Toro 2011 Annual Report Download - page 23

product liability litigation may have upon the reputation and market-
We face intense competition in all of our product lines
ability of our products, may have a negative impact on our busi-
with numerous manufacturers, including some that have
ness and operating results. Some of our products or product
larger operations and financial resources than us. We
improvements were developed relatively recently and defects or
may not be able to compete effectively against
risks that we have not yet identified may give rise to product liabil-
competitors’ actions, which could harm our business
ity claims. Additionally, we could experience a material design or
and operating results.
manufacturing failure in our products, a quality system failure,
Our products are sold in highly competitive markets throughout the other safety issues, or heightened regulatory scrutiny that could
world. Principal competitive factors in our markets include product warrant a recall of some of our products. A recall of some of our
innovation, quality and reliability, pricing, product support and cus- products could also result in increased product liability claims.
tomer service, warranty, brand awareness, reputation, distribution, Unforeseen product quality problems in the development and pro-
product placement and shelf space, and financing options. We duction of new and existing products could also result in loss of
compete in all of our product lines with numerous manufacturers, market share, reduced sales, rework costs, and higher warranty
some that have substantially larger operations and financial expense.
resources than us. As a result, they may be able to adapt more We are also subject to other litigation from time to time that
quickly to new or emerging technologies and changes in customer could adversely affect our operating results or financial condition.
preferences, or devote greater resources to the development, pro-
motion, and sale of their products than we can. In addition, compe- If we are unable to retain our key employees, and attract
tition could increase if new companies enter the market or if and retain other qualified personnel, we may not be able
existing competitors expand their product lines or intensify efforts to meet strategic objectives and our business could
within existing product lines. Our current products, products under suffer.
development, and our ability to develop new and improved prod-
Our ability to meet our strategic objectives and otherwise grow our
ucts may be insufficient to enable us to compete effectively with
business will depend to a significant extent on the continued contri-
our competitors. Internationally, our residential segment products
butions of our leadership team. Our future success will also
typically face more competition where foreign competitors design,
depend in large part on our ability to identify, attract, and retain
manufacture, and market products in their respective countries. We
other highly qualified managerial, technical, sales and marketing,
experience this competition primarily in Europe. In addition, fluctua-
and customer service personnel. Competition for these individuals
tions in the value of the U.S. dollar may affect the price of our
is intense, and we may not succeed in identifying, attracting, or
products in foreign markets, thereby impacting their competitive-
retaining qualified personnel. The loss or interruption of services of
ness. We may not be able to compete effectively against competi-
any of our key personnel, the inability to identify, attract, or retain
tors’ actions, which may include the movement by competitors with
qualified personnel in the future, delays in hiring qualified person-
manufacturing operations to low cost countries for significant cost
nel, or any employee work slowdowns, strikes, or similar actions
and price reductions, and could harm our business and operating
could make it difficult for us to conduct and manage our business
results.
and meet key objectives, which could harm our business, financial
condition, and operating results.
We are subject to product liability claims, product
quality issues, and other litigation from time to time that
As a result of our financing joint venture with TCFIF, we
could adversely affect our operating results or financial
are dependent upon the joint venture to provide
condition.
competitive inventory financing programs, including
The manufacture, sale, and usage of our products expose us to floor plan and open account receivable financing, to
significant risks associated with product liability claims. If a product certain distributors and dealers of our products. Any
liability claim or series of claims is brought against us for uninsured material change in the availability or terms of credit
liabilities or in excess of our insurance coverage, and it is ulti- offered to our customers by the joint venture, any
mately determined that we are liable, our business could suffer. termination or disruption of our joint venture
While we believe that we appropriately instruct our customers on relationship or any delay in securing replacement credit
the proper usage of our products, we cannot ensure that they will sources could adversely affect our net sales and
implement our instructions accurately or completely. If our products operating results.
are defective or used incorrectly by our customers, injury may
In 2009, we established a financing joint venture with TCFIF for
result and this could give rise to product liability claims against us
the purpose of providing reliable, competitive financing to our dis-
or adversely affect our brand image or reputation. Any losses that
tributors and dealers in the U.S. and to select distributors of our
we may suffer from any liability claims, and the effect that any
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