Toro 2013 Annual Report Download - page 26

retaining qualified personnel. The loss or interruption of services of contain financial covenants that, among other things, require us to
any of our key personnel, the inability to identify, attract, or retain maintain a minimum interest coverage ratio and a maximum debt
qualified personnel in the future, delays in hiring qualified person- to earnings ratio. Our credit arrangements and/or indentures also
nel, or any employee work slowdowns, strikes, or similar actions contain provisions that restrict our ability, subject to specified
could make it difficult for us to conduct and manage our business exceptions, to, among other things:
and meet key objectives, which could harm our business, financial
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make loans and investments, including acquisitions and transac-
condition, and operating results. tions with affiliates;
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create liens or other encumbrances on our assets;
As a result of our financing joint venture with TCFIF, we
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dispose of assets;
are dependent upon the joint venture to provide
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enter into contingent obligations;
competitive inventory financing programs, including
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engage in mergers or consolidations; and
floor plan and open account receivable financing, to
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pay dividends that are significantly higher than those currently
certain distributors and dealers of our products. Any being paid, make other distributions to our shareholders or
material change in the availability or terms of credit redeem shares of our common stock.
offered to our customers by the joint venture, any These provisions may limit our ability to conduct our business,
termination or disruption of our joint venture take advantage of business opportunities, and respond to changing
relationship or any delay in securing replacement credit business, market, and economic conditions. In addition, they may
sources could adversely affect our net sales and place us at a competitive disadvantage relative to other companies
operating results. that may be subject to fewer, if any, restrictions or may otherwise
adversely affect our business. Transactions that we may view as
In fiscal 2009, we established a financing joint venture with TCFIF important opportunities, such as significant acquisitions, may be
for the purpose of providing reliable, competitive financing to our subject to the consent of the lenders under our credit arrange-
distributors and dealers in the U.S. and select distributors of our ments, which consent may be withheld or granted subject to condi-
products in Canada to support their businesses and increase our tions specified at the time that may affect the attractiveness or
net sales, as well as to free up our working capital for our other viability of the transaction.
strategic purposes. As a result, we are dependent upon the joint Although we have in place a $150 million revolving credit facility
venture for our inventory financing programs, including floor plan that does not expire until July 2015, market deterioration or other
and open account receivable financing. Additionally, we are depen- factors could jeopardize the counterparty obligations of one or
dent upon TCFCFC to provide inventory financing to dealers of our more of the banks participating in our facility, which could have an
products in Canada. adverse effect on our business if we are not able to replace such
The availability of financing from our joint venture or otherwise credit facility or find other sources of liquidity on acceptable terms.
will be affected by many factors, including, among others, the over-
all credit markets, the credit worthiness of our dealers and distribu- If we are unable to comply with the terms of our credit
tors, and regulations that may affect TCFIF, as the majority owner arrangements and indentures, especially the financial
of the joint venture and a subsidiary of TCF National Bank, a covenants, our credit arrangements could be terminated
national banking association. Any material change in the availabil- and our senior notes and debentures could become due
ity or terms of credit offered to our customers by the joint venture, and payable.
any termination or disruption of our joint venture relationship or any
delay in securing replacement credit sources could adversely affect We cannot assure you that we will be able to comply with all of the
our sales and operating results. terms of our credit arrangements and indentures, especially the
financial covenants. Our ability to comply with such terms depends
The terms of our credit arrangements and the indentures on the success of our business and our operating results. Various
governing our senior notes and debentures could limit risks, uncertainties, and events beyond our control could affect our
our ability to conduct our business, take advantage of ability to comply with the terms of our credit arrangements and/or
business opportunities and respond to changing indentures. If we were out of compliance with any covenant
business, market, and economic conditions. required by our credit arrangements following any applicable cure
Additionally, we are subject to counterparty risk in our periods, the banks could terminate their commitments unless we
credit arrangements. could negotiate a covenant waiver. The banks could condition such
waiver on amendments to the terms of our credit arrangements
Our credit arrangements and the indentures governing our 6.625% that may be unfavorable to us. In addition, our 6.625% senior
senior notes and 7.800% debentures include a number of financial notes and 7.800% debentures could become due and payable if
and operating restrictions. For example, our credit arrangements we were unable to obtain a covenant waiver or refinance our
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