Toro 2014 Annual Report Download - page 21

were 28.7 percent, 30.1 percent, and 30.3 percent of our total
We face intense competition in all of our product lines
consolidated net sales for fiscal 2014, 2013, and 2012, respec-
with numerous manufacturers, including some that have
tively. International markets have been, and will continue to be, a
larger operations and financial resources than us. We
focus for us for revenue growth. We believe many opportunities
may not be able to compete effectively against
exist in the international markets, and over time, we intend for
competitors’ actions, which could harm our business
international net sales to comprise a larger percentage of our total
and operating results.
consolidated net sales. Several factors, including weakened inter-
Our products are sold in highly competitive markets throughout the national economic conditions or the impact of sovereign debt
world. Principal competitive factors in our markets include product defaults by certain European countries, could adversely affect our
innovation, quality and reliability, pricing, product support and cus- international net sales. Additionally, the expansion of our existing
tomer service, warranty, brand awareness, reputation, distribution, international operations and entry into additional international mar-
product placement and shelf space, and financing options. We kets require significant management attention and financial
compete in many product lines with numerous manufacturers, resources. Many of the countries in which we manufacture or sell
some of which have substantially larger operations and financial our products, or otherwise have an international presence are, to
resources than us. As a result, they may be able to adapt more some degree, subject to political, economic, and/or social instabil-
quickly to new or emerging technologies and changes in customer ity, including drug cartel-related violence, which may disrupt our
preferences, or devote greater resources to the development, pro- production activities and maquiladora operations based in Juarez,
motion, and sale of their products than we can. In addition, compe- Mexico. Our international operations expose us and our represent-
tition could increase if new companies enter the market, existing atives, agents, and distributors to risks inherent in operating in for-
competitors consolidate their operations or if existing competitors eign jurisdictions. These risks include:
expand their product lines or intensify efforts within existing prod-
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increased costs of customizing products for foreign countries;
uct lines. Our current products, products under development, and
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difficulties in managing and staffing international operations and
our ability to develop new and improved products may be insuffi- increases in infrastructure costs including legal, tax, accounting,
cient to enable us to compete effectively with our competitors. and information technology;
Internationally, our residential segment products typically face more
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the imposition of additional U.S. and foreign governmental con-
competition because many foreign competitors design, manufac- trols or regulations; new or enhanced trade restrictions and
ture, and market products in their respective countries. We experi- restrictions on the activities of foreign agents, representatives,
ence this competition primarily in Europe. In addition, fluctuations and distributors; and the imposition of increases in, costly and
in the value of the U.S. dollar may affect the price of our products lengthy import and export licensing and other compliance
in foreign markets, thereby impacting their competitiveness. We requirements, customs duties and tariffs, import and export quo-
may not be able to compete effectively against competitors’ tas and other trade restrictions, license obligations, and other
actions, which may include the movement by competitors with non-tariff barriers to trade;
manufacturing operations to low cost countries for significant cost
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the imposition of U.S. and/or international sanctions against a
and price reductions, and could harm our business and operating country, company, person, or entity with whom we do business
results. that would restrict or prohibit our continued business with the
sanctioned country, company, person, or entity;
A significant percentage of our consolidated net sales
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international pricing pressures;
are generated outside of the United States, a portion of
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laws and business practices favoring local companies;
which are financed by third parties, and we intend to
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adverse currency exchange rate fluctuations;
continue to expand our international operations. Our
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longer payment cycles and difficulties in enforcing agreements
international operations require significant management and collecting receivables through certain foreign legal systems;
attention and financial resources, expose us to
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higher tax rates and potentially adverse tax consequences,
difficulties presented by international economic, including restrictions on repatriating earnings;
political, legal, accounting, and business factors, and
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fluctuations in our operating performance based on our geo-
may not be successful or produce desired levels of net graphic mix of sales;
sales.
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transportation delays and interruptions;
We currently manufacture our products in the U.S., Mexico, Aus-
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national and international conflicts, including terrorist acts;
tralia, the United Kingdom, Italy, Romania, and China for sale
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difficulties in enforcing or defending intellectual property rights;
throughout the world. We maintain sales offices in the United and
States, Belgium, the United Kingdom, Australia, Singapore, Japan,
China, Italy, Korea, and Germany. Our net sales outside the U.S.
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