Toro 2013 Annual Report Download - page 23

emissions to air and discharges to water; restrictions placed on plans, our ability to sell our products into the market may be inhib-
water usage and water availability; product and associated packag- ited, which could adversely affect our competitive position and
ing; restricted substances, including ‘‘conflict minerals’’ disclosure financial results. To the extent in which we are able to implement
rules; import and export compliance, including country of origin price increases to cover or partially offset costs related to
certification requirements; worker and product user health and research, development, engineering, and other expenses to design
safety; energy efficiency; product life-cycles; and the generation, Tier 4 diesel engine compliant products in the form of price
use, handling, labeling, collection, management, storage, transpor- increases to our customers, and/or our competitors implement dif-
tation, treatment, and disposal of hazardous substances, wastes, ferent strategies with respect to compliance with Tier 4 diesel
and other regulated materials. Although we believe that we are in engine emission requirements, we may experience lower market
substantial compliance with currently applicable laws, rules, and demand for our products that may, ultimately, adversely affect our
regulations, we are unable to predict the ultimate impact of profit margins, net sales, and overall financial results. Additionally,
adopted or future laws, rules, and regulations on our business, as customers’ buying patterns change to purchase our products in
properties, or products. Any of these laws, rules, or regulations advance of price increases on compliant products, we have and
may cause us to incur significant expenses to achieve or maintain may continue to experience abnormal fluctuation in sales and our
compliance, require us to modify our products, adversely affect the financial results of any one period may not be representative of
price of or demand for some of our products, and ultimately affect expected financial results in subsequent periods. We believe our
the way we conduct our operations. Failure to comply with any of financial results during the first quarter of fiscal 2013 were posi-
these laws, rules, or regulations could result in harm to our reputa- tively impacted by these patterns and our second and third quarter
tion and/or could lead to fines and other penalties, including periods of fiscal 2013 were negatively impacted. We expect that
restrictions on the importation of our products into, and the sale of our first quarter of fiscal 2014 and possibly future quarters may
our products in, one or more jurisdictions until compliance is also be negatively impacted. Alternatively, if our competitors imple-
achieved. In addition, our competitors may adopt strategies with ment different strategies with respect to compliance with Tier 4
respect to regulatory compliance that differ significantly from our requirements that, either in the short term or over the long term,
strategies. This may have the effect of changing customer prefer- enable them to limit price increases, introduce product modifica-
ences and our markets in ways that we did not anticipate, which tions that gain widespread market acceptance, or otherwise chang-
may adversely affect market demand for our products and, ulti- ing customer preferences and buying patterns in ways that we do
mately, our net sales and financial results. Other changes in laws not currently anticipate, we may experience lower market demand
and regulations also may adversely affect our operating results, for our products that may, ultimately, adversely affect our net
including, (i) taxation and tax policy changes, tax rate changes, sales, profit margins, and overall financial results.
new tax laws, revised tax law interpretations, or expiration of the
Climate change and climate change regulations may
domestic research tax credit, which individually or in combination
adversely impact our operations.
may cause our effective tax rate to increase, or (ii) new, recently
enacted, or revised healthcare laws or regulations, which may There is growing concern from members of the scientific commu-
cause us to incur higher employee healthcare and related costs. nity and the general public that an increase in global average tem-
peratures due to emissions of greenhouse gases (‘‘GHG’’) and
Increasingly stringent engine emission regulations could other human activities have or will cause significant changes in
impact our ability to sell certain of our products into the weather patterns and increase the frequency and severity of natu-
market and appropriately price certain of our products, ral disasters. We are currently subject to rules limiting emissions
which could negatively affect our competitive position and other climate related rules and regulations in certain jurisdic-
and financial results. tions where we operate. In addition, we may become subject to
The EPA adopted increasingly stringent engine emission regula- additional legislation and regulation regarding climate change, and
tions, including Tier 4 emission requirements applicable to diesel compliance with any new rules could be difficult and costly. Con-
engines in specified horsepower ranges that are used in some of cerned parties, such as legislators, regulators, and non-govern-
our products. Beginning January 1, 2013, such requirements mental organizations, are considering ways to reduce GHG emis-
expanded to additional horsepower categories and, accordingly, sions. Foreign, federal, state and local regulatory and legislative
apply to more of our products. Although we have developed plans bodies have proposed various legislative and regulatory measures
to achieve substantial compliance with Tier 4 diesel engine emis- relating to climate change, regulating GHG emissions and energy
sion requirements, these plans are subject to many variables policies. If such legislation is enacted, we could incur increased
including, among others, the ability of our suppliers to provide energy, environmental and other costs and capital expenditures to
compliant engines on a timely basis or our ability to meet our comply with the limitations. Due to uncertainty in the regulatory
production schedule. If we are unable to successfully execute such
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