We haveoperate our business in three primary businessreportable segments, Agriculture, Construction and International, within which we engage in four principal business activities:

We offer our customers a one-stop solution by providing equipment and parts sales, equipment repair and maintenance services, and rental functions in each store. Our full service approach provides us with multiple points of customer contact and cross-selling opportunities. We believe our mix of equipment sales and recurring parts and service sales, as well as our diverse geographic footprint, enablesprovide us to operate effectively throughoutwith diversification, which we believe aids in reducing the risks we face associated with adverse economic cycles.cycles that affect particular geographic markets or segments. We also believe our significant scale, superior customer service, diverse and stable customer base, management reporting systemcentralized resources, and experienced management team provide us with a competitive advantage in many of our local markets.

Throughout our 37-year39-year operating history, we have built an extensive, geographically contiguous network of 8974 stores in the U.S., including one outlet store, and 2033 stores in Europe. Our Agriculture stores in the U.S. are located in Iowa, Minnesota, Nebraska, North Dakota and South Dakota and include several highly productive farming regions, such as the Red River Valley in eastern North Dakota and northwestern Minnesota, portions of the corn belt in Iowa, eastern South Dakota and southern Minnesota, and along the I-80 corridor in Nebraska, which sits on top of the Ogallala Aquifer. Our Construction stores are located in Arizona, Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Wisconsin and Wyoming. Our International stores are located in the European countries of Bulgaria, Germany, Romania, Serbia and Ukraine.

Agricultural equipment is purchased primarily by commercial farmers for the production of crops used for food, fiber, feed grain and feedstock for renewable energy. CertainAgricultural equipment is also purchased by "life-style farmers" and for home and garden applications, and

We believe there are many factors that influence demand for agricultural equipment, parts and repair and maintenance services, including net farm net income, commodity markets, production yields, tariffs and trade policies, interest rates, government policies, European Union subvention funds and individual European country subsidies, tax policies, weatherlocal growing conditions, and general economic conditions. Any of these conditions can change materially in a short time period, creating volatility in demand for our products and services. Federal legislation, such as the Farm Bill, attempts to stabilize the agriculture industry through various policies including (i) commodity programs consisting of direct, counter-cyclical and price support payments to farmers; (ii) conservation programs; (iii) crop insurance programs; and (iv) disaster relief programs. For the past two growing seasons, the U.S. Federal government has furnished market facilitation program payments to farmers or ranchers to compensate for the adverse impact of U.S.-China trade policies, which payments have assisted our customers. We believe that these various federal policies reduce financial volatility in the agriculture industry and assist farmers in continuing to operate their farms and equipment during economic down cycles.cycles and through the adverse headwinds caused by trade policies and tariffs.

Construction equipment is purchased primarily for use in commercial, residential and infrastructure construction, as well as for agriculture, demolition, mining, energy production and forestry operations. Caterpillar, Inc., Deere, Komatsu Ltd.,

CNH Industrial and industry reports show that demand for construction equipment in our markets is driven by several factors, including (i) public spending on roads, highways, sewer and water projects, and other public works projects; (ii) public and private expenditures for the energy and mining industries, which are driven in part by demand for fossil fuels, metals and other commodities,commodities; (iii) instabilitybusiness conditions in the agriculture industry; and (iv) general economic and market conditions of the construction sector for residential and commercial buildings.

We believe the following attributes are important factors in our ability to compete effectively and to achieve our long-term financial objectives:

According to CNH Industrial, we are the largest retail dealer of Case IH Agriculture equipment in the world, the largest retail dealer of Case Construction equipment in North America and a major retail dealer of New Holland Agriculture and New Holland Construction equipment in the U.S. We believe our size and large, contiguous geographic market providesignificant scale enables us with several competitive advantages including:

Our actions to centralizecentralization of numerous administrative functions has enabledbetter positions our employees in the field to better focus on customer service as well as eliminating redundant operating expenses. We also centralize our marketing resources to offer our equipment sales consultants and sales employees professional marketing support that includes targeted direct mailings, advertising with targeted local media outlets, internet based marketing strategies, participation in and sponsorship of trade shows and industry events, our Titan Trader monthly magazine, and our hosting of open houses, service clinics, equipment demonstrations, product showcases and customer appreciation outings.

We recognize that attracting and retaining talented employees is essential to achieving outstanding company performance. We strive to maintain a culture that empowersdevelop our employees through a structured training program, and to make decisions and act within the parameters of our operating model. We believe this culture and our size gives us a competitive advantage in attracting and retaining the best employeesinvest in our industry. We developed an operatingemployees' development. In addition, we strive to implement a compensation system and process that provides ourrewards employees with defined objectives and frequent feedback of results within an environment that allows them to work independently yet consistently throughout our company. Through this operating system and process we have established defined financial metrics, which are reviewed with our various levels of managers on a regular basis to assessfor high performance. We believe this balanced management philosophy allowsthat our employees a clear understanding of how to succeedefforts in our organization and how to interact with customers who have come to expect a level of local decision-making autonomy from our employees. Our compensation system focuses on rewarding our employees for high performance, thus enablingthese areas will enable us to attract and retain high performing employees.superior employees, necessary for us to be successful in our industry.

Our large geographic footprint covering 11 U.S. states and five European countries provides a diversified customer base. We believe our large andthat this diverse customer base limits our exposure toreduces the potential impact of risks associated with customer concentration and fluctuations in local market conditions. We have long and stable relationships with our large and diverse customer base. During fiscal 2017,2020, none of our customers accounted for more than 1.0% of our total revenue. Revenue from external customers located outside of the United States is primarily included in our International segment, which represented 12.4%18.1%, 11.8%18.4% and 8.6%17.5% of total consolidated revenue during fiscal 2017, 20162020, 2019 and 2015.

Our executive team is led by David Meyer, our Board Chair and Chief Executive Officer, who has over 40 years of industry experience. Our segment leaders, other executive team members, managers in the field, and equipment sales consultants also have extensive knowledge and experience in our industry. We compensate, develop and review our managers and sales employees based on an approach that aligns their incentives with the goals and objectives of our company,Company, including achievement of revenue, profitability, market share and balance sheet objectives. We believe the strength of our management team will helpimprove our success in the marketplace.

We pursue the following growth strategies:

Increasing same-store sales and Same-Store Sales

Since January 1, 2003, we have completed the acquisition of over 50 dealerships located in 11 U.S. states and four European countries. In addition, we have added dealership locations in Ukraine through new start-up operations. The agricultural and construction equipment industries are fragmented and consist of many relatively small, independent businesses servicingserving discrete local markets. We believe a favorable climate for dealership consolidation will continue to exist in the future due to several factors, including the competitiveness of our industry, increased dealer capitalization requirements, increased sophistication and complexity of equipment and related technologies, increased expectations from our customers and our equipment suppliers, and the lack of succession alternatives for many current owners. We intend to continue to evaluate and pursue acquisitions with the objectives of entering new markets, in addition to consolidating distribution within our established network,existing footprint, and strengthening our competitive position. We expect that opportunistic acquisitions will continue to be a component of our long-term growth strategy.

We regularly assess the acquisition landscape, evaluating potential acquisition candidatesacquisitions in terms of availability and alignment to our long-term growth strategy. Typically, we have acquired only the working capital and fixed assets that we believe are necessary to run an efficient store and we do not generally assume onlyany indebtedness. On occasion, we have acquired all of the liabilities related to financing the inventory and working capital acquired, although we sometimes acquire all theoutstanding equity of a company. Acquisitions are typically financed with available cash balances, floorplan payablespayable line of credit capacity, and long-term debt.

The consent of CNH Industrial is required to acquire any CNH Industrial dealership. TheAdditionally, the consent of our lender group, led by Wells Fargo Bank, National Association (collectively referred to as "Wells Fargo"consisting of a number of national and regional banks (the "Bank Syndicate"), is required for the acquisition of dealershipsacquisitions meeting certain thresholds or other criteria as defined in our Second Amendedcredit agreement (which credit agreement was formerly referred to

In fiscal 2020, CNH Industrial's constructionIndustrial supplied approximately 74% of the new equipment dealers are assigned a specific geographic areasold in our Agriculture segment, 70% of responsibility within which the dealers havenew equipment sold in our Construction segment, and 62% of the rightnew equipment sold in our International segment. In addition, CNH Industrial provides financing and insurance products and services to sell new Case Construction and New Holland Construction equipment.our end-user customers through its affiliate CNH Industrial Capital America, LLC ("CNH Industrial Capital").

We have entered into separate dealership agreements with CNH Industrial to sell and service the Case IH Agriculture, New Holland Agriculture, Case Construction and New Holland Construction brands (collectively the “CNH Industrial Dealer Agreements”). CNH Industrial proposed modified dealer agreements in 2016 for all of its North America dealers. We have not yet finalized negotiations of these agreements, but we expect these new dealer agreements with CNH Industrial to be finalized and entered into during fiscal 2018. Certain terms and conditions of the currentSeparate CNH Industrial Dealer Agreements will be modified byexist for each of our North American stores or store complexes, and for each of the new agreements.European countries in which we operate. The new dealerstructure of the North American and European agreements withare very similar. Except as noted, the following discussion describes the North American CNH Industrial may not be as favorable as our current dealer agreements.Dealer Agreements.

TheEach of the CNH Industrial Dealer Agreements assign to us a geographically defined area of principalprimary responsibility, providing us with distribution and product support rights within the identified territory for specific equipment products of the manufacturer.products. Although the dealer appointment is non-exclusive, in each territory there is typically only one dealershipdealer responsible for retail sales to end-users as well asand for after-sales product support of the equipment. If we sell certain CNH Industrial construction equipment outside of our designated sales and service areas, CNH Industrial has the right to require that we pay sales and service fees for purposes of compensating the dealer assigned to such territory. We are authorized to display and use CNH Industrial trademarks and trade names at our stores, with certain restrictions.

Under our CNH Industrial Dealer Agreements, we have both the right and obligation to sell the manufacturer’sCNH Industrial equipment and related parts and products and to provide customers with repair services. The CNH Industrial Dealer Agreements impose various requirements on us regarding the location and appearance of facilities, satisfactory levels of new equipment and parts inventories, the training of personnel, adequate business enterprise and information technology system, adequate working capital, a maximum adjusted debt to tangible net worth ratio, development of annual sales and marketing goals, and furnishing of monthly and annual financial information.information to CNH Industrial. We must obtain the approval or consent of CNH Industrial in the event of proposed fundamental changes to our ownership, governance or business structure (defined as "change in control" events) including, among other things, (i) a merger, consolidation or reorganization, unless securities representing more than 50% of the total combined voting power of the successor corporation are immediately owned, directly or indirectly, by persons that owned our securities prior to the transaction; (ii) a sale of all or substantially all of our assets; (iii) any transaction or series of transactions resulting in a person or affiliated group acquiring 30% or more of the combined voting power of our securities or, in the case of a competitor of CNH Industrial, 20% or more of the combined voting power of our securities; (iv) a substantial disposition of shares of our common stock by certain named executives; (v) certain significant changes in the composition of our Board of Directors; and (vi) replacement of our Chief Executive Officer. The CNH Industrial Dealer Agreements do not establish mandatory minimum or maximum retail pricing for our equipment, salesparts, or service/parts.service offerings.

The CNH Industrial Dealer Agreements doCase IH Agricultural dealership agreement and the Case Construction dealership agreement have fixed terms expiring on December 31, 2027, and renew automatically for successive 5-year terms unless either party notifies the other party of its intention not have a fixed term and remain in effect until either partyto renew or otherwise exercises its termination rights under the agreement. The New Holland dealership agreement is a 12-month agreement, with automatic 1-year renewals unless either party notifies the other party of its intention not to renew or otherwise exercises its termination rights under the agreement.

CNH Industrial has the right to terminate its dealer agreements with us immediately in certain circumstances, including in the event of (i) our insolvency or bankruptcy, or our(ii) a material breach by us of the provisions of the agreement, if a direct competitor of CNH Industrial (or an affiliated group of such competitor) acquires 20%Dealer Agreement or more of the combined voting power of(iii) our securities, the failure to secure the consent of CNH Industrial for changeprior to the occurrence of a “change in control events, and in some cases,control” event. The CNH Industrial Dealer Agreements governing Case Construction equipment grants CNH Industrial the right to terminate these CNH Industrial Dealer Agreements for any reason following 90upon 120 days prior written notice. In addition, we have the right to terminate any of the CNH Industrial Dealer Agreements at any time, with or without cause, upon 60 days prior written notice. Subject to protections provided under state dealer protection laws, in the event that CNH Industrial offers a new dealer agreement or an amendment to the existing CNH Industrial Dealer Agreements to all authorized CNH Industrial dealers located in the state, CNH Industrial is permitted to terminate our existing CNH Industrial Dealer Agreements for stores located in that state upon at least 180 days prior written notice if we refuse or otherwise fail to enter into such new agreements or amendments. In addition, to the extent CNH Industrial determines that we are not meeting our obligations under the CNH Industrial Dealer Agreement with respect to a particular product, CNH Industrial may, upon 60 days prior written notice to us, remove such product from the authorized product list allowed to be sold or serviced by us. In the event of termination of any of the CNH Industrial Dealer Agreements, CNH Industrial is obligated to repurchase the inventory of the CNH Industrial brand applicable to the agreement being terminated. The CNH Industrial Dealer Agreements generally do not include non-compete provisions that apply during or after the term of such agreements.agreements or limit our operations apart from our designated CNH Industrial dealership store locations. Our dealer agreementsCNH Dealer Agreements for Case constructionConstruction equipment, absent consent of CNH Industrial, restrict our ability to sell competing products (new equipment and parts) of other manufacturers at our Case dealership store locations during the term of such agreements. Our CNH Industrial Dealer Agreements require CNH Industrial's consent, which shall not be unreasonably withheld, priorus to us engaging inoperate any material business activities not related to sales of CNH Industrial products or services to customers in agricultural, construction, industrial or similar markets.markets separately from our CNH Industrial dealership business.

The CNH Industrial Dealer Agreements and industry practices generally provide that payment on equipment and parts purchased from CNH Industrial entities is due within 30 days, andat which time the equipment inventory is typically subject tothen financed through one of our floorplan payable financing.credit facilities. CNH Industrial makes available to us any floorplans,floorplan programs, parts return programs, sales or incentive programs or similar plans or programs it offers to its other dealers, and provides us with promotional items and marketing materials.

In addition to products supplied by CNH Industrial, we sell a variety of new equipment parts and attachmentsparts supplied by other manufacturers. These products tend to address specialized niche markets and complement the CNH Industrial

Our AgricultureNorth America agriculture customers vary from small, single machine owners to large farming operations, primarily in the states of Iowa, Minnesota, Nebraska, North Dakota and South Dakota. In fiscal 2017,2020, no single agriculture customer accounted for more than 1.0% of our Agriculture revenue.

Our Construction customers include a wide range of construction contractors, public utilities, mining, andforestry, energy companies, farmers, municipalities and maintenance contractors, primarily in the states of Arizona, Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, South Dakota, Wisconsin and Wyoming. They vary in size from small, single machine owners to large firms. In fiscal 2017,2020, no single construction equipment customer accounted for more than 2.0% of our Construction revenue.

Our International customers vary from small, single machine owners to large farming operations, primarily in the European countries of Bulgaria, Germany, Romania, Serbia and Ukraine. We also sell Case construction equipment in Bulgaria and Romania. In fiscal 2017, there was2020, no single international customer the lossaccounted for more than 3.0% of which would have a material impact on our International revenue.

We attempt to maintain at each store, or have readily available at other stores in our network, sufficient new equipment inventory to satisfy customer needs.demand. Inventory levels fluctuate throughout the year and tend to increase before the primary sales seasons for agricultural equipment. The cost of floorplan payable financing our inventory is an important factor affecting our financial results.

CNH Industrial Capital offers floorplan payable financing to CNH Industrial dealers to finance the purchase of inventory from CNH Industrial and for used equipment inventory purchased on trade-ins from our customers. CNH Industrial Capital provides this financing in part to enable dealers to carry representative inventories of equipment and encourage the purchase of goods by dealers in advance of seasonal retail demand. CNH Industrial Capital charges variable market rates of interest based on the prime rate on balances outstanding after any interest-free periods and receives a security interest in inventory and other assets. The interest-freeInterest-free periods typically averageare generally about four months in duration for both new and used agriculture and construction equipment. CNH Industrial Capital also provides floorplan financing for used equipment accepted in trade, repossessed equipment and approved equipment from other suppliers, and receives a security interest in such equipment. As of January 31, 2017,2020, we had a $450.0 million floorplan credit facility with CNH Industrial Capital.

We currently market our products and services through:

Our equipment sales employees are referred(who we refer to as equipment"equipment sales consultants, whoconsultants") perform a variety of functions, such as servicing customers at our stores, calling on existing customers, and soliciting new business at farming, construction and industrial sites. We develop customized marketing programs for our sales force by analyzing each customer group for profitability, buying behavior and product selection. All members of our sales force are expected to participate in internal and external manufacturer-sponsored training sessions to develop product and application knowledge, sales techniques and financial acumen. Our shared resources group provides centralized sales force is supported byand marketing support for our corporatefield operations, and coordinates centralized media buys, strategic planning, sales support and training. In addition, we enable our regional and area managers and their sales teams to develop localized sales and marketing department.strategies.

Our parts managers and service managers are involved in our efforts to market parts and service, taking advantage of our seasonal marketing campaigns in parts and service sales. As a group, they have won multiple awards from our suppliers for their efforts benefiting both our customers and our key suppliers.

Each year we initiate several targeted direct mail, print and broadcast advertising and marketing campaigns. CNH Industrial and other suppliers periodically provide us with advertising funds, which we primarily use to promote new equipment, parts and financing programs. We will continue to explore and launch additional sales channels as appropriate, including, for example, newadditional internet-based efforts.

We have one outlet store, which pursues sales opportunities for aged used equipment transferred out of our retail stores. In certain circumstances, we also sell aged equipment inventories through the use of alternative channels such as onsite and online auctions.

The agricultural and construction equipment sales and distribution industries are highly competitive and fragmented, with large numbers of companies operating on a regional or local scale. Our competitors range from multi-location, regional operators to single-location local dealers and include dealers and distributors of competing equipment brands, including Deere, Caterpillar and the AGCO brands, as well as other dealers and distributors of the CNH Industrial family of brands. Competition among equipment dealers, whether they offer agricultural or construction products or both, is primarily based on the price, value, reputation, quality and design of the products, the customer service andincluding repair and maintenance service provided by the dealer, the availability of equipment and parts, and the accessibility of stores. While we believe we compete favorably on each

We are one of the established regional-scale agricultural and construction equipment dealers in the U.S. and Europe. The number of other agricultural and construction equipment dealers operating on a regional scale is limited and we are one of the principal regional-scale agricultural and construction equipment dealers in the U.S. Thelimited. Our primary regional-scale equipment dealers with whom we compete in the U.S.competitors include RDO Equipment Co., Butler Machinery, Ziegler Inc. and, Brandt Holdings Co.

We have registered trademarks for certain names and designs used in our business and have trademark applications pending for certain others. We generally operate each of our stores under the Titan Machinery name. Case IH, Case and New Holland are registered trademarks of CNH Industrial, which we use in connection with advertisements and sales as authorized under our dealership agreements.CNH Industrial Dealer Agreements. We also license trademarks and trade names of new equipment from other suppliers of equipment to us.

Product warranties for new equipment and parts are provided by our suppliers.the original equipment manufacturer ("OEM"). The term and scope of these warranties vary greatly by supplierOEM and by product. At the time equipment is purchased, we also offer customers the option of purchasing extended warranty protection provided by our suppliers. Suppliers pay usthe OEM or through various third-party warranty providers. We are paid by the OEM for repairs we perform toon equipment under warranty. We generally sell used equipment "as is" and without manufacturer'sOEM warranty although manufacturers sometimes provide limited warranties ifunless the supplier's original warranty is transferable andperiod has not expired.expired and is transferable. We also offer extended warranty programs through various third party warranty providers, on certain used equipment.equipment through various third-party warranty providers.

The agricultural and construction equipment businesses are highly seasonal, which causes our quarterly results and our available cash flow to fluctuate during the year. Our customers generally purchase and rent equipment in preparation for, or in conjunction with, their busy seasons. For farmers, the busy seasons which for farmers are the spring planting and fall harvesting seasons, and forharvesting. For Construction customers, is dependent on weather seasons in their respective regions, butthe busy season is typically the second and third quarters of our fiscal year for much of our Construction footprint.footprint, subject to weather conditions. Our parts and service revenues are typically highest during our customers' busy seasons as well, due to the increased use of their equipment during this time, which generates the need for more parts and service work. Weather

Seasonal weather trends, particularly severe wet or dry conditions, can have a significant impact on regional agricultural and construction market performance by affecting crop production yields and the ability to undertake construction projects. Weather conditions that adversely affect the agricultural or construction markets would have a negative effect on the demand for our products and services.

In addition, numerous external factors such as credit markets, commodity prices, production yields, and other circumstances may disrupt normal purchasing practices and buyer sentiment, further contributing to the seasonal fluctuations.

As of January 31, 2017,2020, we employed 2,2751,612 full-time and 156118 part-time employees. Our employees are not covered by a collective bargaining agreement. We believe our relations with our employees are good.

We are subject to numerous federal, state, and local rules and regulations, including regulations promulgated by the Environmental Protection Agency and similar state agencies, with respect to storing, shipping, disposing, discharging and manufacturinghandling hazardous materials and hazardous and non-hazardous waste. The environmental regulations applicable to us are associated with the repair and maintenance of equipment at our stores including the handling and disposal of oil, fluids, wastewater and solvent cleaners. Currently, none of our stores or operations exceeds small quantity generation status. Compliance with these rules and regulations has not had any material effect on our operations, nor do we expect it to in the future. Further, we have not made, and do not anticipate making, any material capital expenditures related to compliance with environmental regulations. However, there can be no assurance that these expectations are accurate, particularly if regulations change, unforeseen incidents occur or unknown past contamination or non-compliance is discovered, among other similar events.

The substantial majority of our business involves the sale and distribution of new equipment and after-market parts supplied by CNH Industrial and the servicing of equipment manufactured by CNH Industrial. In fiscal 2017,2020, CNH Industrial supplied approximately 72%74% of the new equipment sold in our Agriculture segment, 62%70% of the new equipment sold in our Construction segment, and 78%62% of the new equipment sold in our International segment, and supplied a significant portion of our parts inventory. Our financial performance and future success are highly dependent on the overall reputation and success of CNH Industrial in the agricultural and construction equipment manufacturing industries, including its ability to maintain its competitive position in product innovation, product quality, and product pricing. In the event that CNH Industrial decided to sell, or reduce its commitment to, its equipment manufacturing segments or if CNH Industrial would change its distribution system to our detriment, this would have a material adverse effect on our financial condition and results of operations.

In addition to being our primary supplier, CNH Industrial provides to us with the following:following important inputs for our business:

CNH Industrial may limit or decrease the availability of financing, warranty reimbursements, discounts and rebates, or other marketing incentives. Our financial performance will dependand future success are highly dependent on the overall reputation, brand and success of CNH Industrial’s continued commitment to these programs which enable us to effectively competeIndustrial in the market.agricultural and construction equipment manufacturing industries, including its ability to maintain a competitive position in product innovation, product quality, and product pricing, and its ability to continue to provide financing to both us and our retail customers, and warranty reimbursements for service work that we perform.

We have entered into CNH Industrial Dealer Agreements under which we sell CNH Industrial’s branded agricultural and construction equipment, along with after-market parts and repair services. Subject to applicable state statutes that may govern the dealer-manufacturer legal relationship, CNH Industrial may terminate our CNH Industrial Dealer Agreements

Furthermore, CNH Industrial may unilaterally change its operating practices under the terms of its CNH Industrial Dealer Agreements with us to, among other things, change or authorize additional dealers in our sales and service areas, change its distribution system to the detriment of its dealers like us, limit our product offerings, and change pricing or delivery terms. If CNH Industrial were to change the terms of our CNH Industrial Dealer Agreements or its operating practices in a manner that adversely affects us, our business and results of operations would be harmed.

Under our CNH Industrial Dealer Agreements, we are obligated to actively promote the sale of CNH Industrial equipment within our designated geographic areas of responsibility, fulfill the product warranty obligations of CNH Industrial (subject to CNH Industrial’s payment to us of the agreed upon reimbursement), maintain adequate facilities and workforce to service the needs of our customers, and maintain equipment and parts inventories at the level deemed necessary by CNH Industrial to meet sales goals as stated in the annual business plan mutually agreed upon by us and CNH Industrial, maintain adequate working capital, and maintain stores only in authorized locations. Our CNH Industrial Dealer Agreements do not provide us with exclusive dealerships in any territory (except in our European territories), and CNH Industrial could elect to createauthorize additional dealers in our market areas in the future, subject to restrictions imposed by state dealer protection laws.

Consent of CNH Industrial is required for certain material changes in our ownership, governance or business structure, including the acquisition by another partyany person or group of persons of 30% or more of our outstanding stock or 20% or more of our outstanding stock.stock if the person or group is a competitor of CNH Industrial. This requirement may have the effect of discouraging a sale or other change in control of the company,Company, including transactions that our stockholders might otherwise deem to be in their best interests.

The acquisition of additional CNH Industrial geographic areas of responsibility and store locations in our Agriculture, Construction and International segments requires the consent of CNH Industrial under our CNH Industrial Dealer Agreements.Agreements, subject to contrary state dealer protection laws. CNH Industrial may decide to decline, in its sole discretion, to consent to any acquisition of an additional CNH Industrial store location we may pursue. If CNH Industrial is unwilling to consent to any future proposed acquisition of additional dealerships, our ability to execute on our acquisition strategy and to grow our business may be impaired. We cannot assume that CNH Industrial will consent to any acquisition of any stores or dealerships that we may desire to make in the future.

Our Case Dealer Agreement prohibits us from carrying other suppliers' products at our Case construction stores that are competitive with CNH Industrial's products. Our CNH Industrial Dealer Agreements require CNH Industrial's consent, which shall not be unreasonably withheld, priorus to us engaging inoperate any material business activities not related to sales of CNH Industrial products or services to customers in agricultural, construction, industrial or similar markets.markets separately from our CNH Industrial dealership business. Our CNH Industrial Dealer Agreement for Case Construction equipment prohibits us from carrying other suppliers' products (new equipment and parts) at our Case Construction stores that are competitive with CNH Industrial's products. These restrictions may discourage or prevent us from pursuing business activities that we believe are in the best interests of our shareholders.stockholders.

Cyclicality isFarmers' capital expenditures often follow a common feature in farmers’ capital expenditures. Increasedcyclical pattern, with increased capital investments typically occuroccurring during boom cycles spurred by high net farm profitsincome and increasedstrong farmer balance sheets. The USDA has forecasted net farm wealth driven by increased farmland values.

Our construction equipment customers primarily operate in the mining, natural resource development, construction, transportation, agriculture, manufacturing, industrial processing and utilities industries, which industries generally are capital intensive and cyclical in nature. Many of our construction equipment customers are directly and indirectly affected by

Construction contractors' demand for our construction equipment, parts and repair services is affected by economic conditions at both a global and a local level. Economic conditions that negatively affect the construction industry, such as the tightening of credit standards which affect the ability of consumers or businesses to obtain financing for construction projects, could reduce our customers' demand for our construction equipment. The construction industry in many of our geographical areas has experienced periodic, and sometimes prolonged, economic down cycles, which negatively impacts sales of construction equipment in those markets. During these downturns our revenues and profitability could be harmed.

The ability to obtain affordable financing is an important part of a customer's decision to purchase agricultural or construction equipment. Tight credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit, currency and equity markets have the potential to adversely affect available credit for our customers. As net farm income hasand farm wealth have decreased in recent years, the borrowing capacity of our farmer customers may have also decreased. Moreover, in a tighter credit environment, agricultural lenders may discourage their farmer customers from making non-essential capital expenditures.

Interest rate increases may make equipment purchases less affordable for customers and, as a result, our revenue and profitability may decrease as we manage excess inventory and reduce prices for equipment.decrease. We are unable to anticipate the timing and impact of interest rate adjustments.

Changes in federal, state, and stateinternational agricultural policypolicies could adversely affect sales of agricultural equipment. Government programs and subsidies that reduce economic volatility, incentivize agricultural equipment purchases, and enhance farm income positively influence farmers' demand for agricultural equipment. To the extent that future funding or farm programs available to individual farmers are reduced, or, in the case of the U.S. Federal government's market facilitation program, this program is not renewed, these changes could reduce demand for agricultural equipment and we could experience a decline in revenue. Government sponsored conservation programs could remove acres from agricultural production, reducing demand for our products and services. Changes in government spending on infrastructure projects could adversely affect the demand for construction equipment and we could experience a decline in revenue. In addition,The ability to export agricultural products is critical to our agriculture customers. As a result, tariffs and other government trade agreements, policies or regulations impacting or limiting the export or import of agricultural commodities, such as China's import tariffs, could have a material adverse effect on the international flow of agricultural and other commodities, thatwhich may resultcause a decrease in a corresponding negative effect on the demand for agricultural equipment if net farm income declinesequipment. Furthermore, the U.S. federal government has initiated tariffs, such as the current steel tariff, on certain foreign goods, including raw materials, commodities, and products manufactured outside the United States that are used in our manufacturers’ production processes. These tariffs could in turn increase our cost of sales as a result.result of price increases implemented by our domestic suppliers, which we may not be able to pass on to our customers. 

Over-production of equipment by one or more manufacturers, or a sudden reduction in demand for equipment, can dramatically disrupt the equipment market and cause downward pressure on our equipment profit margins. Short-term lease programsCustomer leasing arrangements in the agriculture industry and rental companies inconstruction equipment industries may also impact the construction industry have expanded significantly in North America in recent years.level of industry-wide equipment inventory supplies. When thisleased equipment comes off lease, or rental fleet is sold, there may be a significantan increase in the availability of late-model used equipment, which can worsen thecreate an inventory over-supply condition and put added pressure on our equipment sales and margins, and have an adverse effect on residual values forof our used equipment inventory and rental fleet equipment. Similarly, rental house companies engage in regular sales of rental fleet units, which can further disrupt the supply-demand balance. However, we have no control over or ability to significantly influence any of the foregoing inputs into the equipment and used equipment.

Our agricultural and construction equipment dealership network requires substantial inventories of equipment and parts to be maintained at each store and company-wide to facilitate sales to customers on a timely basis. Our equipment inventory has traditionally represented 50% or more of our total assets. We need to maintain a proper balance of new and used equipment to assure satisfactory inventory turnover and to minimize floorplan financing costs.

Our purchases of new equipment and parts are based primarily on projected demand. Our equipment orders from CNH Industrial typically must be slotted months in advance of actual delivery. If actual sales are materially less than our forecasts, for example, because of the unexpected effects on consumer demand caused by COVID-19, we would experience an over-supply of new equipment inventory. An over-supply of new equipment inventory will generally

Our used equipment is generally acquired as “trade-ins” from customers in connection with equipment sales to those customers. In accordance with generally accepted accounting principles, each item of our used equipment inventory is valuedEquipment inventories are stated at the lower of cost or market and, therefore, lower of cost orvalue. Adjustments to market adjustments to our inventory may be required from time to time. The amount of these write-downsvalue of inventory are included in ourrecognized as a cost of goods sold, and reduce our operating income.sales, negatively impacting earnings, in the periods in which they occur. Our estimates of market value for our used equipment, as determined at the time of the trade-in, may prove to be inaccurate, given the potential for sudden change in market conditions and other factors beyond our control. Changes from our normal retail marketing channel to more aggressive marketing channels for specific pieces or categories of equipment inventory, particularly as equipment inventory ages, will generally cause a modification to our estimate of market value, which may result in a write-down of this inventory's carrying value. Reductions to our inventory's carrying value may result in a lower profit margin than previously expected. Further, pricing forsales prices. Pricing and sales of used equipment can be significantly affected by the limited market for certain types of used equipment.

We are currently operatingoperate dealership locations in Bulgaria, Germany, Romania, Serbia and Ukraine, and also engage in export business to other countries.Ukraine. In fiscal 2017,2020, total International segment revenues were 12.4%18.1% of our consolidated total revenue. As of January 31, 2017,2020, total International segment assets were 13.9%19.6% of our consolidated total assets.

Our operations in international markets subject us to risks related to the differing legal, political, social and regulatory environments and economic conditions present in the countries in which we operate. Risks inherent in our international operations include:

Any escalation of political tensions or instability.

We generally purchase our equipment with the assistance of floorplan payable financing programs through CNH Industrial Capital and our other credit facilities. In the event that our available financing sources are insufficient to satisfy our future requirements, we would be required to obtain financing from other sources. We may not be able to obtain this additional or alternative financing on commercially reasonable terms or at all. To the extent that this financing cannot be obtained on commercially reasonable terms or at all, our growth and results of operations would be adversely affected.

As of January 31, 2017,2020, our indebtedness included floorplan payable financing, real estate mortgage financing arrangements that are secured by real estate assets and other long-term debt, and senior convertible notes.debt. In addition, we have obligations under our lease agreements for our store locations and corporate headquarters.

Our level of indebtedness could have important consequences. For example, it could:

We expect to use cash flow from operations and borrowings under our credit facilities to fund our operations, debt service and capital expenditures. However, our ability to make these payments depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannotmay be beyond our control.

The credit agreements governing our indebtedness contain covenants that, among other things, restrictmay limit or place conditions on our ability to:

Our credit facilities with CNH Industrial Capital and DLL Finance require us to satisfy a net leverage ratio and fixed charge coverage ratio on an ongoing basis, measured at the end of each fiscal quarter. Under our Wells Fargothe Bank Syndicate Credit Agreement, in the event thatFacility, if our excess availability plus eligible cash collateral is(i.e., borrowing base capacity less than 15% of the total facility of $275.0 million,outstanding loan balance and certain reserves) falls below a certain threshold, we are requiredbecome subject to maintain a minimum fixed charge coverage ratio of at least 1.1.ratio. Our ability to borrow under these credit agreements depends upon compliance with these financial covenants.

Our failure to satisfy any covenant, absent a waiver or amendment, would cause us to be in default under our credit facilities and would enable our lenders to accelerate payment of the outstanding indebtedness. Moreover, an event of default accompanied by a demand for accelerated payment under any of our credit facilities would also constitute a default under our Senior Convertible Notes. Each of our credit agreements include cross-default provisions which state that certain types of defaults under any other indebtedness agreement will also constitute a default under that credit agreement. If an event of default occurred, and the lender demanded accelerated payment, we may not be able to satisfy such a pay-off request, whether through internal funds or a new financing.

A substantial portion of our floorplan and working capital borrowings, including the credit facilities with CNH Industrial Capital, Wells Fargo,the Bank Syndicate, DLL Finance, and our international floorplan facilities are at variable rates of interest and expose us to interest rate risk. As such, our results of operations are sensitive to movements in interest rates. There are many economic factors outside our control that have in the past and may, in the future, impact rates of interest including publicly announced indices that underlie the interest obligations related to a certain portion of our debt. Factors that impact interest rates include governmental monetary policies,

We are engaged in the implementation of a new ERP system. The ERP system is designed to accurately maintain the Company’s books and records and provide information to the Company’s management team important to the operation of our business. The Company’s ERP transition has required, and will continue to require, the investment of significant human and financial resources. We may negatively affectnot be able to successfully implement the ERP transition without experiencing delays, increased costs and other difficulties. Beyond cost and scheduling, potential flaws in the implementation of an ERP system may pose risks to the Company’s ability to operate successfully and efficiently, including timely and accurate SEC filings. If we are unable to successfully implement the new ERP system as planned, our financial position, results of operations and liquidity.

The agricultural and construction equipment businesses are highly seasonal, which causes our quarterly results to fluctuate during the year. Farmers generally purchase agricultural equipment and service work in preparation for, or in conjunction with, the spring planting and fall harvesting seasons. Construction equipment customers’ purchases of equipment and service work, as well as rental of equipment, are also seasonal in our stores located in colder climates where construction work slows significantly in the winter months. In addition, the fourth quarter typically is a significant period for equipment sales in the U.S. because of our customers’ year-end tax planning considerations, the timing of dealer incentives and the increase in availability of farmers’ funds from completed harvests and construction customers' funds from completed projects. Also, numerous external factors such as credit markets, commodity prices, weather conditions, and other circumstances may disrupt normal purchasing practices and customers’ sentiment, further contributing to the seasonal fluctuations.

Weather conditions, particularly severe floods and droughts, can have a significant adverse effect on growing conditions and on regional agricultural and construction markets. Adverse weather conditions may result in fewer acres being planted or harvested by farmers and reduced crop yields on those acres that are planted. Accordingly, our financial condition and results of operations may be adversely affected by adverse weather conditions.

Our rental fleet margins are materially impacted by utilization of fleet assets, which is seasonal and can fluctuate materially due to weather and economic factors. If our rental equipment ages, the costs of maintaining that equipment, if not replaced within a certain period of time, will likely increase. The cost of new equipment for use in our rental fleet could also increase due to increased material costs for our suppliers or other factors beyond our control. Furthermore, changes in customer demand could cause certainsome of our existing equipment to become obsolete and require us to purchase new equipment at increased costs.

WeUpon the sale of a rental fleet unit, we include in operating income the difference between the sales price and the depreciated value of an item of rentalthe equipment sold. The market value of any given piece of rental equipment could be less than its depreciated value at the time it is sold. The market value of used rental equipment depends on several factors, including:

Any significant decline in the selling prices for used rental equipment, or increased costs resulting from our rental operations, could have a material adverse effect on our results of operation and cash flow.

The agricultural and construction equipment distribution (including parts and service) and rental industries are highly competitive and fragmented, with large numbers of companies operating on a regional or local basis. Historically, our competitors have competed aggressively on the basis of pricing or inventory availability, resulting in decreased margins on our sales to the extent we choose to match our competitors' pricing. To the extent we choose not to match or remain within a reasonable competitive distance from our competitors' pricing, we may lose sales volume and market share. In addition, to the extent CNH Industrial's competitors (such as Deere, Caterpillar, Komatsu, Volvo, and AGCO) provide their dealers with more innovative or higher quality products, better customer financing, or have more effective marketing programs or the CNH Industrial reputation or brand are tarnished in the marketplace or with our customers, our ability to compete and our results of operations could be adversely affected. In addition, e-commerce companies selling parts have negatively impacted dealers' parts sales and margins, and it is expected that this competitive pressure will only continue to increase in the future.

Our ability to grow through the acquisition of additional CNH Industrial geographic areas of responsibility and store locations or other businesses will be dependent upon the availability of suitable acquisition candidates at acceptable values, our ability to compete effectively for available acquisition candidates and the availability of capital to complete the acquisitions. We may not successfully identify suitable targets, or if we do, we may not be able to close the transactions, or if we close the transactions, they may not be profitable. In addition, CNH Industrial's consent is required for the acquisition of any CNH Industrial dealership, and the consent of our lenders may be required for certain acquisitions. CNH Industrial typically evaluates management, dealer concentration, andhistorical performance, and capitalization of a prospective acquirer in determining whether to consent to the sale of a CNH Industrial dealership. There can be no assurance that CNH Industrial or our lenders will consent to any or all acquisitions of dealerships that we may propose to acquire.propose.

We extend credit to our customers for parts and service work, rental charges, and also for some equipment sales in our domestic and international operations. If we are unable to manage credit risk issues adequately, or if a large number of customers should have financial difficulties at the same time, our credit losses could increase above historical levels and our operating results would be adversely affected. Delinquencies and credit losses generally would be expected to increase if there was a worsening of economic conditions.

Our success in executing our operating and strategic plans depends on the efforts and abilities of our management team and key employees, including the managers of our field operations and our country managers in our International operations. The failure to attract and retain members of our management team and key employees will harm us.

Products sold, rented or serviced by us may expose us to potential liabilities for personal injury or property damage claims that arise from the use of such products. Our commercial liability insurance may not be adequate to cover significant product liability claims. Such insuranceclaims, or we may not continuebe able to be availablesecure such insurance on economically reasonable terms. An uninsured or partially insured claim for which indemnification from the manufacturer is not providedavailable could have a material adverse effect on our financial condition. Furthermore, if any significant claims are made against us or against CNH Industrial or any of our other suppliers, our business may be adversely affected by any related negative publicity.

None.