Toro 2008 Annual Report Download - page 25

attract, or retain qualified personnel in the future, delays in hiring If we are unable to comply with the terms of our credit
qualified personnel, or any employee work slowdowns, strikes, or arrangements and indentures, especially the financial
similar actions could make it difficult for us to conduct and manage covenants, our credit arrangements could be terminated
our business and meet key objectives, which could harm our busi- and our senior notes and debentures could become due
ness, financial condition, and operating results. and payable.
We cannot assure you that we will be able to comply with all of the
The terms of our credit arrangements and the indentures terms of our credit arrangements and indentures, especially the
governing our senior notes and debentures could limit financial covenants. Our ability to comply with such terms depends
our ability to conduct our business, take advantage of on the success of our business and our operating results. Various
business opportunities and respond to changing risks, uncertainties, and events beyond our control could affect our
business, market, and economic conditions. ability to comply with the terms of our credit arrangements and/or
Additionally, we are subject to counterparty risk in our indentures. If we were out of compliance with any covenant
credit arrangements. required by our credit arrangements following any applicable cure
Our credit arrangements and the indentures governing our 6.625% periods, the banks could terminate their commitments unless we
senior notes and 7.800% debentures include a number of financial could negotiate a covenant waiver. The banks could condition such
and operating restrictions. For example, our credit arrangements waiver on amendments to the terms of our credit arrangements
contain financial covenants that, among other things, require us to that may be unfavorable to us. In addition, our 6.625% senior
maintain a minimum interest coverage ratio and a maximum debt notes and 7.800% debentures could become due and payable if
to total capitalization ratio. Our credit arrangements and/or inden- we were unable to obtain a covenant waiver or refinance our
tures also contain provisions that restrict our ability, subject to medium-term debt under our credit arrangements. If our credit rat-
specified exceptions, to, among other things: ing falls below investment grade, the interest rate we currently pay
•
make loans or investments, including acquisitions; on outstanding debt under our credit arrangements could increase,
•
create liens or other encumbrances on our assets; which could adversely affect our operating results.
•
sell assets;
•
engage in mergers or consolidations; and Our business is subject to a number of other
•
pay dividends that are significantly higher than those currently miscellaneous risks that may adversely affect our
being paid, make other distributions to our shareholders or operating results, financial condition, or business.
redeem shares of our common stock. Other miscellaneous risks that could affect our business include:
These provisions may limit our ability to conduct our business,
•
natural or man-made disasters, which may result in shortages of
take advantage of business opportunities, and respond to changing raw materials, higher fuel costs, and increase in insurance
business, market, and economic conditions. In addition, they may premiums;
place us at a competitive disadvantage relative to other companies
•
financial viability of distributors and dealers, changes in distribu-
that may be subject to fewer, if any, restrictions or may otherwise tor ownership, our success in partnering with new dealers, and
adversely affect our business. Transactions that we may view as our customers’ ability to pay amounts owed to us; and
important opportunities, such as significant acquisitions, may be
•
continued threat of terrorist acts and war, which may result in
subject to the consent of the lenders under our credit arrange- heightened security and higher costs for import and export ship-
ments, which consent may be withheld or granted subject to condi- ments of components or finished goods, reduced leisure travel,
tions specified at the time that may affect the attractiveness or and contraction of the U.S. and worldwide economies.
viability of the transaction.
Recent and unprecedented distress in the worldwide credit mar-
ITEM 1B. UNRESOLVED STAFF COMMENTS
kets has had an adverse impact on the availability of credit.
Although our $225 million revolving credit facility does not expire None.
until January 2012, continued market deterioration could jeopardize
the counterparty obligations of one or more of the banks participat-
ing in our facility, which could have an adverse effect on our busi-
ness if we are not able to replace such credit facility or find other
sources of liquidity on acceptable terms.
17