PACIFIC NORTHWEST HARDWARE & IMPLEMENT

ASSOCIATION Serving Dealers Since 1899 March 2015

INSIDE:

Pacific Northwest Association Annual Meeting Elections

Thanks For Taking NAEDA Survey

Customer Data & Privacy: What’s The Big Deal?

A Historic Move For Washington State Senate

Washington State Senate Passes Flash Mob Robbery Bill

Highway Bill Action

You Should Convert To Natural Gas Now That Oil Is Cheap?

Connect The Dots

HR Question Of The Month

Cervus Equipment 2014 Year End Results

Titan Machinery Revenue Tumbles In Fiscal 2015 Fourth Quarter

International Tractors Ltd, Now Exporting Its Tractors To The US

Tractor Supply Reports Fourth Quarter Results

Mahindra Opens New Kansas Assembly & Distribution Center

Mahindra USA Will Begin Utilizing Paladin Attachments

Lumber Liquidators Fights Back

True Value Targets Better Service

True Value Points To Sales

Joe Scarlet To Enter Home Channel Hall Of Fame

Customer Satisfaction And How It Relates To Dealership Market Share

AEM Flash Report

Pacific Northwest Association Annual Meeting Elections: The following dealers were elected to serve a three year term as directors of the Pacific Northwest Association at the February 19, 2015 Annual Business Meeting held at the Embassy Suites Portland Airport, Porltand, Oregon.

• Steve Danner, Ag West Supply, Rickreall, Oregon - CaseIH • Ron Lineman, Klamath Basin Equipment, Klamath Falls, Oregon - New Holland • Marc Christenson, Metro New Holland, North Plains, Oregon - New Holland • Mike Walker, Morrow County Grain Growers, Lexington, Oregon - Case IH • Mike Mikami, Gig Harbor Ace Hardware, Gig Harbor Washington - ACE Hardware

Current directors serving on the board include:

• Farrell Oswald, Pioneer Equipment, Idaho Falls, Idaho - Case IH • John Adams, Coeur d’Alene Tractor, Coeur d’Alene, Idaho - Kubota • Bill Hollingsworth, Hollingsworths’ Inc. Ontario, Oregon - John Deere • Don Kropf, Linn Benton Tractor, Tangent, Oregon - Kubota • Dan Palm, Farm Equipment Headquarters, Pendleton, Oregon – AGCO • Kevin Pawlowski, Farmers Equipment, Lynden, Washington – Case IH • Steve Wilcox, Tri-County Equipment, La Grande, Oregon – John Deere

Thanks For Taking The Dealer Manufacturer Relations Survey! NAEDA sends a thank you to all of the dealers who took the time to provide manufacturer ratings in NAEDA's annual Dealer Manufacturer Relations Survey. Over 1,800 dealers provided over 6,600 individual ratings for the companies they represent. These responses represented significant increases from last year's numbers.

The survey provides dealers with the opportunity to rate their primary manufacturers on 12 key categories of dealership operations and support and are one on the many tools utilized by dealers and manufacturers to rate services and make improvements.

Customer Data And Privacy: What’s The Big Deal? By Lance Formwalt, Seigfried Bingham, P.C.

Unless you’ve been lost at sea the last six months, you have heard about the theft of credit card data from millions of customers of Target and Nieman Marcus, concerns about the collection of call data by the National Security Agency and countless other stories about privacy. You understand how this impacts you as a customer, but do you know how you are impacted as a business owner?

Privacy policies and information security programs are no longer just for big retail chains. The telematics systems and other information-gathering technology that you are selling your customers put you squarely in the middle of the debate about privacy and use of customer information.

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Information generated by the equipment you sell has many benefits for you, your customers, and your manufacturers. However, customers are becoming more sensitive about who has access to the data, how it is secured, and how it will be used. This concern is leading to a growing debate among producers, manufacturers, seed companies, and legislators. On a weekly basis, it seems like a different group has an announcement relating to this issue: from the Farm Bureau’s policy on data privacy, to the formation of a grower’s cooperative for the protection and licensing of producer data, to the establishment of cross-industry projects to develop standardized formats for farm data to facilitate producer access to data generated by various data-gathering tools.

Dealers need to be paying attention, too. As a conduit between your customers and your manufacturers, you are in the position of advising customers on uses of the information available to them. In many cases, you also may have access to your customer’s data and the ability to use that data to help drive your marketing plan or other business decisions.

Due to your access to customer data and growing manufacturer concern about negative brand implications if dealers don’t adopt best practices about data and privacy, you need to be thinking about steps to address customer questions and concerns. As part of that process, you should consider taking the following actions:

• Adopt a Privacy Policy. A privacy policy is simply your promise to customers about how you will collect, use, and secure data at your dealership. When creating a privacy policy, there are two important things to remember. First, if you commit to a policy, you need to make sure you are prepared to follow the policy. Second, a privacy policy doesn’t mean you have to lock up information and never use it. As part of this process, think carefully about how to balance the customer’s interest in privacy and your interest in using the information for valid business purposes.

• Establish an Information Security Program. If you make promises to your customer about how you will use and protect information, it is a good idea to also adopt an internal plan that helps you live up to those promises. More importantly, federal law and the data security and breach notifications laws in place in 46 states require dealers to monitor and respond to a breach of their information systems. In many states, an information security program is either required or provides significant benefits to dealers, such as more limited penalties if violations occur.

• Employee Training. Putting a plan or policy on paper doesn’t do you any good unless your employees understand how to apply it and the importance the dealership places on compliance. To adequately address the issues, it is critical to make someone accountable for training your employees on your policies and security programs.

Taking steps now to keep up with the changing dynamics of information access and privacy will allow you to show your customers you are informed, address manufacturer concerns, reduce your exposure to liability and comply with existing legal obligations. This area will continue to rapidly evolve over the next several years but it is important to act now to meet customer expectations and put your organization in a better position to adapt to (and perhaps shape) changes and standards relating to data privacy in the future.

Reap the Benefits of Your Association Membership

One of those benefits is access to PNA Financial Services – a leading financial services provider in the Agricultural industry!

As a member of your association, you have a dedicated team of sales and credit professionals ready and willing to assist you in structuring retail finance deals!

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need assistance with structuring a payment? Contact one of your sales representatives listed below. These sales professionals have many years of combined experience in the agricultural market, and can help you close the deal by bringing finance to the front of the sale.

• Need a quick quote or have an urgent question? Contact a member of the inside sale team at (800) 873-2474 / Option 1. We can send over a payment quote or help you submit an application right away!

• Do you want to sign up to be a dealer? Call dealer services at (800) 873-2474 Ext 5155 to assist you in submitting a dealer application or go to www.agricredit.com and click on “Become a New Dealer.”

Call your PNA Financial Services Representative today: Randall Hill - Retail

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(800) 873-2474 (682) 777-1225

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A Historic Move For Washington Senate The state Senate passed legislation that would bring much-needed transparency to government unions and help protect the interests of both employees and taxpayers in public-sector collective bargaining.

Senate Bill 5226, introduced by Sen. Randi Becker (R-Yelm), passed 26-22. The Freedom Foundation-supported legislation would require unions representing public employees to file basic financial reports with the state Public Employment Relations Commission on an annual basis. The legislation mirrors the federal Labor Management Reporting and Disclosure Act (LMRDA), which has governed private-sector unions since 1959.

If ultimately passed into law, SB 5226 would make government unions more accountable to the public employees they represent. Since state law permits unions the extraordinary privilege of requiring public employees to pay dues as a condition of employment, requiring that unions be financially transparent with their members and the public is a reasonable expectation.

The Washington Federation of State Employees (WFSE) decried the bill's passage, telling its members its intent is to "take away your bargaining power."

WFSE also claimed that the bill, "generated little testimony in support, except largely from the Freedom Foundation, a think tank bankrolled by corporate foundations including the Koch Brothers network."

In reality, five current and former union-represented public employees joined the Freedom Foundation in testifying in favor of the bill before the Commerce and Labor Committee and the Ways and Means Committee. Only union lobbyists were opposed.

On the Senate floor, all but one Republican, Sen. Pam Roach (R-Auburn), voted for the measure. Two Democrats, Sen. Tim Sheldon (D-Potlatch) and Sen. Jim Hargrove (D-Hoquiam), also voted in favor. More information about SB 5226 is available here.

The 2015 legislative session has seen a level of attention given to public-sector union reform that is unprecedented in recent history. Unions have taken notice, with the Washington State Labor Council recently denouncing the common-sense collective bargaining reforms being promoted by the "the right-wing Freedom Foundation."

Washington State Senate Passes Flash Mob Robbery Bill In a vote that would benefit retailers across the state, the state Senate Tuesday passed SB 5037 that would establish penalties for those found guilty of committing flash mob robberies.

Such incidents typically involve groups of thieves using social media to organize mass spontaneous thefts at retailers. The bill would establish misdemeanor and felony penalties for such a crime committed with at least six accomplices who used electronic communications.

Flash mob robberies have emerged as a new trend in organized retail crime. Incidents have been reported in Federal Way, Portland and major cities across the nation.

The crime leaves retail employees defenseless in attempts to stop large groups of thieves from stealing thousands of dollars of merchandise in seconds. The approved Senate bill now goes to the state House for further consideration.

Highway Bill Action On February 24, a strong majority of House lawmakers joined a letter urging the chamber’s leadership to make passing a long-term, fully-funded surface transportation bill an immediate priority.

The effort, led by Reps. Tom Reed (R-NY), Reed Ribble (R-WI), Dan Lipinksi (D-IL), and Bill Pascrell (D-NJ), garnered the support of 130 Republicans and 155 Democrats, demonstrating the broad, bipartisan backing for an immediate, multiyear solution to the country’s highway funding crisis.

The letter states, “We are united in our conviction that now is the time to end the cycle of short-term extensions that kick the can down the road by doing the work needed to pass a multiyear surface transportation reauthorization bill. To make this happen, we support efforts to develop a long-term sustainable revenue source for our nation’s transportation network as soon as possible.”

AED’s Washington Office, working in conjunction with the Transportation Construction Coalition and distributors across the country, was instrumental in encouraging congressional signatures for the effort. Thank you to AED members that urged their lawmakers to support the bipartisan letter.

With the current authorization law (MAP-21) expiring at the end of May and the Highway Trust Fund projected to go insolvent soon after, the time is now for decisive leadership and significant action by Congress. (Associated Equipment Distributors – AED)

Should You Convert To Natural Gas Now That Oil Is Cheap? Bill Conerly - He connects the dots between the economy and business decisions

The top energy play for the last few years has been converting gasoline and diesel-burning motors to run on natural gas. I wrote about that in Energy Forecast 2013-2014: Convert to Natural Gas. Local delivery vans, over-the-road trucks and even farm tractors have been switched over. Now that oil is cheap, bringing with it drops in gasoline and diesel prices, does it still make sense to convert to natural gas? First we’ll review the economics of natural gas, then discuss business strategy in an uncertain energy future.

Historically, the prices of oil and natural gas (on an energy-equivalent basis) have moved together, with gas typically selling at a discount to oil. Folks in the industry say that’s because you can’t carry natural gas in a bucket. (They think that’s funny.)

The prices diverged starting in about 2006. The global economy was booming, pulling up the price of oil. Natural gas production was about to increase rapidly in North America. Oil is a global market, and increased production here in the United States and Canada reduced our oil imports, which spread the price impact over the world.

Natural gas, in contrast, moves mostly through pipelines and is thus a continental market. Increasing production impacted only North American natural gas prices. Because the price impact was not spread around the world, it was much more pronounced.

The wide gap between oil and natural gas prices, which has been especially strong since 2009, has led to fuel conversion efforts. The first conversions were in electric generation plants, which can switch from oil or coal to natural gas fairly easily. Other energy-intensive industries, such as chemicals, metals, and ceramics, converted next. The real challenge has been for transportation. However, in the past years we have seen liquefied natural gas power locomotives, tugboats and trucks, with compressed natural gas used for shorter-run vehicles. Refueling stations are spreading.

The market for oil has now changed dramatically, consistent with my oil price forecast of 2013. Natural gas prices, though, have hardly budged since oil started plummeting. Last summer the spread between oil and natural gas (on an energy-equivalent basis) was over $80 a barrel for a few days. Last month it was as low as $27.

What should a fuel user do now? Natural gas is still cheaper, so those who have already converted will continue to use natural gas. However, those who have not yet converted have a tougher choice: whether to incur the up-front capital costs of fuel conversion to gain ability to use the cheaper fuel.

That decision depends on where prices are going. Natural gas is the simpler issue: it’s unlikely to rise much from current levels. Oil (and thus gasoline and diesel) are much harder to predict. Even though I anticipated a drop in oil prices, I didn’t see them coming down to $45 a barrel. That level was probably an overreaction by traders and speculators. I expect prices to settle closer to the $60 – $70 range.

I recommend looking at conversions at two price levels. In the low-price scenario, use a diesel price of about $2.40 and a gasoline price of $2.00. This is around the national low. (Diesel didn’t actually get this low, but it’s now running a bit high relative to crude oil, so it’s better to assume the more typical relationship.) If your operations are in one particular region, use your region’s recent low point. Average gasoline and diesel prices are published by the Energy Information Administration. If your calculations with these low prices justify conversion to natural gas, go ahead right now.

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If conversion isn’t justified at the historic low, then run a calculation with a moderate price. Assume the price of oil goes down to $60, which implies diesel at around $2.80 and gasoline at $2.40. If conversion makes sense at these prices, then you have a question: act on Bill Conerly’s oil price forecast or on current prices? I have become more humble over my years forecasting (and I can assure you that humility does not come naturally to me.)

My recommendation in this situation is to drag your feet a bit. Do the cheap and easy steps regarding conversion (planning) but hold off on the big-ticket expenditures until crude prices actually rebound. Once they hit the $60 price point, then pull the trigger on your natural gas conversion. This strategy is not guaranteed, but it’s likely to work out in the long run.

Termination, discharge: What are the requirements for notice to employees over the age of 40?

Question: We have a current employee who has been with the company for 8 years in a Director role. We are considering outsourcing the work he does along with all IT work. I know we can go ahead and lay him off due to these business decisions and we would be putting together a separation agreement. My concern is that I read recently that anyone over the age of 40 is to be given the separation agreement at least 21 days in advance of the separation. True? We are concerned because he does have security controls, etc. and if we give him this advance notice - we are not sure what damage he might do to the company.

Response: If an employee is 40 years of age or older, any separation agreement that seeks to release claims under the Age Discrimination in Employment Act (ADEA) must contain specific language as required by the Older Workers Benefit Protection Act (OWBPA) in order to be a proper, valid and enforceable release (see http://www.eeoc.gov/policy/docs/qanda_severance-agreements.html for specific guidance). You are correct that an employee age 40 and older must be given 21 days to consider a waiver and release agreement, and then an additional seven days once signed (if signed within that time period), to revoke his or her signature and thus the contract itself. There are other requirements that must be satisfied when more than one employee is separating from employment (such as providing information about the ages and positions of employees impacted by a layoff and not impacted by the termination decisions, and a 45-day consideration period), but we assume from the inquiry that only one employee is at issue here (the Director). Note that employers are not required to provide employees under 40 with a specific amount of time to sign a separation agreement and there is no revocation period required in that situation.

As to your concern regarding providing "advance notice" to the subject employee, the 21-day waiting period is solely for purposes of the employee executing the separation agreement. In other words, the employer does not need to give an employee advanced notice as to his or her last day of work. Indeed, the employer can include in the separation agreement that the last day of work is effective immediately requiring him to return all company property, etc. (assuming employment is at-will and no other contract governs the issue) and the employee could still have the 21-day consideration period to decide whether to accept the terms of the separation agreement (albeit the employee would spend this consideration period at home or away from work as he would no longer be employed).

For more information on obligations under the OWBPA in severance agreements, please see http://www.eeoc.gov/policy/docs/qanda_severance-agreements.html and we also recommend that the employer consult with local counsel for guidance in drafting a separation agreement (or to at least review what the employer has endeavored to draft itself) to ensure it meets the employer's objectives while remaining compliant with applicable laws.

© 2014 Advisors Law Group, All Rights Reserved

To learn more about the Federated Employment Practices NetworkSM, contact your local Federated Marketing Representative, or visit www.federatedinsurance.com.

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Cervus Equipment Corp. ("Cervus") Announced Its Financial Results And Operational Highlights For The Year Ended 2014. "Cervus made several strategic acquisitions in 2014, adding 13 Peterbilt dealerships in Ontario and six John Deere dealerships in Alberta, which contributed a total of $125.5 million of incremental revenue for the year. We believe that our geographic, industry and product diversification strategy puts the Company in a strong position for 2015." said Graham Drake, President and CEO of Cervus. "Looking forward, accelerated manufacturing activity and cross border trade provide tailwinds for our Ontario Transportation operations, while Agriculture is operating from a position of strength following a second consecutive year of record Canadian farm income in 2014."

Due to the 2014 expansion of Peterbilt operations, the Company has realigned its operations into Agricultural, Transportation, and Commercial and Industrial ("C&I") segments. All prior period disclosure has been updated to reflect changes in operating segments, and certain amounts have been reclassified to conform to the current year presentation.

Highlights for the Year:

• Revenues increased $118.5 million and gross profit dollars increased$23.4 million compared to2013.

• Income from operating activities on a same store basis increased $0.3 million to $34.7 million.

• The Company incurred $1.6 million in acquisition and integration costs.

• Earnings before interest, taxes, depreciation, and amortization ("EBITDA") increased $0.5million to $52.4 million, excluding acquisition costs.

• Profit attributable to shareholders decreased $4.7 million.

• Cervus was awarded Peterbilt's 2014 North American Dealer of the Year award, for theperformance of the Peterbilt operations.

• Cervus completed the acquisition of the assets of Peterbilt of Ontario Inc., adding 13 Peterbilttruck dealerships.

• Cervus acquired four John Deere full service dealerships adjacent to the Company's existingAlberta locations, through the acquisition of the shares of Evergreen Equipment Ltd.

• Cervus acquired two John Deere full service dealerships adjacent to the Company's existingAlberta locations, through the acquisition of the assets of Deer Country Equipment (1996) Ltd.

• Cervus acquired the remaining 46.7% of Windmill AG Pty Ltd., bringing the Company's ownershipto 100% in Australia.

• The Company entered into a committed, two year, $100 million syndicated credit facility ensuringcontinued strategic flexibility.

• The Company was ranked #20 on Alberta Venture's 2014 Fast Growth 50 List.

Financial Highlights For the Year Ended December 31, 2014:

Revenue increased by $118.5 million or by 13.8% ($43.2 million from the Agricultural equipment segment and $80.4 from the Transportation segment, offset by a $5.1 million decrease from the C&I

equipment segment). Same store 2014 revenue of $854.2 million was consistent with 2013 revenue of $861.1 million.

Gross profit margin was 19.1%, similar to 2013. The increase in sales resulted in an increase in gross profit dollars of $23.4 million for the year ended 2014 when compared to 2013.

Selling, general and administrative expenditures increased to 16.1% of total revenue in 2014 compared to 15.4% in 2013.

Profit attributable to shareholders in the year decreased by $4.7 millioncompared to 2013, primarily due to $1.6 million of non-recurring acquisition costs during the year and a $2.8 million reduction on earnings from equity investments.

EBITDA decreased by $1.1 million to $50.8 million in 2014 compared with$51.9 in 2013. Excluding the $1.6 million of acquisition costs, EBITDA increased $0.5 million in 2014.

As at December 31, 2014, Cervus had working capital of $119.4 million, including $18.8 million in cash and cash equivalents, up $6.1 millioncompared to $113.2 million at December 31, 2013.

Titan Machinery Revenue Tumbles In Fiscal 2015 Fourth Quarter Titan Machinery, a network of full-service construction and agricultural equipment stores including rental operations, said it expects its fourth quarter of fiscal 2015 to total about $491 million in revenue, compared to revenue of $708.6 million in the fourth quarter of last year, a 44-percent decrease. The quarter ended Jan. 31. The company plans to release its fourth quarter and full year complete results April 15.

Titan is recognizing non-cash impairment charges of about $31 million in the quarter, primarily related to goodwill and other intangible assets in the agriculture segment. Pre-tax loss for the quarter is expected to be approximately $37 million. Adjusted pre-tax loss in the construction segment is expected to be about $5 million.

For the full fiscal year, Titan Machinery expects revenue to be about $1.9 billion, compared to $2.23 billion the previous year, a 14.8-percent drop. Excluding the non-cash impairment charge, realignment costs of $3 million, and Ukraine currency devaluation of $6 million.

Titan Machinery is reducing staff by 14 percent “to better align its business in certain markets”, the company said, including the closing of three agriculture stores and one construction store.

“Our Agriculture segment performance was impacted by continued industry headwinds in this segment,” said Titan Machinery chairman and CEO David Meyer. “We reduced our equipment inventory by approximately $168 million in fiscal 2015, which enabled us to generate approximately $82 million of adjusted cash flow from operations. We believe we are well positioned to achieve further inventory reductions and strong adjusted cash flow from operations in fiscal 2016.”

Titan expects construction same-store sales to be flat in 2016, while agricultural same-stores will decline by 25 percent. It also expects its international dealership business to be flat.

Based in West Fargo, N.D., Titan Machinery is No. 31 on the RER 100.

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International Tractors Ltd. (ITL), Now Exporting Its Tractors To The U.S. NEW DELHI, India, March 4, 2014 — International Tractors Ltd. (ITL), an Indian-based company and part of Sonalika Group, is now exporting its tractors to the U.S. under the Worldtrac brand. ITL has plans to set up an office, training center and assembly line in the U.S.

ITL has come a long way since 1995, from its beginnings in Punjab, India, to becoming a global leader in exports. ITL is providing its service in more than 75 countries across the globe. It is the leading company in India to export tractors to the service-oriented European Union market. The company has a 20% tractor market share in Africa and is market leader in the South Asian Association for Regional Cooperation (SAARC).

The tractors are renowned for their quality, reliability and after sales service. After entering Europe and Australia with the Solis range of tractors and becoming a leader in Africa and SAARC, ITL is now geared to launch its best products in the U.S.

Many milestones mark the journey of ITL including its collaboration with Renault of France and Yanmar of Japan. Equity partner Blackstone demonstrated its trust in Sonalika and further gave impetus to ITL’s growth.

The company has tractors ranging from 20–110 horsepower and has recently launched a new range of narrow tractors for orchard application and a common rail direct injection engine (CRDi) model in the 90 horsepower range. The tractors are recognized for their low maintenance, robustness, high fuel efficiency and superior quality. They also comply with EPA regulations.

Managing Director Deepak Mittal says, “We are looking at the U.S. as a major market for exporting our tractors. We are committed to serving the farming community with our best services.”

For additional information visit www.sonalika.com

Tractor Supply Reports Fourth Quarter Results Fourth Quarter Sales Increased 12.0% to $1.58 Billion Comparable Store Sales Increased 5.3%

Tractor Supply Company (NASDAQ: TSCO), the largest rural lifestyle retail store chain in the United States, today announced financial results for its fourth quarter and fiscal year ended December 27, 2014. Additionally, the Company provided its initial outlook for fiscal 2015.

Fourth Quarter 2014 Results Net sales increased 12.0% to $1.58 billion from $1.42 billion in the fourth quarter of 2013. Comparable store sales increased 5.3% versus a 3.5% increase in the prior year's fourth quarter. The increase in comparable store sales was broad based and driven by increases in both traffic and ticket. Comparable store transaction count increased 3.0% and average ticket increased 2.3%. The increase in comparable store sales was driven by a strong winter seasonal business, solid performance in consumable, usable and edible (C.U.E.) products and an increase in sales of big ticket items. In addition, hardline products such as fencing, truck accessories and tools also performed well.

Gross profit increased 12.5% to $539.6 million from $479.7 million in the prior year's fourth quarter and gross margin rate increased 10 basis points to 34.0% from 33.9% in the prior-year period. The

improvement in gross margin rate resulted primarily from price management as the favorable, colder weather early in the quarter created strong demand for winter goods, resulting in fewer seasonal markdowns. This was partially offset by higher transportation costs primarily due to our continued western store expansion.

Selling, general and administrative (SG&A) expenses, including depreciation and amortization, increased 8.8% to $361.9 million. As a percent of sales, SG&A expenses improved 70 basis points to 22.8% from 23.5% in the fourth quarter last year. The improvement as a percent of sales was primarily attributable to the leverage of store operating costs provided by the strong comparable store sales growth and lower year-over-year incentive compensation expense.

Net income increased 16.9% to $112.1 million from $95.9 million and diluted earnings per share increased 19.1% to $0.81 from $0.68 in the fourth quarter of the prior year.

The Company opened 22 new stores and closed one store in the fourth quarter of 2014 compared to 31 new store openings and no store closures in the prior year's fourth quarter.

Greg Sandfort, President and Chief Executive Officer, stated, "Across the board, we had a strong fourth quarter and are pleased with our results. Sales growth was broad-based across all of our major product categories and geographic regions and was well balanced between both traffic and ticket. The fourth quarter was our 27th consecutive quarter of positive comparable store transaction counts. The team did an excellent job of managing product assortments, inventory, and pricing levels to capitalize on early consumer buying trends and drove both sales and margin growth in the quarter. It is my belief that our fourth quarter and full year results reflect our ability to effectively manage seasonal inventory investments, pricing and sell-through during seasonal changes and weather variations."

Full Year Results Net sales increased 10.6% to $5.71 billion from $5.16 billion in fiscal 2013. Comparable store sales increased 3.8% versus a 4.8% increase in fiscal 2013. Gross profit increased 11.2% to $1.95 billion from $1.75 billion and gross margin increased 10 basis points to 34.1% of sales from 34.0% of sales in fiscal 2013.

Selling, general and administrative expenses, including depreciation and amortization, increased 9.8% to $1.36 billion, and improved as a percent of sales to 23.8% compared to 24.0% for fiscal 2013.

Net income increased 13.0% to $370.9 million from $328.2 million and net income per diluted share increased 14.7% to $2.66 from $2.32 for fiscal 2013.

The Company opened 107 new stores and closed one store during fiscal 2014 compared to 102 new store openings and two store closures during fiscal 2013.

Company Outlook The Company anticipates net sales for fiscal 2015 will range between $6.2 billion and $6.3 billion, with comparable store sales expected to increase 2.5% to 4.0%. The Company projects fiscal 2015 full year net income to range from $2.95 to $3.05 per diluted share. For the full year, the Company expects capital expenditures to range between $240 million and $250 million, including spending to support 110 to 115 new store openings and construction of a new Southwest distribution center in Casa Grande, Arizona to open in fiscal 2015.

Mahindra Opens New Kansas Assembly & Distribution Center To Serve The Midwest Mahindra USA, announced the opening of its new Midwest Authorized Distribution Center in mid- February 2015 that will serve a six state area to meet the increasing demand for Mahindra products. This new 15-acre facility is a joint project with long-time Mahindra partner, Kansas Machine Works (KMW), located in Lyons, Kan. This Assembly and Distribution Center will serve Iowa, Kansas, Missouri, Minnesota, North Dakota and South Dakota with the ability to ship 150 tractors per month once fully operational. This is Mahindra USA’s fifth distribution center in North America; the other facilities are located in Texas, Pennsylvania, Tennessee and Georgia.

Mahindra USA Will Begin Utilizing Paladin Attachments Mahindra USA will begin utilizing Paladin Attachments as its implement supplier in April 2015. This follows Paladin’s acquisition of Kodiak Manufacturing, Mahindra’s current implement supplier. Mahindra anticipates a smooth transition as the Kodiak management team will remain in place and the Paladin team will bring its expertise along with a solid platform for continued growth through increased capacity and market support. The integration will be transparent to Mahindra’s dealers who can continue ordering product through existing channels.

“This new partnership will deliver increased capacity and continued quality improvements for our implement business as Paladin will add value through process and manufacturing diversity, improvements and efficiencies,” said Mani Iyer, president, Mahindra USA. “Paladin brings manufacturing diversity and market support services that will enhance the overall customer experience with current Mahindra – Kodiak products.”

“Our dealers can expect a seamless transition from a day-to-day operations perspective. Paladin’s strength in market support services will provide our dealers with a quality customer experience,” said Cleo Franklin, vice president, marketing and strategic planning, Mahindra USA. “Paladin is a great addition to our family of partners supporting Mahindra’s rapid growth in the North American market. Their passion for delivering high-quality products and service is a great fit with our customer first philosophy.”

Lumber Liquidators Fights Back Rocked by a "60 Minutes" expose more than a week ago, Toano, Virginia-based Lumber Liquidators emphasized “Our products are safe,” during a business update conference call on Thursday.

Tom Sullivan, the company’s founder and chairman who was grilled by Anderson Cooper on the CBS news program, did not participate in the call. But president and CEO Rob Lynch took the offensive.

“First and foremost, I want to reassure all of you, all of our customers and the general public that we are confident that all of our products are safe and none of our products pose significant health or safety issues,” Lynch said.

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While "60 Minutes" accused the company of excessive levels of formaldehyde in its laminate flooring, Lynch’s defense of the company included a deep dive into the role of fromaldehyde. “As lamination actually helps seal-in the formaldehyde from the core, as '60 Minutes' acknowledged, formaldehyde emissions arising from our products are a small fraction of the levels the media has discussed.”

"... we are confident that all of our products are safe and none of our products pose significant health or safety issues.”

Lynch also hammered home five steps the 350-store retail company takes that go above and beyond the regulatory requirements:

“First, CARB regulates products sold in California, but we require all of our suppliers to comply with CARB standards regardless of what state or country the product is being sold in,” he said.

“Second, Lumber Liquidators is one of the only flooring retailers that we know of to invest in, install and operate a lab with emission-testing capabilities. This is a state-of-the-art facility. It includes two temperature and humidity controlled conditioning rooms, and two formaldehyde emission chambers that mirror the capabilities of CARB and other state of the art emission testing facilities. The type of chambers, ASTM International D6007, correlate to a CARB-approved Third Party Certifier.

"Third, we test products as they are actually used in a consumer’s home -- in their finished state. CARB considers the emissions of the core MDF, but we do this testing to make sure that the entire product is also safe. Fourth, we perform supplier site audits. This means that we show up at our suppliers’ facilities on an announced and unannounced basis, and perform our own testing to make sure the cores are compliant. CARB doesn’t require this, but we do it anyway.

“Lastly, we perform quarterly invoice and supplier document reviews to verify CARB compliance. During these reviews we look at the documentation from our suppliers and verify that CARB’s standards are being met."

[The company posted a transcript of its conference call here.]

Lend added that Lumber Liquidators’ most popular products -- hardwood floors and vinyl flooring -- are untouched by the recent allegations. HBSDEALER STAFF

He spoke at great length about the CARB emission standards, and the difference between deconstructive testing, the kind that "60 Minutes" used, and the kind of testing that measures how a product will perform in a house.

Meanwhile, the company continues to face lawsuits orchestrated by short sellers, he claimed.

From a financial perspective, the company said comp-store sales following the broadcast of the "60 Minutes" episode fell about 13%. The company’s stock price has dropped about 50% in the last month.

True Value Targets Better Service Customer service -- and ways to improve it -- took the stage in Dallas during the True Value Spring & Rental Reunion.

The Chicago-based co-op is rolling out a new national training program that brings some new techniques and tools to its members, including a focus around organized, in-store "chats." The goal of the program: boost customer service.

Lori Birkey, the co-op's director of True Value University, described the new training program by first explaining what it's not. "It is not e-learning," she said. "Our newly developed customer service does not require that you take you associates off the floor to watch and learn. It is not classroom. And it is not a canned program."

What is it, then? "It is a program that identifies your strengths and needs and areas of improvements in your store," she said. "It is customizable, simple and quick to execute."

Birkey drew spontaneous applause from the members assembled in the Kay Bailey Hutchison Convention Center when she described the training as free. Fifty retailers participated in a first round of the training in Dallas.

True Value’s “chat”-focused training program designed to boost customer service was one of the key takeaway’s from the co-op’s spring Reunion. The co-op believes the term "chat" describes how best to lead small groups within the store. "A chat is how we are describing the tools you'll receive in the training," she said. "By conducting a chat, you give a clear idea of expectations and work with them to put best practices into effect."

The co-op says a survey showed members spend more time on customer service and selling than anything else. The same survey found that retailers wanted the training delivered in the store.

“One of the things we can do is improve customer service, building not just customers but customer’s for life," said Blake Fohl, the co-op’s senior VP of marketing and chief customer officer. “As we build awareness and drive traffic to your stores, it is your job to ensure you create a superior customer service experience that will in turn create loyal customers for life.”

The development of a national customer service training program was described as a response to poor customer-service scores in various surveys, particularly the J.D. Power customer service rankings.

True Value ranked fifth behind Ace, Menards, Lowe’s and Home Depot. In sixth place on the list was Sears.

Rather than criticize the methodology of the source of poor survey results, as Bob Nardelli of Home Depot famously did a decade ago when the University of Michigan’s consumer surveys reported low marks, True Value has taken a direct approach to boost its scores.

“What really jumped out for me was how poorly we ranked in the J.D. Power Survey," Birkey said.

The co-op will measure the results of the training by monitoring the results of its mystery shopper program customer satisfaction surveys, and units per transaction at POS. It will also watch the J.D. Power results closely. The training, she says, hits on all the areas measured by J.D. Power.

"The ultimate measure will be do we see a difference in our J.D. Power scores," she said. "That is up to you."

Steve Kramer was one of several retailers who applauded the co-op for its direction and its general- session focus on customer service. "They presented some not so favorable news, but we need to know those things,” he said. “And they’re giving us some tools to help us take care of those things.”

True Value Points To Sales Growth Chicago-based True Value Company described its fiscal 2014 performance as its "best growth since 1994."

The hardware co-op's total gross billings for the 53-week year were $2.015 billion, up 6.0% compared with the prior year, and the highest in two decades.

On a 52-week comparable basis, gross billings were up 4.9%.

Comparable-store sales to retailers were up 5.2% on a gross billings basis. Destination True Value retail comp-store sales were up 4.8%, and overall comp-store sales were up 3.1%, the company reported.

Amid the sales growth, the co-op's earnings declined 25.7%, largely the result of $13.2 million of "strategic plan related expenses," the company said. For the full year, earnings were $41.1 million. A year ago, the co-op's earnings were $55.3 million.

“Our strategic plan is driving powerful, positive transformation across True Value as we experienced some of the strongest growth we’ve seen in the last 20 years,” said president and CEO John Hartmann. “These achievements are the result of our members’ support and the hard work of our associates as together we make the changes needed to drive new levels of engagement, growth and efficiency.”

Hartmann also pointed to a record year in attracting new members, as gross billings from new stores exceeded lost billings from terminated stores by $23.6 million. The co-op added 230 new stores in 2014, including 126 new ground-up stores.

True Value continued its support of the members’ investment in their stores. In 2014, the co-op provided over $16.7 million in loans to retailers that implemented the Destination True Value retail format. Retailers remodeled, expanded or opened 969,000 sq. ft. of DTV retail format in 2014, up 12.2% from the 864,000 sq. ft. implemented in 2013. That brings the total to approximately 6 million sq. ft. since inception of the format roll out in 2008. Stores that have implemented the DTV format continue to outperform stores that have not.

In December, the company completed an amendment to its existing revolving credit facility to support implementation of its new strategic plan. Changes included increasing the size of the facility to $450 million from $250 million and extending its term to December 2019. The company ended the year with $97.6 million of borrowings outstanding on its revolving credit facility. (Source: HBSDealer March 17, 2015)

Joe Scarlett To Enter Home Channel Hall Of Fame Joe Scarlett, former chairman and CEO of Tractor Supply Company, will enter the Home Channel Hall of Fame during Hardware + Building Supply Dealer magazine’s Golden Hammer Awards ceremony May 5 at the National Hardware Show in Las Vegas.

Scarlett held senior executive roles at Tractor Supply from 1979 until his retirement at the end of 2007. Under his 10-year watch as CEO of the company, revenues quadrupled and the company’s share price increased by a factor of 10.

“I’ve been very fortunate to have had a long and successful retail career in a great industry,” Scarlett said.

"I’ve been very fortunate to have had a long and successful retail career in a great industry.”

Today Scarlett manages the Franklin, Tennessee-based Scarlett Leadership Institute, an organization committed to improving business leadership skills with a strong emphasis on ethical behavior.

“Joe Scarlett’s passion for the retail industry is contagious and inspirational,” said Ken Clark, editor of Hardware + Building Supply Dealer. “We’re excited to honor his career at this year’s Golden Hammer Awards event.”

In partnership with the National Hardware Show, coming to Las Vegas May 5-7, HBSDealer will host the Golden Hammer Awards in a special area on the show floor on May 5.

The Home Channel Hall of Fame was instituted in 2004, when the inaugural class of inductees included Bernie Marcus and Arthur Blank of Home Depot, Joe Hardy of 84 Lumber and Joe Orgill of Orgill Inc.

Customer Satisfaction And How It Relates To Dealership Market Share! Customer Service (Satisfaction) is an attitude that must be displayed by every employee within the dealership. It is not a separate department within the dealership. It is the whole dealership. World-class Customer Service requires that everyone that within the dealerships consistently provide superior customer service to the dealership’s expanding base of customers. There is no room in any organization for those who believe that “the customer is the enemy”!

Customers and prospective customers are the absolute “life blood” of any equipment dealership. There is little chance for survival in today’s market place for an equipment dealer without a culture of customer satisfaction. Once any equipment dealership looses the focus of providing a high level of customer satisfaction, customer remorse begins to creep into the customer’s mind. This focused culture must be expressed by everyone within the dealership, from the receptionist to the president. No one is exempt from the development of a strong and loyal cadre of customers. This includes everyone: technicians, truck drivers, administrative employees, counter people, sales personnel, managers, owners, everybody!

The term Market Share is the loosely worded formula which measures the performance of a particular dealer’s unit sales in that dealer’s given Area of Prime Responsibility, versus the like units being sold by the dealer’s competition. Herb Kelleher of Southwest Airlines is quoted as saying; “Market share has nothing to do with profitability. Market share says we just want to be big and we don’t care whether we make money doing it!” Too many times for the dealer to achieve his manufacturers’ required market share, the sale will be made at a reduced price. We strongly recommend to any dealer who is interested in understanding more about market share to read: Richard Minter’s book entitled: The Myth of Market Share: Why Market Share is the Fool’s Gold of Business.

Over the years market share has become the sword that manufacturers hold over dealers’ heads, if dealers want to continue selling the manufacturers product. We contend that this does not have to be. If manufacturers would be patient and work harder with their dealers to develop a culture of Customer Satisfaction, then market share would follow and the dealer would see the profit opportunities necessary for them to grow and survive. Industry surveys have indicated that in the equipment market, customers and potential customers are willing to pay a bit more for a product if the customer can be assured that they will be treated as a customer, and that this customer will see a continuation of this treatment and culture after the sale has been consummated.

We have studied and read customer surveys performed by the equipment industries for well over 40 years. Despite all the seminars, books and discussions on customer service, indifference continues to lead the list of reasons why customers continue to leave one supplier for another. Indifference can be basically defined as an attitude of not caring. World class equipment dealers long ago began their focus on this one difference between themselves and others.

So where do we begin? Superior customer service develops strong customer satisfaction. Customer satisfaction is how the customer views their relationship with the equipment dealer; who by the way is the manufacturer’s customer. It is what makes the customer want to come back time and time again for the dealer’s superior service. Customer Satisfaction is a genuine feeling that the dealership cares for the customer after the sale has been made. Customer satisfaction is a caring attitude expressed by the dealership and all the dealership’s personnel toward the customer.

Customer retention is earned through customer satisfaction and builds customer loyalty toward the dealership. Listen-up all you manufacturers: Customer loyalty builds market share!

It has been estimated that equipment dealers spend six times the amount of money to capture a new customer versus what they spend in keeping that same customer loyal to the dealership. Is the equipment dealer’s emphasis misplaced? Customer retention means financial success for the equipment dealer. Losing a customer carries a cost five times the annual value of that customer’s yearly account to the dealership. We maintain that how you satisfy the customer’s needs after the sale determines customer retention over the long run.

I will use the words of an equipment dealer who I believe is a true World-Class Dealer. He states that their dealership’s major reason for success in customer retention and loyalty is: “Hiring people with a customer focused attitude and then help and encourage them to continue the development of this attitude through praise and training and more training.” He points out that most dealers hire people that can do the nuts and bolts side of the position very well, but some dealers never ask a potential hire what does world class service look like to them? The dealer goes on to say that you can train people on what a culture of customer service means, but to be the best it must be part of the prospective hire’s character.

Believe it or not, I once met a Service Manager who absolutely loved his job, and the only thing he disliked about it was he constantly had to deal with unhappy customers.

Talk about a “square peg in a round hole”. In most cases, in any dealership absolutely no one has more employee and customer contact over the phone or face-to-face than a service manager. If a potential hire for service management has “poor people skills”, don’t hire him no matter how great his technical skills are.

How many times in the last ten to twenty years have we written that the department with the greatest opportunity for increased sales and the greatest opportunity for increased profitability is the service department? At the same time we are writing or discussing this with dealers we are also pointing out that service generally provides the dealership with the lowest contribution to total sales. When a dealer is hiring or replacing a service manager, the greatest concern should be finding an individual with people skills, while at the same time is able to develop throughout the department the customer service and customer satisfaction culture with all employees.

Is there a correlation to all this? Do you, the dealer principal and your sales personnel, show an attitude of indifference to your service department? Is the indifference picked up by the customer and yes, by all the employees in your shop? Could it be this indifference that causes customers to search elsewhere when they are having repair work done on their equipment?

Many times in discussions with equipment sales personnel we ask why they don’t discuss the dealership’s ability to provide quality service to the customer. Understand that the customer’s number one concern when buying a piece of equipment is: unscheduled down-time! Customers want to know that your dealership is going to be there for them after the sale. Surveys consistently express the fact that customers want to know that their equipment is going to be fixed right, the first time, on time and at a competitive price! Unfortunately, too many times the sales person replies to our question by saying figuratively: “I’m not sure I want to tell a customer we can do that because I am not sure our shop can perform at that level!”

With this reply, remember what was said on the Apollo 13 flight: “Houston, we’ve got a problem!

We must continue to emphasize . . . customer satisfaction, customer loyalty and customer retention, all lead to the equipment dealership’s financial strength and to those so loved words manufacturers like to throw at dealers: Increased Market Share. All are interrelated to that single phrase: Customer Service!

Those equipment dealers who have achieved world class service status recognize that Customer Service is not a department. It is everyone from top to bottom within the dealership working together to create that culture that defines true customer satisfaction.

Special Offer to Readers: We have a publication entitled: Enhancing the Customer’s Buying Experience. This document shows you how to create a Customer for Life Culture within your dealership, how to bring customers back time and time again to buy from your dealership and provides basic but profitable ways to create market share. Along with this document we will email you, free of charge, a second document entitled: Customer Satisfaction is Customer Loyalty, is Customer Retention is Dealer Financial Strength, and Higher Market Share. Simply e-mail your request for these two publications, stating your name, your dealership and your dealership’s location, as well as your produ ct line, and the documents will be sent via email to you along with an invoice in the amount of $16.99, which you will pay after the material has been received. If, after receiving the materials, you are not satisfied, simply e-mail us telling us of your dissatisfaction and withhold any payment whatsoever … simple enough? Our email address is: amsconco@aol.com. AFTER MARKET SERVICES, CONSULTING COMPANY - Ft. Mill, South Carolina (U.S.A.)

Pacific Northwest Hardware & Implement Association PO Box 17819

Salem, OR 97305-7819

(503) 375-9024 –– (800) 933-7437 FAX (888) 686-6271

pnwassoc@pnwassoc.com February 2015 Flash Report

United States Unit Retail Sales Report Released 3/10/2015

http://www.pnwassoc.com

Beginning Februa ry YTD – Feb ary Inventory

2015 2014 %Chg 2015 2014 %Chg Feb 2015

2WD Farm Tractors < 40 HP 4,726 4,733 -0.1 9,483 8,750 8.4 66,149 40 < 100 HP 2,974 3,292 -9.7 7,068 6,936 1.9 31,665 100+ HP 1,651 2,044 -19.2 4,417 4,975 -11.2 11,332 Total 2WD Farm Tractors 9,351 10,069 -7.1 20,968 20,661 1.5 109,146 4WD Farm Tractors 281 455 -38.2 473 995 -52.5 1,075 Total Farm Tractors 9,632 10,524 -8.5 121,441 21,656 -1.0 110,221 Self-Prop Combines 326 414 -21.3 672 1,068 -37.1 1,168

These data are, in part, estimates that are subject to revisions when final detailed data become available. Because of the seasonal nature of the industry, comparisons of monthly data from one period to another should be done with extreme caution. These data represent the machines in each product category being sold at retail in the fifty states and District of Columbia by most, but not all, of the manufacturers.

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