Toro 2009 Annual Report Download - page 21

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incorrect estimates made in the accounting for acquisitions, national banking association. Any difficulty in the continued transi-
incurrence of non-recurring charges, and write-off of significant tioning of our inventory financing programs to the joint venture,
amounts of goodwill or other assets that could adversely affect whether as a result of delays in the availability of enhancements to
our operating results. the wholesale management software system, documentation of
Our ability to grow through acquisitions will depend, in part, on customers, or other transition items, could adversely affect our
the availability of suitable acquisition candidates at acceptable sales and operating results. Further, any material change in the
prices, terms, and conditions, our ability to compete effectively for availability or terms of credit offered to our customers by the joint
these acquisition candidates, and the availability of capital and per- venture, any termination or disruption of our joint venture relation-
sonnel to complete such acquisitions and run the acquired busi- ship or any delay in securing replacement credit sources could
ness effectively. These risks could be heightened if we complete a adversely affect our sales and operating results. Similarly, signifi-
large acquisition or multiple acquisitions within a relatively short cant financed product repurchase requirements could have a mate-
period of time. In addition, some acquisitions may require the con- rial impact on our future operating results.
sent of the lenders under our credit agreements. We cannot pre-
We rely on our management information systems for
dict whether such approvals would be forthcoming or the terms on
inventory management, distribution, and other functions.
which the lenders would approve such acquisitions. Any potential
If our information systems fail to adequately perform
acquisition could impair our operating results, and any large acqui-
these functions or if we experience an interruption in
sition could impair our financial condition, among other things.
their operation, our business and operating results
As a result of our recently established financing joint could be adversely affected.
venture, we are dependent upon the joint venture to The efficient operation of our business is dependent on our man-
provide competitive inventory financing programs, agement information systems. We rely on our management infor-
including floor plan and open account receivable mation systems to effectively manage accounting and financial
financing, to certain distributors and dealers of our functions, manage manufacturing and supply chain processes, and
products. Any difficulty in transitioning our inventory maintain our research and development data. The failure of our
financing programs to the joint venture, any material management information systems to perform properly could disrupt
change in the availability or terms of credit offered to our business and product development and could result in
our customers by the joint venture, any termination or decreased sales, increased overhead costs, excess inventory, and
disruption of our joint venture relationship or any delay product shortages, causing our business and operating results to
in securing replacement credit sources could adversely suffer. In addition, our management information systems, including
affect our net sales and operating results. our computer systems, Internet web sites, telecommunications, and
Historically, most of our dealers and distributors generally financed data networks, are vulnerable to damage or interruption from natu-
their inventories with either TCC, our wholly owned finance subsid- ral or man-made disasters, terrorist attacks and attacks by com-
iary, or third party financing companies. As a result of our recent puter viruses or hackers, or power loss. Any such interruption
joint venture with TCFIF, we are dependent upon the joint venture could adversely affect our business and operating results.
for our inventory financing programs, including floor plan and open
Our reliance upon patents, trademark laws, and
account receivable financing, for distributors and dealers of our
contractual provisions to protect our proprietary rights
products in the U.S. and to select distributors of our products in
may not be sufficient to protect our intellectual property
Canada. The purpose of the joint venture is to provide access to
from others who may sell similar products. Our products
reliable, competitive financing to our distributors and dealers in the
may infringe the proprietary rights of others.
U.S. and to select distributors of our products in Canada to support
their businesses and increase our net sales, as well as to free up We hold patents relating to various aspects of our products and
our working capital for other strategic purposes. Additionally, in believe that proprietary technical know-how is important to our bus-
connection with the joint venture, we are dependent upon TCFCFC iness. Proprietary rights relating to our products are protected from
to provide inventory financing to dealers of our products in unauthorized use by third parties only to the extent that they are
Canada. covered by valid and enforceable patents or are maintained in con-
The availability of financing from our joint venture or otherwise fidence as trade secrets. We cannot be certain that we will be
will be affected by many factors, including, among others, the over- issued any patents from any pending or future patent applications
all credit markets, the credit worthiness of our dealers and distribu- owned by or licensed to us or that the claims allowed under any
tors, and regulations that may affect TCFIF, as the majority owner issued patents will be sufficiently broad to protect our technology.
of the joint venture and a subsidiary of TCF National Bank, a
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