Toro 2014 Annual Report Download - page 22

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multiple, changing, and often inconsistent enforcement of laws, We intend to grow our business through acquisitions
rules, and regulations, including rules relating to environmental, and alliances, stronger customer relations, and new joint
health, and safety matters. ventures and partnerships, which could be risky and
Our international operations may not produce desired levels of may harm our business, reputation, financial condition,
net sales or one or more of the factors listed above may harm our and operating results.
business and operating results. Any material decrease in our inter- One of our growth strategies is to drive growth in our businesses
national sales or profitability could also adversely impact our oper- and accelerate opportunities to expand our global presence
ating results. through targeted acquisitions and alliances, stronger customer rela-
In addition, a portion of our international net sales are financed tions, and new joint ventures and partnerships that add value while
by third parties. The termination of our agreements with these third considering our existing brands and product portfolio. The benefits
parties, any material change to the terms of our agreements with of an acquisition, such as our acquisition of the BOSS business, or
these third parties or in the availability or terms of credit offered to new alliance, joint venture, or partnership may take more time than
our international customers by these third parties, or any delay in expected to develop or integrate into our operations, and we can-
securing replacement credit sources, could adversely affect our not guarantee that previous or future acquisitions, alliances, joint
sales and operating results. ventures, or partnerships will in fact produce any benefits. In addi-
tion, acquisitions, alliances, joint ventures, and partnerships may
If we are unable to continue to enhance existing involve a number of risks, including:
products, as well as develop and market new products,
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diversion of management’s attention;
that respond to customer needs and preferences and
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disruption to our existing operations and plans;
achieve market acceptance, we may experience a
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inability to effectively manage our expanded operations;
decrease in demand for our products, and our net sales,
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difficulties or delays in integrating and assimilating information
which have historically benefited from sales of new and financial systems, and operations and products of an
products, may be adversely affected. acquired business or in realizing projected efficiencies, growth
One of our growth strategies is to develop innovative, customer- prospects, cost savings, and synergies;
valued products to generate revenue growth. In the past, our sales
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inability to successfully integrate or develop a distribution chan-
from new products, which we define as those introduced in the nel for acquired product lines;
current and previous two fiscal years, have represented a signifi-
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potential loss of key employees, customers, distributors or deal-
cant component of our net sales and are expected to continue to ers of the acquired businesses or adverse effects on existing
represent a significant component of our future net sales. We may business relationships with suppliers, customers, distributors and
not be able to compete as effectively with our competitors, and dealers;
ultimately satisfy the needs and preferences of our customers,
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delays or challenges in transitioning distributors and dealers of
unless we can continue to enhance existing products and develop acquired businesses to using our Red Iron financing joint ven-
new innovative products for the markets in which we compete. ture with TCFIF;
Product development requires significant financial, technological,
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violation of any non-compete agreement by any key employee of
and other resources. Product improvements and new product intro- an acquired business;
ductions also require significant research, planning, design, devel-
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adverse impact on overall profitability if acquired businesses do
opment, engineering, and testing at the technological, product, and not achieve the financial results projected in our valuation
manufacturing process levels and we may not be able to timely models;
develop and introduce product improvements or new products. Our
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reallocation of amounts of capital from other operating initiatives
competitors’ new products may beat our products to market, be and/or an increase in our leverage and debt service require-
higher quality or more reliable, be more effective with more fea- ments to pay the acquisition purchase prices, which could in turn
tures and/or less expensive than our products, obtain better market restrict our ability to access additional capital when needed or
acceptance, or render our products obsolete. Any new products pursue other important elements of our business strategy;
that we develop may not receive market acceptance or otherwise
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failure by acquired businesses to comply with applicable interna-
generate any meaningful net sales or profits for us relative to our tional, federal, and state product safety or other regulatory
expectations based on, among other things, existing and antici- standards;
pated investments in manufacturing capacity and commitments to
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infringement by acquired businesses of intellectual property
fund advertising, marketing, promotional programs, and research rights of others;
and development.
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