Toro 2014 Annual Report Download - page 27

could disrupt our business and harm our reputation, which may product liability claims. Additionally, we could experience a material
result in decreased sales, increased overhead costs, excess or design or manufacturing failure in our products, a quality system
obsolete inventory, and product shortages, causing our business, failure, failures in our products and other challenges that are asso-
reputation, financial condition, and operating results to suffer. ciated with our inability to properly manage changes in the suppli-
Although we take steps to secure our management information ers and components that we use in our products, other safety
systems and any access provided by our business partners or third issues, or heightened regulatory scrutiny that could warrant a recall
party service providers, including our computer systems, intranet of some of our products. A recall of some of our products could
and internet sites, email and other telecommunications and data also result in increased product liability claims. Unforeseen product
networks, the security measures we have implemented may not be quality problems in the development and production of new and
effective and our systems may be vulnerable to theft, loss, dam- existing products could also result in loss of market share, reduced
age, and interruption from a number of potential sources and sales, rework costs, and higher warranty expense.
events, including unauthorized access or security breaches, natural We are also subject to other litigation from time to time that
or man-made disasters, cyber attacks, computer viruses, power could adversely affect our business, reputation, operating results or
loss, or other disruptive events. Information technology security financial condition.
threats are increasing in frequency and sophistication. Cyber
If we are unable to retain our key employees, and attract
attacks may be random, coordinated, or targeted, including sophis-
and retain other qualified personnel, we may not be able
ticated computer crime threats. These threats pose a risk to the
to meet strategic objectives and our business could
security of our systems and networks, and those of our business
suffer.
partners and third party service providers, and to the confidential-
ity, availability, and integrity of our data. Our business, reputation, Our ability to meet our strategic objectives and otherwise grow our
operating results, and financial condition could be adversely business will depend to a significant extent on the continued contri-
affected if, as a result of a significant cyber event or otherwise, our butions of our leadership team. Our future success will also
operations are disrupted or shutdown; our confidential, proprietary depend in large part on our ability to identify, attract, and retain
information is stolen or disclosed; our intranet and internet sites other highly qualified managerial, technical, sales and marketing,
are compromised; data is manipulated or destroyed; we incur costs and customer service personnel. Competition for these individuals
or are required to pay fines in connection with stolen customer, is intense, and we may not succeed in identifying, attracting, or
employee, or other confidential information; we must dedicate sig- retaining qualified personnel. The loss or interruption of services of
nificant resources to system repairs or increase cyber security pro- any of our key personnel, the inability to identify, attract, or retain
tection; or we otherwise incur significant litigation or other costs. qualified personnel in the future, delays in hiring qualified person-
nel, or any employee work slowdowns, strikes, or similar actions
We are subject to product liability claims, product could make it difficult for us to conduct and manage our business
quality issues, and other litigation from time to time that and meet key objectives, which could harm our business, financial
could adversely affect our business, reputation, condition, and operating results.
operating results or financial condition.
As a result of our Red Iron Acceptance LLC financing
The manufacture, sale, and use of our products expose us to sig-
joint venture with TCFIF, we are dependent upon the
nificant risks associated with product liability claims. If a product
joint venture to provide competitive inventory financing
liability claim or series of claims is brought against us for uninsured
programs, including floor plan and open account
liabilities or in excess of our insurance coverage, and it is ulti-
receivable financing, to certain distributors and dealers
mately determined that we are liable, our business could suffer.
of our products. Any material change in the availability
While we believe that we appropriately instruct our customers on
or terms of credit offered to our customers by the joint
the proper usage of our products, we cannot ensure that they will
venture, challenges or delays in transferring new
implement our instructions accurately or completely. If our products
distributors and dealers from any business we might
are defective or used incorrectly by our customers, injury may
acquire to this financing platform, any termination or
result and this could give rise to product liability claims against us
disruption of our joint venture relationship or any delay
or adversely affect our brand image or reputation. Any losses that
in securing replacement credit sources could adversely
we may suffer from any liability claims, and the effect that any
affect our net sales and operating results.
product liability litigation may have upon the reputation and market-
ability of our products, may have a negative impact on our busi- We are a party to a financing joint venture with TCFIF for the
ness, reputation, and operating results. Some of our products or purpose of providing reliable, competitive financing to our distribu-
product improvements were developed relatively recently and tors and dealers in the U.S. and select distributors of our products
defects or risks that we have not yet identified may give rise to
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