Toro 2013 Annual Report Download - page 22

not recover our investment in these facilities and our operating under our credit agreements. We cannot predict whether such
results may be adversely affected. approvals would be forthcoming or the terms on which the lenders
would approve such acquisitions. Any potential acquisition could
We intend to grow our business through acquisitions impair our operating results, and any large acquisition could,
and alliances, stronger customer relations, and new joint among other things, impair our financial condition.
ventures and partnerships, which could be risky and
may harm our business. Fluctuations in foreign currency exchange rates could
result in declines in our reported net sales and net
One of our growth strategies is to drive growth in our businesses earnings.
and accelerate opportunities to expand our global presence
through targeted acquisitions and alliances, stronger customer rela- Because the functional currency of most of our foreign operations
tions, and new joint ventures and partnerships that add value while is the applicable local currency, we are exposed to foreign cur-
considering our existing brands and product portfolio. The benefits rency exchange rate risk arising from transactions in the normal
of an acquisition or new alliance, joint venture, or partnership may course of business, such as sales and loans to wholly owned sub-
take more time than expected to develop or integrate into our sidiaries, as well as sales to third party customers, purchases from
operations, and we cannot guarantee that previous or future acqui- suppliers, and bank lines of credit with creditors denominated in
sitions, alliances, joint ventures, or partnerships will in fact produce foreign currencies. Our reported net sales and net earnings are
any benefits. In addition, acquisitions, alliances, joint ventures, and subject to fluctuations in foreign currency exchange rates. Because
partnerships may involve a number of risks, including: our products are manufactured or sourced primarily from the U.S.
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diversion of management’s attention; and Mexico, a stronger U.S. dollar and Mexican peso generally
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difficulties in integrating and assimilating the operations and have a negative impact on our operating results, while a weaker
products of an acquired business or in realizing projected effi- dollar and peso generally have a positive effect. Our primary for-
ciencies, cost savings, and synergies; eign currency exchange rate exposure is with the Euro, the Austra-
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inability to successfully integrate or develop a distribution chan- lian dollar, the Canadian dollar, the British pound, the Mexican
nel for acquired product lines; peso, the Japanese yen, the Chinese Yuan, and the Romanian
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potential loss of key employees or customers of the acquired New Leu against the U.S. dollar, as well as the Romanian New
businesses or adverse effects on existing business relationships Leu against the Euro. While we actively manage the exposure of
with suppliers and customers; our foreign currency market risk in the normal course of business
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adverse impact on overall profitability if acquired businesses do by entering into various foreign exchange contracts, these instru-
not achieve the financial results projected in our valuation ments involve risks and may not effectively limit our underlying
models; exposure from foreign currency exchange rate fluctuations or mini-
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reallocation of amounts of capital from other operating initiatives mize our net earnings and cash volatility associated with foreign
and/or an increase in our leverage and debt service require- currency exchange rate changes. Further, a number of financial
ments to pay the acquisition purchase prices, which could in turn institutions similar to those that serve as counterparties to our for-
restrict our ability to access additional capital when needed or to eign exchange contracts have been adversely affected by the
pursue other important elements of our business strategy; unprecedented distress in the worldwide credit markets during the
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inaccurate assessment of additional post-acquisition investments, past few years. The failure of one or more counterparties to our
undisclosed, contingent or other liabilities or problems, unantici- foreign currency exchange rate contracts to fulfill their obligations
pated costs associated with an acquisition, and an inability to to us could adversely affect our operating results.
recover or manage such liabilities and costs; and
Our business, properties, and products are subject to
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incorrect estimates made in the accounting for acquisitions,
governmental regulation with which compliance may
incurrence of non-recurring charges, and write-off of significant
require us to incur expenses, or modify our products or
amounts of goodwill or other assets that could adversely affect
operations, and non-compliance may result in harm to
our operating results.
our reputation and/or expose us to penalties.
Our ability to grow through acquisitions will depend, in part, on
Governmental regulation may also adversely affect the
the availability of suitable candidates at acceptable prices, terms,
demand for some of our products and our operating
and conditions, our ability to compete effectively for acquisition
results.
candidates, and the availability of capital and personnel to com-
plete such acquisitions and run the acquired business effectively. Our business, properties, and products are subject to numerous
These risks could be heightened if we complete a large acquisition international, federal, state, and other governmental laws, rules,
or multiple acquisitions within a relatively short period of time. In and regulations relating to, among other things; climate change;
addition, some acquisitions may require the consent of the lenders
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