||
|
Cash
and cash equivalents as of the end of the fiscal period
|
$ | 29,762 | $ | 30,051 | ||||