Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Oct. 31, 2015 | Dec. 11, 2015 | May. 01, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | TORO CO | ||
Entity Central Index Key | 737,758 | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --10-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 3.8 | ||
Entity Common Stock, Shares Outstanding | 54,742,172 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF EARN
CONSOLIDATED STATEMENTS OF EARNINGS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Consolidated Statements of Earnings | |||
Net sales | $ 2,390,875 | $ 2,172,691 | $ 2,041,431 |
Cost of sales | 1,554,940 | 1,399,420 | 1,316,634 |
Gross profit | 835,935 | 773,271 | 724,797 |
Selling, general, and administrative expense | 536,821 | 510,114 | 494,135 |
Operating earnings | 299,114 | 263,157 | 230,662 |
Interest expense | (18,757) | (15,426) | (16,210) |
Other income, net | 10,674 | 8,714 | 12,261 |
Earnings before income taxes | 291,031 | 256,445 | 226,713 |
Provision for income taxes | 89,440 | 82,575 | 71,868 |
Net earnings | $ 201,591 | $ 173,870 | $ 154,845 |
Basic net earnings per share of common stock (in dollars per share) | $ 3.63 | $ 3.09 | $ 2.67 |
Diluted net earnings per share of common stock (in dollars per share) | $ 3.55 | $ 3.02 | $ 2.62 |
Weighted-average number of shares of common stock outstanding - Basic (in shares) | 55,565 | 56,359 | 57,922 |
Weighted-average number of shares of common stock outstanding - Diluted (in shares) | 56,757 | 57,628 | 59,105 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Consolidated Statements of Comprehensive Income | |||
Net earnings | $ 201,591 | $ 173,870 | $ 154,845 |
Other comprehensive (loss) income, net of tax: | |||
Foreign currency translation adjustments, net of tax of $(51), $(34), and $247, respectively | (11,792) | (4,758) | (2,342) |
Pension and retiree medical benefits, net of tax of $299, $10, and $904, respectively | (120) | (1,583) | 645 |
Derivative instruments, net of tax of $(933), $2,350, and $(261), respectively | (2,226) | 3,206 | (899) |
Other comprehensive loss, net | (14,138) | (3,135) | (2,596) |
Comprehensive income | $ 187,453 | $ 170,735 | $ 152,249 |
CONSOLIDATED STATEMENTS OF COM4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Consolidated Statements of Comprehensive Income | |||
Foreign currency translation adjustments, tax | $ (51) | $ (34) | $ 247 |
Pension and retiree medical benefits, tax | 299 | 10 | 904 |
Derivative instruments, tax | $ (933) | $ 2,350 | $ (261) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2015 | Oct. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 126,275 | $ 314,873 |
Receivables, net: | ||
Customers (net of $1,378 and $1,481, respectively, for allowance for doubtful accounts) | 171,172 | 151,479 |
Other | 5,841 | 6,679 |
Total receivables, net | 177,013 | 158,158 |
Inventories, net | 334,514 | 274,603 |
Prepaid expenses and other current assets | 34,782 | 33,580 |
Deferred income taxes | 38,095 | 42,822 |
Total current assets | 710,679 | 824,036 |
Property, plant, and equipment, net | 224,995 | 205,195 |
Long-term deferred income taxes | 28,568 | 26,075 |
Goodwill | 195,533 | 91,851 |
Other intangible assets, net | 119,010 | 23,829 |
Other assets | 24,873 | 21,429 |
Total assets | 1,303,658 | 1,192,415 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current portion of long-term debt | 23,134 | 6,640 |
Short-term debt | 222 | 20,818 |
Accounts payable | 152,017 | 124,271 |
Accrued liabilities: | ||
Warranty | 70,734 | 71,080 |
Advertising and marketing programs | 76,689 | 66,169 |
Compensation and benefit costs | 56,269 | 59,724 |
Insurance | 6,814 | 6,960 |
Income taxes | 4,275 | 4,699 |
Other | 53,580 | 40,059 |
Total current liabilities | 443,734 | 400,420 |
Long-term debt, less current portion | 354,818 | 347,316 |
Deferred revenue | 11,365 | 10,947 |
Deferred income taxes | 7 | |
Other long-term liabilities | $ 31,569 | $ 25,005 |
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 | ||
Common stock, par value $1.00 per share, authorized 175,000,000 shares; issued and outstanding 54,650,916 shares as of October 31, 2015 and 55,678,419 shares as of October 31, 2014 | $ 54,651 | $ 55,678 |
Retained earnings | 437,357 | 368,754 |
Accumulated other comprehensive loss | (29,843) | (15,705) |
Total stockholders' equity | 462,165 | 408,727 |
Total liabilities and stockholders' equity | $ 1,303,658 | $ 1,192,415 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2015 | Oct. 31, 2014 |
Consolidated Balance Sheets | ||
Customers, allowance for doubtful accounts (in dollars) | $ 1,378 | $ 1,481 |
Preferred stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred stock, authorized voting shares | 1,000,000 | 1,000,000 |
Preferred stock, authorized non-voting shares | 850,000 | 850,000 |
Preferred stock, issued voting shares | 0 | 0 |
Preferred stock, outstanding voting shares | 0 | 0 |
Preferred stock, outstanding non-voting shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, authorized shares | 175,000,000 | 175,000,000 |
Common stock, issued shares | 54,650,916 | 55,678,419 |
Common stock, outstanding shares | 54,650,916 | 55,678,419 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net earnings | $ 201,591 | $ 173,870 | $ 154,845 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Provision for depreciation, amortization, and impairment losses | 63,143 | 53,138 | 54,134 |
Noncash income from finance affiliate | (8,353) | (7,262) | (7,097) |
Decrease (increase) in deferred income taxes | 200 | (4,700) | 149 |
Stock-based compensation expense | 10,836 | 11,291 | 10,237 |
Other | (128) | 28 | 10 |
Changes in operating assets and liabilities, net of effect of acquisitions: | |||
Receivables, net | (25,647) | (5,042) | (11,912) |
Inventories, net | (52,656) | (37,183) | 9,373 |
Prepaid expenses and other assets | (607) | (3,245) | (6,825) |
Accounts payable, accrued liabilities, deferred revenue, and other long-term liabilities | 48,490 | 1,470 | 18,962 |
Net cash provided by operating activities | 236,869 | 182,365 | 221,876 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchases of property, plant, and equipment | (56,374) | (71,138) | (49,427) |
Proceeds from asset disposals | 179 | 479 | 413 |
Distributions from finance affiliate, net | 4,264 | 5,672 | 6,342 |
Acquisitions, net of cash acquired | (198,329) | (715) | (2,101) |
Net cash used in investing activities | (250,260) | (65,702) | (44,773) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
(Repayments of) increase in short-term debt | (21,283) | 19,498 | (415) |
(Repayments of) increase in long-term debt | (7,227) | 129,557 | (1,739) |
Excess tax benefits from stock-based awards | 8,459 | 8,857 | 6,134 |
Proceeds from exercise of stock options | 9,203 | 7,192 | 9,808 |
Purchases of Toro common stock | (106,964) | (103,039) | (99,587) |
Dividends paid on Toro common stock | (55,549) | (45,048) | (32,499) |
Net cash (used in) provided by financing activities | (173,361) | 17,017 | (118,298) |
Effect of exchange rates on cash and cash equivalents | (1,846) | (1,800) | (1,668) |
Net (decrease) increase in cash and cash equivalents | (188,598) | 131,880 | 57,137 |
Cash and cash equivalents as of the beginning of the fiscal year | 314,873 | 182,993 | 125,856 |
Cash and cash equivalents as of the end of the fiscal year | 126,275 | 314,873 | 182,993 |
Cash paid during the fiscal year for: | |||
Interest | 18,133 | 16,925 | 17,054 |
Income taxes | 77,043 | 76,325 | 76,186 |
Shares issued in connection with stock-based compensation plans | 7,705 | 6,619 | 6,629 |
Payment obligations issued in connection with acquisitions | $ 31,161 | $ 420 | $ 1,395 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at Oct. 31, 2012 | $ 58,266 | $ 264,110 | $ (9,974) | $ 312,402 |
Increase (Decrease) in Stockholders' Equity | ||||
Cash dividends paid on common stock - $1.00, $0.80, and $0.56 per share during 2015, 2014, and 2013, respectively | (32,499) | (32,499) | ||
Issuance of 548,486, 532,692, and 669,426 shares for stock options exercised and restricted stock vested during 2015, 2014, and 2013, respectively | 670 | 7,667 | 8,337 | |
Stock-based compensation expense | 10,237 | 10,237 | ||
Contribution of stock to a deferred compensation trust | 1,466 | 1,466 | ||
Purchase of 1,575,989, 1,644,230, and 2,147,185 shares of common stock during 2015, 2014, and 2013, respectively | (2,147) | (97,441) | (99,588) | |
Excess tax benefits from stock-based awards | 6,134 | 6,134 | ||
Other comprehensive loss | (2,596) | (2,596) | ||
Net earnings | 154,845 | 154,845 | ||
Balance at Oct. 31, 2013 | 56,789 | 314,519 | (12,570) | 358,738 |
Increase (Decrease) in Stockholders' Equity | ||||
Cash dividends paid on common stock - $1.00, $0.80, and $0.56 per share during 2015, 2014, and 2013, respectively | (45,048) | (45,048) | ||
Issuance of 548,486, 532,692, and 669,426 shares for stock options exercised and restricted stock vested during 2015, 2014, and 2013, respectively | 533 | 4,979 | 5,512 | |
Stock-based compensation expense | 11,291 | 11,291 | ||
Contribution of stock to a deferred compensation trust | 1,681 | 1,681 | ||
Purchase of 1,575,989, 1,644,230, and 2,147,185 shares of common stock during 2015, 2014, and 2013, respectively | (1,644) | (101,395) | (103,039) | |
Excess tax benefits from stock-based awards | 8,857 | 8,857 | ||
Other comprehensive loss | (3,135) | (3,135) | ||
Net earnings | 173,870 | 173,870 | ||
Balance at Oct. 31, 2014 | 55,678 | 368,754 | (15,705) | 408,727 |
Increase (Decrease) in Stockholders' Equity | ||||
Cash dividends paid on common stock - $1.00, $0.80, and $0.56 per share during 2015, 2014, and 2013, respectively | (55,549) | (55,549) | ||
Issuance of 548,486, 532,692, and 669,426 shares for stock options exercised and restricted stock vested during 2015, 2014, and 2013, respectively | 549 | 7,687 | 8,236 | |
Stock-based compensation expense | 10,836 | 10,836 | ||
Contribution of stock to a deferred compensation trust | 967 | 967 | ||
Purchase of 1,575,989, 1,644,230, and 2,147,185 shares of common stock during 2015, 2014, and 2013, respectively | (1,576) | (105,388) | (106,964) | |
Excess tax benefits from stock-based awards | 8,459 | 8,459 | ||
Other comprehensive loss | (14,138) | (14,138) | ||
Net earnings | 201,591 | 201,591 | ||
Balance at Oct. 31, 2015 | $ 54,651 | $ 437,357 | $ (29,843) | $ 462,165 |
CONSOLIDATED STATEMENTS OF STO9
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |||
Cash dividends paid on common stock (in dollars per share) | $ 1 | $ 0.80 | $ 0.56 |
Issuance of shares under stock-based compensation plans (in shares) | 548,486 | 532,692 | 669,426 |
Purchase of shares of common stock (in shares) | 1,575,989 | 1,644,230 | 2,147,185 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA | 12 Months Ended |
Oct. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA | 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA Basis of Presentation and Consolidation The accompanying consolidated financial statements include the accounts of the company and its wholly owned subsidiaries. The company uses the equity method to account for investments over which it has the ability to exercise significant influence over operating and financial policies. Consolidated net earnings include the company's share of the net earnings (losses) of these companies. The cost method is used to account for investments in companies that the company does not control and for which it does not have the ability to exercise significant influence over operating and financial policies. These investments are recorded at cost. All intercompany accounts and transactions have been eliminated from the consolidated financial statements. Accounting Estimates In preparing the consolidated financial statements in conformity with United States ("U.S.") generally accepted accounting principles ("GAAP"), management must make decisions that impact the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures, including disclosures of contingent assets and liabilities. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. Estimates are used in determining, among other items, sales promotions and incentives accruals, incentive compensation accruals, inventory valuation, warranty reserves, earnout liabilities, allowance for doubtful accounts, pension and postretirement accruals, self-insurance accruals, useful lives for tangible and intangible assets, and future cash flows associated with impairment testing for goodwill and other long-lived assets. These estimates and assumptions are based on management's best estimates and judgments at the time they are made. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances, including the current economic environment. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with certainty, actual amounts could differ significantly from those estimated at the time the consolidated financial statements are prepared. Changes in those estimates will be reflected in the consolidated financial statements in future periods. Reclassifications Certain amounts from prior years' Consolidated Statements of Stockholders' Equity and Notes to Consolidated Financial Statements have been reclassified to conform to the current year presentation. The reclassifications had no impact on the results of operations as previously reported. Cash and Cash Equivalents The company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents and are stated at cost, which approximates fair value. As of October 31, 2015, cash and short-term investments held by the company's foreign subsidiaries that are not available to fund domestic operations unless repatriated were $61,272. Receivables The company's financial exposure to collection of accounts receivable is reduced due to its Red Iron Acceptance, LLC ("Red Iron") joint venture with TCF Inventory Finance, Inc. ("TCFIF"), as further discussed in Note 3. For receivables not serviced through Red Iron, the company grants credit to customers in the normal course of business and performs on-going credit evaluations of customers. Receivables are recorded at original carrying amount less reserves for estimated uncollectible accounts, as described below. Allowance for Doubtful Accounts The company estimates the balance of allowance for doubtful accounts by analyzing the age of accounts and notes receivable balances and applying historical write-off trend rates. The company also estimates separately specific customer balances when it is deemed probable that the balance is uncollectible. Account balances are charged off against the allowance when all collection efforts have been exhausted. Inventory Valuations Inventories are valued at the lower of cost or net realizable value, with cost determined by the last-in, first-out ("LIFO") method for a majority of the company's inventories. The first-in, first-out ("FIFO") method is used for all other inventories, constituting 26 and 28 percent of total inventories as of October 31, 2015 and 2014, respectively. The company establishes a reserve for excess, slow-moving, and obsolete inventory that is equal to the difference between the cost and estimated net realizable value for that inventory. These reserves are based on a review and comparison of current inventory levels to planned production, as well as planned and historical sales of the inventory. During fiscal 2015 and 2014, LIFO layers were reduced, which resulted in charging lower inventory costs prevailing in previous years to cost of sales, thus reducing cost of sales by $1,348 and $65, respectively. Inventories as of October 31 were as follows: Raw materials and work in progress $ $ Finished goods and service parts Total FIFO value Less: adjustment to LIFO value Total $ $ Property and Depreciation Property, plant, and equipment are carried at cost. The company provides for depreciation of plant and equipment utilizing the straight-line method over the estimated useful lives of the assets. Buildings, including leasehold improvements, are generally depreciated over 10 to 45 years, and equipment over two to seven years. Tooling costs are generally depreciated over three to five years using the straight-line method. Software and web site development costs are generally amortized over two to five years utilizing the straight-line method. Expenditures for major renewals and improvements, which substantially increase the useful lives of existing assets, are capitalized, and maintenance and repairs are charged to operating expenses as incurred. Interest is capitalized during the construction period for significant capital projects. During the fiscal years ended October 31, 2015, 2014, and 2013, the company capitalized $897, $1,710, and $722 of interest, respectively. Property, plant, and equipment as of October 31 was as follows: Land and land improvements $ $ Buildings and leasehold improvements Machinery and equipment Tooling Computer hardware and software Construction in process Subtotal Less: accumulated depreciation Total property, plant, and equipment, net $ $ During fiscal years 2015, 2014, and 2013, the company recorded depreciation expense of $50,322, $47,136, and $48,207, respectively. Goodwill and Indefinite-Life Intangible Assets Goodwill represents the cost of acquisitions in excess of the fair values assigned to identifiable net assets acquired. Goodwill is assigned to reporting units based upon the expected benefit of the synergies of the acquisition. Goodwill and some trade names, which are considered to have indefinite lives, are not amortized; however, the company reviews them for impairment annually during each fourth fiscal quarter or more frequently if changes in circumstances or occurrence of events suggest the fair value may not be recoverable. The company reviewed the fair value of its reporting units that have goodwill on their respective balance sheets and compared these fair values to the respective carrying amounts during the fourth quarter of fiscal 2015. The company determined that it has nine reporting units, which are the same as its nine operating segments. Seven reporting units contain goodwill on their respective balance sheets. As of August 28, 2015, the company performed an analysis of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. Based on the company's analysis of qualitative factors, the company determined that it was not necessary to perform a two-step goodwill impairment test for any of its reporting units. As of August 28, 2015, the company also performed an assessment of its indefinite-life intangible assets, which consist of certain trade names. The company's estimate of the fair value of its trade names are based on a discounted cash flow model using inputs which included: projected revenues from the company's forecasting process; assumed royalty rates that could be payable if the company did not own the trade name; and a discount rate. Based on this analysis, which was also performed in prior fiscal years, the company concluded its indefinite-life intangible assets were not impaired during fiscal 2015, 2014, or 2013. Other Long-Lived Assets Other long-lived assets include property, plant, and equipment and definite-life intangible assets, which are identifiable assets that arose from purchase acquisitions consisting primarily of patents, non-compete agreements, customer relationships, trade names, and developed technology and are amortized on a straight-line basis over periods ranging from 1.5 to 20 years. The company reviews other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. An impairment loss is recognized when estimated undiscounted future cash flows from the operation or disposition of the asset group are less than the carrying amount of the asset group. Asset groups have identifiable cash flows and are largely independent of other asset groups. Measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value. Fair value is measured using a discounted cash flow model or independent appraisals, as appropriate. For long-lived assets to be abandoned, the company tests for potential impairment. If the company commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, depreciation estimates are revised. Based on the company's impairment analysis for definite-life intangible assets, the company wrote down $1,383 of other long-lived assets for fiscal 2015. For fiscal 2014, the company did not have any impairment losses of other long-lived assets. Additionally, based on the company's analysis of estimated useful lives of property, plant, and equipment, the company had $531, $0, and $824 of accelerated depreciation expense during fiscal 2015, 2014, and 2013, respectively. Accounts Payable The company has a customer-managed service agreement with a third party to provide a web-based platform that facilitates participating suppliers' ability to finance payment obligations from the company with a designated third party financial institution. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the company prior to their scheduled due dates at a discounted price to a participating financial institution. The company's obligations to its suppliers, including amounts due and scheduled payment dates, are not affected by suppliers' decisions to finance amounts under this arrangement. However, the company's right to offset balances due from suppliers against payment obligations is restricted by this arrangement for those payment obligations that have been financed by suppliers. As of October 31, 2015 and 2014, $16,101 and $12,296, respectively, of the company's outstanding payment obligations had been placed on the accounts payable tracking system. Insurance The company is self-insured for certain losses relating to medical, dental, and workers' compensation claims, and certain product liability occurrences. Specific stop loss coverages are provided for catastrophic claims in order to limit exposure to significant claims. Losses and claims are charged to operations when it is probable a loss has been incurred and the amount can be reasonably estimated. Self-insured liabilities are based on a number of factors, including historical claims experience, an estimate of claims incurred but not reported, demographic and severity factors, and utilizing valuations provided by independent third-party actuaries. Accrued Warranties The company provides an accrual for estimated future warranty costs at the time of sale. The company also establishes accruals for major rework campaigns. The amount of warranty accruals is based primarily on the estimated number of products under warranty, historical average costs incurred to service warranty claims, the trend in the historical ratio of claims to sales, and the historical length of time between the sale and resulting warranty claim. The company periodically assesses the adequacy of its warranty accruals based on changes in these factors and records any necessary adjustments if actual claims experience indicates that adjustments are necessary. The changes in accrued warranties were as follows: Fiscal years ended October 31 Beginning balance $ $ Warranty provisions Warranty claims ) ) Changes in estimates ) ) Ending balance $ $ Derivatives Derivatives, consisting mainly of forward currency contracts, are used to hedge most foreign currency transactions, including forecasted sales and purchases denominated in foreign currencies. The company also utilizes cross currency swaps to offset foreign currency intercompany loan exposures. Derivatives are recognized on the consolidated balance sheet at fair value. If the derivative is designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded as a component of other comprehensive income within the consolidated statements of comprehensive income and the consolidated statements of stockholders' equity, and recognized in earnings when the hedged item affects earnings. Derivatives that do not meet the requirements for hedge accounting are adjusted to fair value through other income, net in the consolidated statements of earnings. Foreign Currency Translation and Transactions The functional currency of the company's foreign operations is generally the applicable local currency. The functional currency is translated into U.S. dollars for balance sheet accounts using current exchange rates in effect as of the balance sheet date and for revenue and expense accounts using a weighted-average exchange rate during the fiscal year. The translation adjustments are deferred as a component of other comprehensive income (loss) within the consolidated statements of comprehensive income and the consolidated statements of stockholders' equity. Gains or losses resulting from transactions denominated in foreign currencies are included in other income, net in the consolidated statements of earnings. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years that those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. A valuation allowance is provided when, in management's judgment, it is more likely than not that some portion or all of the deferred tax asset will not be realized. The company has reflected the necessary deferred tax assets and liabilities in the accompanying consolidated balance sheets. Management believes the future tax deductions will be realized principally through carryback to taxable income in prior years, future reversals of existing taxable temporary differences, and future taxable income. The company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The company also records interest and penalties related to unrecognized tax benefits in income tax expense. Revenue Recognition The company recognizes revenue for product sales when persuasive evidence of an arrangement exists, title and risk of ownership passes to the customer, the sales price is fixed or determinable, and collectability is probable. These criteria are typically met at the time product is shipped, or in the case of certain agreements, when product is delivered. A provision is made at the time the related revenue is recognized for estimated product returns, floor plan costs, rebates, and other sales promotion expenses. Sales, use, value-added, and other excise taxes are not recognized in revenue. Freight revenue billed to customers is included in net sales. The company ships some of its products to a key retailer's seasonal distribution centers on a consignment basis. The company retains title to its products stored at the seasonal distribution centers. As the company's products are removed from the seasonal distribution centers by the key retailer and shipped to the key retailer's stores, title passes from the company to the key retailer. At that time, the company invoices the key retailer and recognizes revenue for these consignment transactions. The company does not offer a right of return for products shipped to the key retailer's stores from the seasonal distribution centers. From time to time, the company also stores inventory on a consignment basis at other customers' locations. The amount of consignment inventory as of October 31, 2015 and 2014 was $23,566 and $22,080, respectively. Revenue earned from service and maintenance contracts is recognized ratably over the contractual period. Revenue from extended warranty programs is deferred at the time the contract is sold and amortized into net sales using the straight-line method over the extended warranty period. Sales Promotions and Incentives At the time of sale, the company records an estimate for sales promotion and incentive costs. Examples of sales promotion and incentive programs include off-invoice discounts, rebate programs, volume discounts, retail financing support, commissions, and other sales discounts and promotional programs. The estimates of sales promotion and incentive costs are based on the terms of the arrangements with customers, historical payment experience, field inventory levels, volume purchases, and expectations for changes in relevant trends in the future. The expense of each program is classified as a reduction from gross sales or as a component of selling, general, and administrative expense. Cost of Sales Cost of sales primarily comprises direct materials and supplies consumed in the manufacture of product, as well as manufacturing labor, depreciation expense, and direct overhead expense necessary to convert purchased materials and supplies into finished product. Cost of sales also includes inbound freight costs, outbound freight costs for shipping products to customers, obsolescence expense, cost of services provided, and cash discounts on payments to vendors. Selling, General, and Administrative Expense Selling, general, and administrative expense primarily comprises payroll and benefit costs, occupancy and operating costs of distribution and corporate facilities, warranty expense, depreciation and amortization expense on non-manufacturing assets, advertising and marketing expenses, selling expenses, engineering and research costs, information systems costs, incentive and profit sharing expense, and other miscellaneous administrative costs, such as legal costs for internal and outside services that are expensed as incurred. Cost of Financing Distributor / Dealer Inventory The company enters into limited inventory repurchase agreements with a third party financing company and Red Iron. The company has repurchased immaterial amounts of inventory under these repurchase agreements over the last three fiscal years. However, an adverse change in retail sales could cause this situation to change, and thereby require the company to repurchase a portion of financed product. See Note 13 for additional information regarding the company's repurchase arrangements. Included as a reduction to net sales are costs associated with programs under which the company shares the expense of financing distributor and dealer inventories, referred to as floor plan expenses. This charge represents interest for a pre-established length of time based on a predefined rate from a contract with third party financing sources to finance distributor and dealer inventory purchases. These financing arrangements are used by the company as a marketing tool to assist customers to buy inventory. The financing costs for distributor and dealer inventories were $24,130, $21,080, and $19,729 for the fiscal years ended October 31, 2015, 2014, and 2013, respectively. Advertising General advertising expenditures are expensed the first time advertising takes place. Production costs associated with advertising are expensed in the period incurred. Cooperative advertising represents expenditures for shared advertising costs that the company reimburses to customers and is classified as a component of selling, general, and administrative expense. These obligations are accrued and expensed when the related revenues are recognized in accordance with the programs established for various product lines. Advertising costs were $42,843, $43,590, and $48,071 for the fiscal years ended October 31, 2015, 2014, and 2013, respectively. Stock-Based Compensation The company's stock-based compensation awards are generally granted to executive officers, other employees, and non-employee members of the company's Board of Directors, and include performance share awards that are contingent on the achievement of performance goals of the company, non-qualified stock options, restricted stock units, and restricted stock awards. Compensation expense equal to the grant date fair value is recognized for these awards over the vesting period and is classified in selling, general and administrative expense. See Note 10 for additional information regarding stock-based compensation plans. Net Earnings Per Share Basic net earnings per share is calculated using net earnings available to common stockholders divided by the weighted-average number of shares of common stock outstanding during the year plus the assumed issuance of contingent shares. Diluted net earnings per share is similar to basic net earnings per share except that the weighted-average number of shares of common stock outstanding plus the assumed issuance of contingent shares is increased to include the number of additional shares of common stock that would have been outstanding assuming the issuance of all potentially dilutive shares, such as common stock to be issued upon exercise of options, contingently issuable shares, and restricted stock units. Reconciliations of basic and diluted weighted-average shares of common stock outstanding are as follows: BASIC (Shares in thousands) Fiscal years ended October 31 Weighted-average number of shares of common stock Assumed issuance of contingent shares Weighted-average number of shares of common stock and assumed issuance of contingent shares DILUTED (Shares in thousands) Fiscal years ended October 31 Weighted-average number of shares of common stock and assumed issuance of contingent shares Effect of dilutive securities Weighted-average number of shares of common stock, assumed issuance of contingent and restricted shares, and effect of dilutive securities Incremental shares from options and restricted stock units are computed by the treasury stock method. Options for the purchase of 145,060, 259,925, and 182,868 shares of common stock during fiscal 2015, 2014, and 2013, respectively, were excluded from the computation of diluted net earnings per share because they were anti-dilutive. Cash Flow Presentation The consolidated statements of cash flows are prepared using the indirect method, which reconciles net earnings to cash flow from operating activities. The necessary adjustments include the removal of timing differences between the occurrence of operating receipts and payments and their recognition in net earnings. The adjustments also remove from operating activities cash flows arising from investing and financing activities, which are presented separately from operating activities. Cash flows from foreign currency transactions and operations are translated at an average exchange rate for the period. Cash paid for acquisitions is classified as investing activities. New Accounting Pronouncement Adopted In December 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-11, Disclosures about Offsetting Assets and Liabilities . ASU No. 2011-11 requires entities to disclose gross and net information about both instruments and transactions eligible for offset in the statement of financial position and those subject to an agreement similar to a master netting arrangement. This would include derivatives and other financial securities arrangements. The company adopted this guidance in the first quarter of fiscal 2014, as required. The adoption of this guidance did not have an impact on the company's consolidated financial statements. |
ACQUISITIONS AND DIVESTITURE
ACQUISITIONS AND DIVESTITURE | 12 Months Ended |
Oct. 31, 2015 | |
ACQUISITIONS AND DIVESTITURE | |
ACQUISITIONS AND DIVESTITURE | 2 ACQUISITIONS AND DIVESTITURE On November 14, 2014, during the first quarter of fiscal 2015, the company acquired substantially all of the assets (excluding accounts receivable) of the BOSS® professional snow and ice management business of privately held Northern Star Industries, Inc. Based in Iron Mountain, Michigan, BOSS designs, manufactures, markets, and sells a broad line of snowplows, salt and sand spreaders, and related parts and accessories for light and medium duty trucks, all terrain vehicles, utility terrain vehicles, skid steers, and front-end loaders. Through this acquisition, the company added another professional contractor brand; a portfolio of counter-seasonal equipment; manufacturing and distribution facilities located in Iron Mountain, Michigan; and a distribution network for these products. Management believes that this acquisition positions the company to strengthen and grow its relationships with professional contractors, municipalities, and other customers by enabling the company to provide them with innovative, durable equipment and high-quality service they need each season. The purchase price of this acquisition was $229,490, which included a cash payment of $198,329 and issuance of a note payable at fair value of $31,161. The company funded the acquisition with cash on hand, a $130,000 term loan, and short-term debt under the company's revolving credit facility. The purchase price of this acquisition was accounted for as a business combination using the acquisition method, which requires that, among other things, assets acquired and liabilities assumed, be recorded at their fair value as of the acquisition date using independent appraisals and other analyses. The excess of the consideration transferred over those fair values is recorded as goodwill. The following table presents the allocation of the purchase price to the acquired assets, liabilities, and goodwill. Inventory $ Prepaid expenses Property, plant, and equipment Intangible assets Goodwill Current liabilities ) Purchase price $ The goodwill recorded as part of the acquisition primarily reflects the value of the assembled workforce, anticipated cost synergies, expected future cash flows, and anticipated sales growth from integrating and expanding existing product lines. The amount of goodwill that is expected to be deductible for income tax purposes is $101,867. The goodwill and intangible assets have been allocated to the Professional segment. During fiscal 2015 and 2014, the company expensed $259 and $509, respectively, of acquisition-related costs, which was recorded in selling, general, and administrative expense. The company also capitalized $373 of debt issuance costs in other assets related to the $130,000 term loan, which will be amortized over the term of the loan. Operating results for this acquisition have been included in the company's consolidated statements of earnings from the November 14, 2014 date of acquisition and are reflected in the Professional segment. The sale of BOSS products contributed $128,515 of net sales and had an immaterial impact on net earnings for fiscal 2015. Proforma results are not presented, as the acquisition was not considered material to the company's consolidated results of operations. On November 27, 2013, during the first quarter of fiscal 2014, the company completed the acquisition of certain assets of a quality value-priced line of outdoor lighting fixtures for the landscape lighting market. The purchase price of this acquisition was $1,245, which included cash payments, issuance of a long-term note, and an estimated contingent consideration. On September 30, 2013, during the fourth quarter of fiscal 2013, the company completed the acquisition of certain assets and assumed certain liabilities for a company in China that manufactures water-efficient drip irrigation products, sprinklers, emitters, and filters for agriculture, landscaping, and green house production. The net purchase price of this acquisition was $3,481, of which $2,101 was paid in cash in fiscal 2013 and $1,380 was paid in cash in fiscal 2014. The purchase price of all of these acquisitions was allocated to the identifiable assets acquired and liabilities assumed based on estimates of their fair value, with the excess purchase price for acquisitions recorded as goodwill. Additional purchase accounting disclosures have been omitted given the immateriality of these acquisitions in relation to the company's consolidated financial condition and results of operations. See Note 5 for further details related to the acquired intangible assets. On November 27, 2015, in the first quarter of fiscal 2016, the company completed the sale of its Northwestern U.S. distribution company. |
INVESTMENT IN JOINT VENTURE
INVESTMENT IN JOINT VENTURE | 12 Months Ended |
Oct. 31, 2015 | |
INVESTMENT IN JOINT VENTURE | |
INVESTMENT IN JOINT VENTURE | 3 INVESTMENT IN JOINT VENTURE In fiscal 2009, the company and TCFIF, a subsidiary of TCF National Bank, established Red Iron, a joint venture in the form of a Delaware limited liability company that provides inventory financing, including floor plan and open account receivable financing, to distributors and dealers of the company's products in the U.S. and select distributors of the company's products in Canada. The initial term will continue until October 31, 2017, subject to unlimited automatic two-year extensions thereafter. Either the company or TCFIF may elect not to extend the initial term or any subsequent term by giving one-year notice to the other party. Additionally, in connection with the joint venture, the company and an affiliate of TCFIF entered into an arrangement to provide inventory financing to dealers of the company's products in Canada. The company owns 45 percent of Red Iron and TCFIF owns 55 percent of Red Iron. The company accounts for its investment in Red Iron under the equity method of accounting. Each of the company and TCFIF contributed a specified amount of the estimated cash required to enable Red Iron to purchase the company's inventory financing receivables and to provide financial support for Red Iron's inventory financing programs. Red Iron borrows the remaining requisite estimated cash utilizing a $450,000 secured revolving credit facility established under a credit agreement between Red Iron and TCFIF. The company's total investment in Red Iron as of October 31, 2015 and 2014 was $18,979 and $14,890, respectively. The company has not guaranteed the outstanding indebtedness of Red Iron. The company has agreed to repurchase products repossessed by Red Iron and the TCFIF Canadian affiliate, up to a maximum aggregate amount of $7,500 in a calendar year. In addition, the company has provided recourse to Red Iron for certain outstanding receivables, which amounted to a maximum amount of $781 and $470 as of October 31, 2015 and 2014, respectively. Under the repurchase agreement between Red Iron and the company, Red Iron provides financing for certain dealers and distributors. These transactions are structured as an advance in the form of a payment by Red Iron to the company on behalf of a distributor or dealer with respect to invoices financed by Red Iron. These payments extinguish the obligation of the dealer or distributor to make payment to the company under the terms of the applicable invoice. Under separate agreements between Red Iron and the dealers and distributors, Red Iron provides loans to the dealers and distributors for the advances paid by Red Iron to the company. The net amount of new receivables financed for dealers and distributors under this arrangement during fiscal 2015, 2014, and 2013 was $1,430,855, $1,280,505, and $1,211,470, respectively. Summarized financial information for Red Iron is presented as follows: For the twelve months ended October 31 Revenue $ $ $ Net income As of October 31 Finance receivables, net $ $ Other assets Total liabilities |
OTHER INCOME, NET
OTHER INCOME, NET | 12 Months Ended |
Oct. 31, 2015 | |
OTHER INCOME, NET | |
OTHER INCOME, NET | 4 OTHER INCOME, NET Other income (expense) is as follows: Fiscal years ended October 31 Interest income $ $ $ Retail financing revenue Foreign currency exchange rate loss ) ) ) Noncash income from finance affiliate Litigation recovery, net Miscellaneous Total other income, net $ $ $ |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Oct. 31, 2015 | |
GOODWILL AND OTHER INTANGIBLE ASSETS. | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 5 GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill – The changes in the net carrying amount of goodwill for fiscal 2015 and 2014 were as follows: Professional Segment Residential Segment Total Balance as of October 31, 2013 $ $ $ Translation adjustments ) ) ) Balance as of October 31, 2014 $ $ $ Goodwill acquired – Translation and other adjustments ) Balance as of October 31, 2015 $ $ $ Other Intangible Assets – The components of other intangible assets were as follows: October 31, 2015 Estimated Life (Years) Gross Carrying Amount Accumulated Amortization Net Patents $ $ ) $ Non-compete agreements ) Customer-related ) Developed technology ) Trade names ) Other ) – Total amortizable ) Non-amortizable – trade names – Total other intangible assets, net $ $ ) $ October 31, 2014 Estimated Life (Years) Gross Carrying Amount Accumulated Amortization Net Patents $ $ ) $ Non-compete agreements ) Customer-related ) Developed technology ) Trade names ) Other ) – Total amortizable ) Non-amortizable – trade names – Total other intangible assets, net $ $ ) $ The change in gross carrying amount of other intangible assets of $107,425 from October 31, 2015 compared to October 31, 2014 was the result of intangible assets acquired from a company, disclosed in Note 2, and changes in foreign currency exchange rates. In fiscal 2015, the company determined certain amortizable intangible assets were impaired based on its assessment that the carrying value may not be recovered. Based on the company's impairment analysis, the company wrote down $1,383 of other intangible assets in fiscal 2015. Amortization expense for intangible assets for the fiscal years ended October 31, 2015, 2014, and 2013 was $11,438, $6,002, and $5,769, respectively. Estimated amortization expense for the succeeding fiscal years is as follows: 2016, $10,353; 2017, $9,458; 2018, $7,440; 2019, $6,562; 2020, $6,006; and after 2020, $74,360. |
SHORT-TERM CAPITAL RESOURCES
SHORT-TERM CAPITAL RESOURCES | 12 Months Ended |
Oct. 31, 2015 | |
SHORT-TERM CAPITAL RESOURCES | |
SHORT-TERM CAPITAL RESOURCES | 6 SHORT-TERM CAPITAL RESOURCES As of October 31, 2015, the company had a $150,000 unsecured senior five-year revolving credit facility that expires in October 2019. Included in this $150,000 revolving credit facility is a sublimit of $20,000 for standby letters of credit and a sublimit for swingline loans of $20,000. At the election of the company, and the approval of the named borrowers on the revolving credit facility, the aggregate maximum principal amount available under the facility may be increased by an amount up to $100,000 in aggregate. Funds are available under the revolving credit facility for working capital, capital expenditures, and other lawful purposes, including, but not limited to, acquisitions and stock repurchases. Interest expense on this credit line is determined based on a LIBOR rate (or other rates quoted by the Administrative Agent, Bank of America, N.A.) plus a basis point spread defined in the credit agreement. The company's non-U.S. operations also maintain unsecured short-term lines of credit in the aggregate amount of $11,085. These facilities bear interest at various rates depending on the rates in their respective countries of operation. Under the company's lines of credit, there was no outstanding debt as of October 31, 2015 and $20,818 outstanding short-term debt as of October 31, 2014. The weighted-average interest rate on outstanding short-term debt as of October 31, 2014 was 1.95%. In addition, the company had $222 in short-term debt for certain receivables that the company provided recourse to Red Iron as of October 31, 2015. The credit agreement that contains the revolving credit facility and term loan, which is described in more detail in Note 7, contains standard covenants, including, without limitation, financial covenants, such as the maintenance of minimum interest coverage and maximum debt to earnings ratios; and negative covenants, which among other things, limit loans and investments, disposition of assets, consolidations and mergers, transactions with affiliates, restricted payments, contingent obligations, liens, and other matters customarily restricted in such agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. Under the revolving credit facility, the company is not limited in the amount for payments of cash dividends and stock repurchases as long as the debt to earnings before interest, tax, depreciation, and amortization ("EBITDA") ratio from the previous quarter compliance certificate is less than or equal to 3.25, provided that immediately after giving effect of any such proposed action, no default or event of default would exist. In fiscal 2015, 2014, and 2013, the company was not limited in the amount for payments of cash dividends and stock repurchases as its debt to EBITDA ratio was below the thresholds. The company was in compliance with all covenants related to the lines of credit described above as of October 31, 2015 and 2014. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Oct. 31, 2015 | |
LONG-TERM DEBT. | |
LONG-TERM DEBT | 7 LONG TERM DEBT A summary of long-term debt as of October 31 is as follows: Term loan, due October 25, 2019 $ $ 7.800% Debentures, due June 15, 2027 6.625% Senior Notes, due May 1, 2037 4% Unsecured Note, due November 14, 2017 – Other Total long-term debt Less current portion Long-term debt, less current portion $ $ On November 14, 2014, the company issued a note with the aggregate principal amount of $30,000 to the former owner of the BOSS business, Northern Star Industries, Inc., which was recorded at fair value of $31,161 as disclosed in Note 2. Effective as of the closing of the acquisition, the company hired David J. Brule II, who is also a minority shareholder of Northern Star Industries, Inc., as an executive officer of the company; see Note 15 for further details regarding this related party transaction. In October 2014, the company obtained a $130,000 term loan with various banks, which was a part of the new credit agreement that included the new revolving credit facility. Under the credit agreement, the term loan bears interest based on a LIBOR rate (or other rates quoted by the Administrative Agent, Bank of America, N.A.) plus a basis point spread defined in the credit agreement. The term loan can be repaid in part or in full at any time without penalty, but in any event must be paid in full by October 2019. On April 26, 2007, the company issued $125,000 in aggregate principal amount of 6.625% senior notes due May 1, 2037. The senior notes were priced at 98.513% of par value, and the resulting discount of $1,859 associated with the issuance of these senior notes is being amortized over the term of the notes using the effective interest rate method. The underwriting fee and direct debt issue costs totaling $1,524 will be amortized over the life of the notes. Although the coupon rate of the senior notes is 6.625%, the effective interest rate is 6.741% after taking into account the issuance discount. Interest on the senior notes is payable semi-annually on May 1 and November 1 of each year. The senior notes are unsecured senior obligations of the company and rank equally with the company's other unsecured and unsubordinated indebtedness. The indentures under which the senior notes were issued contain customary covenants and event of default provisions. The company may redeem some or all of the senior notes at any time at the greater of the full principal amount of the senior notes being redeemed or the present value of the remaining scheduled payments of principal and interest discounted to the redemption date on a semi-annual basis at the treasury rate plus 30 basis points, plus, in both cases, accrued and unpaid interest. In the event of the occurrence of both (i) a change of control of the company, and (ii) a downgrade of the notes below an investment grade rating by both Moody's Investors Service, Inc. and Standard & Poor's Ratings Services within a specified period, the company would be required to make an offer to purchase the senior notes at a price equal to 101% of the principal amount of the senior notes plus accrued and unpaid interest to the date of repurchase. In connection with the issuance in June 1997 of $175,000 in long-term debt securities, the company paid $23,688 to terminate three forward-starting interest rate swap agreements with notional amounts totaling $125,000. These swap agreements had been entered into to reduce exposure to interest rate risk prior to the issuance of the new long-term debt securities. As of the inception of one of the swap agreements, the company had received payments that were recorded as deferred income to be recognized as an adjustment to interest expense over the term of the new debt securities. As of the date the swaps were terminated, this deferred income totaled $18,710. The excess termination fees over the deferred income recorded has been deferred and is being recognized as an adjustment to interest expense over the term of the debt securities issued. As of October 31, 2015, the company had $1,838 remaining in other assets for the excess termination fees over deferred income. Principal payments required on long-term debt in each of the next five fiscal years ending October 31 are as follows: 2016, $23,110; 2017, $23,070; 2018, $23,000; 2019, $84,500; 2020, $0; and after 2020, $225,000. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Oct. 31, 2015 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 8 STOCKHOLDERS' EQUITY Stock Repurchase Program. On December 11, 2012, the company's Board of Directors authorized the repurchase of 5,000,000 shares of the company's common stock in open-market or in privately negotiated transactions. This program has no expiration date but may be terminated by the Board at any time. During fiscal 2015, 2014, and 2013, the company paid $105,964, $101,674, and $98,842 to repurchase an aggregate of 1,561,179 shares, 1,622,569 shares, and 2,131,615 shares, respectively. As of October 31, 2015, 1,159,314 shares remained authorized for repurchase. On December 3, 2015, the company's Board of Directors authorized the repurchase of up to an additional 4,000,000 shares of the company's common stock in open-market or in privately negotiated transactions. This repurchase program has no expiration date but may be terminated by the Board at any time. Treasury Shares. As of October 31, 2015, the company had 23,413,524 treasury shares at a cost of $1,243,729. As of October 31, 2014, the company had 22,386,021 treasury shares at a cost of $1,163,706. Accumulated Other Comprehensive Loss. Components of accumulated other comprehensive loss ("AOCL"), net of tax, within the consolidated statements of stockholders' equity are as follows: As of October 31 Foreign currency translation adjustments $ $ $ Pension and postretirement benefits Derivative instruments ) Total accumulated other comprehensive loss $ $ $ The components and activity of AOCL are as follows: Foreign Currency Translation Adjustments Pension and Post- retirement Benefits Cash Flow Derivative Instruments Total AOCL as of October 31, 2013 $ $ $ $ Other comprehensive loss before reclassifications – ) Amounts reclassified from AOCL – ) Net current period other comprehensive loss (income) $ $ $ ) $ AOCL as of October 31, 2014 $ $ $ ) $ Other comprehensive loss (income) before reclassifications $ $ – $ ) $ Amounts reclassified from AOCL – Net current period other comprehensive loss $ $ $ $ AOCL as of October 31, 2015 $ $ $ $ AOCL associated with pension and postretirement benefits are included in Note 11. Details of amounts reclassified from accumulated other comprehensive loss to the respective line items in net earnings for cash flow derivative instruments are included in Note 14. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Oct. 31, 2015 | |
INCOME TAXES | |
INCOME TAXES | 9 INCOME TAXES Earnings before income taxes were as follows: Fiscal years ended October 31 Earnings before income taxes: U.S. $ $ $ Non-U.S. Total $ $ $ A reconciliation of the statutory federal income tax rate to the company's consolidated effective tax rate is summarized as follows: Fiscal years ended October 31 Statutory federal income tax rate % % % Domestic manufacturer's deduction ) ) ) State and local income taxes, net of federal benefit Non-U.S. taxes ) ) ) Federal research tax credit ) ) ) Other, net ) ) ) Consolidated effective tax rate % % % Components of the provision for income taxes were as follows: Fiscal years ended October 31 Provision for income taxes: Current – Federal $ $ $ State Non-U.S. Current provision $ $ $ Deferred – Federal $ $ ) $ State – ) Non-U.S. ) ) Deferred benefit ) ) ) Total provision for income taxes $ $ $ During the fiscal years ended October 31, 2015, 2014, and 2013, respectively, $8,459, $8,857, and $6,134 was added to stockholders' equity reflecting the permanent book to tax difference in accounting for tax benefits related to employee stock-based award transactions. The tax effects of temporary differences that give rise to the net deferred income tax assets are presented below: October 31 Deferred tax assets (liabilities): Compensation and benefits $ $ Warranty and insurance Advertising and sales allowance Depreciation ) Other Deferred tax assets $ $ Valuation allowance ) ) Net deferred tax assets $ $ The valuation allowance as of October 31, 2015 and 2014 principally applies to capital loss carryforwards and foreign net operating loss carryforwards that are expected to expire prior to utilization. In fiscal 2015, the valuation allowance decreased due to the release in certain foreign jurisdictions as deferred tax assets were determined more likely than not to be realized. As of October 31, 2015, the company had net operating loss carryforwards of approximately $15,354 in foreign jurisdictions. The carryforward periods are as follows: $10,871 that do not expire; and $4,483 that expire between fiscal years 2017 and 2022. No provision has been made for U.S. federal income taxes on certain undistributed earnings of foreign subsidiaries the company intends to permanently invest or that may be remitted substantially tax-free. The total of undistributed earnings that would be subject to federal income tax if remitted under existing law is approximately $96,494 as of October 31, 2015. Determination of the unrecognized deferred tax liability related to these earnings is not practicable because of the complexities with its hypothetical calculation. Upon distribution of these earnings, the company will be subject to U.S. taxes and withholding taxes payable to various foreign governments. A credit for foreign taxes already paid would be available to reduce the U.S. tax liability. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Balance as of October 31, 2014 $ Increase as a result of tax positions taken during a prior period Decrease as a result of tax positions taken during a prior period ) Increase as a result of tax positions taken during the current period Decrease relating to settlements with taxing authorities ) Balance as of October 31, 2015 $ The company recognizes interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. In addition to the liability of $6,343 for unrecognized tax benefits as of October 31, 2015 was an amount of approximately $1,356 for accrued interest and penalties. Included in the balance of unrecognized tax benefits as of October 31, 2015 are potential benefits of $5,636 that, if recognized, would affect the effective tax rate from continuing operations. The company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and numerous state and foreign jurisdictions. With few exceptions, the company is no longer subject to U.S. federal, state and local, and non-U.S. income tax examinations by tax authorities for taxable years before fiscal 2010. The Internal Revenue Service is nearing completion of an audit for fiscal years 2010 through 2012, with no material adjustments to income tax expense or unrecognized tax benefits expected. The company is also under audit in several state jurisdictions, and expects various statutes of limitation to expire during the next 12 months. Due to the uncertain response of taxing authorities, a range of outcomes cannot be reasonably estimated at this time. |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS | 12 Months Ended |
Oct. 31, 2015 | |
STOCK-BASED COMPENSATION PLANS | |
STOCK-BASED COMPENSATION PLANS | 10 STOCK-BASED COMPENSATION PLANS The company maintains The Toro Company Amended and Restated 2010 Equity and Incentive Plan, as amended (the "2010 plan"), for executive officers, other employees, and non-employee members of the company's Board of Directors. The 2010 plan allows the company to grant equity-based compensation awards, including stock options, restricted stock units, restricted stock, and performance share awards. The compensation costs related to stock-based awards were as follows: Fiscal years ended October 31 Stock option awards $ $ $ Restricted stock and restricted stock units Performance share awards Total compensation cost for stock-based awards $ $ $ Tax benefit realized for tax deductions from stock-based awards $ $ $ The number of unissued shares of common stock available for future equity-based grants under the 2010 plan was 3,400,896 as of October 31, 2015. Shares of common stock issued upon exercise or settlement of stock options, restricted stock units, and performance shares are issued from treasury shares. During fiscal 2015, 2014 and 2013, 6,680, 7,000 and 10,152 shares, respectively, of fully vested unrestricted common stock awards were granted to certain members of the company's Board of Directors as a component of their compensation for their service on the board. Total compensation cost for these share grants in fiscal years 2015, 2014, and 2013 was $412, $409, and $438, respectively, which is recorded in selling, general, and administrative expense in the consolidated statements of earnings. Stock Option Awards. Under the 2010 plan, stock options are granted with an exercise price equal to the closing price of the company's common stock on the date of grant, as reported by the New York Stock Exchange. Options are generally granted to executive officers, other employees, and non-employee members of the company's Board of Directors on an annual basis in the first quarter of the company's fiscal year. Options generally vest one-third each year over a three-year period and have a ten-year term. Other options granted to certain employees vest in full on the three-year anniversary of the date of grant and have a ten-year term. Compensation expense equal to the grant date fair value is generally recognized for these awards over the vesting period. Stock options granted to executive officers and other employees are subject to accelerated expensing if the option holder meets the retirement definition set forth in the 2010 plan. In that case, the fair value of the options is expensed in the fiscal year of grant because the option holder must be employed as of the end of the fiscal year in which the options are granted in order for the options to continue to vest following retirement. Similarly, if a non-employee director has served on the company's Board of Directors for ten full fiscal years or more, the awards vest immediately upon retirement, and therefore, the fair value of the options granted is fully expensed on the date of the grant. The table below presents stock option activity for fiscal 2015: Stock Option Awards Weighted- Average Exercise Price Weighted- Average Contractual Life(years) Intrinsic Value Outstanding as of October 31, 2014 $ $ Granted Exercised ) Cancelled/forfeited ) Expired ) Outstanding as of October 31, 2015 $ $ Exercisable as of October 31, 2015 $ $ As of October 31, 2015, there was $1,769 of total unrecognized compensation expense related to unvested stock options. That cost is expected to be recognized over a weighted-average period of 1.86 years. The table below presents the total market value of stock options exercised and the total intrinsic value of options exercised during the following fiscal years: Fiscal years ended October 31 Market value of stock options exercised $ $ $ Intrinsic value of options exercised 1 1 Intrinsic value is calculated as amount by which the stock price at exercise date exceeded the option exercise price The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation method with the assumptions noted in the table below. The expected life is a significant assumption as it determines the period for which the risk-free interest rate, volatility, and dividend yield must be applied. The expected life is the average length of time in which executive officers, other employees, and non-employee directors are expected to exercise their stock options, which is primarily based on historical experience. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. Expected volatilities are based on the movement of the company's common stock over the most recent historical period equivalent to the expected life of the option. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury rate over the expected life at the time of grant. Dividend yield is estimated over the expected life based on the company's historical cash dividends paid, expected future cash dividends and dividend yield, and expected changes in the company's stock price. The table below illustrates the valuation assumptions of stock-based compensation for the following fiscal years: Fiscal years ended October 31 Expected life of option in years Expected stock price volatility % % % Risk-free interest rate % % % Expected dividend yield % % % Weighted-average fair value at date of grant $ $ $ Restricted Stock and Restricted Stock Units. Under the 2010 plan, restricted stock and restricted stock unit awards are generally granted to certain employees that are not executive officers. Occasionally, restricted stock or restricted stock unit awards may be granted, including to executive officers, in connection with hiring, mid-year promotions, leadership transition, or retention. Restricted stock and restricted stock units generally vest one-third each year over a three-year period, or vest in full on the three-year anniversary of the date of grant. Such awards may have performance-based rather than time-based vesting requirements. Compensation expense equal to the grant date fair value, which is equal to the closing price of the company's common stock on the date of grant multiplied by the number of shares subject to the restricted stock and restricted stock units, is recognized for these awards over the vesting period. Factors related to the company's restricted stock and restricted stock units during the following fiscal years are as follows: Fiscal years ended October 31 Weighted-average fair value at date of grant $ $ $ Fair value of restricted stock and restricted stock units vested The table below summarizes the activity during fiscal 2015 for unvested restricted stock and restricted stock units: Restricted Stock and Units Weighted- Average Fair Value at Date of Grant Unvested as of October 31, 2014 $ Granted Vested ) Forfeited ) Unvested as of October 31, 2015 $ As of October 31, 2015, there was $3,518 of total unrecognized compensation expense related to unvested restricted stock units. That cost is expected to be recognized over a weighted-average period of 2.43 years. Performance Share Awards. The company grants performance share awards to executive officers and other employees under which they are entitled to receive shares of the company's common stock contingent on the achievement of performance goals of the company and businesses of the company, which are generally measured over a three-year period. The number of shares of common stock a participant receives will be increased (up to 200 percent of target levels) or reduced (down to zero) based on the level of achievement of performance goals and vest at the end of a three-year period. Performance share awards are generally granted on an annual basis in the first quarter of the company's fiscal year. Compensation expense is recognized for these awards on a straight-line basis over the vesting period based on the per share fair value as of the date of grant and the probability of achieving each performance goal. Factors related to the company's performance share awards are as follows: Fiscal years ended October 31 Weighted-average fair value at date of grant $ $ $ Fair value of performance share awards vested The table below summarizes the activity during fiscal 2015 for unvested performance share awards: Performance Shares Weighted- Average Fair Value at Date of Grant Unvested as of October 31, 2014 $ Granted Vested ) Cancelled/forfeited ) Unvested as of October 31, 2015 $ As of October 31, 2015, there was $4,227 of total unrecognized compensation expense related to unvested performance share awards. That cost is expected to be recognized over a weighted-average period of 1.69 years. |
EMPLOYEE RETIREMENT PLANS
EMPLOYEE RETIREMENT PLANS | 12 Months Ended |
Oct. 31, 2015 | |
EMPLOYEE RETIREMENT PLANS | |
EMPLOYEE RETIREMENT PLANS | 11 EMPLOYEE RETIREMENT PLANS The company maintains The Toro Company Investment, Savings, and Employee Stock Ownership Plan for eligible employees. The company's expenses under this plan were $17,400, $15,550, and $14,931 for the fiscal years ended October 31, 2015, 2014, and 2013, respectively. In addition, the company and its subsidiaries have defined benefit, supplemental, and other retirement plans covering certain employees in the U.S. and the United Kingdom. The projected benefit obligation of these plans as of October 31, 2015 and 2014 was $46,427 and $45,420, respectively, and the net liability amount recognized in the consolidated balance sheets as of October 31, 2015 and 2014 was $4,829 and $3,432, respectively. The accumulated benefit obligation of these plans as of October 31, 2015 and 2014 was $43,145 and $42,431, respectively. The funded status of these plans as of October 31, 2015 and 2014 was $11,303 and $10,085, respectively. The fair value of the plan assets as of October 31, 2015 and 2014 was $35,124 and $35,335, respectively. The net expense recognized in the consolidated financial statements for these plans was $2,406, $1,092, and $1,149 for the fiscal years ended October 31, 2015, 2014, and 2013, respectively. Amounts recognized in accumulated other comprehensive loss consisted of: Fiscal years ended October 31 Defined Benefit Pension Plans Postretirement Benefit Plan Total 2015 Net actuarial loss (gain) $ $ ) $ Net prior service cost – Accumulated other comprehensive loss (income) $ $ ) $ 2014 Net actuarial loss $ $ $ Net prior service cost (credit) ) Accumulated other comprehensive loss $ $ $ The following amounts are included in accumulated other comprehensive loss as of October 31, 2015 and are expected to be recognized as components of net periodic benefit cost during fiscal 2016. Defined Benefit Pension Plans Postretirement Benefit Plan Total Net actuarial loss $ – $ Net prior service cost – Total $ – $ Amounts recognized in net periodic benefit cost and other comprehensive loss consisted of: Fiscal years ended October 31 Defined Benefit Pension Plans Postretirement Benefit Plan Total 2015 Net actuarial loss (gain) $ $ ) $ ) Prior service cost – Amortization of unrecognized prior service (credit) cost ) ) Amortization of unrecognized actuarial loss (gain) ) Total recognized in other comprehensive loss (income) $ $ ) $ Total recognized in net periodic benefit cost and other comprehensive loss $ $ $ 2014 Net actuarial loss (gain) $ $ ) $ ) Amortization of unrecognized prior service (credit) cost ) Amortization of unrecognized actuarial loss (gain) ) Total recognized in other comprehensive loss $ $ $ Total recognized in net periodic benefit cost and other comprehensive loss $ $ $ The company has omitted the remaining disclosures for its defined benefit plans and postretirement healthcare plan as the company deems these plans to be immaterial to its consolidated financial position and results of operations. |
SEGMENT DATA
SEGMENT DATA | 12 Months Ended |
Oct. 31, 2015 | |
SEGMENT DATA | |
SEGMENT DATA | 12 SEGMENT DATA The company's businesses are organized, managed, and internally grouped into segments based on differences in products and services. Segment selection was based on the manner in which management organizes segments for making operating and investment decisions and assessing performance. The company has identified nine operating segments and has aggregated those segments into three reportable segments: Professional, Residential, and Distribution. The aggregation of the company's segments is based on the segments having the following similarities: economic characteristics, types of products and services, types of production processes, type or class of customers, and method of distribution. The company's Distribution segment, which consists of company-owned domestic distributorships, has been combined with the company's corporate activities and elimination of intersegment revenues and expenses and is shown as "Other" due to the insignificance of the segment. The Professional business segment consists of turf and landscape equipment and irrigation products. The Professional business segment also includes professional snow and ice removal equipment as a result of the acquisition of the BOSS business, as discussed in Note 2. Turf and landscape equipment products include sports fields and grounds maintenance equipment, golf course mowing and maintenance equipment, landscape contractor mowing equipment, landscape creation and renovation equipment, rental and specialty construction equipment, and other maintenance equipment. Irrigation and lighting products consist of sprinkler heads, electric and hydraulic valves, controllers, computer irrigation central control systems, and micro-irrigation drip tape and hose products, as well as professionally installed lighting products offered through distributors and landscape contractors that also purchase irrigation products. Professional business segment products are sold mainly through a network of distributors and dealers to professional users engaged in maintaining golf courses, sports fields, municipal properties, agricultural fields, residential and commercial landscapes, and removing snow, as well as directly to government customers, rental companies, and large retailers. The Residential business segment consists of walk power mowers, riding mowers, snow throwers, replacement parts, and home solutions products, including trimmers, blowers, blower-vacuums, and underground and hose-end retail irrigation products sold in Australia. Residential business segment products are sold to homeowners through a network of distributors and dealers, and through a broad array of home centers, hardware retailers, and mass retailers, as well as over the Internet. The Other segment consists of the company's Distribution segment and corporate activities and elimination of intersegment revenues and expenses. Corporate activities include general corporate expenditures (finance, human resources, legal, information services, public relations, and similar activities) and other unallocated corporate assets and liabilities, such as corporate facilities, parts inventory, and deferred tax assets. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1. The company evaluates the performance of its Professional and Residential business segment results based on earnings from operations plus other income, net. Operating loss for the Other segment includes earnings (loss) from domestic wholly owned distribution companies, corporate activities, other income, and interest expense. The business segment's operating profits or losses include direct costs incurred at the segment's operating level plus allocated expenses, such as profit sharing and manufacturing expenses. The allocated expenses represent costs that these operations would have incurred otherwise, but do not include general corporate expenses, interest expense, and income taxes. The company accounts for intersegment gross sales at current market prices. The following table shows summarized financial information concerning the company's reportable segments: Fiscal years ended October 31 Professional Residential Other Total 2015 Net sales $ $ $ $ Intersegment gross sales ) – Earnings (loss) before income taxes ) Total assets Capital expenditures Depreciation and amortization 2014 Net sales $ $ $ $ Intersegment gross sales ) – Earnings (loss) before income taxes ) Total assets Capital expenditures Depreciation and amortization 2013 Net sales $ $ $ $ Intersegment gross sales ) – Earnings (loss) before income taxes ) Total assets Capital expenditures Depreciation and amortization The following table presents the details of the Other segment operating loss before income taxes: Fiscal years ended October 31 Corporate expenses $ ) $ ) $ ) Interest expense ) ) ) Other income Total $ ) $ ) $ ) The following table presents net sales for groups of similar products and services: Fiscal years ended October 31 Equipment $ $ $ Irrigation and lighting Total $ $ $ Sales to one customer in the Residential segment accounted for 11 percent of total consolidated gross sales in both fiscal 2015 and 2014, and 10 percent in fiscal 2013. Geographic Data The following geographic area data includes net sales based on product shipment destination. Long-lived assets consist of net property, plant, and equipment, which is determined based on physical location in addition to allocated capital tooling from U.S. plant facilities. Fiscal years ended October 31 United States Foreign Countries Total 2015 Net sales $ $ $ Long-lived assets 2014 Net sales $ $ $ Long-lived assets 2013 Net sales $ $ $ Long-lived assets |
COMMITMENTS AND CONTINGENT LIAB
COMMITMENTS AND CONTINGENT LIABILITIES | 12 Months Ended |
Oct. 31, 2015 | |
COMMITMENTS AND CONTINGENT LIABILITIES | |
COMMITMENTS AND CONTINGENT LIABILITIES | 13 COMMITMENTS AND CONTINGENT LIABILITIES Leases Total rental expense for operating leases was $24,986, $24,329, and $24,399 for the fiscal years ended October 31, 2015, 2014, and 2013, respectively. As of October 31, 2015, future minimum lease payments under noncancelable operating leases amounted to $77,685 as follows: 2016, $13,956; 2017, $10,220; 2018, $8,219; 2019, $6,827; 2020, $6,350; and after 2020, $32,113. Customer Financing Wholesale Financing. The company is party to a joint venture with TCFIF established as Red Iron. See Note 3 for additional information related to Red Iron. Some products sold to independent dealers in Australia are financed by a third party finance company. This third party financing company purchased $24,979 of receivables from the company during fiscal 2015. As of October 31, 2015, $10,576 of receivables financed by the third party financing company, excluding Red Iron, was outstanding. The company also enters into limited inventory repurchase agreements with third party financing companies and Red Iron for receivables financed by third party financing companies and Red Iron. As of October 31, 2015, the company was contingently liable to repurchase up to a maximum amount of $9,998 of inventory related to receivables under these financing arrangements. The company has repurchased only immaterial amounts of inventory under these repurchase agreements since inception. End-User Financing. The company has agreements with third party financing companies to provide lease-financing options to golf course and sports fields and grounds equipment customers in the U.S. and select countries in Europe. The company has no contingent liabilities for residual value or credit collection risk under these agreements with third party financing companies. From time to time, the company enters into agreements where it provides recourse to third party finance companies in the event of default by the customer for lease payments to the third party finance company. The company's maximum exposure for credit collection as of October 31, 2015 was $4,601. Purchase Commitments As of October 31, 2015, the company had $4,663 of noncancelable purchase commitments with some suppliers for materials and supplies as part of the normal course of business. The company also entered into a construction agreement for the renovation of its original corporate facility located at Bloomington, Minnesota, to accommodate needs for expansion of product development and test capacities, for a maximum obligation, subject to certain exceptions, of $15,291. The amount of the remaining obligation as of October 31, 2015 was $5,285. Letters of Credit Letters of credit are issued by the company during the normal course of business, as required by some vendor contracts. As of October 31, 2015 and 2014, the company had $16,245 and $16,220, respectively, in outstanding letters of credit. Litigation The company is party to litigation in the ordinary course of business. Such matters are generally subject to uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time. Litigation occasionally involves claims for punitive, as well as compensatory, damages arising out of the use of the company's products. Although the company is self-insured to some extent, the company maintains insurance against certain product liability losses. The company is also subject to litigation and administrative and judicial proceedings with respect to claims involving asbestos and the discharge of hazardous substances into the environment. Some of these claims assert damages and liability for personal injury, remedial investigations or clean up and other costs and damages. The company is also typically involved in commercial disputes, employment disputes, and patent litigation cases in which it is asserting or defending against patent infringement claims. To prevent possible infringement of the company's patents by others, the company periodically reviews competitors' products. To avoid potential liability with respect to others' patents, the company regularly reviews certain patents issued by the United States Patent and Trademark Office and foreign patent offices. Management believes these activities help minimize its risk of being a defendant in patent infringement litigation. The company is currently involved in patent litigation cases, including cases by or against competitors, where it is asserting and defending against claims of patent infringement. Such cases are at varying stages in the litigation process. The company records a liability in its consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, where the company has assessed that a loss is probable and an amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. In the opinion of management, the amount of liability, if any, with respect to these matters, individually or in the aggregate, will not materially affect its consolidated results of operations, financial position, or cash flows. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Oct. 31, 2015 | |
FINANCIAL INSTRUMENTS | |
FINANCIAL INSTRUMENTS | 14 FINANCIAL INSTRUMENTS Concentrations of Credit Risk Financial instruments, which potentially subject the company to concentrations of credit risk, consist principally of accounts receivable that are concentrated in the Professional and Residential business segments. The credit risk associated with these segments is limited because of the large number of customers in the company's customer base and their geographic dispersion, except for the Residential segment that has significant sales to The Home Depot. Derivative Instruments and Hedging Activities The company is exposed to foreign currency exchange rate risk arising from transactions in the normal course of business, such as sales to third party customers, sales and loans to wholly owned foreign subsidiaries, foreign plant operations, and purchases from suppliers. The company actively manages the exposure of its foreign currency exchange rate market risk by entering into various hedging instruments, authorized under company policies that place controls on these activities, with counterparties that are highly rated financial institutions. The company's hedging activities primarily involve the use of forward currency contracts, as well as cross currency swaps that are intended to offset intercompany loan exposures. The company uses derivative instruments only in an attempt to limit underlying exposure from foreign currency exchange rate fluctuations and to minimize earnings and cash flow volatility associated with foreign currency exchange rate changes. Decisions on whether to use such contracts are primarily based on the amount of exposure to the currency involved and an assessment of the near-term market value for each currency. The company's policy does not allow the use of derivatives for trading or speculative purposes. The company also made an accounting policy election to use the portfolio exception with respect to measuring counterparty credit risk for derivative instruments, and to measure the fair value of a portfolio of financial assets and financial liabilities on the basis of the net open risk position with each counterparty. The company's primary currency exchange rate exposures are with the Euro, the Australian dollar, the Canadian dollar, the British pound, the Mexican peso, the Japanese yen, the Chinese Renminbi, and the Romanian New Leu against the U.S. dollar, as well as the Romanian New Leu against the Euro. Cash Flow Hedges. The company recognizes all derivative instruments as either assets or liabilities at fair value on the consolidated balance sheet and formally documents relationships between cash flow hedging instruments and hedged transactions, as well as its risk-management objective and strategy for undertaking hedge transactions. This process includes linking all derivatives to the forecasted transactions, such as sales to third parties, foreign plant operations, and purchases from suppliers. Changes in fair values of outstanding cash flow hedge derivatives, except the ineffective portion, are recorded in other comprehensive income ("OCI"), until net earnings is affected by the variability of cash flows of the hedged transaction. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in net earnings. The consolidated statement of earnings classification of effective hedge results is the same as that of the underlying exposure. Results of hedges of sales are recorded in net sales, and foreign plant operations and purchases of suppliers are recorded in cost of sales when the underlying hedged transaction affects net earnings. The maximum amount of time the company hedges its exposure to the variability in future cash flows for forecasted trade sales and purchases is two years. Results of hedges of intercompany loans are recorded in other income, net as an offset to the remeasurement of the foreign loan balance. The company formally assesses, at a hedge's inception and on an ongoing basis, whether the derivatives that are designated as hedges have been highly effective in offsetting changes in the cash flows of the hedged transactions and whether those derivatives may be expected to remain highly effective in future periods. When it is determined that a derivative is not, or has ceased to be, highly effective as a hedge, the company discontinues hedge accounting prospectively. When the company discontinues hedge accounting because it is no longer probable, but it is still reasonably possible that the forecasted transaction will occur by the end of the originally expected period or within an additional two-month period of time thereafter, the gain or loss on the derivative remains in AOCL and is reclassified to net earnings when the forecasted transaction affects net earnings. However, if it is probable that a forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period of time thereafter, the gains and losses that were in AOCL are recognized immediately in net earnings. In all situations in which hedge accounting is discontinued and the derivative remains outstanding, the company carries the derivative at its fair value on the consolidated balance sheet, recognizing future changes in the fair value in other income, net. For the fiscal years ended October 31, 2015 and 2014, there were immaterial gains and losses on contracts reclassified into earnings as a result of the discontinuance of cash flow hedges. As of October 31, 2015, the notional amount of outstanding forward contracts designated as cash flow hedges was $103,740. Additionally, the company has one cross currency interest rate swap instrument outstanding as of October 31, 2015 for a fixed pay notional of 36,593 Romanian New Leu and receive floating notional of 8,500 Euro. Derivatives Not Designated as Hedging Instruments. The company also enters into foreign currency contracts that include forward currency contracts and cross currency swaps to mitigate the remeasurement of specific assets and liabilities on the consolidated balance sheet. These contracts are not designated as hedging instruments. Accordingly, changes in the fair value of hedges of recorded balance sheet positions, such as cash, receivables, payables, intercompany notes, and other various contractual claims to pay or receive foreign currencies other than the functional currency, are recognized immediately in other income, net, on the consolidated statements of earnings together with the transaction gain or loss from the hedged balance sheet position. The following table presents the fair value of the company's derivatives and consolidated balance sheet location. Asset Derivatives Liability Derivatives October 31, 2015 October 31, 2014 October 31, 2015 October 31, 2014 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives Designated as Hedging Instruments Forward currency contracts Prepaid expenses $ Prepaid expenses $ Accrued liabilities $ Accrued liabilities $ Cross currency contracts Prepaid expenses – Prepaid expenses Accrued liabilities Accrued liabilities – Derivatives Not Designated as Hedging Instruments Forward currency contracts Prepaid expenses $ Prepaid expenses $ Accrued liabilities $ Accrued liabilities $ – Cross currency contracts Prepaid expenses Prepaid expenses – Accrued liabilities – Accrued liabilities Total Derivatives $ $ $ $ The following table presents the impact of derivative instruments on the consolidated statements of earnings and the consolidated statements of comprehensive income for the company's derivatives designated as cash flow hedging instruments for the fiscal years ended October 31, 2015 and 2014, respectively. Gain (Loss) Recognized in OCI on Derivatives, net of tax (Effective Portion) Location of Gain (Loss) Reclassified from AOCL into Income (Effective Portion) Gain (Loss) Reclassified from AOCL into Income (Effective Portion) Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and excluded from Effectiveness Testing) Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Excluded from Effectiveness Testing) Fiscal years ended October 31, 2015 October 31, 2014 October 31, 2015 October 31, 2014 October 31, 2015 October 31, 2014 Forward currency contracts $ ) $ Net sales $ $ ) Other income, net $ $ Forward currency contracts ) ) Cost of sales ) Cross currency contracts ) Other income, net ) ) Total $ ) $ Total $ $ ) As of October 31, 2015, the company anticipates to reclassify approximately $652 of gains from AOCL to earnings during the next twelve months. The following table presents the impact of derivative instruments on the consolidated statements of earnings for the company's derivatives not designated as hedging instruments. Gain (Loss) Recognized in Net Earnings Fiscal Year Ended Location of Gain (Loss) Recognized in Net Earnings October 31, 2015 October 31, 2014 Forward currency contracts Other income, net $ $ Cross currency contracts Other income, net Total $ $ The company entered into an International Swap Dealers Association ("ISDA") Master Agreement with each counterparty that permits the net settlement of amounts owed under their respective contracts. The ISDA Master Agreement is an industry standardized contract that governs all derivative contracts entered into between the company and the respective counterparty. Under these master netting agreements, net settlement generally permits the company or the counterparty to determine the net amount payable or receivable for contracts due on the same date or in the same currency for similar types of derivative transactions. The company records the fair value of its derivative contracts at the net amount in its consolidated balance sheets. The following tables show the effects of the master netting arrangements on the fair value of the company's derivative contracts that are recorded in the consolidated balance sheets: Assets Liabilities October 31, 2015 Gross Amounts of Recognized Assets Gross Liabilities Offset in the Balance Sheet Net Amount of Assets Presented in the Balance Sheet Gross Amounts of Recognized Liabilities Gross Assets offset in the Balance Sheet Net Amount of Liabilities Presented in the Balance Sheet Forward currency contracts $ $ ) $ $ ) – $ ) Cross currency contracts – ) – ) Total $ $ ) $ $ ) – $ ) Assets Liabilities October 31, 2014 Gross Amounts of Recognized Assets Gross Liabilities Offset in the Balance Sheet Net Amount of Assets Presented in the Balance Sheet Gross Amounts of Recognized Liabilities Gross Assets offset in the Balance Sheet Net Amount of Liabilities Presented in the Balance Sheet Forward currency contracts $ $ ) $ $ ) – $ ) Cross currency contracts – ) – ) Total $ $ ) $ $ ) – $ ) Fair Value The company categorizes its assets and liabilities into one of three levels based on the assumptions (inputs) used in valuing the asset or liability. Estimates of fair value for financial assets and financial liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value, and requires certain disclosures. The framework discusses valuation techniques such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are defined as follows: Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs reflecting management's assumptions about the inputs used in pricing the asset or liability. Cash balances are valued at their carrying amounts in the consolidated balance sheets, which are reasonable estimates of their fair value due to their short-term nature. Forward currency contracts are valued based on observable market transactions of forward currency prices and spot currency rates as of the reporting date. The fair value of cross currency contracts is determined using discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs such as interest rates and foreign currency exchange rates. In addition, credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, such as collateral postings, thresholds, mutual puts, and guarantees, are incorporated in the fair values to account for potential nonperformance risk. The unfunded deferred compensation liability is primarily subject to changes in fixed-income investment contracts based on current yields. For accounts receivable and accounts payable, carrying amounts are a reasonable estimate of fair value given their short-term nature. Assets and liabilities measured at fair value on a recurring basis, as of October 31, 2015 and 2014, respectively, are summarized below: October 31, 2015 Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ $ $ – – Forward currency contracts – – Cross currency contracts – – Total assets $ $ $ – Liabilities: Forward currency contracts $ – $ – Cross currency contracts – – Deferred compensation liabilities – – Total liabilities $ – $ – October 31, 2014 Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ $ $ – – Forward currency contracts – – Cross currency contracts – – Total assets $ $ $ – Liabilities: Forward currency contracts $ – $ – Cross currency contracts – – Deferred compensation liabilities – – Total liabilities $ – $ – The company measures certain assets and liabilities at fair value on a non-recurring basis. Assets acquired and liabilities assumed as part of acquisitions are measured at fair value. Refer to Note 2 for additional information. There were no transfers between Level 1 and Level 2 during the fiscal years ended October 31, 2015 and 2014. As of October 31, 2015, the estimated fair value of long-term debt with fixed interest rates was $298,541 compared to its carrying amount of $254,452. As of October 31, 2014, the estimated fair value of long-term debt with fixed interest rates was $260,970 compared to its carrying amount of $223,956. The fair value is estimated by discounting the projected cash flows using the rate at which similar amounts of debt could currently be borrowed. Long-term debt is a Level 2 liability in the fair value hierarchy. |
RELATED PARTY TRANSACTION
RELATED PARTY TRANSACTION | 12 Months Ended |
Oct. 31, 2015 | |
RELATED PARTY TRANSACTION | |
RELATED PARTY TRANSACTION | 15 RELATED PARTY TRANSACTION On November 14, 2014, during the first quarter of fiscal 2015, the company acquired substantially all of the assets (excluding accounts receivable) of the BOSS® professional snow and ice management business of privately held Northern Star Industries, Inc., as discussed in Note 2. The purchase price included a cash payment and issuance of an unsecured promissory note in the aggregate principal amount of $30,000. Under the terms of the note, interest will accrue at the rate of 4.0% per year and principal payments of $10,000 each, together with accrued interest, will be payable on the first, second, and third anniversaries of the closing date of the acquisition, subject to certain conditions. Effective as of the closing of the acquisition on November 14, 2014, the company hired David J. Brule II, who is also a minority shareholder of Northern Star Industries, Inc., as an executive officer of the company. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Oct. 31, 2015 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 16 SUBSEQUENT EVENTS The company evaluated all subsequent events and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. |
QUARTERLY FINANCIAL DATA (unaud
QUARTERLY FINANCIAL DATA (unaudited) | 12 Months Ended |
Oct. 31, 2015 | |
QUARTERLY FINANCIAL DATA (unaudited) | |
QUARTERLY FINANCIAL DATA (unaudited) | 17 QUARTERLY FINANCIAL DATA (unaudited) Summarized quarterly financial data for fiscal 2015 and 2014 are as follows: Fiscal year ended October 31, 2015 Quarter First Second Third Fourth Net sales $ $ $ $ Gross profit Net earnings Basic net earnings per share 1 .55 .96 .43 Diluted net earnings per share 1 .54 .94 .42 Fiscal year ended October 31, 2014 Quarter First Second Third Fourth Net sales $ $ $ $ Gross profit Net earnings Basic net earnings per share 1 Diluted net earnings per share 1 1 Net earnings per share amounts do not sum to equal full year total due to changes in the number of shares outstanding during the periods and rounding. |
SCHEDULE II Valuation and Quali
SCHEDULE II Valuation and Qualifying Accounts | 12 Months Ended |
Oct. 31, 2015 | |
SCHEDULE II Valuation and Qualifying Accounts | |
SCHEDULE II Valuation and Qualifying Accounts | SCHEDULE II THE TORO COMPANY AND SUBSIDIARIES Valuation and Qualifying Accounts (Dollars in thousands) Balance as of the beginning of the fiscal year Charged to costs and expenses 1 Deductions 2 Balance as of the end of the fiscal year Fiscal year ended October 31, 2015 Allowance for doubtful accounts and notes receivable reserves $ $ $ $ Fiscal year ended October 31, 2014 Allowance for doubtful accounts and notes receivable reserves ) Fiscal year ended October 31, 2013 Allowance for doubtful accounts and notes receivable reserves 1 Provision/(recovery). 2 Uncollectible accounts charged off. (Dollars in thousands) Balance as of the beginning of the fiscal year Charged to costs and expenses 1 Deductions 2 Balance as of the end of the fiscal year Fiscal year ended October 31, 2015 Accrued advertising and marketing programs $ $ $ $ Fiscal year ended October 31, 2014 Accrued advertising and marketing programs Fiscal year ended October 31, 2013 Accrued advertising and marketing programs 1 Provision consists of rebates, cooperative advertising, floor planning costs, commissions, and other promotional program expenses. The expense of each program is classified either as a reduction of net sales or as a component of selling, general, and administrative expense. 2 Claims paid. |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA (Policies) | 12 Months Ended |
Oct. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying consolidated financial statements include the accounts of the company and its wholly owned subsidiaries. The company uses the equity method to account for investments over which it has the ability to exercise significant influence over operating and financial policies. Consolidated net earnings include the company's share of the net earnings (losses) of these companies. The cost method is used to account for investments in companies that the company does not control and for which it does not have the ability to exercise significant influence over operating and financial policies. These investments are recorded at cost. All intercompany accounts and transactions have been eliminated from the consolidated financial statements. |
Accounting Estimates | Accounting Estimates In preparing the consolidated financial statements in conformity with United States ("U.S.") generally accepted accounting principles ("GAAP"), management must make decisions that impact the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures, including disclosures of contingent assets and liabilities. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. Estimates are used in determining, among other items, sales promotions and incentives accruals, incentive compensation accruals, inventory valuation, warranty reserves, earnout liabilities, allowance for doubtful accounts, pension and postretirement accruals, self-insurance accruals, useful lives for tangible and intangible assets, and future cash flows associated with impairment testing for goodwill and other long-lived assets. These estimates and assumptions are based on management's best estimates and judgments at the time they are made. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances, including the current economic environment. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with certainty, actual amounts could differ significantly from those estimated at the time the consolidated financial statements are prepared. Changes in those estimates will be reflected in the consolidated financial statements in future periods. |
Reclassifications | Reclassifications Certain amounts from prior years' Consolidated Statements of Stockholders' Equity and Notes to Consolidated Financial Statements have been reclassified to conform to the current year presentation. The reclassifications had no impact on the results of operations as previously reported. |
Cash and Cash Equivalents | Cash and Cash Equivalents The company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents and are stated at cost, which approximates fair value. As of October 31, 2015, cash and short-term investments held by the company's foreign subsidiaries that are not available to fund domestic operations unless repatriated were $61,272. |
Receivables | Receivables The company's financial exposure to collection of accounts receivable is reduced due to its Red Iron Acceptance, LLC ("Red Iron") joint venture with TCF Inventory Finance, Inc. ("TCFIF"), as further discussed in Note 3. For receivables not serviced through Red Iron, the company grants credit to customers in the normal course of business and performs on-going credit evaluations of customers. Receivables are recorded at original carrying amount less reserves for estimated uncollectible accounts, as described below. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The company estimates the balance of allowance for doubtful accounts by analyzing the age of accounts and notes receivable balances and applying historical write-off trend rates. The company also estimates separately specific customer balances when it is deemed probable that the balance is uncollectible. Account balances are charged off against the allowance when all collection efforts have been exhausted. |
Inventory Valuations | Inventory Valuations Inventories are valued at the lower of cost or net realizable value, with cost determined by the last-in, first-out ("LIFO") method for a majority of the company's inventories. The first-in, first-out ("FIFO") method is used for all other inventories, constituting 26 and 28 percent of total inventories as of October 31, 2015 and 2014, respectively. The company establishes a reserve for excess, slow-moving, and obsolete inventory that is equal to the difference between the cost and estimated net realizable value for that inventory. These reserves are based on a review and comparison of current inventory levels to planned production, as well as planned and historical sales of the inventory. During fiscal 2015 and 2014, LIFO layers were reduced, which resulted in charging lower inventory costs prevailing in previous years to cost of sales, thus reducing cost of sales by $1,348 and $65, respectively. Inventories as of October 31 were as follows: Raw materials and work in progress $ $ Finished goods and service parts Total FIFO value Less: adjustment to LIFO value Total $ $ |
Property and Depreciation | Property and Depreciation Property, plant, and equipment are carried at cost. The company provides for depreciation of plant and equipment utilizing the straight-line method over the estimated useful lives of the assets. Buildings, including leasehold improvements, are generally depreciated over 10 to 45 years, and equipment over two to seven years. Tooling costs are generally depreciated over three to five years using the straight-line method. Software and web site development costs are generally amortized over two to five years utilizing the straight-line method. Expenditures for major renewals and improvements, which substantially increase the useful lives of existing assets, are capitalized, and maintenance and repairs are charged to operating expenses as incurred. Interest is capitalized during the construction period for significant capital projects. During the fiscal years ended October 31, 2015, 2014, and 2013, the company capitalized $897, $1,710, and $722 of interest, respectively. Property, plant, and equipment as of October 31 was as follows: Land and land improvements $ $ Buildings and leasehold improvements Machinery and equipment Tooling Computer hardware and software Construction in process Subtotal Less: accumulated depreciation Total property, plant, and equipment, net $ $ During fiscal years 2015, 2014, and 2013, the company recorded depreciation expense of $50,322, $47,136, and $48,207, respectively. |
Goodwill and Indefinite-Life Intangible Assets | Goodwill and Indefinite-Life Intangible Assets Goodwill represents the cost of acquisitions in excess of the fair values assigned to identifiable net assets acquired. Goodwill is assigned to reporting units based upon the expected benefit of the synergies of the acquisition. Goodwill and some trade names, which are considered to have indefinite lives, are not amortized; however, the company reviews them for impairment annually during each fourth fiscal quarter or more frequently if changes in circumstances or occurrence of events suggest the fair value may not be recoverable. The company reviewed the fair value of its reporting units that have goodwill on their respective balance sheets and compared these fair values to the respective carrying amounts during the fourth quarter of fiscal 2015. The company determined that it has nine reporting units, which are the same as its nine operating segments. Seven reporting units contain goodwill on their respective balance sheets. As of August 28, 2015, the company performed an analysis of qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill impairment test. Based on the company's analysis of qualitative factors, the company determined that it was not necessary to perform a two-step goodwill impairment test for any of its reporting units. As of August 28, 2015, the company also performed an assessment of its indefinite-life intangible assets, which consist of certain trade names. The company's estimate of the fair value of its trade names are based on a discounted cash flow model using inputs which included: projected revenues from the company's forecasting process; assumed royalty rates that could be payable if the company did not own the trade name; and a discount rate. Based on this analysis, which was also performed in prior fiscal years, the company concluded its indefinite-life intangible assets were not impaired during fiscal 2015, 2014, or 2013. |
Other Long-Lived Assets | Other Long-Lived Assets Other long-lived assets include property, plant, and equipment and definite-life intangible assets, which are identifiable assets that arose from purchase acquisitions consisting primarily of patents, non-compete agreements, customer relationships, trade names, and developed technology and are amortized on a straight-line basis over periods ranging from 1.5 to 20 years. The company reviews other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. An impairment loss is recognized when estimated undiscounted future cash flows from the operation or disposition of the asset group are less than the carrying amount of the asset group. Asset groups have identifiable cash flows and are largely independent of other asset groups. Measurement of an impairment loss is based on the excess of the carrying amount of the asset group over its fair value. Fair value is measured using a discounted cash flow model or independent appraisals, as appropriate. For long-lived assets to be abandoned, the company tests for potential impairment. If the company commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, depreciation estimates are revised. Based on the company's impairment analysis for definite-life intangible assets, the company wrote down $1,383 of other long-lived assets for fiscal 2015. For fiscal 2014, the company did not have any impairment losses of other long-lived assets. Additionally, based on the company's analysis of estimated useful lives of property, plant, and equipment, the company had $531, $0, and $824 of accelerated depreciation expense during fiscal 2015, 2014, and 2013, respectively. |
Accounts Payable | Accounts Payable The company has a customer-managed service agreement with a third party to provide a web-based platform that facilitates participating suppliers' ability to finance payment obligations from the company with a designated third party financial institution. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the company prior to their scheduled due dates at a discounted price to a participating financial institution. The company's obligations to its suppliers, including amounts due and scheduled payment dates, are not affected by suppliers' decisions to finance amounts under this arrangement. However, the company's right to offset balances due from suppliers against payment obligations is restricted by this arrangement for those payment obligations that have been financed by suppliers. As of October 31, 2015 and 2014, $16,101 and $12,296, respectively, of the company's outstanding payment obligations had been placed on the accounts payable tracking system. |
Insurance | Insurance The company is self-insured for certain losses relating to medical, dental, and workers' compensation claims, and certain product liability occurrences. Specific stop loss coverages are provided for catastrophic claims in order to limit exposure to significant claims. Losses and claims are charged to operations when it is probable a loss has been incurred and the amount can be reasonably estimated. Self-insured liabilities are based on a number of factors, including historical claims experience, an estimate of claims incurred but not reported, demographic and severity factors, and utilizing valuations provided by independent third-party actuaries. |
Accrued Warranties | Accrued Warranties The company provides an accrual for estimated future warranty costs at the time of sale. The company also establishes accruals for major rework campaigns. The amount of warranty accruals is based primarily on the estimated number of products under warranty, historical average costs incurred to service warranty claims, the trend in the historical ratio of claims to sales, and the historical length of time between the sale and resulting warranty claim. The company periodically assesses the adequacy of its warranty accruals based on changes in these factors and records any necessary adjustments if actual claims experience indicates that adjustments are necessary. The changes in accrued warranties were as follows: Fiscal years ended October 31 Beginning balance $ $ Warranty provisions Warranty claims ) ) Changes in estimates ) ) Ending balance $ $ |
Derivatives | Derivatives Derivatives, consisting mainly of forward currency contracts, are used to hedge most foreign currency transactions, including forecasted sales and purchases denominated in foreign currencies. The company also utilizes cross currency swaps to offset foreign currency intercompany loan exposures. Derivatives are recognized on the consolidated balance sheet at fair value. If the derivative is designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded as a component of other comprehensive income within the consolidated statements of comprehensive income and the consolidated statements of stockholders' equity, and recognized in earnings when the hedged item affects earnings. Derivatives that do not meet the requirements for hedge accounting are adjusted to fair value through other income, net in the consolidated statements of earnings. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions The functional currency of the company's foreign operations is generally the applicable local currency. The functional currency is translated into U.S. dollars for balance sheet accounts using current exchange rates in effect as of the balance sheet date and for revenue and expense accounts using a weighted-average exchange rate during the fiscal year. The translation adjustments are deferred as a component of other comprehensive income (loss) within the consolidated statements of comprehensive income and the consolidated statements of stockholders' equity. Gains or losses resulting from transactions denominated in foreign currencies are included in other income, net in the consolidated statements of earnings. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years that those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. A valuation allowance is provided when, in management's judgment, it is more likely than not that some portion or all of the deferred tax asset will not be realized. The company has reflected the necessary deferred tax assets and liabilities in the accompanying consolidated balance sheets. Management believes the future tax deductions will be realized principally through carryback to taxable income in prior years, future reversals of existing taxable temporary differences, and future taxable income. The company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50 percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The company also records interest and penalties related to unrecognized tax benefits in income tax expense. |
Revenue Recognition | Revenue Recognition The company recognizes revenue for product sales when persuasive evidence of an arrangement exists, title and risk of ownership passes to the customer, the sales price is fixed or determinable, and collectability is probable. These criteria are typically met at the time product is shipped, or in the case of certain agreements, when product is delivered. A provision is made at the time the related revenue is recognized for estimated product returns, floor plan costs, rebates, and other sales promotion expenses. Sales, use, value-added, and other excise taxes are not recognized in revenue. Freight revenue billed to customers is included in net sales. The company ships some of its products to a key retailer's seasonal distribution centers on a consignment basis. The company retains title to its products stored at the seasonal distribution centers. As the company's products are removed from the seasonal distribution centers by the key retailer and shipped to the key retailer's stores, title passes from the company to the key retailer. At that time, the company invoices the key retailer and recognizes revenue for these consignment transactions. The company does not offer a right of return for products shipped to the key retailer's stores from the seasonal distribution centers. From time to time, the company also stores inventory on a consignment basis at other customers' locations. The amount of consignment inventory as of October 31, 2015 and 2014 was $23,566 and $22,080, respectively. Revenue earned from service and maintenance contracts is recognized ratably over the contractual period. Revenue from extended warranty programs is deferred at the time the contract is sold and amortized into net sales using the straight-line method over the extended warranty period. |
Sales Promotions and Incentives | Sales Promotions and Incentives At the time of sale, the company records an estimate for sales promotion and incentive costs. Examples of sales promotion and incentive programs include off-invoice discounts, rebate programs, volume discounts, retail financing support, commissions, and other sales discounts and promotional programs. The estimates of sales promotion and incentive costs are based on the terms of the arrangements with customers, historical payment experience, field inventory levels, volume purchases, and expectations for changes in relevant trends in the future. The expense of each program is classified as a reduction from gross sales or as a component of selling, general, and administrative expense. |
Cost of Sales | Cost of Sales Cost of sales primarily comprises direct materials and supplies consumed in the manufacture of product, as well as manufacturing labor, depreciation expense, and direct overhead expense necessary to convert purchased materials and supplies into finished product. Cost of sales also includes inbound freight costs, outbound freight costs for shipping products to customers, obsolescence expense, cost of services provided, and cash discounts on payments to vendors. |
Selling, General, and Administrative Expense | Selling, General, and Administrative Expense Selling, general, and administrative expense primarily comprises payroll and benefit costs, occupancy and operating costs of distribution and corporate facilities, warranty expense, depreciation and amortization expense on non-manufacturing assets, advertising and marketing expenses, selling expenses, engineering and research costs, information systems costs, incentive and profit sharing expense, and other miscellaneous administrative costs, such as legal costs for internal and outside services that are expensed as incurred. |
Cost of Financing Distributor/Dealer Inventory | Cost of Financing Distributor / Dealer Inventory The company enters into limited inventory repurchase agreements with a third party financing company and Red Iron. The company has repurchased immaterial amounts of inventory under these repurchase agreements over the last three fiscal years. However, an adverse change in retail sales could cause this situation to change, and thereby require the company to repurchase a portion of financed product. See Note 13 for additional information regarding the company's repurchase arrangements. Included as a reduction to net sales are costs associated with programs under which the company shares the expense of financing distributor and dealer inventories, referred to as floor plan expenses. This charge represents interest for a pre-established length of time based on a predefined rate from a contract with third party financing sources to finance distributor and dealer inventory purchases. These financing arrangements are used by the company as a marketing tool to assist customers to buy inventory. The financing costs for distributor and dealer inventories were $24,130, $21,080, and $19,729 for the fiscal years ended October 31, 2015, 2014, and 2013, respectively. |
Advertising | Advertising General advertising expenditures are expensed the first time advertising takes place. Production costs associated with advertising are expensed in the period incurred. Cooperative advertising represents expenditures for shared advertising costs that the company reimburses to customers and is classified as a component of selling, general, and administrative expense. These obligations are accrued and expensed when the related revenues are recognized in accordance with the programs established for various product lines. Advertising costs were $42,843, $43,590, and $48,071 for the fiscal years ended October 31, 2015, 2014, and 2013, respectively. |
Stock-Based Compensation | Stock-Based Compensation The company's stock-based compensation awards are generally granted to executive officers, other employees, and non-employee members of the company's Board of Directors, and include performance share awards that are contingent on the achievement of performance goals of the company, non-qualified stock options, restricted stock units, and restricted stock awards. Compensation expense equal to the grant date fair value is recognized for these awards over the vesting period and is classified in selling, general and administrative expense. See Note 10 for additional information regarding stock-based compensation plans. |
Net Earnings Per Share | Net Earnings Per Share Basic net earnings per share is calculated using net earnings available to common stockholders divided by the weighted-average number of shares of common stock outstanding during the year plus the assumed issuance of contingent shares. Diluted net earnings per share is similar to basic net earnings per share except that the weighted-average number of shares of common stock outstanding plus the assumed issuance of contingent shares is increased to include the number of additional shares of common stock that would have been outstanding assuming the issuance of all potentially dilutive shares, such as common stock to be issued upon exercise of options, contingently issuable shares, and restricted stock units. Reconciliations of basic and diluted weighted-average shares of common stock outstanding are as follows: BASIC (Shares in thousands) Fiscal years ended October 31 Weighted-average number of shares of common stock Assumed issuance of contingent shares Weighted-average number of shares of common stock and assumed issuance of contingent shares DILUTED (Shares in thousands) Fiscal years ended October 31 Weighted-average number of shares of common stock and assumed issuance of contingent shares Effect of dilutive securities Weighted-average number of shares of common stock, assumed issuance of contingent and restricted shares, and effect of dilutive securities Incremental shares from options and restricted stock units are computed by the treasury stock method. Options for the purchase of 145,060, 259,925, and 182,868 shares of common stock during fiscal 2015, 2014, and 2013, respectively, were excluded from the computation of diluted net earnings per share because they were anti-dilutive. |
Cash Flow Presentation | Cash Flow Presentation The consolidated statements of cash flows are prepared using the indirect method, which reconciles net earnings to cash flow from operating activities. The necessary adjustments include the removal of timing differences between the occurrence of operating receipts and payments and their recognition in net earnings. The adjustments also remove from operating activities cash flows arising from investing and financing activities, which are presented separately from operating activities. Cash flows from foreign currency transactions and operations are translated at an average exchange rate for the period. Cash paid for acquisitions is classified as investing activities. |
New Accounting Pronouncement Adopted | New Accounting Pronouncement Adopted In December 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-11, Disclosures about Offsetting Assets and Liabilities . ASU No. 2011-11 requires entities to disclose gross and net information about both instruments and transactions eligible for offset in the statement of financial position and those subject to an agreement similar to a master netting arrangement. This would include derivatives and other financial securities arrangements. The company adopted this guidance in the first quarter of fiscal 2014, as required. The adoption of this guidance did not have an impact on the company's consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA | |
Schedule of Inventories | Raw materials and work in progress $ $ Finished goods and service parts Total FIFO value Less: adjustment to LIFO value Total $ $ |
Schedule of property, plant and equipment | Land and land improvements $ $ Buildings and leasehold improvements Machinery and equipment Tooling Computer hardware and software Construction in process Subtotal Less: accumulated depreciation Total property, plant, and equipment, net $ $ |
Schedule of changes in accrued warranties | Fiscal years ended October 31 Beginning balance $ $ Warranty provisions Warranty claims ) ) Changes in estimates ) ) Ending balance $ $ |
Reconciliations of basic and diluted weighted-average shares of common stock outstanding | BASIC (Shares in thousands) Fiscal years ended October 31 Weighted-average number of shares of common stock Assumed issuance of contingent shares Weighted-average number of shares of common stock and assumed issuance of contingent shares DILUTED (Shares in thousands) Fiscal years ended October 31 Weighted-average number of shares of common stock and assumed issuance of contingent shares Effect of dilutive securities Weighted-average number of shares of common stock, assumed issuance of contingent and restricted shares, and effect of dilutive securities |
ACQUISITIONS AND DIVESTITURE (T
ACQUISITIONS AND DIVESTITURE (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
ACQUISITIONS AND DIVESTITURE | |
Allocation of purchase price | Inventory $ Prepaid expenses Property, plant, and equipment Intangible assets Goodwill Current liabilities ) Purchase price $ |
INVESTMENT IN JOINT VENTURE (Ta
INVESTMENT IN JOINT VENTURE (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
INVESTMENT IN JOINT VENTURE | |
Schedule of summarized financial information | For the twelve months ended October 31 Revenue $ $ $ Net income As of October 31 Finance receivables, net $ $ Other assets Total liabilities |
OTHER INCOME, NET (Tables)
OTHER INCOME, NET (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
OTHER INCOME, NET | |
Schedule of other income (expense) | Fiscal years ended October 31 Interest income $ $ $ Retail financing revenue Foreign currency exchange rate loss ) ) ) Noncash income from finance affiliate Litigation recovery, net Miscellaneous Total other income, net $ $ $ |
GOODWILL AND OTHER INTANGIBLE33
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Changes in the net carrying amount of goodwill | Professional Segment Residential Segment Total Balance as of October 31, 2013 $ $ $ Translation adjustments ) ) ) Balance as of October 31, 2014 $ $ $ Goodwill acquired – Translation and other adjustments ) Balance as of October 31, 2015 $ $ $ |
Components of other amortizable intangible assets | October 31, 2015 Estimated Life (Years) Gross Carrying Amount Accumulated Amortization Net Patents $ $ ) $ Non-compete agreements ) Customer-related ) Developed technology ) Trade names ) Other ) – Total amortizable ) Non-amortizable – trade names – Total other intangible assets, net $ $ ) $ October 31, 2014 Estimated Life (Years) Gross Carrying Amount Accumulated Amortization Net Patents $ $ ) $ Non-compete agreements ) Customer-related ) Developed technology ) Trade names ) Other ) – Total amortizable ) Non-amortizable – trade names – Total other intangible assets, net $ $ ) $ |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
LONG-TERM DEBT. | |
Schedule of long-term debt | Term loan, due October 25, 2019 $ $ 7.800% Debentures, due June 15, 2027 6.625% Senior Notes, due May 1, 2037 4% Unsecured Note, due November 14, 2017 – Other Total long-term debt Less current portion Long-term debt, less current portion $ $ |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
STOCKHOLDERS' EQUITY | |
Schedule of components of accumulated other comprehensive loss ("AOCL"), net of tax, within the consolidated statements of stockholders' equity | As of October 31 Foreign currency translation adjustments $ $ $ Pension and postretirement benefits Derivative instruments ) Total accumulated other comprehensive loss $ $ $ |
Schedule of components and activity of accumulated other comprehensive loss | Foreign Currency Translation Adjustments Pension and Post- retirement Benefits Cash Flow Derivative Instruments Total AOCL as of October 31, 2013 $ $ $ $ Other comprehensive loss before reclassifications – ) Amounts reclassified from AOCL – ) Net current period other comprehensive loss (income) $ $ $ ) $ AOCL as of October 31, 2014 $ $ $ ) $ Other comprehensive loss (income) before reclassifications $ $ – $ ) $ Amounts reclassified from AOCL – Net current period other comprehensive loss $ $ $ $ AOCL as of October 31, 2015 $ $ $ $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
INCOME TAXES | |
Schedule of earnings before income taxes | Fiscal years ended October 31 Earnings before income taxes: U.S. $ $ $ Non-U.S. Total $ $ $ |
Schedule of reconciliation of the statutory federal income tax rate to the company's consolidated effective tax rate | Fiscal years ended October 31 Statutory federal income tax rate % % % Domestic manufacturer's deduction ) ) ) State and local income taxes, net of federal benefit Non-U.S. taxes ) ) ) Federal research tax credit ) ) ) Other, net ) ) ) Consolidated effective tax rate % % % |
Schedule of components of the provision for income taxes | Fiscal years ended October 31 Provision for income taxes: Current – Federal $ $ $ State Non-U.S. Current provision $ $ $ Deferred – Federal $ $ ) $ State – ) Non-U.S. ) ) Deferred benefit ) ) ) Total provision for income taxes $ $ $ |
Schedule of tax effects of temporary differences that give rise to the net deferred income tax assets | October 31 Deferred tax assets (liabilities): Compensation and benefits $ $ Warranty and insurance Advertising and sales allowance Depreciation ) Other Deferred tax assets $ $ Valuation allowance ) ) Net deferred tax assets $ $ |
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits | Balance as of October 31, 2014 $ Increase as a result of tax positions taken during a prior period Decrease as a result of tax positions taken during a prior period ) Increase as a result of tax positions taken during the current period Decrease relating to settlements with taxing authorities ) Balance as of October 31, 2015 $ |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
STOCK-BASED COMPENSATION PLANS | |
Schedule of compensation costs related to stock-based awards | Fiscal years ended October 31 Stock option awards $ $ $ Restricted stock and restricted stock units Performance share awards Total compensation cost for stock-based awards $ $ $ Tax benefit realized for tax deductions from stock-based awards $ $ $ |
Schedule of stock options activity | Stock Option Awards Weighted- Average Exercise Price Weighted- Average Contractual Life(years) Intrinsic Value Outstanding as of October 31, 2014 $ $ Granted Exercised ) Cancelled/forfeited ) Expired ) Outstanding as of October 31, 2015 $ $ Exercisable as of October 31, 2015 $ $ |
Schedule of total market value and the intrinsic value of options exercised | Fiscal years ended October 31 Market value of stock options exercised $ $ $ Intrinsic value of options exercised 1 1 Intrinsic value is calculated as amount by which the stock price at exercise date exceeded the option exercise price |
Schedule of valuation assumptions of stock-based compensation | Fiscal years ended October 31 Expected life of option in years Expected stock price volatility % % % Risk-free interest rate % % % Expected dividend yield % % % Weighted-average fair value at date of grant $ $ $ |
Schedule of restricted stock and restricted stock unit awards granted | Fiscal years ended October 31 Weighted-average fair value at date of grant $ $ $ Fair value of restricted stock and restricted stock units vested |
Schedule of unvested restricted stock shares and the weighted average fair value at the date of grant | Restricted Stock and Units Weighted- Average Fair Value at Date of Grant Unvested as of October 31, 2014 $ Granted Vested ) Forfeited ) Unvested as of October 31, 2015 $ |
Schedule of performance share awards granted | Fiscal years ended October 31 Weighted-average fair value at date of grant $ $ $ Fair value of performance share awards vested |
Schedule of unvested performance share awards and the weighted average fair value at the date of grant | Performance Shares Weighted- Average Fair Value at Date of Grant Unvested as of October 31, 2014 $ Granted Vested ) Cancelled/forfeited ) Unvested as of October 31, 2015 $ |
EMPLOYEE RETIREMENT PLANS (Tabl
EMPLOYEE RETIREMENT PLANS (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
EMPLOYEE RETIREMENT PLANS | |
Schedule of amounts recognized in accumulated other comprehensive loss | Fiscal years ended October 31 Defined Benefit Pension Plans Postretirement Benefit Plan Total 2015 Net actuarial loss (gain) $ $ ) $ Net prior service cost – Accumulated other comprehensive loss (income) $ $ ) $ 2014 Net actuarial loss $ $ $ Net prior service cost (credit) ) Accumulated other comprehensive loss $ $ $ |
Schedule of amounts included in accumulated other comprehensive loss and are expected to be recognized as components of net periodic benefit cost during next fiscal year | Defined Benefit Pension Plans Postretirement Benefit Plan Total Net actuarial loss $ – $ Net prior service cost – Total $ – $ |
Schedule of amounts recognized in net periodic benefit cost and other comprehensive income | Fiscal years ended October 31 Defined Benefit Pension Plans Postretirement Benefit Plan Total 2015 Net actuarial loss (gain) $ $ ) $ ) Prior service cost – Amortization of unrecognized prior service (credit) cost ) ) Amortization of unrecognized actuarial loss (gain) ) Total recognized in other comprehensive loss (income) $ $ ) $ Total recognized in net periodic benefit cost and other comprehensive loss $ $ $ 2014 Net actuarial loss (gain) $ $ ) $ ) Amortization of unrecognized prior service (credit) cost ) Amortization of unrecognized actuarial loss (gain) ) Total recognized in other comprehensive loss $ $ $ Total recognized in net periodic benefit cost and other comprehensive loss $ $ $ |
SEGMENT DATA (Tables)
SEGMENT DATA (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
SEGMENT DATA | |
Summarized financial information concerning the company's reportable segments | Fiscal years ended October 31 Professional Residential Other Total 2015 Net sales $ $ $ $ Intersegment gross sales ) – Earnings (loss) before income taxes ) Total assets Capital expenditures Depreciation and amortization 2014 Net sales $ $ $ $ Intersegment gross sales ) – Earnings (loss) before income taxes ) Total assets Capital expenditures Depreciation and amortization 2013 Net sales $ $ $ $ Intersegment gross sales ) – Earnings (loss) before income taxes ) Total assets Capital expenditures Depreciation and amortization |
Summary of the components of the loss before income taxes included in "Other" | Fiscal years ended October 31 Corporate expenses $ ) $ ) $ ) Interest expense ) ) ) Other income Total $ ) $ ) $ ) |
Schedule of net sales for groups of similar products and services | Fiscal years ended October 31 Equipment $ $ $ Irrigation and lighting Total $ $ $ |
Schedule of geographic area data | Fiscal years ended October 31 United States Foreign Countries Total 2015 Net sales $ $ $ Long-lived assets 2014 Net sales $ $ $ Long-lived assets 2013 Net sales $ $ $ Long-lived assets |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
FINANCIAL INSTRUMENTS | |
Fair value of the company's derivatives and consolidated balance sheet location | Asset Derivatives Liability Derivatives October 31, 2015 October 31, 2014 October 31, 2015 October 31, 2014 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives Designated as Hedging Instruments Forward currency contracts Prepaid expenses $ Prepaid expenses $ Accrued liabilities $ Accrued liabilities $ Cross currency contracts Prepaid expenses – Prepaid expenses Accrued liabilities Accrued liabilities – Derivatives Not Designated as Hedging Instruments Forward currency contracts Prepaid expenses $ Prepaid expenses $ Accrued liabilities $ Accrued liabilities $ – Cross currency contracts Prepaid expenses Prepaid expenses – Accrued liabilities – Accrued liabilities Total Derivatives $ $ $ $ |
Impact of derivative instruments on the consolidated statements of earnings for the company's derivatives designated as cash flow hedging instruments | Gain (Loss) Recognized in OCI on Derivatives, net of tax (Effective Portion) Location of Gain (Loss) Reclassified from AOCL into Income (Effective Portion) Gain (Loss) Reclassified from AOCL into Income (Effective Portion) Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and excluded from Effectiveness Testing) Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Excluded from Effectiveness Testing) Fiscal years ended October 31, 2015 October 31, 2014 October 31, 2015 October 31, 2014 October 31, 2015 October 31, 2014 Forward currency contracts $ ) $ Net sales $ $ ) Other income, net $ $ Forward currency contracts ) ) Cost of sales ) Cross currency contracts ) Other income, net ) ) Total $ ) $ Total $ $ ) |
Impact of derivative instruments on the consolidated statements of earnings for the company's derivatives not designated as hedging instruments | Gain (Loss) Recognized in Net Earnings Fiscal Year Ended Location of Gain (Loss) Recognized in Net Earnings October 31, 2015 October 31, 2014 Forward currency contracts Other income, net $ $ Cross currency contracts Other income, net Total $ $ |
Schedule of effects of the master netting arrangements on the fair value of the company's derivative contracts that are recorded in the Consolidated Balance Sheets | Assets Liabilities October 31, 2015 Gross Amounts of Recognized Assets Gross Liabilities Offset in the Balance Sheet Net Amount of Assets Presented in the Balance Sheet Gross Amounts of Recognized Liabilities Gross Assets offset in the Balance Sheet Net Amount of Liabilities Presented in the Balance Sheet Forward currency contracts $ $ ) $ $ ) – $ ) Cross currency contracts – ) – ) Total $ $ ) $ $ ) – $ ) Assets Liabilities October 31, 2014 Gross Amounts of Recognized Assets Gross Liabilities Offset in the Balance Sheet Net Amount of Assets Presented in the Balance Sheet Gross Amounts of Recognized Liabilities Gross Assets offset in the Balance Sheet Net Amount of Liabilities Presented in the Balance Sheet Forward currency contracts $ $ ) $ $ ) – $ ) Cross currency contracts – ) – ) Total $ $ ) $ $ ) – $ ) |
Assets and liabilities measured at fair value on a recurring basis | October 31, 2015 Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ $ $ – – Forward currency contracts – – Cross currency contracts – – Total assets $ $ $ – Liabilities: Forward currency contracts $ – $ – Cross currency contracts – – Deferred compensation liabilities – – Total liabilities $ – $ – October 31, 2014 Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ $ $ – – Forward currency contracts – – Cross currency contracts – – Total assets $ $ $ – Liabilities: Forward currency contracts $ – $ – Cross currency contracts – – Deferred compensation liabilities – – Total liabilities $ – $ – |
QUARTERLY FINANCIAL DATA (una41
QUARTERLY FINANCIAL DATA (unaudited) (Tables) | 12 Months Ended |
Oct. 31, 2015 | |
QUARTERLY FINANCIAL DATA (unaudited) | |
Summary of quarterly financial data | Fiscal year ended October 31, 2015 Quarter First Second Third Fourth Net sales $ $ $ $ Gross profit Net earnings Basic net earnings per share 1 .55 .96 .43 Diluted net earnings per share 1 .54 .94 .42 Fiscal year ended October 31, 2014 Quarter First Second Third Fourth Net sales $ $ $ $ Gross profit Net earnings Basic net earnings per share 1 Diluted net earnings per share 1 1 Net earnings per share amounts do not sum to equal full year total due to changes in the number of shares outstanding during the periods and rounding. |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Cash and Cash Equivalents | ||
Restricted cash and short-term investments | $ 61,272 | |
Inventory Valuations | ||
Percentage of total inventory valued under FIFO method | 26.00% | 28.00% |
Effect of LIFO inventory layers reduction on cost of sales | $ 1,348 | $ 65 |
Inventories | ||
Raw materials and work in progress | 107,086 | 95,144 |
Finished goods and service parts | 291,468 | 246,954 |
Total FIFO value | 398,554 | 342,098 |
Less: adjustment to LIFO value | 64,040 | 67,495 |
Total | $ 334,514 | $ 274,603 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Property and Depreciation | |||
Capitalized interest amount | $ 897 | $ 1,710 | $ 722 |
Subtotal | 804,598 | 760,192 | |
Less: accumulated depreciation | 579,603 | 554,997 | |
Property, plant, and equipment, net | 224,995 | 205,195 | 185,096 |
Depreciation expense | 50,322 | 47,136 | $ 48,207 |
Land and land improvements | |||
Property and Depreciation | |||
Subtotal | 34,240 | 32,731 | |
Buildings and leasehold improvements | |||
Property and Depreciation | |||
Subtotal | $ 170,342 | 156,374 | |
Buildings and leasehold improvements | Minimum | |||
Property and Depreciation | |||
Estimated useful life | 10 years | ||
Buildings and leasehold improvements | Maximum | |||
Property and Depreciation | |||
Estimated useful life | 45 years | ||
Machinery and equipment | |||
Property and Depreciation | |||
Subtotal | $ 315,884 | 305,131 | |
Tooling | |||
Property and Depreciation | |||
Subtotal | $ 187,652 | 177,704 | |
Tooling | Minimum | |||
Property and Depreciation | |||
Estimated useful life | 3 years | ||
Tooling | Maximum | |||
Property and Depreciation | |||
Estimated useful life | 5 years | ||
Computer hardware and software | |||
Property and Depreciation | |||
Subtotal | $ 81,131 | 77,395 | |
Software and website development costs | Minimum | |||
Property and Depreciation | |||
Estimated useful life | 2 years | ||
Software and website development costs | Maximum | |||
Property and Depreciation | |||
Estimated useful life | 5 years | ||
Construction in process | |||
Property and Depreciation | |||
Subtotal | $ 15,349 | $ 10,857 | |
Equipment | Minimum | |||
Property and Depreciation | |||
Estimated useful life | 2 years | ||
Equipment | Maximum | |||
Property and Depreciation | |||
Estimated useful life | 7 years |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA (Details 3) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015USD ($)segmentitemshares | Oct. 31, 2014USD ($)shares | Oct. 31, 2013USD ($)shares | |
GOODWILL AND OTHER INTANGIBLE ASSETS. | |||
Number of operating segment | segment | 9 | ||
Number of reporting units containing goodwill | item | 7 | ||
Other Long-Lived Assets | |||
Impairment of Long-Lived Assets Held-for-use | $ 1,383 | ||
Accelerated depreciation expense | $ 531 | $ 0 | $ 824 |
Accounts Payable | |||
Minimum number of payment obligations to be financed | item | 1 | ||
Outstanding payment obligations placed on the accounts payable tracking system | $ 16,101 | 12,296 | |
Changes in accrued warranties | |||
Beginning balance | 71,080 | 72,177 | |
Warranty provisions | 41,747 | 41,608 | |
Warranty claims | (39,730) | (38,568) | |
Changes in estimates | (2,363) | (4,137) | |
Ending balance | 70,734 | 71,080 | 72,177 |
Revenue Recognition | |||
Consignment inventory amount | $ 23,566 | 22,080 | |
Cost of Financing Distributor/Dealer Inventory | |||
Number of fiscal years the entity has repurchased immaterial amounts of inventory under repurchase agreements | 3 years | ||
Financing costs for distributor and dealer inventories | $ 24,130 | 21,080 | 19,729 |
Advertising | |||
Advertising costs | $ 42,843 | $ 43,590 | $ 48,071 |
Basic | |||
Weighted-average number of shares of common stock | shares | 55,554 | 56,346 | 57,898 |
Assumed issuance of contingent shares | shares | 11 | 13 | 24 |
Weighted-average number of shares of common stock and assumed issuance of contingent shares | shares | 55,565 | 56,359 | 57,922 |
Diluted | |||
Weighted-average number of shares of common stock and assumed issuance of contingent shares | shares | 55,565 | 56,359 | 57,922 |
Effect of dilutive securities (in shares) | shares | 1,192 | 1,269 | 1,183 |
Weighted-average number of shares of common stock, assumed issuance of contingent shares and effect of dilutive securities | shares | 56,757 | 57,628 | 59,105 |
Options, restricted stock, and restricted stock units, excluded from the diluted earnings per share | shares | 145,060 | 259,925 | 182,868 |
Minimum | |||
Finite-Lived Intangible Assets | |||
Estimated life | 1 year 6 months | ||
Maximum | |||
Finite-Lived Intangible Assets | |||
Estimated life | 20 years |
ACQUISITIONS AND DIVESTITURE (D
ACQUISITIONS AND DIVESTITURE (Details) - USD ($) $ in Thousands | Nov. 14, 2014 | Oct. 31, 2015 | Jul. 31, 2015 | May. 01, 2015 | Jan. 30, 2015 | Oct. 31, 2014 | Aug. 01, 2014 | May. 02, 2014 | Jan. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 |
Acquisition | ||||||||||||
Long-term loan | $ 30,000 | |||||||||||
Term loan | $ 254,452 | $ 223,956 | $ 254,452 | $ 223,956 | ||||||||
Acquisition related costs | 259 | 509 | ||||||||||
Net sales | $ 480,807 | $ 609,615 | $ 826,242 | $ 474,211 | $ 414,140 | $ 567,540 | $ 745,030 | $ 445,981 | 2,390,875 | 2,172,691 | $ 2,041,431 | |
Fiscal 2015 Acquisitions | ||||||||||||
Acquisition | ||||||||||||
Purchase price | 229,490 | |||||||||||
Cash consideration | 198,329 | |||||||||||
Note payable at fair value | 31,161 | |||||||||||
Term loan | 130,000 | |||||||||||
Capitalized debt issuance costs | 373 | |||||||||||
Goodwill deductible for income tax purposes | $ 101,867 | |||||||||||
Net sales | $ 128,515 | |||||||||||
Fiscal 2014 Acquisitions | ||||||||||||
Acquisition | ||||||||||||
Purchase price | 1,245 | |||||||||||
Fiscal 2013 Acquisitions | ||||||||||||
Acquisition | ||||||||||||
Purchase price | 3,481 | |||||||||||
Cash consideration | $ 1,380 | $ 2,101 |
ACQUISITIONS AND DIVESTITURE 46
ACQUISITIONS AND DIVESTITURE (Details 2) - USD ($) $ in Thousands | Oct. 31, 2015 | Nov. 14, 2014 | Oct. 31, 2014 | Oct. 31, 2013 |
Acquisition | ||||
Goodwill | $ 195,533 | $ 91,851 | $ 91,914 | |
Fiscal 2015 Acquisitions | ||||
Acquisition | ||||
Inventory | $ 14,106 | |||
Prepaid expenses | 266 | |||
Property, plant, and equipment | 13,689 | |||
Intangible assets | 107,700 | |||
Goodwill | 103,028 | |||
Current liabilities | (9,299) | |||
Purchase price | $ 229,490 |
INVESTMENT IN JOINT VENTURE (De
INVESTMENT IN JOINT VENTURE (Details) - Red Iron Acceptance, LLC - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Schedule of Equity Method Investments | |||
Period of unlimited automatic extensions after the initial term of joint venture | 2 years | ||
Period of notice to be given by parties under the joint venture for not extending the initial term or any subsequent term of joint venture | 1 year | ||
Portion owned by Toro (as a percent) | 45.00% | ||
Portion owned by TCFIF (as a percent) | 55.00% | ||
Secured revolving credit facility | $ 450,000 | ||
Investment in joint venture | 18,979 | $ 14,890 | |
Maximum aggregate amount of products repossessed by Red Iron and the TCFIF Canadian affiliate, entity has agreed to repurchase in a calendar year | 7,500 | ||
Maximum amount of recourse provided to joint venture for outstanding receivables | 781 | 470 | |
Net amount of new receivables financed for dealers and distributors | 1,430,855 | 1,280,505 | $ 1,211,470 |
Summarized financial information for Red Iron | |||
Revenue | 27,483 | 22,678 | 22,418 |
Net income | 18,598 | 16,139 | $ 15,776 |
Finance receivables, net | 366,397 | 290,927 | |
Other assets | 5,928 | 3,659 | |
Total liabilities | $ 330,149 | $ 261,527 |
OTHER INCOME, NET (Details)
OTHER INCOME, NET (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
OTHER INCOME, NET | |||
Interest income | $ 494 | $ 465 | $ 447 |
Retail financing revenue | 1,086 | 1,077 | 1,093 |
Foreign currency exchange rate loss | (324) | (1,006) | (702) |
Noncash income from finance affiliates | 8,353 | 7,262 | 7,097 |
Litigation recovery, net | 125 | 127 | 3,071 |
Miscellaneous | 940 | 789 | 1,255 |
Total other income, net | $ 10,674 | $ 8,714 | $ 12,261 |
GOODWILL AND OTHER INTANGIBLE49
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Changes in Goodwill | ||
Goodwill at the beginning of the period | $ 91,851 | $ 91,914 |
Goodwill acquired | 103,028 | |
Translation adjustments | 654 | (63) |
Goodwill at the end of the period | 195,533 | 91,851 |
Professional | ||
Changes in Goodwill | ||
Goodwill at the beginning of the period | 80,946 | 80,962 |
Goodwill acquired | 103,028 | |
Translation adjustments | 792 | (16) |
Goodwill at the end of the period | 184,766 | 80,946 |
Residential | ||
Changes in Goodwill | ||
Goodwill at the beginning of the period | 10,905 | 10,952 |
Translation adjustments | (138) | (47) |
Goodwill at the end of the period | $ 10,767 | $ 10,905 |
GOODWILL AND OTHER INTANGIBLE50
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Other Intangible Assets | |||
Gross Carrying Amount | $ 165,031 | $ 57,556 | |
Accumulated Amortization | (50,852) | (38,608) | |
Net | 114,179 | 18,948 | |
Total other intangible assets, gross | 169,862 | 62,437 | |
Total other intangible assets, net | 119,010 | 23,829 | |
Change in gross carrying amount of other intangible assets | 107,425 | ||
Amortization of Intangible Assets | 11,438 | $ 6,002 | $ 5,769 |
Fiscal 2,016 | 10,353 | ||
Fiscal 2,017 | 9,458 | ||
Fiscal 2,018 | 7,440 | ||
Fiscal 2,019 | 6,562 | ||
Fiscal 2,020 | 6,006 | ||
After fiscal 2020 | $ 74,360 | ||
Patents | |||
Other Intangible Assets | |||
Estimated life (Years) | 9 years 10 months 24 days | 9 years 4 months 24 days | |
Gross Carrying Amount | $ 15,191 | $ 10,711 | |
Accumulated Amortization | (10,175) | (8,942) | |
Net | $ 5,016 | $ 1,769 | |
Non-compete agreements | |||
Other Intangible Assets | |||
Estimated life (Years) | 5 years 6 months | 5 years 4 months 24 days | |
Gross Carrying Amount | $ 6,922 | $ 7,039 | |
Accumulated Amortization | (6,206) | (5,315) | |
Net | $ 716 | $ 1,724 | |
Customer-related | |||
Other Intangible Assets | |||
Estimated life (Years) | 19 years 1 month 6 days | 10 years 8 months 12 days | |
Gross Carrying Amount | $ 84,599 | $ 8,650 | |
Accumulated Amortization | (10,316) | (5,517) | |
Net | $ 74,283 | $ 3,133 | |
Developed technology | |||
Other Intangible Assets | |||
Estimated life (Years) | 7 years 7 months 6 days | 7 years 7 months 6 days | |
Gross Carrying Amount | $ 28,804 | $ 28,841 | |
Accumulated Amortization | (20,530) | (16,869) | |
Net | $ 8,274 | $ 11,972 | |
Trade names | |||
Other Intangible Assets | |||
Estimated life (Years) | 19 years 2 months 12 days | 5 years | |
Gross Carrying Amount | $ 28,715 | $ 1,515 | |
Accumulated Amortization | (2,825) | (1,165) | |
Net | 25,890 | 350 | |
Non-amortizable - trade names | 4,831 | 4,881 | |
Other | |||
Other Intangible Assets | |||
Gross Carrying Amount | 800 | 800 | |
Accumulated Amortization | $ (800) | $ (800) |
SHORT-TERM CAPITAL RESOURCES (D
SHORT-TERM CAPITAL RESOURCES (Details) $ in Thousands | 12 Months Ended | |
Oct. 31, 2015USD ($) | Oct. 31, 2014USD ($) | |
Short-term capital resources | ||
Outstanding short-term debt | $ 20,818 | |
Short-term debt | $ 222 | $ 20,818 |
Weighted-average interest rate | 1.95% | |
Unsecured senior five-year revolving credit facility | ||
Short-term capital resources | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 150,000 | |
Credit facility term (in years) | 5 years | |
Increase in the credit agreement's borrowing capacity available under the approval of named borrowers | $ 100,000 | |
Description of variable base interest rate | LIBOR | |
Ratio of debt to EBITDA, maximum | 3.25 | |
Standby letters of credit | ||
Short-term capital resources | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 20,000 | |
Swingline loans | ||
Short-term capital resources | ||
Line of Credit Facility, Maximum Borrowing Capacity | 20,000 | |
Short term debt for certain receivables provided recourse with Red Iron | ||
Short-term capital resources | ||
Short-term debt | 222 | |
Non-U.S.Operations | Non-U.S. operations, unsecured short-term lines of credit | ||
Short-term capital resources | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 11,085 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Thousands | Nov. 14, 2014USD ($) | Jun. 30, 1997USD ($)item | Oct. 31, 2015USD ($) | Oct. 31, 2014USD ($) | Apr. 26, 2007USD ($) |
LONG-TERM DEBT | |||||
Total long-term debt | $ 377,952 | $ 353,956 | |||
Current portion of long-term debt | 23,134 | 6,640 | |||
Long-term debt, less current portion | 354,818 | 347,316 | |||
Aggregate principal amount of notes issued | $ 30,000 | ||||
Interest rate percentage | 4.00% | ||||
Other assets, excess termination fees over deferred income | 1,838 | ||||
Principal payments on long-term debt in fiscal years | |||||
2,016 | 23,110 | ||||
2,017 | 23,070 | ||||
2,018 | 23,000 | ||||
2,019 | 84,500 | ||||
2,020 | 0 | ||||
After 2,020 | 225,000 | ||||
Term loan | |||||
LONG-TERM DEBT | |||||
Total long-term debt | $ 123,500 | 130,000 | |||
Debt Instrument, Description of Variable Rate Basis | LIBOR | ||||
7.800% Debentures, due June 15, 2027 | |||||
LONG-TERM DEBT | |||||
Total long-term debt | $ 100,000 | 100,000 | |||
Aggregate principal amount of notes issued | $ 175,000 | ||||
Interest rate percentage | 7.80% | ||||
Amount paid to terminate forward-starting interest rate swap agreements | $ 23,688 | ||||
Number of terminated forward-starting interest rate swap agreements | item | 3 | ||||
Derivative, Notional Amount | $ 125,000 | ||||
Deferred income amount at the time of swap termination | $ 18,710 | ||||
6.625% Senior Notes, due May 1, 2037 | |||||
LONG-TERM DEBT | |||||
Total long-term debt | $ 123,668 | 123,606 | |||
Aggregate principal amount of notes issued | $ 125,000 | ||||
Interest rate percentage | 6.625% | 6.625% | |||
Percentage of par value at which debt was issued | 98.513% | ||||
Debt discount, unamortized | $ 1,859 | ||||
Total underwriting fee and direct debt issue costs | $ 1,524 | ||||
Effective interest rate (as a percent) | 6.741% | ||||
Redemption value, basis points added to the treasury rate (as a percent) | 0.30% | ||||
Redemption price as a percentage of the principal amount upon the occurrence of both a change of control and downgrade of rating (as a percent) | 101.00% | ||||
4% Unsecured Note, due November 14, 2017 | |||||
LONG-TERM DEBT | |||||
Total long-term debt | $ 30,604 | ||||
Interest rate percentage | 4.00% | ||||
Other. | |||||
LONG-TERM DEBT | |||||
Total long-term debt | $ 180 | $ 350 | |||
Fiscal 2015 Acquisitions | |||||
LONG-TERM DEBT | |||||
Note payable at fair value | $ 31,161 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | Dec. 03, 2015 | Dec. 11, 2012 | |
Stock repurchase program | |||||
Amount paid to repurchase the shares (in dollars) | $ 106,964 | $ 103,039 | $ 99,588 | ||
Repurchase of shares | 1,575,989 | 1,644,230 | 2,147,185 | ||
Treasury shares held | 23,413,524 | 22,386,021 | |||
Cost of treasury shares (in dollars) | $ 1,243,729 | $ 1,163,706 | |||
Stock repurchase program | |||||
Stock repurchase program | |||||
Number of shares authorized to be repurchased | 5,000,000 | ||||
Amount paid to repurchase the shares (in dollars) | $ 105,964 | $ 101,674 | $ 98,842 | ||
Repurchase of shares | 1,561,179 | 1,622,569 | 2,131,615 | ||
Number of shares remained authorized for repurchase | 1,159,314 | ||||
Additional number of shares authorized to be repurchased | 4,000,000 |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) - USD ($) $ in Thousands | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 |
Accumulated other comprehensive loss (AOCL) | |||
Foreign currency translation adjustments | $ 24,328 | $ 12,536 | $ 7,778 |
Pension and postretirement benefits | 5,386 | 5,266 | 3,683 |
Derivative instruments | 129 | (2,097) | 1,109 |
Total accumulated other comprehensive loss | $ 29,843 | $ 15,705 | $ 12,570 |
STOCKHOLDERS' EQUITY (Details 3
STOCKHOLDERS' EQUITY (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Components and activity of accumulated other comprehensive loss | |||
Balance at the beginning of the period | $ (408,727) | $ (358,738) | $ (312,402) |
Net current period other comprehensive loss (income) | 14,138 | 3,135 | 2,596 |
Balance at the end of the period | (462,165) | (408,727) | (358,738) |
Accumulated Other Comprehensive Loss | |||
Components and activity of accumulated other comprehensive loss | |||
Balance at the beginning of the period | 15,705 | 12,570 | 9,974 |
Other comprehensive loss (income) before reclassifications | 4,112 | 3,114 | |
Amounts reclassified from AOCL | 10,026 | 21 | |
Net current period other comprehensive loss (income) | 14,138 | 3,135 | 2,596 |
Balance at the end of the period | 29,843 | 15,705 | 12,570 |
Foreign Currency Translation Adjustments | |||
Components and activity of accumulated other comprehensive loss | |||
Balance at the beginning of the period | 12,536 | 7,778 | |
Other comprehensive loss (income) before reclassifications | 11,792 | 4,758 | |
Net current period other comprehensive loss (income) | 11,792 | 4,758 | |
Balance at the end of the period | 24,328 | 12,536 | 7,778 |
Pension and Postretirement Benefits | |||
Components and activity of accumulated other comprehensive loss | |||
Balance at the beginning of the period | 5,266 | 3,683 | |
Amounts reclassified from AOCL | 120 | 1,583 | |
Net current period other comprehensive loss (income) | 120 | 1,583 | |
Balance at the end of the period | 5,386 | 5,266 | 3,683 |
Cash Flow Derivative Instruments | |||
Components and activity of accumulated other comprehensive loss | |||
Balance at the beginning of the period | (2,097) | 1,109 | |
Other comprehensive loss (income) before reclassifications | (7,680) | (1,644) | |
Amounts reclassified from AOCL | 9,906 | (1,562) | |
Net current period other comprehensive loss (income) | 2,226 | (3,206) | |
Balance at the end of the period | $ 129 | $ (2,097) | $ 1,109 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Earnings before income taxes: | |||
U.S. | $ 254,276 | $ 239,501 | $ 213,509 |
Non-U.S. | 36,755 | 16,944 | 13,204 |
Earnings before income taxes | 291,031 | 256,445 | 226,713 |
Adjustment to stockholders' equity for tax benefits related to employee stock-based award transactions | $ 8,459 | $ 8,857 | $ 6,134 |
Reconciliation of the statutory federal income tax rate to consolidated effective tax rate | |||
Statutory federal income tax rate (as a percent) | 35.00% | 35.00% | 35.00% |
Domestic manufacturer's deduction (as a percent) | (1.70%) | (1.90%) | (2.00%) |
State and local income taxes, net of federal benefit (as a percent) | 2.20% | 1.50% | 1.50% |
Non-U.S. taxes | (3.10%) | (1.20%) | (0.30%) |
Federal research tax credit (as a percent) | (0.90%) | (0.20%) | (2.40%) |
Other, net (as a percent) | (0.80%) | (1.00%) | (0.10%) |
Consolidated effective tax rate (as a percent) | 30.70% | 32.20% | 31.70% |
Current | |||
Federal | $ 75,496 | $ 75,815 | $ 61,388 |
State | 9,389 | 5,997 | 5,108 |
Non-U.S. | 6,219 | 3,672 | 5,734 |
Current provision | 91,104 | 85,484 | 72,230 |
Deferred | |||
Federal | 430 | (3,047) | 824 |
State | (81) | 91 | |
Non-U.S. | (2,094) | 219 | (1,277) |
Deferred benefit | (1,664) | (2,909) | (362) |
Total provision for income taxes | 89,440 | 82,575 | $ 71,868 |
Deferred tax assets (liabilities): | |||
Compensation and benefits | 41,341 | 40,412 | |
Warranty and insurance | 12,067 | 8,787 | |
Advertising and sales allowance | 10,474 | 8,954 | |
Depreciation | 3,096 | ||
Depreciation | (7,689) | ||
Other | 12,264 | 11,660 | |
Deferred tax assets | 68,457 | 72,909 | |
Valuation allowance | (1,801) | (4,012) | |
Net deferred tax assets | 66,656 | 68,897 | |
Deferred tax liability provided for undistributed earnings from subsidiaries outside the United States | 0 | ||
Undistributed earnings of foreign subsidiaries | 96,494 | ||
Reconciliation of unrecognized tax benefits | |||
Balance at the beginning of the period | 5,042 | ||
Increase as a result of tax positions taken during a prior period | 801 | ||
Decrease as a result of tax positions taken during a prior period | (138) | ||
Increase as a result of tax positions taken during the current period | 807 | ||
Decrease relating to settlements with taxing authorities | (169) | ||
Reduction as a result of a lapse of the applicable statute of limitations | 6,343 | ||
Balance at the end of the period | 6,343 | $ 5,042 | |
Potential benefits that would affect the effective tax rate | 5,636 | ||
Accrued interest and penalties for unrecognized tax benefits | 1,356 | ||
Foreign Jurisdictions | |||
Net operating loss | |||
Net operating loss carryforwards in foreign jurisdictions | 15,354 | ||
Net operating loss carryforwards in foreign jurisdictions not subject to expiration | 10,871 | ||
Net operating loss carryforwards in foreign jurisdictions subject to expiration between fiscal years 2017 and 2022 | $ 4,483 |
STOCK-BASED COMPENSATION PLAN57
STOCK-BASED COMPENSATION PLANS (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015USD ($)$ / sharesshares | Oct. 31, 2014USD ($)$ / sharesshares | Oct. 31, 2013USD ($)$ / sharesshares | |
Stock-Based Compensation | |||
Total compensation cost for stock-based awards | $ 10,424 | $ 11,291 | $ 10,237 |
Tax benefit realized for tax deductions from stock-based awards | $ 12,925 | 12,988 | 10,614 |
Common stock available for future grants (in shares) | shares | 3,400,896 | ||
Certain members of the Board Of Directors | |||
Stock-Based Compensation | |||
Total compensation cost for stock-based awards | $ 412 | $ 409 | $ 438 |
Stock option awards | |||
Granted (in shares) | shares | 6,680 | 7,000 | 10,152 |
Stock Option Awards | |||
Stock-Based Compensation | |||
Total compensation cost for stock-based awards | $ 4,704 | $ 5,142 | $ 4,710 |
Stock option awards | |||
Outstanding at the beginning of the period (in shares) | shares | 3,049,652 | ||
Granted (in shares) | shares | 292,013 | ||
Exercised (in shares) | shares | (410,428) | ||
Cancelled (in shares) | shares | (16,145) | ||
Expired (in shares) | shares | (371) | ||
Outstanding at the end of the period (in shares) | shares | 2,914,721 | 3,049,652 | |
Exercisable at the end of the period (in shares) | shares | 2,309,155 | ||
Stock options, weighted-average exercise price | |||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 29.04 | ||
Granted (in dollars per share) | $ / shares | 62.74 | ||
Exercised (in dollars per share) | $ / shares | 22.23 | ||
Cancelled/forfeited (in dollars per share) | $ / shares | 60.98 | ||
Expired (in dollars per share) | $ / shares | 59.50 | ||
Outstanding at the end of the period (in dollars per share) | $ / shares | 33.21 | $ 29.04 | |
Exercisable at the end of the period (in dollars per share) | $ / shares | $ 26.92 | ||
Stock options, weighted-average contractual life | |||
Outstanding at the end of the period | 5 years 2 months 12 days | 5 years 4 months 24 days | |
Exercisable at the end of the period | 4 years 4 months 24 days | ||
Aggregate intrinsic value | |||
Outstanding at the beginning of the period | $ 99,713 | ||
Outstanding at the end of the period | 122,606 | $ 99,713 | |
Exercisable at the end of the period | 111,644 | ||
Other stock-based compensation plan disclosures | |||
Total unrecognized compensation cost related to unvested awards | $ 1,769 | ||
Weighted-average period for recognition of compensation cost related to unvested awards | 1 year 10 months 10 days | ||
Total market value, intrinsic value and fair value of stock options exercised and vested | |||
Market value of stock options exercised | $ 27,860 | 19,017 | 23,160 |
Intrinsic value of options exercised | $ 18,739 | $ 12,311 | $ 13,875 |
Valuation assumptions of stock-based compensation | |||
Expected life of option in years | 5 years 11 months 9 days | 6 years | 6 years |
Expected stock price volatility (as a percent) | 29.66% | 34.29% | 35.19% |
Risk-free interest rate (as a percent) | 1.61% | 1.92% | 0.88% |
Expected dividend yield (as a percent) | 1.29% | 1.25% | 1.07% |
Weighted-average fair value at date of grant (in dollars per share) | $ / shares | $ 16.81 | $ 18.69 | $ 13.03 |
Stock Option Awards | Executive officers | |||
Stock-Based Compensation | |||
Frequency of grants | On an annual basis in the first quarter of the company's fiscal year | ||
Portion of stock-based award that generally vest per year for employees and non-employee directors | 0.333 | ||
Award vesting period | 3 years | ||
Term of award | 10 years | ||
Stock Option Awards | Other employees | |||
Stock-Based Compensation | |||
Frequency of grants | On an annual basis in the first quarter of the company's fiscal year | ||
Portion of stock-based award that generally vest per year for employees and non-employee directors | 0.333 | ||
Award vesting period | 3 years | ||
Term of award | 10 years | ||
Stock Option Awards | Non-employee directors | |||
Stock-Based Compensation | |||
Frequency of grants | On an annual basis in the first quarter of the company's fiscal year | ||
Portion of stock-based award that generally vest per year for employees and non-employee directors | 0.333 | ||
Award vesting period | 3 years | ||
Term of award | 10 years | ||
Requisite service period for non-employee director based upon which fair value of options granted is expensed on the date of grant | 10 years | ||
Stock Option Awards | Non-officer employees | |||
Stock-Based Compensation | |||
Award vesting period | 3 years | ||
Term of award | 10 years | ||
Restricted Stock and Restricted Stock Units | |||
Stock-Based Compensation | |||
Total compensation cost for stock-based awards | $ 1,756 | $ 1,653 | $ 1,694 |
Portion of stock-based award that generally vest per year for employees and non-employee directors | 0.333 | ||
Award vesting period | 3 years | ||
Other stock-based compensation plan disclosures | |||
Total unrecognized compensation cost related to unvested awards | $ 3,518 | ||
Weighted-average period for recognition of compensation cost related to unvested awards | 2 years 5 months 5 days | ||
Performance Share Awards | |||
Stock-Based Compensation | |||
Total compensation cost for stock-based awards | $ 3,964 | $ 4,496 | $ 3,833 |
Frequency of grants | On an annual basis in the first quarter of the company's fiscal year | ||
Award vesting period | 3 years | ||
Other stock-based compensation plan disclosures | |||
Total unrecognized compensation cost related to unvested awards | $ 4,227 | ||
Weighted-average period for recognition of compensation cost related to unvested awards | 1 year 8 months 9 days | ||
Valuation assumptions of stock-based compensation | |||
Maximum increase in the number of shares of common stock a participant receives based on the achievement of performance goals (as a percent) | 200.00% | ||
Potential lowest number of shares of common stock that could be received based on the achievement level of performance goals | shares | 0 |
STOCK-BASED COMPENSATION PLAN58
STOCK-BASED COMPENSATION PLANS (Details 2) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Restricted Stock and Restricted Stock Units | |||
Granted shares of awards | |||
Weighted-average fair value at date of grant (in dollars per share) | $ 67.77 | $ 63.05 | $ 46.10 |
Fair value of restricted stock, restricted stock units, and performance share awards vested | $ 1,702 | $ 1,890 | $ 1,207 |
Unvested awards | |||
Unvested at the beginning of the period (in shares) | 78,529 | ||
Granted (in shares) | 55,180 | ||
Vested (in shares) | (39,457) | ||
Forfeited (in shares) | (2,455) | ||
Unvested at the end of the period (in shares) | 91,797 | 78,529 | |
Weighted-Average Fair Value at Date of Grant | |||
Unvested at the beginning of the period (in dollars per share) | $ 49.22 | ||
Granted (in dollars per share) | 67.77 | $ 63.05 | $ 46.10 |
Vested (in dollars per share) | 43.15 | ||
Forfeited (in dollars per share) | 56.72 | ||
Unvested at the end of the period (in dollars per share) | 62.78 | 49.22 | |
Performance Share Awards | |||
Granted shares of awards | |||
Weighted-average fair value at date of grant (in dollars per share) | $ 65.68 | $ 59.31 | $ 42.06 |
Fair value of restricted stock, restricted stock units, and performance share awards vested | $ 7,989 | $ 7,926 | $ 9,057 |
Unvested awards | |||
Unvested at the beginning of the period (in shares) | 476,800 | ||
Granted (in shares) | 61,700 | ||
Vested (in shares) | (202,400) | ||
Forfeited (in shares) | (6,300) | ||
Unvested at the end of the period (in shares) | 329,800 | 476,800 | |
Weighted-Average Fair Value at Date of Grant | |||
Unvested at the beginning of the period (in dollars per share) | $ 40.82 | ||
Granted (in dollars per share) | 65.68 | $ 59.31 | $ 42.06 |
Vested (in dollars per share) | 28.24 | ||
Forfeited (in dollars per share) | 58.69 | ||
Unvested at the end of the period (in dollars per share) | $ 52.85 | $ 40.82 |
EMPLOYEE RETIREMENT PLANS (Deta
EMPLOYEE RETIREMENT PLANS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
EMPLOYEE RETIREMENT PLANS | |||
Investments, Savings, Employee Stock Ownership Plan, expenses | $ 17,400 | $ 15,550 | $ 14,931 |
Projected benefit obligation | 46,427 | 45,420 | |
Amount of net liability recognized | 4,829 | 3,432 | |
Accumulated benefit obligation | 43,145 | 42,431 | |
Funded status of plans | 11,303 | 10,085 | |
Fair value of the plan assets | 35,124 | 35,335 | |
Net expense recognized | 2,406 | 1,092 | 1,149 |
Amounts recognized in accumulated other comprehensive loss | |||
Net actuarial loss (gain) | 5,034 | 5,034 | |
Net prior service cost (credit) | 352 | 232 | |
Accumulated other comprehensive loss (income) | 5,386 | 5,266 | $ 3,683 |
Amounts included in accumulated other comprehensive loss, expected to be recognized as components of net periodic benefit cost | |||
Net actuarial loss | 661 | ||
Net prior service cost | 67 | ||
Total | 728 | ||
Amounts recognized in net periodic benefit cost and other comprehensive income | |||
Net actuarial loss (gain) | (540) | (1) | |
Prior service cost | 126 | ||
Amortization of unrecognized prior service (credit) cost | (7) | 74 | |
Amortization of unrecognized actuarial loss (gain) | 541 | 1,510 | |
Total recognized in other comprehensive loss (income) | 120 | 1,583 | |
Total recognized in net periodic benefit cost and other comprehensive loss | 2,526 | 2,675 | |
Defined Benefit Pension Plans | |||
Amounts recognized in accumulated other comprehensive loss | |||
Net actuarial loss (gain) | 5,100 | 4,521 | |
Net prior service cost (credit) | 352 | 257 | |
Accumulated other comprehensive loss (income) | 5,452 | 4,778 | |
Amounts included in accumulated other comprehensive loss, expected to be recognized as components of net periodic benefit cost | |||
Net actuarial loss | 661 | ||
Net prior service cost | 67 | ||
Total | 728 | ||
Amounts recognized in net periodic benefit cost and other comprehensive income | |||
Net actuarial loss (gain) | 37 | 88 | |
Prior service cost | 126 | ||
Amortization of unrecognized prior service (credit) cost | (32) | (32) | |
Amortization of unrecognized actuarial loss (gain) | 542 | 1,519 | |
Total recognized in other comprehensive loss (income) | 673 | 1,575 | |
Total recognized in net periodic benefit cost and other comprehensive loss | 2,475 | 2,110 | |
Other Postretirement Benefit Plans | |||
Amounts recognized in accumulated other comprehensive loss | |||
Net actuarial loss (gain) | (66) | 513 | |
Net prior service cost (credit) | (25) | ||
Accumulated other comprehensive loss (income) | (66) | 488 | |
Amounts recognized in net periodic benefit cost and other comprehensive income | |||
Net actuarial loss (gain) | (577) | (89) | |
Amortization of unrecognized prior service (credit) cost | 25 | 106 | |
Amortization of unrecognized actuarial loss (gain) | (1) | (9) | |
Total recognized in other comprehensive loss (income) | (553) | 8 | |
Total recognized in net periodic benefit cost and other comprehensive loss | $ 51 | $ 565 |
SEGMENT DATA (Details)
SEGMENT DATA (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2015USD ($) | Jul. 31, 2015USD ($) | May. 01, 2015USD ($) | Jan. 30, 2015USD ($) | Oct. 31, 2014USD ($) | Aug. 01, 2014USD ($) | May. 02, 2014USD ($) | Jan. 31, 2014USD ($) | Oct. 31, 2015USD ($)segment | Oct. 31, 2014USD ($) | Oct. 31, 2013USD ($) | |
SEGMENT DATA | |||||||||||
Number of operating segment | segment | 9 | ||||||||||
Number of reportable business segments | segment | 3 | ||||||||||
Financial information concerning the company's reportable segments | |||||||||||
Net sales | $ 480,807 | $ 609,615 | $ 826,242 | $ 474,211 | $ 414,140 | $ 567,540 | $ 745,030 | $ 445,981 | $ 2,390,875 | $ 2,172,691 | $ 2,041,431 |
Earnings (loss) before income taxes | 291,031 | 256,445 | 226,713 | ||||||||
Total assets | 1,303,658 | 1,192,415 | 1,303,658 | 1,192,415 | 1,002,748 | ||||||
Capital expenditures | 56,374 | 71,138 | 49,427 | ||||||||
Depreciation and amortization | 63,143 | 53,138 | 54,134 | ||||||||
Components of the loss before income taxes included in "Other" | |||||||||||
Interest expense | (18,757) | (15,426) | (16,210) | ||||||||
Other income | 10,674 | 8,714 | 12,261 | ||||||||
Earnings before income taxes | 291,031 | 256,445 | 226,713 | ||||||||
Professional | |||||||||||
Financial information concerning the company's reportable segments | |||||||||||
Net sales | 1,639,659 | 1,477,578 | 1,425,259 | ||||||||
Earnings (loss) before income taxes | 308,010 | 276,305 | 254,424 | ||||||||
Total assets | 805,686 | 573,086 | 805,686 | 573,086 | 528,926 | ||||||
Capital expenditures | 29,016 | 25,226 | 32,362 | ||||||||
Depreciation and amortization | 42,799 | 34,228 | 34,706 | ||||||||
Components of the loss before income taxes included in "Other" | |||||||||||
Earnings before income taxes | 308,010 | 276,305 | 254,424 | ||||||||
Residential | |||||||||||
Financial information concerning the company's reportable segments | |||||||||||
Net sales | 725,682 | 672,443 | 594,411 | ||||||||
Earnings (loss) before income taxes | 84,956 | 76,916 | 62,033 | ||||||||
Total assets | 217,093 | 172,984 | 217,093 | 172,984 | 167,918 | ||||||
Capital expenditures | 9,953 | 12,417 | 7,838 | ||||||||
Depreciation and amortization | 9,131 | 8,883 | 10,321 | ||||||||
Components of the loss before income taxes included in "Other" | |||||||||||
Earnings before income taxes | 84,956 | 76,916 | 62,033 | ||||||||
Other | |||||||||||
Financial information concerning the company's reportable segments | |||||||||||
Net sales | 25,534 | 22,670 | 21,761 | ||||||||
Earnings (loss) before income taxes | (101,935) | (96,776) | (89,744) | ||||||||
Total assets | $ 280,879 | $ 446,345 | 280,879 | 446,345 | 305,904 | ||||||
Capital expenditures | 17,405 | 33,495 | 9,227 | ||||||||
Depreciation and amortization | 11,213 | 10,027 | 9,107 | ||||||||
Components of the loss before income taxes included in "Other" | |||||||||||
Corporate expenses | (95,167) | (88,539) | (85,359) | ||||||||
Interest expense | (18,757) | (15,426) | (16,210) | ||||||||
Other income | 11,989 | 7,189 | 11,825 | ||||||||
Earnings before income taxes | (101,935) | (96,776) | (89,744) | ||||||||
Intersegment | Professional | |||||||||||
Financial information concerning the company's reportable segments | |||||||||||
Gross sales | 45,634 | 41,376 | 40,416 | ||||||||
Intersegment | Residential | |||||||||||
Financial information concerning the company's reportable segments | |||||||||||
Gross sales | 406 | 424 | 402 | ||||||||
Intersegment | Other | |||||||||||
Financial information concerning the company's reportable segments | |||||||||||
Gross sales | $ (46,040) | $ (41,800) | $ (40,818) |
SEGMENT DATA (Details 2)
SEGMENT DATA (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2015 | Jul. 31, 2015 | May. 01, 2015 | Jan. 30, 2015 | Oct. 31, 2014 | Aug. 01, 2014 | May. 02, 2014 | Jan. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Net sales for groups of similar products and services | |||||||||||
Net sales | $ 480,807 | $ 609,615 | $ 826,242 | $ 474,211 | $ 414,140 | $ 567,540 | $ 745,030 | $ 445,981 | $ 2,390,875 | $ 2,172,691 | $ 2,041,431 |
Equipment | |||||||||||
Net sales for groups of similar products and services | |||||||||||
Net sales | 2,004,274 | 1,765,845 | 1,649,489 | ||||||||
Irrigation and lighting | |||||||||||
Net sales for groups of similar products and services | |||||||||||
Net sales | $ 386,601 | $ 406,846 | $ 391,942 |
SEGMENT DATA (Details 3)
SEGMENT DATA (Details 3) - Sales - Customer concentration - Single customer - Residential - customer | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Concentration Risk | |||
Number of customers | 1 | 1 | 1 |
Percentage of consolidated gross sales accounted for by one customer (as a percent) | 11.00% | 10.00% |
SEGMENT DATA (Details 4)
SEGMENT DATA (Details 4) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2015 | Jul. 31, 2015 | May. 01, 2015 | Jan. 30, 2015 | Oct. 31, 2014 | Aug. 01, 2014 | May. 02, 2014 | Jan. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Geographic Data | |||||||||||
Net sales | $ 480,807 | $ 609,615 | $ 826,242 | $ 474,211 | $ 414,140 | $ 567,540 | $ 745,030 | $ 445,981 | $ 2,390,875 | $ 2,172,691 | $ 2,041,431 |
Long-lived assets | 224,995 | 205,195 | 224,995 | 205,195 | 185,096 | ||||||
United States | |||||||||||
Geographic Data | |||||||||||
Net sales | 1,780,240 | 1,550,077 | 1,426,060 | ||||||||
Long-lived assets | 190,262 | 169,797 | 190,262 | 169,797 | 143,547 | ||||||
Foreign Countries | |||||||||||
Geographic Data | |||||||||||
Net sales | 610,635 | 622,614 | 615,371 | ||||||||
Long-lived assets | $ 34,733 | $ 35,398 | $ 34,733 | $ 35,398 | $ 41,549 |
COMMITMENTS AND CONTINGENT LI64
COMMITMENTS AND CONTINGENT LIABILITIES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Leases | |||
Rental expense for operating leases | $ 24,986 | $ 24,329 | $ 24,399 |
Future minimum lease payments under noncancelable operating leases | |||
Total future minimum lease payments | 77,685 | ||
2,016 | 13,956 | ||
2,017 | 10,220 | ||
2,018 | 8,219 | ||
2,019 | 6,827 | ||
2,020 | 6,350 | ||
After 2,020 | 32,113 | ||
Purchase Commitments | |||
Amount of noncancelable purchase commitments | 4,663 | ||
Maximum obligation for the construction of a new corporate headquarters facility | 15,291 | ||
Remaining obligation for the construction of a new corporate headquarters facility | 5,285 | ||
Letters of Credit | |||
Letters of credit outstanding | 16,245 | $ 16,220 | |
Wholesale Financing | |||
Customer Financing | |||
Receivables purchased by third party financing company from the company | 24,979 | ||
Receivables financed by third party financing company, excluding Red Iron, outstanding | 10,576 | ||
Maximum amount of contingent liability to repurchase inventory related receivables under limited inventory repurchase agreements | 9,998 | ||
End-User Financing | |||
Customer Financing | |||
Contingent liabilities for residual value or credit collection risk | 0 | ||
Maximum exposure for credit collection | $ 4,601 |
FINANCIAL INSTRUMENTS (Details)
FINANCIAL INSTRUMENTS (Details) € in Thousands, RON in Thousands, $ in Thousands | 12 Months Ended | |||
Oct. 31, 2015RONitem | Oct. 31, 2015EUR (€)item | Oct. 31, 2015USD ($)item | Oct. 31, 2014USD ($) | |
Summary of cash flow hedge activity | ||||
Maximum time limit for cash flow hedge | 2 years | |||
Cash flow hedge effectiveness testing, grace period | 2 months | |||
Fair value of derivatives | ||||
Asset Derivatives | $ 5,309 | $ 6,861 | ||
Liability Derivatives | 1,845 | 545 | ||
Forward currency contracts | ||||
Fair value of derivatives | ||||
Notional amount | 103,740 | |||
Asset Derivatives | 3,173 | 6,030 | ||
Liability Derivatives | 1,711 | 9 | ||
Forward currency contracts | Derivatives Designated as Hedging Instruments | Prepaid expenses | ||||
Fair value of derivatives | ||||
Asset Derivatives | 2,102 | 4,626 | ||
Forward currency contracts | Derivatives Designated as Hedging Instruments | Accrued liabilities | ||||
Fair value of derivatives | ||||
Liability Derivatives | 1,363 | 9 | ||
Forward currency contracts | Derivatives Not Designated as Hedging Instruments | Prepaid expenses | ||||
Fair value of derivatives | ||||
Asset Derivatives | 1,071 | 1,404 | ||
Forward currency contracts | Derivatives Not Designated as Hedging Instruments | Accrued liabilities | ||||
Fair value of derivatives | ||||
Liability Derivatives | $ 348 | |||
Cross currency contract | ||||
Fair value of derivatives | ||||
Notional amount | RON 36,593 | € 8,500 | ||
Number of foreign currency contracts held | item | 1 | 1 | 1 | |
Asset Derivatives | $ 2,136 | 831 | ||
Liability Derivatives | 134 | 536 | ||
Cross currency contract | Derivatives Designated as Hedging Instruments | Prepaid expenses | ||||
Fair value of derivatives | ||||
Asset Derivatives | 831 | |||
Cross currency contract | Derivatives Designated as Hedging Instruments | Accrued liabilities | ||||
Fair value of derivatives | ||||
Liability Derivatives | 134 | |||
Cross currency contract | Derivatives Not Designated as Hedging Instruments | Prepaid expenses | ||||
Fair value of derivatives | ||||
Asset Derivatives | $ 2,136 | |||
Cross currency contract | Derivatives Not Designated as Hedging Instruments | Accrued liabilities | ||||
Fair value of derivatives | ||||
Liability Derivatives | $ 536 |
FINANCIAL INSTRUMENTS (Details
FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Oct. 31, 2015 | Oct. 31, 2014 | |
Derivative Instruments and Hedging Activities | ||
Gain (Loss) Recognized in OCI on Derivatives, net of tax (Effective Portion) | $ (2,232) | $ 3,200 |
Gain (Loss) Reclassified from AOCL into Income (Effective Portion) | 9,906 | (1,562) |
Gain (Loss) Recognized in Net Earnings | 9,103 | 4,506 |
Reclassification of gains from AOCI to earnings during the next 12 months on foreign currency contracts | 652 | |
Forward currency contracts | Net sales | ||
Derivative Instruments and Hedging Activities | ||
Gain (Loss) Recognized in OCI on Derivatives, net of tax (Effective Portion) | (745) | 4,150 |
Gain (Loss) Reclassified from AOCL into Income (Effective Portion) | 13,067 | (1,128) |
Forward currency contracts | Cost of sales | ||
Derivative Instruments and Hedging Activities | ||
Gain (Loss) Recognized in OCI on Derivatives, net of tax (Effective Portion) | (1,687) | (712) |
Gain (Loss) Reclassified from AOCL into Income (Effective Portion) | (2,806) | 103 |
Forward currency contracts | Other income, net. | ||
Derivative Instruments and Hedging Activities | ||
Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Excluded from Effectiveness Testing) | 747 | 120 |
Gain (Loss) Recognized in Net Earnings | 7,703 | 3,555 |
Cross currency contract | Other income, net. | ||
Derivative Instruments and Hedging Activities | ||
Gain (Loss) Recognized in OCI on Derivatives, net of tax (Effective Portion) | 200 | (238) |
Gain (Loss) Reclassified from AOCL into Income (Effective Portion) | (355) | (537) |
Gain (Loss) Recognized in Net Earnings | $ 1,400 | $ 951 |
FINANCIAL INSTRUMENTS (Detail67
FINANCIAL INSTRUMENTS (Details 3) - USD ($) $ in Thousands | Oct. 31, 2015 | Oct. 31, 2014 |
Assets | ||
Gross Amounts of Recognized Assets | $ 5,516 | $ 7,096 |
Gross Liabilities Offset in the Balance Sheet | (207) | (235) |
Net Amount of Assets Presented in the Balance Sheet | 5,309 | 6,861 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | (1,845) | (545) |
Net Amount of Liabilities Presented in the Balance Sheet | (1,845) | (545) |
Forward currency contracts | ||
Assets | ||
Gross Amounts of Recognized Assets | 3,380 | 6,265 |
Gross Liabilities Offset in the Balance Sheet | (207) | (235) |
Net Amount of Assets Presented in the Balance Sheet | 3,173 | 6,030 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | (1,711) | (9) |
Net Amount of Liabilities Presented in the Balance Sheet | (1,711) | (9) |
Cross currency contract | ||
Assets | ||
Gross Amounts of Recognized Assets | 2,136 | 831 |
Net Amount of Assets Presented in the Balance Sheet | 2,136 | 831 |
Liabilities | ||
Gross Amounts of Recognized Liabilities | (134) | (536) |
Net Amount of Liabilities Presented in the Balance Sheet | $ (134) | $ (536) |
FINANCIAL INSTRUMENTS (Detail68
FINANCIAL INSTRUMENTS (Details 4) - USD ($) $ in Thousands | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 |
FINANCIAL INSTRUMENTS | |||
Amount of unrecognized loss portion in accumulated other comprehensive loss | $ (129) | $ 2,097 | $ (1,109) |
FINANCIAL INSTRUMENTS (Detail69
FINANCIAL INSTRUMENTS (Details 5) - USD ($) $ in Thousands | Oct. 31, 2015 | Oct. 31, 2014 |
Liabilities: | ||
Transfer of asset from level 1 to level 2 | $ 0 | $ 0 |
Transfer of asset from level 2 to level 1 | 0 | 0 |
Transfer of liabilities from level 1 to level 2 | 0 | 0 |
Transfer of liabilities from level 2 to level 1 | 0 | 0 |
Long-term debt with fixed interest rates | 298,541 | 260,970 |
Carrying amount of long-term debt | 254,452 | 223,956 |
Measured on a recurring basis | ||
Assets: | ||
Cash and cash equivalents | 126,275 | 314,873 |
Forward currency contracts | 3,173 | 6,030 |
Cross currency contracts | 2,136 | 831 |
Total assets | 131,584 | 321,734 |
Liabilities: | ||
Forward currency contracts | 1,711 | 9 |
Cross currency contracts | 134 | 536 |
Deferred compensation liabilities | 1,652 | 2,141 |
Total liabilities | 3,497 | 2,686 |
Measured on a recurring basis | Level 1 | ||
Assets: | ||
Cash and cash equivalents | 126,275 | 314,873 |
Total assets | 126,275 | 314,873 |
Measured on a recurring basis | Level 2 | ||
Assets: | ||
Forward currency contracts | 3,173 | 6,030 |
Cross currency contracts | 2,136 | 831 |
Total assets | 5,309 | 6,861 |
Liabilities: | ||
Forward currency contracts | 1,711 | 9 |
Cross currency contracts | 134 | 536 |
Deferred compensation liabilities | 1,652 | 2,141 |
Total liabilities | $ 3,497 | $ 2,686 |
RELATED PARTY TRANSACTION (Deta
RELATED PARTY TRANSACTION (Details) $ in Thousands | Nov. 14, 2014USD ($) |
RELATED PARTY TRANSACTION | |
Aggregate principal amount of notes issued | $ 30,000 |
Interest rate percentage | 4.00% |
Principal payment | $ 10,000 |
QUARTERLY FINANCIAL DATA (una71
QUARTERLY FINANCIAL DATA (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2015 | Jul. 31, 2015 | May. 01, 2015 | Jan. 30, 2015 | Oct. 31, 2014 | Aug. 01, 2014 | May. 02, 2014 | Jan. 31, 2014 | Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Consolidated Statements of Earnings | |||||||||||
Net sales | $ 480,807 | $ 609,615 | $ 826,242 | $ 474,211 | $ 414,140 | $ 567,540 | $ 745,030 | $ 445,981 | $ 2,390,875 | $ 2,172,691 | $ 2,041,431 |
Gross profit | 168,574 | 216,390 | 281,972 | 168,999 | 143,137 | 202,080 | 264,540 | 163,514 | 835,935 | 773,271 | 724,797 |
Net earnings | $ 23,554 | $ 53,324 | $ 93,763 | $ 30,950 | $ 10,902 | $ 50,013 | $ 87,086 | $ 25,869 | $ 201,591 | $ 173,870 | $ 154,845 |
Basic net earnings per share of common stock (in dollars per share) | $ 0.43 | $ 0.96 | $ 1.68 | $ 0.55 | $ 0.19 | $ 0.89 | $ 1.54 | $ 0.45 | $ 3.63 | $ 3.09 | $ 2.67 |
Diluted net earnings per share of common stock (in dollars per share) | $ 0.42 | $ 0.94 | $ 1.64 | $ 0.54 | $ 0.19 | $ 0.87 | $ 1.51 | $ 0.44 | $ 3.55 | $ 3.02 | $ 2.62 |
SCHEDULE II Valuation and Qua72
SCHEDULE II Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Oct. 31, 2015 | Oct. 31, 2014 | Oct. 31, 2013 | |
Allowance for doubtful accounts and notes receivable reserves | |||
Movement in allowance for doubtful accounts and notes receivable reserves and accrued advertising and marketing programs | |||
Balance at the beginning of the fiscal year | $ 1,481 | $ 3,425 | $ 3,733 |
Charged to costs and expense | 350 | (79) | 123 |
Deductions | 453 | 1,865 | 431 |
Balance at the end of the fiscal year | 1,378 | 1,481 | 3,425 |
Accrued advertising and marketing programs | |||
Movement in allowance for doubtful accounts and notes receivable reserves and accrued advertising and marketing programs | |||
Balance at the beginning of the fiscal year | 66,169 | 64,191 | 56,264 |
Charged to costs and expense | 318,211 | 306,650 | 287,217 |
Deductions | 307,691 | 304,672 | 279,290 |
Balance at the end of the fiscal year | $ 76,689 | $ 66,169 | $ 64,191 |