Michael J. Hoffman - Chairman and Chief Executive Officer Stephen P.

Wolfe - Vice President of Finance and Chief Financial Officer

Eric Bosshard - Cleveland Research Company James Lucas - Janney Montgomery Scott LLC Sam Darkatsh - Raymond James Mark Rupe - Longbow Research Jim Barrett - C.L. King & Associates, Inc.

James Bank - Sidoti & Company Good day ladies and gentlemen and welcome to the Toro Company First Quarter Earning Conference Call. My name is Tanya and I will be your coordinator for today.

At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference.

(Operator Instructions). I would now like to turn the presentation over to your host for today's conference Mr.

Michael J. Hoffman, Chairman and CEO of The Toro Company.

Please proceed Mr. Hoffman.

Thank you Tanya and good morning everyone. We appreciate you joining us for our first quarter earning conference call.

Here with me this morning are Steve Wolfe, our Chief Financial Officer; Tom Larson, Vice President and Treasurer; and John Wright Director of Investor Relations. Let's begin with our forward-looking statement policy.

Please keep in mind that during the call we will make certain forward-looking statements which are intended to assist you in understanding the company's results. You are all aware of the inherent difficulties, risks, and uncertainties in making predictive statements, particularly in the current environment.

So the Safe Harbor portion of the company's earnings release, as well as SEC filings, detail some of the important risk factors that may cause actual results to differ from those in our predictions. Our earnings release was issued this morning by Business Wire and can also be found in the investor information section of our corporate website, thetorocompany.com.

Before we get to the results for our first quarter ended January 30, 2009, I would like to update you on a few key items since we last spoke. As you are all acutely aware these are extraordinary times.

In one way or another each of us has been affected by the challenges of today's economic environment. Unfortunately the recessionary conditions have showed no signs of abating and have only intensified.

In response to the deteriorating market conditions we've taken a number of actions to deal with the new reality of the global recession. We have further aligned production schedules for reduced demand and our determined to lower inventory.

We continue to scrutinize discretionary expenses and reduce spending. The freeze on all open positions that we initiated early last year remains in place and we completed a voluntary retirement program this past December.

Unfortunately just last week we were forced to take additional action to reduce our office and salaried work force by approximately a 100 employees. This was a very difficult decision, but one that became unavoidable given the harsh realities of the current business climate.

Combined with previous measures, the company has reduced its overall work force by approximately 15% from the previous year when you include contractors, part time, and temporary employees. Beyond the reduction, we took additional actions that will effect all the remaining employees including the suspension of regularly scheduled salary increases, reduced officer salaries, changes in our vacation policy, and the addition of for referral days all for the remainder of fiscal 2009.

We know these steps are very painful, and yet they were necessary to keep Toro competitive through this difficult environment, so we can resume our chart record of solid financial performance when the world economy begins to improve. In addition to aggressively managing cost we remain committed to reducing our working capital needs and the resulting improvements to our balance sheet stand out as a positive factor for us in this very difficult business environment.

Our inventory levels are much lower, receivables are down considerably, and we are about $60 million less than we did last year -- in last year's first quarter. Also our field inventory levels are down on a year-over-year basis.

So while we are disappointed with our results for the quarter, we know we are not alone in dealing with the current challenges. We will continue to manage the business in line with this new reality and remain confident in the strength of our brands, our products, our people, and our channel partners to effectively compete for our customer's business in the months ahead.

I'll now turn it over to Steve to review our financial results for the first quarter. Steve.

Thanks Mike and good morning to everyone. For the quarter net sales were down 16.2% to $340.2 million.

Worldwide sales has declined across most professional categories due to the global recession that we are in. These declines were somewhat offset by stronger orders for snowthrower products and favorable preseason shipments for our redesign lineup of Toro and Lawn-Boy Walk Power mowers.

Net earnings for the quarter were $6.7 million or $0.18 per share, a decrease of 62% on a per share basis compared to the same period last year. The earnings decline included a pre-tax charge of $1.3 million or $0.02 per share on an after-tax basis to account for the workforce adjustments Mike talked about.

Let me turn now to our segment results. Starting with the professional segment, worldwide sales for the quarter were down 22.3% up to $229.4 million.

Shipments declined across most professional product categories due to the challenging market conditions and customers reluctance to place orders in this time of economic uncertainty. Within the golf market shipments of turf maintenance equipment and irrigation systems were down significantly as existing courses delayed purchases of new equipment and the number of renovation projects and new golf course under construction slowed considerably.

In addition, shipments of professionally installed residential and commercial irrigation products declined due to the ongoing pressure in housing and commercial construction. And finally Exmark and Toro products in the landscape contractor category were also down for the quarter.

Partially offsetting the decline in shipments was strong, initial stocking orders for our new platform of zero turn mowers and our new stand-on mower that launches us into an entirely new product category. Net earnings in the professional segment for the quarter were $30.1 million down 41.5% from the comparable fiscal 2008 period.

The decline was primarily due to the significant sales decrease. Fixed SG&A expense spread over lower sales volumes and higher manufacturing variances.

In the residential segment, worldwide sales for the quarter were up less than 1% to $107 million. Despite the recessionary conditions, consumers appetite personal products remained healthy.

In fact worldwide demand for Toro snow throwers improved significantly over the last year due to lower field inventory entering the season, a powerful product line up and strong early snowfall in Canada and key U.S. markets like the Mid-West and the North-East.

We have sold out our inventory and field inventory in most locations is in good shape which bodes well for pre-season orders for the next snow season. Within the Lock Power mower category, shipments of Lawn-Boy products were up as a result of expanded placement at the key retailer, while Toro products experienced increased orders from our dealer channel due to better product availability this year.

Both brands of steel Lock Power mowers were re-designed and re-positioned to cover a broader range of price points and deliver greater value to our customers. These gains were somewhat offset by delayed shipments of consumer value products as customer shifted orders closer to retail demand.

Also impacting our residential segment results for the quarter were lower international sales, primarily due to the effects of unfavorable currency. Net earnings in the residential segment for the first quarter were $4.8 million, up 26.8% from a comparable fiscal 2008 period.

The improvement was primarily driven by lower SG&A expense due to reduced spending from marketing, warehousing, and engineering. Now let's turn to key...

at our key operating results. Starting with gross margin, gross margin decreased by 2 percentage points in the first quarter to 34.8%.

The decline was primarily attributed to lower production volumes and efforts to reduce inventory levels, favorable product mix, and increased commodity cost. A portion of the decline was offset by a drop in freight expenses.

SG&A expenses for the quarter were down $12.6 million or 10.7%. However, as a percent of sales, SG&A expenses increased to 30.7% compared to 28.9% in the first quarter of last year.

While actual expenses declined, it was not enough to keep pace with the reduction in sales volume for the quarter. Interest expense was down $500,000 for the quarter, the result of significantly lower short-term borrowing levels and reduced interest rates.

And our effective tax rate for the quarter was 33.7% compared to 35.4% in the first quarter of last year. The decline was primarily due to the extension over the federal research and engineering tax credit.

And for fiscal year 2009, we now expect our tax rate to remain at approximately 33.7%. Now Mike touched on the working capital improvements that have strengthened our balance sheet and the results are significant.

A good proxy of field inventory is accounts receivable which is down $46.7 million or 13.6% from last year's first quarter. And by closely managing production, we've lowered our net inventories by $57.2 million or 19.3%.

And in these recessionary times, we all know liquidity is paramount and I am pleased that our seasonal short term borrowing needs are $60 million below from we were one year ago today. On that note, let me conclude this section with a few comments on the credit environment for Toro, our channel partners, and our customers.

At Toro, we have a solid relationship with our credit line banks. And at the end of the first quarter, we've drawn only $25 million against our total domestic committed credit lines of 225 million.

This compares to the $85 million we had drawn at the end of last year's first quarter. As a result, our liquidity position appears to be more than sufficient heading into our peak selling season.

And at this point as future reference, last year we had $50 million of committed revolvers that were unused at our peak borrowing time. And this year, we are tracking substantially better in comparison to last year.

Regarding our channel partners, their financing is provided primarily by third-parties and the Toro credit company, and currently we have no major credit availability issues in this area. As for our end customers, credit for consumers and contractors has tightened noticeably compared to last year and may impact sales as we enter our primary selling season.

The same applies to our golfing grounds customers to release equipment leasing. So, we've added three additional financing providers to our company sponsored leasing program to alleviate the credit availability concerns.

That's all for the first quarter results. I'll now turn it back to Mike for some discussion regarding our outlook.

Thanks Steve. In the introductory comments we noted that the global recession continues to intensify and we expect these difficult conditions will continue for the remainder of our fiscal year.

We've already covered the many actions we've taken to deal with this period of reduced demand and uncertainty. Despite the many unknowns, we will work diligently to drive retail demand and believe we can build momentum if mother nature provides a reasonable spring for us.

One of the many ways we will compete for business is through selling the merits of our new innovative products. Entering the primary selling season our new products are at the highest level in recent history and that will help us.

Products like the Toro GrandStand, Toro Z Master G3, and X-Mark Next Lazer Z referred to earlier have energized our channel and captured the interest of landscape contractor customers. We need productivity and innovation they have come to expect from us.

For golfing ground customers, we recently introduced a new offering of heavy duty work in utility vehicles, Pro Core Deep-Tine Aerators and highly productive Groundsmaster rotary mowers. In the area of water management, our new Precision spray nozzles are helping customers achieve optimal plant health with significantly less water.

And for home owners our new line up of Toro Lawn-Boy Walk Power mowers provided an expanded line up at competitive prices. Together the strong combination of our trusted brands, innovative products, solid customer relationships will enable us to compete effectively for the business this season.

A little while ago I shared an interesting conversation with a large commercial contractor in the South West. While the construction side of their business has been quite sluggish; the landscape maintenance side has been solid, the point being while construction equipment may sit idle during these difficult times, Turf equipment remains in constant use as the grass continues to grow.

Speaking of customers interactions, earlier this month we had a chance to visit with a number of our customers at the Golf Industry Show in New Orleans. Many golf courses will be operating on reduced budgets this year, but they remain hopeful that market conditions will improve later in the year.

While overall show attendance was down we were encouraged by the constant flow of serious buyers in our booth and a strong interest in our new product innovations. I'm also pleased to announce that we just recently secured a contract with the U.S.

army to provide golf course maintenance equipment and services to maintain their more than 50 golf facilities worldwide. This includes courses in the United States, Germany, Puerto Rico, Japan and Korea.

This is a great win for Toro, a testament to our brand and product strength along with the dedicated efforts of the Toro team to secure this business. So, looking forward, we expect the global recessionary conditions to continue for the remainder of this fiscal year.

Given these conditions the resulting impact to our business and corresponding outlook is more uncertain. While we are confident in our ability to hold and improve market share, there is a larger question on just to what degree our markets will contract.

With that uncertainty, we now expect the fiscal 2009 revenues to decline about 15% from fiscal 2008 and our net earnings to be approximately $1.75 to $2 per share. For our fiscal 2009 second quarter, we expect to report net earnings per share of $0.85 to $1.

There is no doubt that fiscal 2009 will be one of the most challenging years we've faced in decades. We don't know how long it will take for our markets in the world economy to rebound, but we do know that the choices we make will determine our future position.

While we continue to take appropriate actions in the short term to remain financially strong and competitive, we are mindful of the risk of damaging what will ultimately drive our success for the long term and will manage the business accordingly. That concludes the formal portion of The Toro Company's fiscal 2009 first quarter results, now let's open it up for your questions.

Good morning Eric.

Good morning guys.

Good morning.

A couple of questions, first the SG&A performance in the quarter was quite impressive in terms of year-over-year contraction. Two things, one can you talk about how the SG&A is down as much as it is $10 million or $12 million in the quarter.

If that is sustainable sort of how is it done and is it sustainable? And then secondly the actions that you've taken recently in the last it sounds like 30 or 45 days, what's the incremental benefit, net benefit that we should expect from that as we go through the year?

Yes, this is Steve, Eric. That is the result of a couple of things.

One is spending which you said that's the primary piece where we told you I think even at the fourth call -- quarter call in December that we were starting to watch open head accounts. We were filling those begrudgingly.

In fact, we didn't fill many from December through now. So we're getting the benefit of some of that.

The overall budget spending, we've had several rounds of spending through our divisions in terms of cut backs in spending. And then the other thing is we had just an unusual item.

We had a distributor change cost in last year's first quarter, we didn't have this year that makes that number look a little bigger. But to your point those should be sustainable.

Those are things that we will continue to look at as we go forward to see if we need to do even more and the thing that drilled us as you mentioned to our announcement earlier last week in terms of the overall cost cutting we've done in terms of head reductions, salary freezes, all that sort of things and that those dollars are somewhere in the $16 million range in terms of sustainable benefit that's what you should expect and we will continue to watch that to see if there is anything else we need to do in any of those categories as we get further into the end of the year.

And that 16 million, is that net of expenses to implement that and is there a run-rate that we should start to think is appearing, and coming in the second quarter?

Yeah, that should be. You have to really go through the pieces.

There are some things that are in there one time, there are some things that are ongoing, but your purpose as we factored that into the guidance that we've given you here going forward.

Secondly, in terms of the guidance, the mid teens revenue contraction, you gave the earnings guidance for the second quarter, but should we think about kind of similar mid-teens contraction in the second quarter as we saw in the first quarter and is there for the year or might the second quarter be worse, can you just give us a little bit of clarity on that?

Yeah, we've not given anything in that regard Eric, in terms of the top line.

Is there any reason to think that 2Q is different than 3Q, I mean those are the two big quarters remaining of the years. Is there anything that's different within those quarters and how things are expected to play out?

Not significantly, but again we're just going to give EPS guidance at this point.

Okay and then lastly just on the currency impact, the international business was down about 20% and I think that you had commented that a good portion that was currency. Can you give us a little bit of color on how much of that was currency?

Yeah, a little less than half was currency. The dollar amount actually was a little over $12 million was currency.

Perfect, thank you.

Thank you Eric.

Thanks, good morning guys. First question Steve.

Could you just give a little bit of color on the other income line that tends to fluctuate quarter-to-quarter and the income versus expenses this time around, what was in there and what is that look like going forward?

Yes, there are three main pieces to that drove the numbers this is quarter that's interest income, finance charges, and currency. So when you look at those three, those do fluctuate from time-to-time, our finance -- interest income was down prior from last year, because we had more cash at this time.

Rates are little higher, finance charges are relatively equal and then currency was a negative. So, its those three pieces that drive it, and it does fluctuate from time to time depending on what's happening with rates and what's happening with vacation, what type of interest income you have?

Okay.

You can from my -- just from a, I think we've told you it is kind of a standing rule that's somewhere in the $3 million to $4 million range from year-to-year. It doesn't fluctuate too much from that.

Okay. And big picture question here, when you said the initial guidance, I mean clearly hopefully we're now in the epicenter of this whatever is going on around the world right now but when you look at December, when you said the initial guidance versus where you are today.

What has changed and built into your contingency plans, what -- how much worse would it have to get before you implement the next round of contingency plans?

Jim, this is Mike I'll take a shot at that. Well I think it's pretty clear that from the beginning of December to date now things have gotten substantially worse.

And they continue to I think the word we've used and many others have used is they have continued to intensify. And as we talk and we pay close attention to our end markets and as golf courses for example go through their budgeting process, well that doesn't take place until the New Year starts and that's wasn't that long ago.

And so we started getting more signals as there would be from a capital stand point. Delays, potential reductions within the golf industry, and that I would say is that as we see these are challenging times for us we haven't seen that to that degree for decades.

And while we have said golf is not immune, it finally reached the point where whether that was membership driven or which is again just budget driven, they were looking to delay capital purchases. We know they can't delay forever because golf courses have to continue to operate.

But they can like we talked in quarters passed they can for a period just like landscapers. So that business which you know isn't really important piece of business for us is under some pressure.

Landscape contractors maybe a little more need driven and we've got a lot of new products there. They had -- a number of them had good seasons and so, while again we think there will still be some pressure in that market there is reasons for some optimism on the new product side and the revenues they generated from snow.

And then getting back to the consumer business, consumers have delays in purchases over the last two or three years, we know that. Again its somewhat need driven and so to the earlier point in our remarks, if mother nature is reasonable this spring, we know that always a big if, but last year was not a particularly good spring from a weather standpoint.

So if its reasonable this year coupled with the expanded product offering at much better price points like in the area of Walk Power mowers, we're positioned to think to take advantage of that and that may be enough to offset some of the economic pressures that we're facing, so that's a pretty significant part of it.

Okay and with regards to the pricing environments, we've round tripped on commodity, you've been able to reset at the consumer level and on the professional side you had the price increase at the end of last year. In a weakened demand environment what does pricing look like for you as the year progresses?

Well we'll try to certainly preserve the price that we have realized, yet we recognize that as markets contract and people compete for a smaller pie that puts pressure on that and the bottom-line is we will make sure we hold or grow our market share. So that may require us to borrow from some of that pricing that we put in place last year, and we're prepared to do that.

Okay, and when you look at as you look at as you said things continuing to get worse, and you look at citing things earlier in the call such as the customer is reluctant to order credit risk, not so much at the customers, but the end user level, overall lack of demand. If you had to weigh what it is from a lack of demand standpoint, how do you characterize from a major bucket standpoint?

I think the number one thing would just be uncertainty whether that's the consumer or the professional customer. It's just what's in front of us.

When do we begin to see if you will the bottom or we are at the bottom and we start to see things moving back in the right direction. So to your point financing is a factor, but we've worked hard to make sure we have alternatives there for our channel partners.

And it will still be a factor but, I think the number one factor is consumer professional customers just being careful.

Okay and finally in terms of your production, in terms of you've been hurt on the absorption side the last couple of quarters, clearly working diligently to right size the cost structure, at what points do you feel that the gross margin contraction begins to stabilize, is that next quarter, is that three quarter out, can you just help us understand from where your production schedules lie right now?

Yeah, I guess I would Steve can add to this. I would say that as we put even a stronger focus on managing our inventory and are prepared to make the necessary production cuts and the consequence that goes with that -- that obviously creates a head wind.

We've talked about from a significant part of our cost of goods is in materials and we faced some significant challenges there last year as we saw that the commodity increases, and we continue to work on reducing that, getting that back and so hopefully they may be offset to some degree. So we don't to your point see a lot of gross margin erosion.

I'll just add Jim, but the bottom-line is we want to adjust those production schedules, so that we don't end up with a lot of inventory on our bonds. So we'll be watching those regularly to see what does the demand look like, making sure we've got those matched properly.

And on your comment about gross margin and when does that start to even off, a big part of that will depend on where -- kind of where commodities go. And as we've said, we think the first half will be a little tougher in terms of commodities, because we are still working off some prices from some of our components suppliers that they bought at higher prices but at the back half we should get some benefits of that.

So it depends a lot whether those commodity prices stay where they are now.

Okay, great. Thanks guys.

Thank you Jim.

Hi Mike, Steve how are you?

Good morning Sam.

Just a little bit more color with some of the questions that Jim just asked, the down 15 in terms of sales volumes or I should say sales dollars year-on-year. Can you help us with what that implies in terms of unit volume versus pricing versus foreign exchange?

Well just to kind of high level Sam, pricing will somewhat more than offset the currency headwinds we were experiencing. And so the vast majority of that is simply organic reduction.

Okay. So if currency, I guess Steve that you would be in tune with this, if the dollar remains where it is versus your market basket, what would the currency impact be on sales on year-on-year basis for the fiscal year?

You are talking top-line now?

Yes sir.

Yes, that's pretty hard, I think we've talked before, that that's pretty difficult to determine. But what we've done from a currency standpoint is as I think you know is we try and go out at the beginning of the year and hedge as much as we can to protect our plan.

And we do that, sometimes that works to your advantage, sometimes that works against you. Last year that actually worked against us because the dollar continued to weaken and we had hedged it at lower rate.

So, this year we would hope to get a little benefit from that as the dollar is now strengthening, sorry, weakening. So it's tough to say dollar wise we have not actually given a number out in terms of what that would be.

Are you talking about on transaction basis, as opposed to the translation basis?

Yes transaction.

Okay. And on a translation basis it would be I guess more straight forward though?

We don't hedge translations for the most part.

Right. So I'm getting about 3% to 3.5% or so for the year, is that kind of in the ballpark for a translation basis?

It comes a little high.

Okay. So you're thinking that selling prices then would be probably in that 2% to 3% range for the year then?

Yes, probably the bottom end of that more to bottom end.

Okay. So if sales volumes are expected to be down about 15, your production, I know (inaudible) yesterday mentioned in their CC&E business that their the production is going to be considerably lower than the unit volumes in their CC&E business by a difference of about 5% or 6% or so.

Is that a similar plan of what you guys have in terms of production being down about 20% this year?

Yeah, as we said earlier, we want to have reduced inventory in this process here. We don't want to end up with a lot of additional inventory so our production will be less than the sales number, the demand number that we gave you.

Okay.

You're not far off with the number you're talking about.

Okay and then the commodities have they changed versus the $20 million inflation that there was back in December, rather you talked about has that changed meaningfully or not really all that much?

Now hopefully we're hoping that's going to get better. We've got our people really focused on going out to our vendors and making sure that we're getting every advantage of prices as things drop whether it's steel or resins.

So we would hope we could do better than that and we were having some early success, but it's still early in the year too.

Okay. Thank you, gentlemen.

Thanks Sam.

Hey guys. Heading into this year international golf seem to be one of the positive offset to the weakness here in the U.S.

and obviously you indicated today that budgets kind of came in, I was surprised to hear that it was different than that. I'm just curious to see if on a kind of a country basis or region basis or any of the international golf areas is positive during this quarter in the (indiscernible) or is it everything pretty much completely down right now?

This is Mike. I guess I would say Mark, international golf is still a relative positive.

The fact is that there continues to be new golf constructions -- significant new golf construction around the world, far more than areas in the U.S. and when I was committing early on golf budgets that was more in the domestic context.

And so it's just even with that said its reduced, right. So if you go to a place like Dubai, it was crazy in terms of what was going on in construction when oil was $150 a barrel, it slowed somewhat, but construction continues.

And in Asia construction continues. Those markets are still -- they still have positive economic growth not quite to the level they were at.

So again just on a relative basis this has shifted down somewhat, still stronger than within the U.S.

Okay and then just secondly on the riding products, I believe you said in the call that something to the effect that the orders have been shifted closer to the season, is there any risk in some of those not actually happening?

Well I think not in the short run. In the long run as we ship those products in, our plans, our projections are based on sell through and replenishment of sell through and replenishment and so its not the early orders that are at risk, it is the replenishment orders depending on how retail tracks.

And we're a company very focused on retail, because we know if we take care of retail with our partners, everything else will take care of itself.

Okay. Thank you.

Thank you Mark.

Hi Good morning everyone.

Good morning Jim.

Mike, could you talk about your product development, your R&D, given your retrenchment, can you give us a general sense as to what degree R&D is participating in that SG&A reduction?

It's a good question, and I think it is tied to the last comment on our prepared remarks and that is, while they certainly have a part to play in these times in some respect to innovations even more important. And so as we have over the last several years increased R&D as a percent of sales year-over-year-over-year and that's been going on for five or six years now.

It's clear in this environment it probably has to flatten out, but what you won't see is a dramatic cut back in R&D as a percent of sales, but that's too important to our long term health.

Okay good. Could you comment on how the municipal and institutional markets are holding up in this environment?

Well on the municipal side one of the things that happens with that market is it tends to be a bit of a lagging market. And so, their budgets have been set based on earlier tax revenues and I think the -- we'll see a little less impact in the short term.

But ultimately we'll see an impact there as many of these municipalities and state governments deal with serious budget issues. So, we know we will have -- there will be some impact I think maybe somewhat less in '09 than '10.

And then finally could you comment on the company's capital allocation process going forward, you bought that relatively few shares in the quarter. What your thoughts during this recession as to buying back stock?

Yeah Jim James, this is Steve.

Yes.

Needless to say we have taken a conservative position in that regard and which I think we have a lot of company out there. People are trying to preserve liquidity and that -- when we kind of look at our priorities today with everything going on is unclear as a crystal ball can be.

One thing is clear, if you don't have liquidity all the rest doesn't matter because you're not around. So our stock repurchase program would reflect that.

We've taking a very conservative approach for the year. We do still have plenty of authorization left on our last Board approval.

We still got over 2 million shares on that authorization but we will use those very sparingly until the whole market situation clears up a bit.

Okay. And considering the -- the fact that a good chunk of your debts not due for quite sometime, Steve does that mean you will simply accumulate cash as opposed to paying down your note?

Yes, looking for opportunities. We're obviously we're being conservative as I said in terms of liquidity.

But these times often time create good opportunities. So we've certainly got our eyes open there and.

And if there is something we would find to reduce some of that cash, and we can still preserve our liquidity, we would certainly want to do that.

Okay. Well than you both.

Thanks Jim.

Thank you.

Hi, good morning.

Good morning James.

Good morning James.

Something is wrong with my phone with the "*" "1", so I apologize if this was asked, I have only one question left. John Dear's (ph) consumer commercial division, I believe they referenced that this year would be down 15%, which attracts 25% decline in the first quarter that they saw.

So is your guidance here more market driven or just the order placement that you guys are seeing right now?

Well again James, we look at kind of from where do we expect retail to be and how does that translate all the way back from a demand standpoint and all the way back to operations. So, as we look towards the rest of '09, our selling has been okay.

We're closely watching to see how retail will track. As I said earlier on the residential side replenishment is the key part of that, factor is a key part of that on the professional side as well.

Steve mentioned in the earlier remarks, snow is a good piece of business for us, small, but still good piece of business, and as we close out a strong snowy year this year, that bodes well for the third and fourth quarter. So, I guess all in, we need to keep tracking like we are and it kind of gets back to the larger question if this recession we're in were to intensify substantially more, well then obviously we would have issues as most companies would.

Right, okay fair enough. And Steve I'm sorry.

There is roughly 2 million left on the share repurchase, but in there was about one and a half bought back in the first quarter?

We bought very little back in the first quarter.

Okay.

Okay. And it's a little over 2 million, 2.3 million I think is the authorization that's left.

So much was bought back in the first quarter?

Very few.

Okay, just nominal.

It's under a couple of million bucks, 1 million to 1.5 million something like that. And a lot of that had to do with options and that sort of thing.

Right. Okay terrific that's all I have.

Everything else has been answered. Thank you.

Thank you.

Steve, just to be clear, if the current economic conditions sustain through the balance of the year, do you think you're going to buy any stock?

That a good question. I think we will look to see how comfortable we are with the environment.

This as I said goes back to liquidity and we want to make sure we don't end up in the position we're seeing some companies today that can't borrow and can't pay their bills. So if things are as weak as they are, we're going to watch our liquidity and one good place to get that as you know is not buying back stocks.

So we'll watch as we go, but we need to be comfortable doing that is the right investment and as the right thing to do from a liquidity standpoint.

Okay, fair enough, thank you.

You're welcome.

Thank you Tanya, and once again thank you to all our listeners and for your questions and interest in The Toro Company. We appreciate your confidence and trust and we will look forward to talking with you again in late May to discuss our second quarter results.

Thank you and have a good day.