<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, 1999.
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 28, 2000 /s/ Stephen P. Wolfe
------------- --------------------
Stephen P. Wolfe
Vice President - Finance
Chief Financial Officer
<PAGE>
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Financial Statements and Schedule
December 31, 1999 and 1998
<PAGE>
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGES
<S> <C>
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits 2
Statements of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4 - 8
SCHEDULE
1 Item 27a--Schedule of Assets Held for Investment Purposes 9
</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, 1999 and 1998, 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, 1999 and 1998, 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 schedule of
assets held for investment purposes is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is 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 supplemental schedule
has been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
KPMG LLP
Minneapolis, Minnesota
June 19, 2000
<PAGE>
THE TORO COMPANY INVESTMENT AND SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
<S> <C> <C>
Assets held by Trustee:
Investments $ 248,987,475 $ 191,027,850
Employer contribution receivable 7,286,018 6,786,968
Employee contribution receivable 37,770 29,533
---------------- ----------------
Net assets available for plan benefits $ 256,311,263 $ 197,844,351
================ ================
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
THE TORO COMPANY INVESTMENT AND SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
<S> <C> <C>
Investment income:
Interest, dividends, and cash earnings $ 16,178,496 11,307,733
Net appreciation in the fair value of investments 34,268,115 5,239,691
---------------- ----------------
Net investment income 50,446,611 16,547,424
Employer contributions 9,386,976 8,823,345
Employee contributions 8,228,068 7,332,967
Rollover contributions 569,477 672,693
---------------- ----------------
Total contributions 18,184,521 16,829,005
Benefit payments (10,164,210) (9,806,833)
Transfers to other plans (10) (7,052)
---------------- ----------------
Increase in net assets
available for plan benefits 58,466,912 23,562,544
Net assets available for plan benefits:
Beginning of year 197,844,351 174,281,807
---------------- ----------------
End of year $ 256,311,263 197,844,351
================ ================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(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 an accrual basis.
(b) INVESTMENTS
The Plan's investments are held by Putnam Fiduciary Trust Company (the
Trustee). The investment securities are stated at fair values based
upon published quotations or, in the absence of available quotations,
at fair values determined by the Trustee. Purchases and sales of
securities are recorded on a trade-date basis.
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 5.41% to 7.41%. These investments have maturities ranging
from the year 2000 to the year 2003.
(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.
4
<PAGE>
(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 December 21, 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.
(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 Company 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.
5
<PAGE>
(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) were 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. Effective August 1, 1995, a loan agreement was
established between the Company and the Plan providing the Company to
fund payments to plan participants (or their beneficiaries) for 100% of
the interests of plan participants in the CL annuity contracts based on
the valuation of the CL annuity contracts as of August 11, 1994.
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, 1999 were as follows:
<TABLE>
<CAPTION>
TORO STABLE
VALUE FUND
---------------
<S> <C>
Investments:
Short-term investment funds $ 34,690,962
Guaranteed investment contracts 10,031,869
---------------
Total assets available for benefits $ 44,722,831
===============
</TABLE>
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>
6
<PAGE>
The changes in net assets available for benefits of the master trust for
the year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
TORO STABLE
VALUE FUND
--------------
<S> <C>
Investment income (interest and dividends) $ 2,385,233
Deposits by participating plans 10,963,781
Withdrawals by participating plans (8,362,307)
--------------
Increase in net assets 4,986,707
Net assets available for benefits:
Beginning of year 39,736,124
--------------
End of year $ 44,722,831
==============
</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 1,635,847
Withdrawals by participating plans (934,561)
--------------
Decrease in net assets 3,106,325
Net assets available for benefits:
Beginning of year 36,629,799
--------------
End of year $ 39,736,124
==============
</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 95% and 96% as
of December 31, 1999 and 1998, respectively.
7
<PAGE>
The following investments represent 5% or more of the Plan's net assets
available for plan benefits as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
Toro Stable Value Fund* $ 42,395,665 38,111,311
Putnam Fund for Growth and Income* 46,374,395 47,563,426
Putnam Asset Allocation: Growth Fund* 13,217,598 10,352,492
Putnam Asset Allocation: Balanced Fund* 15,096,642 11,837,025
Putnam Voyager Fund* 80,406,689 49,396,518
The Toro Company Common Stock* 26,895,793 19,786,357
Putnam Growth Opportunies Fund - International* 13,845,262 --
</TABLE>
*Party-in-interest
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year, interest,
dividends, and cash earnings) appreciated in value by $50,446,611 as
follows:
<TABLE>
<CAPTION>
1999
-------------------
<S> <C>
Mutual funds $ 41,483,312
Common stock 6,664,780
Master trust fund (Toro Stable Value Fund) 2,298,519
-------------------
$ 50,446,611
===================
</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) RESTATEMENT OF PRIOR YEAR AMOUNTS
The previously reported net assets available for plan benefits as of
December 31, 1997 of $167,342,427 have been restated to $174,281,807 to
reflect contributions receivable of $6,939,380.
8
<PAGE>
SCHEDULE 1
THE TORO COMPANY
INVESTMENT AND SAVINGS PLAN
Item 27a--Schedule of Assets Held for Investment Purposes
December 31, 1999
<TABLE>
<CAPTION>
FACE
AMOUNT OR FAIR
DESCRIPTION SHARES COST VALUE
-------------------------------------------------------------- -------------- ---------------- ----------------
<S> <C> <C> <C>
The Toro Company Common Stock** 719,998 $ 19,772,959 $ 26,895,793
Toro Stable Value Fund* 34,395,315 42,395,665
Putnam Fund for Growth and Income* 2,470,666 46,374,395
Putnam Asset Allocation: Growth Fund* 864,460 13,217,598
Putnam Asset Allocation: Balanced Fund* 1,163,966 15,096,642
Putnam Asset Allocation: Conservative Fund* 629,956 6,652,336
Putnam Growth Opportunities Fund - International* 464,762 13,845,262
Putnam Growth Opportunies Fund* 106,293 3,185,612
Putnam Voyager Fund* 2,544,515 80,406,689
UAM ICM Small Company Portfolio 44,173 917,483
----------------
Total $ 248,987,475
================
</TABLE>
*Party-in-interest.
**Party-in-interest and nonparticipant-directed.
See accompanying independent auditors' report.
9
