<PAGE>
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS
PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the fiscal year ended DECEMBER 31, 1998.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______________ to _______________.
Commission file number 1-8649.
A. The Toro Company Investment and Savings Plan
B. The Toro Company
8111 Lyndale Avenue South
Minneapolis, MN 55420
REQUIRED INFORMATION
The following financial statements shall be furnished for the plan:
1. An audited statement of financial condition as of the end of the latest two
fiscal years of the plan (or such lesser period as the plan has been in
existence).
2. An audited statement of income and changes in plan equity for each of the
latest three fiscal years of the plan (or such lesser period as the plan
has been in existence).
3. The statements required by Items 1 and 2 shall be prepared in accordance
with the applicable provisions of Article 6A of Regulation S-X.
4. In lieu of the requirements of Items 1-3 above, plans subject to ERISA may
file plan financial statements and schedules prepared in accordance with
the financial reporting requirements of ERISA. To the extent required by
ERISA, the plan financial statements shall be examined by an independent
accountant, except that the "limited scope of exemption" contained in
Section 103(a)(3)(C) of ERISA shall not be available.
Note: A written consent of the accountant is required with respect to the plan
annual financial statements which have been incorporated by reference in a
registration statement on Form S-8 under the Securities Act of 1933. The consent
should be filed as an exhibit to this annual report. Such consent shall be
currently dated and manually signed.
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
THE TORO COMPANY SAVINGS AND INVESTMENT PLAN
(Name of Plan)
Dated JUNE 29, 1999 /s/ STEPHEN P. WOLFE
------------- -----------------------------
Stephen P. Wolfe
Vice President - Finance
Chief Financial Officer
<PAGE>
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Financial Statements and Schedules
December 31, 1998 and 1997
<PAGE>
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report 1
Statement of Net Assets Available for Plan Benefits
December 31, 1998 2
Statement of Net Assets Available for Plan Benefits
December 31, 1997 3
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1998 4
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1997 5
Notes to Financial Statements 6-10
SCHEDULES:
1--Item 27a--Schedule of Assets Held for Investment Purposes 11
2--Item 27d--Schedule of Reportable Transactions 12
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Plan Administrator
The Toro Company Investment and Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of The Toro Company Investment and Savings Plan (the Plan) as of
December 31, 1998 and 1997, and the related statements of changes in net assets
available for plan benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits as of December
31, 1998 and 1997, and the changes in net assets available for plan benefits for
the years then ended, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in the
statements of net assets available for plan benefits and the statements of
changes in net assets available for plan benefits are presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund. The
supplemental schedules and fund information have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
Minneapolis, Minnesota
June 18, 1999 1
<PAGE>
THE TORO COMPANY INVESTMENT AND SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
December 31, 1998
<TABLE>
<CAPTION>
PUTNAM PUTNAM PUTNAM PUTNAM
GROWTH ASSET ASSET ASSET PUTNAM
AND ALLOCATION ALLOCATION ALLOCATION INTERNATIONAL PUTNAM
TORO STABLE INCOME GROWTH BALANCED CONSERVATIVE GROWTH VOYAGER
VALUE FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND
------------ ------------ ------------ ------------ -------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets held by Trustee:
Investments $ 38,111,311 47,563,426 10,352,492 11,837,025 5,611,645 7,371,753 49,396,518
------------ ------------ ------------ ------------ ---------- ---------- ------------
Net assets
available for
plan benefits $ 38,111,311 47,563,426 10,352,492 11,837,025 5,611,645 7,371,753 49,396,518
------------ ------------ ------------ ------------ ---------- ---------- ------------
------------ ------------ ------------ ------------ ---------- ---------- ------------
<CAPTION>
UAM
ICM THE TORO
SMALL COMPANY
COMPANY COMMON
PORTFOLIO STOCK TOTAL
--------- ----------- -------------
<S> <C> <C> <C>
Assets held by Trustee:
Investments 997,323 19,786,357 191,027,850
--------- ----------- -------------
Net assets
available for
plan benefits 997,323 19,786,357 191,027,850
--------- ----------- -------------
--------- ----------- -------------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
THE TORO COMPANY INVESTMENT AND SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
December 31, 1997
<TABLE>
<CAPTION>
PUTNAM PUTNAM PUTNAM PUTNAM
GROWTH ASSET ASSET ASSET PUTNAM
AND ALLOCATION ALLOCATION ALLOCATION INTERNATIONAL PUTNAM
TORO STABLE INCOME GROWTH BALANCED CONSERVATIVE GROWTH VOYAGER
VALUE FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO FUND FUND
------------ ------------ ----------- ----------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets held by Trustee:
Investments $ 35,228,096 40,803,566 8,522,425 10,353,353 5,149,130 6,183,358 38,550,901
------------ ------------ ----------- ----------- --------------- -------------- ------------
Net assets
available for
plan benefits $ 35,228,096 40,803,566 8,522,425 10,353,353 5,149,130 6,183,358 38,550,901
------------ ------------ ----------- ----------- --------------- -------------- ------------
------------ ------------ ----------- ----------- --------------- -------------- ------------
<CAPTION>
UAM
ICM THE TORO
SMALL COMPANY
COMPANY COMMON
PORTFOLIO STOCK TOTAL
--------- ------------ -------------
<S> <C> <C> <C>
Assets held by Trustee:
Investments 933,067 21,618,531 167,342,427
--------- ------------ -------------
Net assets
available for
plan benefits 933,067 21,618,531 167,342,427
--------- ------------ -------------
--------- ------------ -------------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
THE TORO COMPANY INVESTMENT AND SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1998
<TABLE>
<CAPTION>
PUTNAM PUTNAM PUTNAM PUTNAM
GROWTH ASSET ASSET ASSET PUTNAM
AND ALLOCATION ALLOCATION ALLOCATION INTERNATIONAL
TORO STABLE INCOME GROWTH BALANCED CONSERVATIVE GROWTH
VALUE FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO FUND
------------ ------------ ----------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest and dividends $ 2,314,535 4,227,851 276,669 383,188 252,514 211,025
Net appreciation
(depreciation) in the fair
value of investments -- 2,108,021 984,735 871,508 218,065 950,497
------------ ------------ ----------- ------------ --------------- --------------
Net investment
income (loss) 2,314,535 6,335,872 1,261,404 1,254,696 470,579 1,161,522
Employer contributions 908,234 2,051,217 568,067 550,053 146,324 364,789
Employee contributions 632,374 1,900,703 669,693 530,302 155,040 482,106
Rollover contributions 94,728 45,096 217,344 29,334 27,512 28,415
------------ ------------ ----------- ------------ ----------- ----------
Total contributions 1,635,336 3,997,016 1,455,104 1,109,689 328,876 875,310
Benefit payments (2,189,694) (2,617,671) (626,866) (503,464) (180,593) (295,046)
Transfers between funds 1,130,090 (955,357) (259,575) (377,249) (156,347) (553,391)
Transfers to other plans (7,052) -- -- -- -- --
------------ ------------ ----------- ------------ ----------- ----------
Increase (decrease)
in net assets
available for
plan benefits 2,883,215 6,759,860 1,830,067 1,483,672 462,515 1,188,395
Net assets available for plan
benefits:
Beginning of year 35,228,096 40,803,566 8,522,425 10,353,353 5,149,130 6,183,358
------------ ------------ ----------- ------------ --------------- --------------
End of year $ 38,111,311 47,563,426 10,352,492 11,837,025 5,611,645 7,371,753
------------ ------------ ----------- ------------ --------------- --------------
------------ ------------ ----------- ------------ --------------- --------------
<CAPTION>
UAM
ICM THE TORO
PUTNAM SMALL COMPANY
VOYAGER COMPANY COMMON
FUND PORTFOLIO STOCK TOTAL
----------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Investment income:
Interest and dividends 3,319,802 64,104 258,045 11,307,733
Net appreciation
(depreciation) in the fair
value of investments 6,182,402 (66,301) (6,009,236) 5,239,691
----------- ---------- ------------ -------------
Net investment
income (loss) 9,502,204 (2,197) (5,751,191) 16,547,424
Employer contributions 1,976,871 49,505 2,336,134 8,951,194
Employee contributions 2,490,365 96,412 371,002 7,327,997
Rollover contributions 163,673 19,693 46,898 672,693
----------- ---------- ------------ -------------
Total contributions 4,630,909 165,610 2,754,034 16,951,884
Benefit payments (2,363,818) (22,048) (1,007,633) (9,806,833)
Transfers between funds (923,678) (77,109) 2,172,616 --
Transfers to other plans -- -- -- (7,052)
----------- ---------- ------------ -------------
Increase (decrease)
in net assets
available for
plan benefits 10,845,617 64,256 (1,832,174) 23,685,423
Net assets available for plan
benefits:
Beginning of year 38,550,901 933,067 21,618,531 167,342,427
----------- ---------- ------------ -------------
End of year 49,396,518 997,323 19,786,357 191,027,850
----------- ---------- ------------ -------------
----------- ---------- ------------ -------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
THE TORO COMPANY INVESTMENT AND SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1997
<TABLE>
<CAPTION>
PUTNAM PUTNAM PUTNAM PUTNAM
GROWTH ASSET ASSET ASSET PUTNAM
AND ALLOCATION ALLOCATION ALLOCATION INTERNATIONAL
TORO STABLE INCOME GROWTH BALANCED CONSERVATIVE GROWTH
VALUE FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO FUND
------------ ------------ ----------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest and dividends $ 2,409,383 5,194,953 614,187 901,736 351,080 366,127
Net appreciation
(depreciation) in the fair
value of investments -- 2,405,364 655,061 532,782 173,113 491,044
------------ ------------ ----------- ------------ --------------- --------------
Net investment
income 2,409,383 7,600,317 1,269,248 1,434,518 524,193 857,171
Employer contributions 728,548 1,714,517 397,282 438,193 110,023 280,472
Employee contributions 628,782 1,848,213 656,680 577,950 148,535 466,227
Rollover contributions 35,747 156,330 41,973 19,474 -- 40,531
------------ ------------ ----------- ------------ --------------- --------------
Total contributions 1,393,077 3,719,060 1,095,935 1,035,617 258,558 787,230
Benefit payments (3,512,548) (1,161,914) (434,374) (419,981) (58,681) (112,130)
Transfers between funds (2,005,730) 1,845,408 394,531 (116,888) 189,771 382,843
Transfers from (to) other plans (185,847) -- -- 79 -- --
------------ ------------ ----------- ------------ --------------- --------------
Increase (decrease)
in net assets
available for
plan benefits (1,901,665) 12,002,871 2,325,340 1,933,345 913,841 1,915,114
Net assets available for plan
benefits:
Beginning of year 37,129,761 28,800,695 6,197,085 8,420,008 4,235,289 4,268,244
------------ ------------ ----------- ------------ --------------- --------------
End of year $ 35,228,096 40,803,566 8,522,425 10,353,353 5,149,130 6,183,358
------------ ------------ ----------- ------------ --------------- --------------
------------ ------------ ----------- ------------ --------------- --------------
<CAPTION>
UAM
ICM THE TORO
PUTNAM SMALL COMPANY
VOYAGER COMPANY COMMON
FUND PORTFOLIO STOCK TOTAL
------------ --------- ------------ -------------
<S> <C> <C> <C> <C>
Investment income:
Interest and dividends 2,280,977 62,583 237,729 12,418,755
Net appreciation
(depreciation) in the fair
value of investments 5,397,599 (55,462) 3,116,442 12,715,943
------------ --------- ------------ -------------
Net investment
income 7,678,576 7,121 3,354,171 25,134,698
Employer contributions 1,784,099 -- 2,286,103 7,739,237
Employee contributions 2,417,775 7,313 335,230 7,086,705
Rollover contributions 138,257 37,731 12,538 482,581
------------ --------- ------------ -------------
Total contributions 4,340,131 45,044 2,633,871 15,308,523
Benefit payments (995,981) (81) (594,291) (7,289,981)
Transfers between funds (304,113) 880,983 (1,266,805) --
Transfers from (to) other plans 10 -- 5,635 (180,123)
------------ --------- ------------ -------------
Increase (decrease)
in net assets
available for
plan benefits 10,718,623 933,067 4,132,581 32,973,117
Net assets available for plan
benefits:
Beginning of year 27,832,278 -- 17,485,950 134,369,310
------------ --------- ------------ -------------
End of year 38,550,901 933,067 21,618,531 167,342,427
----------- ---------- ------------ -------------
----------- ---------- ------------ -------------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying financial statements of The Toro Company
Investment and Savings Plan (the Plan) are presented in accordance
with generally accepted accounting principles. The accounting
records of the Plan are maintained on the accrual basis.
(b) INVESTMENTS
The Plan's investments are held by Putnam Fiduciary Trust Company
(the Trustee). Plan investments are invested in the following
investment funds:
(a) The Toro Stable Value Fund is a master trust, which invests
in investment contracts with insurance companies, major
banks, and other financial institutions. The fund's
holdings may also include U.S. Government agency
mortgage-backed securities, AAA-rated asset-backed
securities, high-quality debt securities, and money market
investments.
(b) The Putnam Growth and Income Fund is invested in common
stock of companies that pay dividends and have the
potential for capital growth.
(c) The Putnam Asset Allocation Growth Portfolio is invested in
approximately 80% equity securities (primarily common
stock) and 20% debt securities.
(d) The Putnam Asset Allocation Balanced Portfolio is invested
in approximately 65% equity securities (primarily common
stock) and 35% debt securities.
(e) The Putnam Asset Allocation Conservative Portfolio is
invested in approximately 35% equity securities (primarily
common stock) and 65% debt securities.
(f) The Putnam International Growth Fund is invested primarily
in equity securities of companies located outside North
America.
(g) The Putnam Voyager Fund is invested primarily in common
stocks of small to medium sized companies that have the
potential for long-term capital appreciation.
(h) United Asset Management--Investment Counselors of Maryland
(UAM-ICM) Small Company Portfolio is invested in common
stocks of smaller companies that have the potential for
long-term capital appreciation.
(i) The Toro Company Common Stock--common stock of The Toro Company.
The investment securities are stated at fair value based upon
published quotations or, in the absence of available quotations, at
fair value as determined by the Trustee. Purchases and sales of
securities are recorded on a trade-date basis.
6 (Continued)
<PAGE>
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
Currently, The Toro Company (the Company) maintains one master trust,
the Toro Stable Value Fund (master trust) for three profit sharing and
retirement plans that are sponsored by the Company. The three plans
are The Toro Company Profit Sharing Plan for Plymouth Union Employees,
The Toro Company Investment and Savings Plan, and The Toro Company
Employee Stock Ownership Plan. The purpose of the master trust is to
pool investment transactions and achieve uniform rates of return on
comparable funds under all plans.
The Plan's share of net investment income from the master trust is
determined by the Trustee based on the ratio of the fair value of the
Plan's equity in the investment fund to the total net assets of the
investment fund at the beginning of the plan year.
The short term securities of the Toro Stable Value Fund are stated at
cost, which approximates fair value. The Toro Stable Value Fund
includes various fully benefit responsive investment contracts. These
contracts are valued in the Plan at contract value, which includes
cost plus accrued interest. These contracts have stated interest rates
ranging from 5.31% to 7.41%. These investments have maturities ranging
from the year 1999 to the year 2002.
(c) ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(2) DESCRIPTION OF PLAN
The Plan is a defined contribution profit sharing plan sponsored by the
Company. The Company, as administrator of the Plan, absorbs all
administrative costs and Trustee fees of the Plan, with the exception of
investment management fees, which are netted against investment income.
A general description of the Plan is contained in the Plan document amended
as of June 24, 1998. Participants should refer to the Plan document for
more complete information.
Contributions are made under control of the plan administrator. The
allocation of the participants' and Company contributions to the investment
funds is selected by the participants.
Benefit payments and transfers of participants' interests are made under
control of the Trustee. Company matching contributions, together with
income attributable thereto, vest at the rate of 20% after one year of
vesting service, with an additional 20% being accumulated annually
thereafter until the participant is 100% vested.
7 (Continued)
<PAGE>
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(3) CONTRIBUTIONS AND PLAN TRANSFERS
The Company's funding policy is to make annual contributions to the Plan in
amounts determined by a formula set forth in the Plan. The contribution
formula is based on 5.5% of the participants' total compensation earned
during the plan year plus 5.5% of the participants' compensation above the
Social Security taxable wage base as of the beginning of the plan year. In
addition, the Company is required to make a matching contribution equal to
50% of the participants' contributions to the Plan not to exceed two
percent of the participant's total compensation. The contribution formula
specifies a minimum annual contribution to the Plan. The Company
contribution is allocated to participants based on compensation earned
during the plan year. Investment income is allocated based on participants'
account balances.
The employee contributions consist of salary reduction elections under a
401(k) feature and rollover funds from other qualified plans.
Transfers to/from other plans represent participant elected transfers
to/from other plans.
(4) PARTY-IN-INTEREST TRANSACTIONS
Putnam Fiduciary Trust Company and The Toro Company are parties-in-interest
with respect to the Plan. In the opinion of the Plan's legal counsel,
transactions between the Plan and the Trustee and the Company are exempt
from being considered as `prohibited transactions' under the Employee
Retirement Income Security Act of 1974 (ERISA) Section 408(b).
(5) PLAN TERMINATION
The Company has voluntarily agreed to make contributions to the Plan.
Although the Company has not expressed any intent to terminate the profit
sharing plan agreement, it may do so at any time. Upon termination of the
Plan, the interest of the participants in the Plan shall fully vest.
(6) INVESTMENTS
Under the terms of the trust agreement, the Trustee manages investment
funds on behalf of the Plan. The Trustee has been granted discretionary
authority concerning the purchases and sales of the investments of the
investment funds. In accordance with the trust agreement, certain assets of
the Plan are held together with assets of other plans sponsored by the
Company in the master trust.
On August 12, 1994, guaranteed investment contracts in the Toro Stable
Value Fund of $2,132,761 issued by Confederation Life Insurance Company
(CL) was placed under court supervised rehabilitation. Beginning August 1,
1995, payments from the CL annuity contracts were suspended pending further
court action until such time as the fair value of the CL annuity contracts
could be determined. The actions suspending distributions were consistent
with procedures published by the Internal Revenue Service.
8 (Continued)
<PAGE>
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
During 1997, the Toro Stable Value Fund received payments of $2,147,799
related to the CL annuity contracts. The amount in excess of the $2,132,761
($15,038) was recorded as investment income in 1997. Any further payments
received upon final liquidation of these contracts will be recorded as
investment income upon receipt.
The net assets available for benefits of the master trust at December 31,
1998 were as follows:
<TABLE>
<CAPTION>
TORO STABLE
VALUE FUND
------------------
<S> <C>
Investments:
Short-term investment funds $ 22,284,879
Guaranteed investment contracts 17,451,245
------------------
Total assets available for benefits $ 39,736,124
------------------
------------------
</TABLE>
The net assets available for benefits of the master trust at December 31,
1997 were as follows:
<TABLE>
<CAPTION>
TORO STABLE
VALUE FUND
------------------
<S> <C>
Investments:
Short-term investment funds $ 15,706,617
Guaranteed investment contracts 20,923,182
------------------
Total assets available for benefits $ 36,629,799
------------------
------------------
</TABLE>
The changes in net assets available for benefits of the master trust for
the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
TORO STABLE
VALUE FUND
------------------
<S> <C>
Investment income (interest and dividends) $ 2,405,039
Deposits by participating plans 1,635,336
Withdrawals by participating plans (934,050)
------------------
Increase in net assets 3,106,325
Net assets available for benefits:
Beginning of year 36,629,799
------------------
End of year $ 39,736,124
------------------
------------------
</TABLE>
9 (Continued)
<PAGE>
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
The changes in net assets available for benefits of the master trust for
the year ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
TORO STABLE
VALUE FUND
------------------
<S> <C>
Investment income (interest and dividends) $ 2,492,450
Deposits by participating plans 1,393,077
Withdrawals by participating plans (5,652,669)
------------------
Decrease in net assets (1,767,142)
Net assets available for benefits:
Beginning of year 38,396,941
------------------
End of year $ 36,629,799
------------------
------------------
</TABLE>
The Plan's proportionate share of net investment income from the master
trust is based upon the percentage of the fair value of the Plan's
investment in the master trust's assets. The Plan's percentage interest in
the net assets of the master trust was approximately 97% as of December 31,
1998 and 1997, and the Plan's share of net investment income was 96% for
the years then ended.
The following investments represent 5% or more of the Plan's net assets
available for plan benefits as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
---------------- ---------------
<S> <C> <C>
Toro Stable Value Fund* $ 38,111,311 35,228,096
Putnam Growth and Income Fund* 47,563,426 40,803,566
Putnam Asset Allocation Growth Portfolio* 10,352,492 8,522,425
Putnam Asset Allocation Balanced Portfolio* 11,837,025 10,353,353
Putnam Voyager Fund* 49,396,518 38,550,901
The Toro Company Common Stock* 19,786,357 21,618,531
*Party-in-interest
</TABLE>
(7) FEDERAL INCOME TAXES
The plan administrator has received a determination letter from the
Internal Revenue Service dated July 18, 1996 stating that the Plan is
qualified under Section 401(a) of the Internal Revenue Code and that the
trust created under the Plan is exempt from federal income taxes under
Section 501(a) of the Code. The plan administrator believes that the Plan
and its related trust continue to qualify under the provisions of Sections
401(a) and 501(a) of the Code and are exempt from federal income taxes.
(8) SUBSEQUENT EVENT
Effective January 1, 1999, the company amended the plan by reducing the
eligibility requirement and requiring new employee minimum contributions to
the plan unless declined by the employee.
10
<PAGE>
SCHEDULE 1
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Item 27a--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
FACE
AMOUNT OR FAIR
DESCRIPTION SHARES COST VALUE
- ---------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Toro Stable Value Fund* 32,865,912 $ 33,526,341 $ 38,111,311
Putnam Growth and Income Fund* 2,321,299 40,553,210 47,563,426
Putnam Asset Allocation Growth Portfolio* 759,537 8,266,678 10,352,492
Putnam Asset Allocation Balanced Portfolio* 985,597 10,033,154 11,837,025
Putnam Asset Allocation Conservative Portfolio* 540,621 5,130,084 5,611,645
Putnam International Growth Fund* 383,346 5,739,638 7,371,753
Putnam Voyager Fund* 2,253,491 37,331,068 49,396,518
UAM ICM Small Company Portfolio 40,899 1,109,093 997,323
The Toro Company Common Stock* 694,258 17,838,748 19,786,357
------------- -------------
Total investments $ 159,528,013 $ 191,027,850
------------- -------------
------------- -------------
</TABLE>
*Party-in-interest.
See accompanying independent auditors' report.
11
<PAGE>
SCHEDULE 2
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Item 27d--Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
PURCHASES SALES FAIR
DESCRIPTION OF ASSETS TRANSACTIONS TRANSACTIONS COST VALUE NET GAIN
- --------------------------------------- ------------ -------------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
5% series of transactions by
Rule 2520.103-6(c)(1)(iii):
Putnam Growth and Income Fund* 179 221 $ 14,810,316 $ 15,498,662 $ 688,346
Putnam Voyager Fund* 203 190 14,181,507 15,072,402 890,895
Toro Stable Value Fund* 172 241 12,168,157 12,585,298 417,141
</TABLE>
*Party-in-interest.
See accompanying independent auditors' report.
12
<PAGE>
] EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The Toro Company:
We consent to incorporation by reference in the Registration Statement No.
33-59563 on Form S-8 of The Toro Company of our report dated June 18, 1999,
relating to the statements of net assets available for plan benefits of The Toro
Company Investment and Savings Plan as of December 31, 1998 and 1997, and the
related statements of changes in net assets available for plan benefits for the
years then ended, with fund information for the years ended December 31, 1998
and 1997 and supplemental schedules as of and for the year ended December 31,
1998 which report is included in Form 11-K of The Toro Company.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
June 29, 1999
