Toro 2007 Annual Report Download - page 29

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personnel in the future, delays in hiring qualified personnel, or any
employee work slowdowns, strikes, or similar actions could make it
difficult for us to conduct and manage our business and meet key
objectives, which could harm our business, financial condition, and
operating results.
The terms of our credit arrangements and the indentures
governing our senior notes and debentures could limit
our ability to conduct our business, take advantage of
business opportunities and respond to changing
business, market, and economic conditions.
Our credit arrangements and the indentures governing our 6.625%
senior notes and 7.800% debentures include a number of financial
and operating restrictions. For example, our credit arrangements
contain financial covenants that, among other things, require us to
maintain a minimum interest coverage ratio and a maximum debt
to total capitalization ratio. Our credit arrangements and/or inden-
tures also contain provisions that restrict our ability, subject to
specified exceptions, to, among other things:
• make loans or investments, including acquisitions;
• create liens or other encumbrances on our assets;
• sell assets;
• engage in mergers or consolidations; and
• pay dividends that are significantly higher than those currently
being paid, make other distributions to our stockholders or re-
deem shares of our common stock.
These provisions may limit our ability to conduct our business, take
advantage of business opportunities and respond to changing
business, market and economic conditions. In addition, they may
place us at a competitive disadvantage relative to other companies
that may be subject to fewer, if any, restrictions or may otherwise
adversely affect our business. Transactions that we may view as
important opportunities, such as significant acquisitions, may be
subject to the consent of the lenders under our credit arrange-
ments, which consent may be withheld or granted subject to
conditions specified at the time that may affect the attractiveness
or viability of the transaction.
If we are unable to comply with the terms of our credit
arrangements and indentures, especially the financial
covenants, our credit arrangements could be terminated
and our senior notes and debentures could become due
and payable.
We cannot assure you that we will be able to comply with all of the
terms of our credit arrangements and indentures, especially the
financial covenants. Our ability to comply with such terms depends
on the success of our business and our operating results. Various
risks, uncertainties and events beyond our control could affect our
ability to comply with the terms of our credit arrangements and/or
indentures. If we were out of compliance with any covenant
required by our credit arrangements following any applicable cure
periods, the banks could terminate their commitments unless we
could negotiate a covenant waiver from the banks. In addition, our
6.625% senior notes and 7.800% debentures could become due
and payable if we were unable to obtain a covenant waiver or
refinance our medium-term debt under our credit arrangements. If
our credit rating falls below investment grade, the interest rate we
currently pay on outstanding debt under our credit arrangements
could increase, which could adversely affect our operating results.
Our business is subject to a number of other
miscellaneous risks that may adversely affect our
operating results, financial condition, or business.
Other miscellaneous risks that could affect our business include:
• natural or man-made disasters, which may result in shortages of
raw materials, higher fuel costs, and increase in insurance pre-
miums;
• financial viability of distributors and dealers, changes in distribu-
tor ownership, our success in partnering with new dealers, and
our customers’ ability to pay amounts owed to us; and
• continued threat of terrorist acts and war, which may result in
heightened security and higher costs for import and export
shipments of components or finished goods, reduced leisure
travel, and contraction of the U.S. and worldwide economies.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.