What Really Caused UPS's Christmas Eve Bottleneck

December 26, 2013 -- In the earliest hours of Dec. 24, packages poured into United Parcel Service Inc. 's main air hub in Louisville, Ky. And they were piling up.

Employees responsible for sorting packages—already deep into a 100-hour week—were furiously getting them ready to be sent on to their destinations at airports around the country. But dozens of other workers responsible for loading those packages into planes to be shipped out were left standing around idle, because the unexpected glut of packages from last-minute shoppers had swamped the company's air fleet.

The dearth of planes stranded a large volume of packages in Louisville in the early hours of Tuesday morning. Many of those that did make it out were shipped too late to make delivery trucks' pickup schedules and were left sitting in warehouses not far from their destinations. By sundown, UPS was forced to tell many Americans that the gifts they had ordered wouldn't arrive before Christmas as promised.

The bottleneck was largely in UPS's air business, which retailers leaned on heavily in the past week as they scrambled to fill down-to-the-wire orders. UPS has a bigger share of retail e-commerce business than FedEx Corp. , but its smaller fleet of cargo planes might have been a limiting factor, people in the industry said. UPS said it had added 23 extra chartered aircraft to its year-round operating fleet of more than 237 planes and regular 293 daily charters. FedEx owned 581 and leased 66 as of May 31.

UPS originally expected to ship about 7.75 million packages in its air network Monday, with about 3.5 million of those sorted at Worldport, as the Louisville hub is known. The facility handles on average 1.6 million packages a day. It isn't yet known how many packages arrived at Worldport during the last minute crush, but on Christmas Eve UPS said the volume of air packages in its system had exceeded its capacity.

It is still too early to know what went wrong, UPS said, adding that the company is analyzing the situation.

Some shoppers also complained of delays with shipments handled by FedEx. A spokeswoman said FedEx "experienced no major service disruptions during this holiday season, and we experienced no major service disruptions in the week before Christmas, despite heavy volume." She said FedEx is working with customers "to address any isolated incidents."

UPS carefully plans how it will handle the holiday peak. Extra resources such as additional cargo planes had been lined up as "hot spares"—company lingo for aircraft that could be fired up quickly in case of a logistics emergency. But it ran into a confluence of factors. Retailers have been encouraging online sales, which have grown much faster than retail sales overall. And retailers likely contributed to the logjam by offering some of their best discounts late in the season in a final push for sales. Many chains dropped prices on the final Saturday before Christmas to levels below what they were offering on Black Friday, according to Simeon Siegel, an analyst with Nomura Equity Research.

That, coupled with retailers' promises of just-in-time deliveries, encouraged many shoppers to put in orders at the last minute. People buying from more than 70 retailers including Toys "R" Us Inc. and Dick's Sporting Goods Inc., whose online shipping is handled by eBay Enterprise, were able to place Web orders as late as 11 p.m. on Monday, Dec. 23, a full 24 hours later than last year.

The result was a surge in online sales shortly before Christmas. UPS had been forecasting an 8% average rise in its daily shipping volumes during the holidays. But online sales in the last weekend before Christmas jumped by 37% from the year before, according to data from IBM Digital Analytics.

On Monday Dec. 23, growth in online orders spiked by 63% from the year before, according to Mercent Corp., which works with more than 550 retailers. By comparison, overall sales of holiday goods rose 2.3% between Nov. 1 and Dec. 24, according to preliminary data from MasterCard Inc.'s Spending Pulse unit.

To cope, retailers shifted more orders from shippers' ground delivery to their air networks to get gifts to customers in time to put them under the tree.

Mercent CEO Eric Best said some of his clients experienced delays.  "It's easy to blame UPS, but it's the retailers that are pushing these next-day shipping offers in the final hours of the shopping season," Mr. Best said. "Retailers are driving consumer expectations to get stuff they ordered by the next day and the later shoppers wait, the harder it is to predict."

The shipping delays at UPS sparked outrage among people who had bought gifts from Amazon.com Inc., Kohl's Corp. and other online retailers in the days and weeks before Christmas. Many had been swayed by guarantees from the retailers that their packages would be delivered by the holiday.

Rudy Lai, a finance executive in Union City, Calif., said part of a gift he ordered from Amazon was scheduled to be delivered on Christmas Eve. That morning, the UPS tracking information showed the item had reached Oakland, Calif., and was "out for delivery," he said. At 5 p.m., he found out that the package "was left in a UPS facility," according to the information.

Retailers including Wal-Mart Stores Inc., Amazon and Kohl's have started issuing customers gift cards and refunds for shipping costs and items that didn't arrive before Christmas. Those retailers are expected to seek reimbursement from UPS or other carriers that had guaranteed arrival times. UPS had made such guarantees for many air shipments during the holidays, though some large retailers may have waived them, analysts said. The company has said it would honor guarantees it made to customers, but it isn't clear how much the carrier might have to pay.

Analysts at StellaService Inc., a startup that measures customer satisfaction with online shopping, placed orders for tablets, boots and other gift items at 25 top retailers including Amazon, Wal-Mart and Kohl's to see if they would receive the gifts in time for Christmas Eve.

The orders were placed on the last day the retailer guaranteed delivery by Dec. 24, the latest of which was Dec. 23. Out of 75 orders, 12 items—from retailers including Dell, Macy's, Gap and Pottery Barn—didn't make it to the analysts' homes by Dec. 25. Eleven of those items were delivered by UPS.

UPS handles 50% to 60% of e-commerce orders, according to Sucharita Mulpuru, an analyst with Forrester Research. And it is an increasingly crucial part of its business. In its 2012 annual report, UPS said "business to consumer" shipments represented over 40% of its domestic package volume and grew rapidly. Its business-to-business shipping volume, meanwhile, was relatively flat.

UPS deployed its spare planes Monday and flew twice as many flights as usual on Christmas Eve. It flew 50% more on Thursday to handle the additional volume.

Laura Stevens, Serena Ng And Shelly Banjo             www.onlinewsj.com

Ex-Dixie Chopper President Charged With Theft

Greencastle, IN -- December 20 -- The former president and one-time chief financial officer of Dixie Chopper/Magic Circle Corp. is facing theft charges following his arrest Thursday.

Simon Paul Delancey Wilson, 39, who was named president and Chief Executive Officer of the Fillmore-based lawnmower manufacturer in October 2011, was arrested Thursday morning in Plainfield where he was reportedly attending the closing on the sale of his home there.

Initially lodged in the Putnam County Jail at 11:15 a.m. Thursday, Wilson bonded out at 6:50 p.m. and made his initial appearance in Putnam Superior Court Friday morning in a brief hearing in front of Judge Denny Bridges.

The judge entered a preliminary not-guilty plea for Wilson, represented by Indianapolis legal counsel, and scheduled a pretrial conference for 8:30 a.m. Feb. 12.

Charged with theft, a Class D felony, Wilson could face six months to three years in prison and a fine of up to $10,000 if found guilty.

A report by investigating officer Det. Pat McFadden of the Putnam County Sheriff's Department alleges that Wilson stole $18,705 in cash and merchandise from the rewards account set up on a corporate American Express Card issued to Magic Circle Corp. in Wilson's name.

He reportedly collected the rewards points from company expenses that were charged to the corporate credit card, allegedly converting them into 17 American Express gift cards of $1,000 each and $1,705 in merchandise he reportedly had sent directly to his Plainfield home.

Wilson has been living and working in Fargo, N.D., since he was asked to resign this past June for "misrepresenting the corporation's financial position," a probable cause affidavit states.

Wilson was elevated to head up Dixie Chopper operations in October 2011 after then-president Gary Morgan was also asked to resign for reasons unrelated to this incident, court documents note.

Morgan was hired from New Holland Corp. in November 2008 to be president and CEO of Dixie Chopper. Soon thereafter, he brought in Wilson from New Holland to be CFO.

Morgan was also issued one of the two original American Express cards acquired when the account was initially opened, Det. McFadden reported. Eventually more cards were added to the account, totaling approximately 40 in 2013.

Dixie Chopper accounts never received any rewards benefits from the American Express program, McFadden's report also noted.

The investigation determined that Wilson did not have Magic Circle Corp. board approval to open a corporate account, as required by corporation bylaws.

Documents indicate Wilson made 13 documented purchases through the rewards program, totaling the $18,705 over the period April 12, 2011-April 5, 2012.

McFadden further noted that Magic Circle provided documentation that none of the cash or merchandise was ever awarded to Wilson as a company bonus. The detective also noted that none of the income was reported on Simon's tax returns.

www.bannergraphic.com

Polaris Announces Strategic Partnership With Ariens Company

MINNEAPOLIS -- December 18 -- Polaris Industries Inc. today announced a strategic partnership with Ariens Company, a Brillion, Wis.-based manufacturer of outdoor power equipment. Ariens is a family-owned manufacturer of snow blowers, lawnmowers and other outdoor power equipment. In the 80 years since its founding, Ariens has driven exceptional growth across its product lines, sold under Ariens, Gravely, and other brands. Both companies will benefit from this arrangement, growing through exposure to adjacent markets while fostering innovation through shared technology and R&D investments.

"By partnering with Ariens, we bring together two leading and highly-respected companies that are well-positioned for growth," said Scott Wine, Polaris Chairman and CEO. "This partnership will enable Polaris to grow beyond our core power sports market, as we will reach new customers with innovative, relevant new products. We are looking forward to working with Ariens for many years to come."

The partnership includes supplying Ariens with a highly differentiated work vehicle. Branded Gravely, the vehicle will have different performance and styling characteristics to meet the requirements of Gravely's work-focused end users. And with both Polaris and Ariens investing in research and development of new technology, this partnership enables the companies to leverage information, technology and R&D investments, making innovation more efficient.

Additionally, it provides both companies access to expanded dealer channel opportunities. The two company's service complementary customer bases through well-developed dealer networks, and this partnership will create new sales opportunities for select dealerships in both networks.

"This partnership will create an even stronger dealer network by bringing together the related categories of outdoor power sports and outdoor power equipment. Dealers for the two companies share a lot of commonality including the understanding of how to serve and service the customers in this outdoor space," said Dan Ariens, Ariens Company President and CEO. "With Polaris' position as the global power sports leader, we are looking forward to collaborating on projects that drive results for both companies."

Beyond market leadership, Polaris and Ariens also share similarities in their business cultures. Both have long histories rooted in the Midwest and have grown significantly with a disciplined focus on lean manufacturing processes, innovative products and passionate employees.

Polaris has successfully executed similar partnerships in the past, notably its ongoing partnership with Bobcat Company and Eicher Motors in India.

About Polaris

Polaris is a recognized leader in the power sports industry with annual 2012 sales of $3.2 billion. Polaris designs, engineers, manufactures and markets innovative, high quality off-road vehicles, including all-terrain vehicles (ATVs) and the Polaris RANGER(R) and RZR(R) side-by-side vehicles, snowmobiles, motorcycles and small vehicles.

Polaris is among the global sales leaders for both snowmobiles and off-road vehicles and has established a presence in the heavyweight cruiser and touring motorcycle market with the Victory and Indian motorcycle brands. Additionally, Polaris continues to invest in the global on-road small vehicle industry with Global Electric Motorcars (GEM), Goupil Industrie SA, Aixam Mega S.A.S., and internally developed vehicles. Polaris enhances the riding experience with a complete line of Polaris and KLIM branded apparel and Polaris accessories and parts.

Polaris Industries Inc. trades on the New York Stock Exchange under the symbol "PII", and the Company is included in the S&P Mid-Cap 400 stock price index.

Information about the complete line of Polaris products, apparel and vehicle accessories are available from authorized Polaris dealers or anytime at www.polaris.com.

About Ariens Company

Established in 1933 in Brillion, Wis., Ariens Company is an outdoor power equipment manufacturing and distribution company serving consumer and professional markets. The company's premium international equipment brands include Ariens Sno-Thro(R) and Ariens lawn and garden products for consumers; Countax(R) and Westwood(R) lawn tractors; and Gravely(R) and Parker(R) commercial equipment for the landscape management, facilities maintenance and sports field sectors. Ariens' affiliates, Stens Corporation, J Thomas and Ariens Pty Ltd. (Australia), supply replacement parts to the outdoor power equipment industry. The company has operations in Wisconsin, Nebraska, Indiana, Michigan, the United Kingdom, Norway and Australia. Visit http://www.ariensco.com for more information.

Exmark, CPSC, Recall Commercial Walk-Behind Mowers Due to Injury Hazard

December 10, 2013

Consumers should stop using this product unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Recall Summary

Name of product:

Commercial Walk-Behind Mowers

Recall Details

Hazard:

The mower’s blade can break and injure the user and others nearby.

Units

About 6,900 in the United States and 330 in Canada

Description

This recall involves 2013 Exmark Commercial 30” Walk-Behind Mowers, model ECKA30 and serial numbers ranging from 313605897 to 313660824. The phrases “Commercial 30” and “Exmark” are printed on the front of the black and red mower. “Exmark” is also printed on the side of the mower. The model and serial numbers are located on a decal affixed to the engine base above the left rear tire.

Incidents/Injuries

None

Remedy

Consumers should immediately stop using the recalled mowers and contact Exmark for a free repair.

Sold at

Exmark dealers nationwide from November 2012 through October 2013 for about $1,800.

Distributor

Exmark Manufacturing Company, Inc., from Beatrice, Neb.

Manufactured in

Mexico

EFCO, CPSC, Recall Gas Trimmers Due to Fire Hazard

December 10, 2013

Consumers should stop using this product unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Recall Summary

Name of product:

efco brand Gas Trimmers from Emak USA

Hazard:

The muffler on the trimmer’s engine can break during use and pose a fire hazard.

Recall Details

Units

About 1,400 in the U.S. and 166 in Canada

Description

The trimmers are used in both residential and professional applications for cutting grass and light brush. The cutting attachments include a trimmer head and metal blade. The trimmers are about 72 inches long. They are colored red and gray with either a bike or loop handle configuration. Three models are recalled in two engine sizes measured in cubic centimeters.  They are: 36cc models 8371 S and 8371 T, and a 40.2cc model 8421 T engine displacement. The brand name “efco” and model number are printed on the front of the engine and the brand name also appears on the wand.

Incidents/Injuries

The firm has received eight reports of incidents, including one resulting in singed hair. No serious injury or property damage have been reported. 

Remedy

Consumers should stop using the recalled trimmers immediately and return them to an authorized efco dealer for a free muffler replacement kit.

Sold at

Authorized efco dealers at both retail stores and online, and Menards stores between June 2009 and July 2013 for about $400.

Manufacturer

Emak USA, Inc., of Wooster, Ohio

Manufactured in

China

Toro, CPSC, Recalls Timemaster and Turfmaster Lawn Mowers Due to Injury Hazard

December 10, 2013

Consumers should stop using this product unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Recall Summary

Name of product:

TimeMaster and TurfMaster lawn mowers

Hazard:

The mower’s blade can break and injure the user and others nearby

Recall Details

Units

About 34,500 in the United States and 1,600 in Canada

Description

This recall involves 2013 Toro TimeMaster 30” and 2013 Toro TurfMaster 30” lawn mowers with the following model and serial numbers: Model number 20199 with serial numbers ranging from 313000101 to 313020271; model number 20200 with serial numbers ranging from 313000101 to 313007366; and, model number 22200 with serial numbers ranging from 313000101 to 313007146.  The phrases “TimeMaster” or “TurfMaster” and “Toro” are printed on the front of the black and red mower. “Toro” is also printed on the side of the mower. The model and serial numbers are located on a decal affixed to the engine base above the left rear tire.

Incidents/Injuries

Toro has received ten reports of blades breaking. No injuries have been reported.

Remedy

Consumers should immediately stop using the recalled mowers and contact Toro for a free repair.

Sold at

Toro dealers nationwide from November 2012 through October 2013 for between $999 and $1,799. 

Distributor

The Toro Co., of Bloomington, Minn.

Manufactured in

Mexico

Husqvarna Group Plant Receives $10 Million New Markets Tax Credit Loan

The Husqvarna Group manufacturing facility in Nashville, Arkansas, has received a $10 million New Markets Tax Credit loan to purchase equipment for a new production process. The expansion will create 22 new jobs at the plant and support more than 800 additional jobs in Southwest Arkansas.

Nashville, AR -- November 21 -- HOPE (Hope Enterprise Corporation/Hope Credit Union) has committed $8,000,000 in New Markets Tax Credit allocation to Husqvarna Group’s Nashville manufacturing facility for new plating and honing equipment for their hand-held lawn tool engine assembly. The funding will be used to purchase new machinery, which will bring the plating and honing process in-house and will be more efficient and environmentally friendly than commonly-used methods.

The new plating and honing line will create 22 new jobs at the 1,200 employee facility. Husqvarna Group operations in Nashville support more than 800 additional jobs in Southwest Arkansas.

“Partnering with HOPE on this initiative will help to bring the right tools to our facilities to help maintain our efficiency in producing outdoor power equipment,” said Jack Fish, VP of Manufacturing, Husqvarna Americas.  “Additionally, when you can add new jobs that will support our local town and economy, that’s great!”

The New Markets Tax Credit Program is run by the U.S. Treasury Department and brings private capital investments into economically distressed areas. The NMTC allocation from HOPE is being paired with a $2 million allocation from Chase Community Development Banking. Chase also served as the equity investor for the $10 million equipment purchase and installation.

“The jobs supported by this investment offer good wages and benefits, and generate a tremendous economic impact in southwest Arkansas,” said HOPE CEO Bill Bynum. “Companies like Husqvarna are vital to a prosperous community, which makes it a perfect fit for our mission, and for our New Markets Tax Credits.”

Rural and inner-city regions of the country have suffered from a chronic shortage of capital for economic development because private capital tends to flow toward where money is already accumulating – in fast-growing metropolitan areas. A desire to bring economic prosperity to low-income communities resulted in the federal New Markets Tax Credit program enacted by Congress as part of the Community Renewal Tax Relief Act of 2000.

“This is a great day for Husqvarna, for Chase and for Nashville, Arkansas. This investment will create jobs - which will strengthen the company, the community and the families who live here,” said Wanda Clark, Vice President, Chase Community Development Banking.

Since 1976, Husqvarna has been a key employer and contributor to the economic engine of Southwest Arkansas. This investment in new equipment will bring the plating and honing process local without the need to source these components from overseas.

Using three previous allocations totaling $50 million, HOPE has financed 108 projects for a total of more than $71 million, with 23 NMTC loans for nearly $6 million in Arkansas.

About HOPE

HOPE (Hope Enterprise Corporation/Hope Credit Union) is a community development financial institution, community development intermediary and policy center that provides affordable financial services; leverages private, public and philanthropic resources; and engages in policy analysis in order to fulfill its mission of strengthening communities, building assets, and improving lives in economically distressed parts of the Mid-South.

Since 1994, HOPE has generated more than $1.7 billion in financing and related services for the unbanked and underbanked, entrepreneurs, homeowners, nonprofit organizations, health care providers and other community development purposes. Collectively, these projects have benefitted more than 400,000 individuals in the Delta, Katrina-affected areas and other distressed communities throughout Arkansas, Louisiana, Mississippi and Tennessee. This impact has been substantially multiplied by HOPE’s policy and intermediary efforts, which have informed and influenced the flow of public and private resources to assist disenfranchised people and places across the Mid-South and nationwide.

About Husqvarna

Husqvarna Group is the world’s largest producer of outdoor power products including robotic lawn mowers, garden tractors, chainsaws and trimmers. The Group is also the European leader in consumer watering products and one of the world leaders in cutting equipment and diamond tools for the construction and stone industries. The Group’s products and solutions are sold via dealers and retailers to both consumers and professional users in more than 100 countries. Net sales in 2012 amounted to SEK 31 billion, and the Group had 15,400 employees on average in more than 40 countries.

The Toro Company Reports Record Results for Fiscal 2013

• Fiscal 2013 sales increase to a record $2 billion
• Operating earnings expand to 11.3 percent and a record $230.7 million
• Net earnings per share for the year up 22 percent to a record $2.62
• Quarterly cash dividend increased 43 percent to $0.20 per share

BLOOMINGTON, Minn.-- Dec. 5, 2013-- The Toro Company today reported net earnings of $154.8 million, or $2.62 per share, on a net sales increase of 4.2 percent to $2,041.4 million for its fiscal year ended October 31, 2013. In fiscal 2012, the company delivered net earnings of $129.5 million, or $2.14 per share, on net sales of $1,958.7 million.

For the fourth quarter, Toro reported net earnings of $5 million, or $0.08 per share, on a net sales increase of 12.7 percent to $382.4 million. In the comparable fiscal 2012 period, the company posted net earnings of $0.3 million on net sales of $339.3 million.

The company also announced that its board of directors has declared a quarterly cash dividend of $0.20 per share, an increase from its previous quarterly dividend rate of $0.14 per share. This dividend is payable on January 15, 2014, to shareholders of record on December 30, 2013. In addition, the company increased its annual dividend guideline to 30 to 40 percent of its three-year average net earnings per share, up from the previous guideline of 20 to 30 percent. In fiscal 2013, the company paid $32.5 million in dividends and repurchased over 2 million shares of its common stock, returning more than $130 million in total cash to its shareholders.

“The Toro Company completed a record year with new highs for revenues, operating earnings and earnings per share,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “We are particularly excited to have crossed over the $2 billion revenue milestone for the first time in the company’s history, a timely accomplishment as we head down the home stretch to our Centennial in July 2014. In addition, we remain focused on returning value to our shareholders, as demonstrated by the increase in both our annual dividend guideline and quarterly cash dividend.”

“Looking across our businesses, Fiscal 2013 was a good year. I am extremely proud of our team and their passion for innovation and serving our customers. Of course we had our share of challenges, but we were able to successfully manage through less than ideal weather conditions in the first half of the year, as well as the phase-in of the Tier 4 diesel engine transition. 

Our innovative new product offerings helped us to defend and grow our positions in golf equipment and irrigation, landscape maintenance products, residential ZTR mowers and handheld blowers and trimmers. Our recent acquisitions in the rental and construction space are integrated and contributing. 

Demand for our precision agriculture irrigation products continued to grow and we further expanded our global presence with the closing of our China acquisition in the fourth quarter. And our efforts on productivity are making a positive difference, helping to expand our operating earnings to a record $230.7 million and 11.3 percent and continuing our progress toward our Destination 2014 operating earnings goal.”

“For the fourth quarter, even with favorable comparisons to last year when we saw soft preseason demand for our snow products, we delivered solid performance. Practically all of our product lines contributed to our sales growth and our expanded gross margins further evidence the traction we are gaining with our productivity efforts.”

“Looking ahead to fiscal 2014, we are mindful of the mild expectations for our world-wide economic environments, as well as the challenges that Mother Nature can create for our businesses and customers. Nonetheless, we are cautiously optimistic about the prospects for our end markets in this Centennial year. Golf course development is progressing in key markets, housing and construction continues to improve, and around the world customers are seeking more efficient methods of irrigation. 

We are well-positioned across our product portfolio to capitalize on growth in all of these areas. In addition, our recent investments to expand the global footprint of our micro irrigation business and grow our rental and construction market presence are yielding positive results and will continue to gain momentum. 

While we hope that Mother Nature will deliver favorable weather, that is out of our control. Instead, we remain focused on the things that have made us successful for our first 100 years: developing innovative products, serving our customers and executing in the marketplace. We continue to pursue our Destination 2014 goals in this final year of our initiative and our employees are engaged to drive revenue growth and further improve productivity.”

The company expects revenue growth for fiscal 2014 to be about 4 to 5 percent, and net earnings to be about $2.85 to $2.90 per share. For the first quarter, the company expects net earnings to be about $0.35 per share, with unfavorable year-over-year quarterly comparisons due to increased sales accelerated into the first quarter of last year by the Tier 4 diesel engine transition that will not be repeated this year.

SEGMENT RESULTS

Professional

Professional segment net sales for fiscal 2013 totaled $1,425.3 million, up 7.2 percent over last year. Sales of landscape maintenance equipment increased on strong retail demand for our zero turn radius products and successful new product introductions—including our new TurfMaster™ heavy duty walk power mower, electronic fuel injection products and turf renovation products. Worldwide golf and irrigation sales were up as existing golf courses continued to replace aging equipment and irrigation systems with our offerings and new international golf course projects were awarded to us. 

Rental and construction equipment sales grew on increased demand for our products and incremental sales from recent acquisitions. Global micro irrigation sales increased with continued demand for more efficient irrigation solutions for agriculture. For the fourth quarter, professional segment net sales were $255.8 million, up 11.9 percent from the comparable fiscal 2012 period.

Professional segment earnings for fiscal 2013 totaled $254.4 million, up 9.6 percent from the prior year. For the fourth quarter, professional segment earnings were $21.8 million, up 5 percent from the comparable fiscal 2012 period.

Residential

Residential segment net sales for fiscal 2013 were $594.4 million, down 2.1 percent from last year. This slight decline largely was attributable to challenged preseason sales of snow products early in fiscal 2013 and unfavorable spring weather at the beginning of the key selling season. Sales benefitted from increased shipments of domestic residential riding products as consumers continued to transition to our zero turn radius mowers, including our Timecutter® line of Zs, and from higher demand for our handheld trimmer and blower products in the U.S. and Pope-branded irrigation products in Australia. 

For the fourth quarter, residential segment net sales were $116.6 million, up 14.3 percent from the comparable fiscal 2012 period. This increase primarily was due to improved preseason demand for snowthrowers as compared to our fiscal 2012 fourth quarter, with sales of worldwide residential riding products, handheld solutions and Pope irrigation products also contributing.

Residential segment earnings for fiscal 2013 totaled $62 million, up 7.2 percent from fiscal 2012. For the fourth quarter, residential segment earnings were $10.1 million, up from $6.7 million in the comparable fiscal 2012 period.

OPERATING RESULTS

Gross margin for fiscal 2013 improved 110 basis points from last year to 35.5 percent. The majority of the margin expansion was due to realized price, product mix and productivity improvement, somewhat offset by unfavorable currency exchange rates. For the fourth quarter, gross margin was up 30 basis points to 33.6 percent.

Selling, general and administrative (SG&A) expense as a percent of sales increased 30 basis points to 24.2 percent for fiscal 2013. For the fourth quarter, SG&A expense as a percentage of sales decreased 70 basis points to 31.4 percent.

Other income for fiscal 2013 was $12.3 million, up $4.7 million from last year. The increase primarily was due to a one-time legal recovery, as well as lower foreign currency losses and higher income from our investment in Red Iron Acceptance, our channel financing joint venture.

Operating earnings as a percent of sales improved 80 basis points to 11.3 percent for fiscal 2013 For the fourth quarter, operating earnings improved 100 basis points to 2.2 percent of sales compared to 1.2 percent last year.

Interest expense for fiscal 2013 was $16.2 million, down 4.1 percent compared to fiscal 2012. For the fourth quarter, interest expense totaled $3.9 million, down 5.2 percent from the same period last year.

The effective tax rate for the fiscal year was 31.7 percent compared with 34 percent last year, primarily due to the reinstatement of the Federal Research and Engineering Tax Credit.

Accounts receivable at the end of the fiscal year totaled $157.2 million, up 6.6 percent from the prior year period. Net inventories were $240.1 million, down 4.4 percent from the end of fiscal 2012. Trade payables were $136.2 million, up 9.1 percent compared with last year.

About The Toro Company

The Toro Company is a leading worldwide provider of innovative turf, landscape, rental and construction equipment, and irrigation and outdoor lighting solutions. With sales of more than $2 billion in fiscal 2013, Toro’s global presence extends to more than 90 countries through strong relationships built on integrity and trust, constant innovation and a commitment to helping customers enrich the beauty, productivity and sustainability of the land. Since 1914, the company has built a tradition of excellence around a number of strong brands to help customers care for golf courses, sports fields, public green spaces, commercial and residential properties and agricultural fields.

Ariens Buys 3 Direct Marketing Brands From W.W. Grainger

Calling it part of a strategy to offset some of the seasonality inherent in its business, Ariens Co. said Monday it is acquiring three direct marketing brands from W.W. Grainger Inc.

The brands are Gempler's, Ben Meadows and AW Direct. All three brands market outdoor-related products including landscape and horticulture equipment, gear for fighting wildfires and tow truck equipment.

The brands will become part of Brillion-based Ariens on Jan. 1. Terms of the agreement were not disclosed, but, "the dollars are fairly significant," said Dan Ariens, CEO of Ariens and the fourth generation of the family to lead the company. "It adds a big new revenue base to our business."

Grainger said in a statement that the three brands total had estimated revenue of $90 million in 2013.

The three brands will help smooth Arien's revenue, which is skewed heavily toward fall and winter when sales of its snow blowers spike.

"When we look at their revenues over quarters they are much more level," Ariens said.

Ariens will add 250 new employees total at an office in Madison and a distribution site in Janesville as a result of the transaction, putting its total employment at about 2,300.

The company has been seeking an acquisition as a means to diversify its portfolio of businesses, Ariens said.

"We've been looking for a couple of years to find something that fits like this," Ariens said.

Ariens operates in the outdoor power equipment manufacturing as well as distribution segments in consumer and professional markets. The company's brands include Sno-Thro snow blowers; Countax and Westwood lawn tractors; and Gravely and Parker commercial equipment for the landscape management, facilities maintenance and sports field sectors. Ariens' affiliates, Stens Corp., J Thomas and Ariens Pty Ltd. in Australia, supply replacement parts to the outdoor power equipment industry.

"As we grow the distribution side of the business, these companies represent strong niche segments that fit nicely with our current portfolio of outdoor brands," the company said in a statement.

The acquisition is "another way to talk to the same customer with a different set of products," Ariens said.

Ariens will be taking over leased space in Madison as well as leasing space in the Janesville distribution center from Grainger, said Ariens spokeswoman Ann Stilp, in an email.

Ariens will operate the acquired brands along with Stens and J. Thomas as part of a newly formed specialty brands group.

The location of the businesses Ariens is acquiring played a role in the agreement, Dan Ariens said.

"We want to invest in Wisconsin wherever we can," he added. "We see opportunity here."

Ariens was established in 1933.

W.W. Grainger Inc., is based in Lake Forest, Ill., and had 2012 sales of $9 billion. The company is a business-to-business distributor of products used to maintain, repair or operate facilities.

Joe Taschler       www.jsonline.com  

NAEDA Announces New Association President/CEO

St. Louis, MO. – December 2 -- The North American Equipment Dealers Association (NAEDA) named Richard E. “Rick” Lawhun, president and chief executive officer effective January 1, 2014. Prior to joining NAEDA, he served as president and CEO of the American Concrete Pressure Pipe Association (ACPPA) in Fairfax, VA.

Prior to joining ACPPA, Lawhun was vice president of member benefits for the National Association of Insurance and Financial Advisors in Falls Church, VA. He also served in a variety of staff leadership roles at the American Society of Civil Engineers, including manager of technical activities, senior manager of membership development and director of the Construction Institute. Early in his career, Lawhun managed an engineering department at Dewberry & Davis, an ENR Top 50 design firm.

“We are extremely pleased to have Rick as our new president,” noted NAEDA chair Tom Nobbe, CEO of Wm. Nobbe & Co., Inc., Waterloo, IL. “He has a unique set of skills and experience that will serve NAEDA well as we seek to reorganize our governance structure and increase the effectiveness of the organization.”

 “This is a challenging opportunity to be part of an organization that is seeking to increase its visibility and better serve its members. I am honored to have been selected and look forward to working with the members, board of directors and staff in leading NAEDA into a promising future,” stated Lawhun.

Lawhun is an alumnus of Virginia Tech in Blacksburg, VA, where he earned a Bachelor of Science degree in Civil Engineering.  He and his wife, Ping will be relocating to St. Louis from their current home in Fairfax, VA.

Kohler Company To Start Making Portable Generators

November 20 -- Kohler Co. will start making portable generators next year, joining competitors like Generac Holdings Inc. and Briggs & Stratton Corp. that already make both standby and portable generators.

The privately held Kohler-based company has made standby generators, but not portable ones. That will change in January when it formally unveils a line of portable generators that range from a 2-kilowatt inverter to a 12.3-kilowatt gasoline generator, the company said Wednesday.

The line will also include trash pumps and water pumps.

“Today Kohler offers a complete range of generators up to 3.2 megawatts that are relied upon in myriad applications: construction, telecom, residential/light commercial, industrial, mobile and marine,” said Manny Rumao, senior product manager, in a prepared statement. “Adding portable generators helps us further meet our customers’ needs for clean, efficient and dependable power.”

Generator demand has increased nationwide in recent years in the wake of devastating storms like Superstorm Sandy.

Generator manufacturers say that demand for portable generators spikes immediately after such storms, then demand for home standby generators jumps for several months afterward. The move by Kohler allows it to play in both spaces.

Jeff Engel          www.bizjournals.com   

Dixie Chopper Says Will Call Back Laid Off Workers By Early 2014

FILLMORE – November 18 -- Reluctantly, Dixie Chopper has temporarily laid off some of its employees as of Monday.

"The decision was not an easy decision but it was necessary for the continued success of the company," Chief Financial Officer (CFO) Bradley M. Craig said in a prepared statement provided to the Banner Graphic.

"The doors at Dixie Chopper are open and will remain open," he added.

Dixie Chopper has every intention of calling back as many of the affected employees during the beginning of 2014, company officials said

Specific numbers laid off were not disclosed.

The layoffs have come as the Dixie Chopper management team, which was put in place back in June, is reorganizing the company "to ensure a strong financial position in the marketplace, optimal production levels, reduced overhead costs, and a streamlined shipping process."

The new management team is composed of company founder Art Evans as chairman of the board, Wes Evans as president and chief executive officer (CEO), Jeff Haltom as vice president, Bradley Craig as CFO and Greg Fernandez as vice president of administration.

Company founder Art Evans, who built the first of Dixie Chopper's zero-turning-radius lawnmowers in an old dairy barn on his parents' property north of Fillmore in 1980, is delighted to let everyone know that the "city slickers are out of town" and that the company is "getting back to its roots."

Those roots run deep locally and include producing commercial and residential zero-turn mowers designed to outlast the competition.

To date, every Dixie Chopper mower ever built has been assembled in Putnam County -- either at the longtime factory outside Fillmore or for a short time in the former Mallory plant in Greencastle that was razed in April 2011, two years after production was transferred back to Fillmore from that facility.

Meanwhile, in related news, Dixie Chopper has announced the release of a new stand-on mower, The Stryker, which was recently unveiled at the Green Industry Expo (GIE) show in Louisville, Ky.

The Stryker stand-on received a lot of attention for its durability and state-of-the-"Art" handling.

Dixie Chopper plans to begin production on The Stryker stand-on in early spring as the homegrown Putnam County company focuses on continuing to bring new, innovative ideas to the marketplace.

www.bannergraphic.com     

GE Capital Survey Says Successful Selling Season Leads to Positive Sentiment in Lawn and Garden Industry

November 18 -- Lawn and garden industry participants are inclined to stock up on new low-cost models based on a positive summer selling season, according to survey results released today by GE Capital, Commercial Distribution Finance (CDF).

Fifty-four percent of industry participants said the popularity of lower-cost models will have the largest impact on sales this year, compared to 43 percent last year. One quarter said reduced levels of inventory will impact sales, down one percentage point from last year. Only seven percent pointed to long production lead times impacting sales, down from 20 percent.

“Pent-up demand for machines may have driven both consumer and commercial sales this year,” said Michael Horak, commercial leader of CDF’s outdoor products group. “Dealers have told us they feel good about the recent selling season and, based on current conditions, they’re planning to order more new equipment for next year.”

In fact, nearly half (49 percent) of respondents said this is a good time to consider re-stocking, up from 40 percent last year. About one-third (34 percent) had mixed feelings, down from 40 percent.

Respondents were generally optimistic about sales trends next year, as well. Thirty-eight percent said their sales would grow 5-10 percent; 23 percent said 10-15 percent; and 23 percent said 15 percent or more.

“From the inventory financing point of view, we’ve seen strong liquidations and ‘outstandings’ have been reduced to levels equivalent to this time last year,” Horak added. “At the same time, inventory turns have increased to a very healthy level.”

The lawn and garden industry survey was conducted Oct. 23–25. The 164 respondents were composed of retailers and dealers (27 percent); manufacturers (23 percent); distributors (15 percent); and other industry participants (35 percent).

For more than 20 years, CDF has played an important role in the green industry. Inventory financing, also known as floorplan financing, enables dealers to stock, market and sell lawn care products. Manufacturers generally benefit from enhanced product flow and increased sales opportunities, while dealers can obtain improved credit availability and terms.

To learn more about the ways CDF helps customers manage their inventory and access exclusive industry intelligence, dealers can speak with a CDF representative by calling 800-451-5944 or visiting the web site: http://www.gecdf.com/home.

About GE Capital, Commercial Distribution Finance

GE Capital, Commercial Distribution Finance provided nearly $31 billion in financing for more than 33,000 dealers and 2,000 distributors and manufacturers in the U.S. and Canada in 2012. Programs include inventory and accounts receivable financing, asset-based lending, private label financing, collateral management and related financial products. For more information, visit www.gecdf.com/ or follow company news via Twitter (www.twitter.com/GEInventoryFin