Toro 2011 Annual Report Download - page 22

Our operating results may also be adversely affected if we are amounts of goodwill or other assets that could adversely affect
unable to cost-effectively open and manage new manufacturing our operating results.
and distribution facilities, and move production between such facili- Our ability to grow through acquisitions will depend, in part, on
ties as needed from time to time. In late fiscal 2011, we completed the availability of suitable candidates at acceptable prices, terms,
the construction of a new manufacturing facility in Romania for and conditions, our ability to compete effectively for these acquisi-
micro-irrigation products. If the facility does not produce the antici- tion candidates, and the availability of capital and personnel to
pated manufacturing and operational efficiencies, or if the micro- complete such acquisitions and run the acquired business effec-
irrigation products produced at this facility are not accepted into tively. These risks could be heightened if we complete a large
new geographic markets at expected levels, we may not recover acquisition or multiple acquisitions within a relatively short period of
the costs of the new facility and our operating results may be time. In addition, some acquisitions may require the consent of the
adversely affected. lenders under our credit agreements. We cannot predict whether
such approvals would be forthcoming or the terms on which the
We intend to grow our business through acquisitions lenders would approve such acquisitions. Any potential acquisition
and alliances, stronger customer relations, and new joint could impair our operating results, and any large acquisition could,
ventures and partnerships, which could be risky and among other things, impair our financial condition.
may harm our business.
We rely on our management information systems for
One of our growth strategies is to drive growth in our businesses inventory management, distribution, and other key
and accelerate opportunities to expand our global presence functions. If our information systems fail to adequately
through targeted acquisitions and alliances, stronger customer rela- perform these functions, or if we experience an
tions, and new joint ventures and partnerships that add value while interruption in their operation, our business and
considering our existing brands and product portfolio. The benefits operating results could be adversely affected.
of an acquisition or new alliance, joint venture, or partnership may
take more time than expected to develop or integrate into our The efficient operation of our business is dependent on our man-
operations, and we cannot guarantee that previous or future acqui- agement information systems. We rely on our management infor-
sitions, alliances, joint ventures, or partnerships will in fact produce mation systems to, among other things, effectively manage our
any benefits. In addition, acquisitions, alliances, joint ventures, and accounting and financial functions, including maintaining our inter-
partnerships may involve a number of risks, including: nal controls; to manage our manufacturing and supply chain
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diversion of management’s attention; processes; and to maintain our research and development data.
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difficulties in integrating and assimilating the operations and The failure of our management information systems to perform
products of an acquired business or in realizing projected effi- properly could disrupt our business and product development,
ciencies, cost savings, and synergies; which may result in decreased sales, increased overhead costs,
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inability to successfully integrate or develop a distribution chan- excess or obsolete inventory, and product shortages, causing our
nel for acquired product lines; business and operating results to suffer. Although we take steps to
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potential loss of key employees or customers of the acquired secure our management information systems, including our com-
businesses or adverse effects on existing business relationships puter systems, intranet and internet sites, email and other telecom-
with suppliers and customers; munications and data networks, the security measures we have
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adverse impact on overall profitability if acquired businesses do implemented may not be effective and our systems may be vulner-
not achieve the financial results projected in our valuation able to theft, loss, damage and interruption from a number of
models; potential sources and events, including unauthorized access or
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reallocation of amounts of capital from other operating initiatives security breaches, natural or man-made disasters, cyber attacks,
and/or an increase in our leverage and debt service require- computer viruses, power loss, or other disruptive events. Our repu-
ments to pay the acquisition purchase prices, which could in turn tation, brand, and financial condition could be adversely affected if,
restrict our ability to access additional capital when needed or to as a result of a significant cyber event or otherwise, our operations
pursue other important elements of our business strategy; are disrupted or shutdown; our confidential, proprietary information
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inaccurate assessment of additional post-acquisition investments, is stolen or disclosed; we incur costs or are required to pay fines
undisclosed, contingent or other liabilities or problems, unantici- in connection with stolen customer, employee, or other confidential
pated costs associated with an acquisition, and an inability to information; we must dedicate significant resources to system
recover or manage such liabilities and costs; and repairs or increase cyber security protection; or we otherwise incur
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incorrect estimates made in the accounting for acquisitions, significant litigation or other costs.
incurrence of non-recurring charges, and write-off of significant
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