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 (FEE REQUIRED)
For the fiscal year ended July 31, 1994
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from____________________to_________________
Commission file number_______________________________
A. The Toro Company Matching Stock Plan
B. The Toro Company
8111 Lyndale Avenue South
Minneapolis, MN 55420
REQUIRED INFORMATION
The following financial statements are 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 of 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 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 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 Matching Stock Plan
------------------------------------
(Name of Plan)
Date January 26, 1995 /s/ Gerald T. Knight
---------------- -------------------------------------
Gerald T. Knight
Vice President - Finance
Chief Financial Officer
THE TORO COMPANY
MATCHING STOCK PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
July 31, 1994 and 1993
1994 1993
---- ----
Assets held by trustee:
Investments:
First Common Short Term Investment Fund $ 12,058 $ 15,210
Toro Investment Fund A 71,543 13,155
Toro Investment Fund B 16,480 5,302
The Toro Company Common Stock 8,435,935 6,410,554
Other receivables 355 186
--------- ---------
Total assets held by trustee 8,536,371 6,444,407
Employer contributions receivable 309,544 268,383
Employee contributions receivable 77,111 67,491
Forfeitures payable (30,188) (36,134)
-------- --------
Net assets available for benefits $ 8,892,838 $ 6,744,147
---------- -----------
---------- -----------
See accompanying notes to financial statements.
THE TORO COMPANY
MATCHING STOCK PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended July 31, 1994, 1993 and 1992
1994 1993 1992
---- ---- ----
Investment income related to assets held by
trustee:
Interest $ 6,994 $ 3,829 $4,500
Dividends 3,122 3,256 117,444
Net appreciation (depreciation)
in the fair value of investments 821,586 1,996,750 (714,344)
-------- --------- -------
Total investment income (loss) 831,702 2,003,835 (592,400)
Employer contributions 587,346 512,458 277,994
Employee contributions 1,188,251 1,043,869 1,109,644
Benefit payments (428,141) (400,614) (392,730)
Cash management fee (279) (254) (243)
Forfeitures (30,188) (36,134) (27,357)
-------- -------- --------
Increase in net assets available for benefits 2,148,691 3,123,160 374,908
Net assets available for benefits:
Beginning of year 6,744,147 3,620,987 3,246,079
--------- --------- ---------
End of year $8,892,838 $6,744,147 $3,620,987
---------- ---------- ----------
---------- ---------- ----------
See accompanying notes to financial statements.
THE TORO COMPANY MATCHING STOCK PLAN
NOTES TO FINANCIAL STATEMENTS
July 31, 1994 and 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF STATEMENT PRESENTATION
The accompanying financial statements of The Toro Company Matching Stock
Plan (the Plan) are presented in accordance with generally accepted
accounting principles.
INVESTMENTS
The investment in 372,859 and 324,585 shares of The Toro Company common
stock is stated at quoted market price at July 31, 1994 and 1993,
respectively. The cost of the investment at July 31, 1994 and 1993
was $7,084,969 and $5,727,104, respectively and is determined on an
average cost basis.
The First Common Short Term Investment Fund is limited to bonds, notes,
certificates of deposit, variable rate notes and other evidences of
indebtedness that are payable on demand or that have a maturity rate
not exceeding 91 days from the date of purchase. The First Common
Short Term Investment Fund is stated at cost which approximates market
value.
The Toro Company has established a master trust consisting of three
investment funds with First National Trust Association (the Trustee)
for seven plans: The Toro Company Profit-Sharing Plan and Trust
Agreement for Office Employees, The Toro Company Profit-Sharing Plan
and Trust Agreement for Hourly Employees, The Toro Company Profit-
Sharing Plan and Trust Agreement for Windom Factory Employees, The
Toro Company Profit-Sharing Plan and Trust Agreement for Minneapolis
Factory Employees, The Toro Company Matching Stock Plan, The Toro
Company Employee Stock Ownership Plan and The Lawn-Boy Inc. Profit-
Sharing Plan and Trust Agreement for Plymouth Union Employees. The
purpose of this combination is to pool investment transactions and
achieve uniform rates of return on comparable funds under all plans.
The plans have deposited funds in certain of the investment funds of
the Trust Fund and each owns an undivided interest in net assets of
the investment funds based on its equity in the investment funds. The
investment securities of the investment funds are stated at market
value based upon published quotations or, in the absence of available
quotations, on fair values determined by the Trustee. Guaranteed
investment contracts are stated at contract value (cost plus accrued
interest). Gains and losses on the sales of investment securities are
recorded on the date of the trade. The Plan's share of net investment
income from the investment funds is determined by the Trustee based on
the ratio of the fair value of the Plan's equity in the investment
funds to the total net assets of the Trust at the beginning of the
plan year. Financial information on the investment funds is presented
in note 6.
(Continued)
2
TORO COMPANY MATCHING STOCK PLAN
(1) INVESTMENTS (Continued)
Toro Investment Fund A is invested in a fixed income fund that provides a
guaranteed income. The fund is comprised primarily of insurance
contracts. All investments in Fund A are AAA graded by Standard
and Poors at the time of purchase.
Toro Investment Fund B is composed of selected medium to large sized common
stocks which are chosen to represent the U.S. stock market.
(2) DESCRIPTION OF PLAN
The Plan became effective as of August 1, 1988, and has approximately 1,400
active participants. The purpose of the Plan is to provide certain
eligible employees of The Toro Company and its participating
subsidiaries (referred to together as the "Company") with an
opportunity to save part of their compensation on a pre-tax basis
(and, if an employee so elects, on an after-tax basis) and to have
those savings accumulate in a tax-deferred investment account which is
invested in the common stock of the Company and distributed after
termination of active employment. The Company, as administrator of
the Plan, absorbs the major portion of the administrative costs and
trustee fees of the Plan.
A participant may agree to have his or her salary reduced on a pre-tax
basis, after-tax basis or a combination thereof at rates ranging up to
4% of annual compensation through an automatic payroll deduction each
payroll period, provided that such deductions may not exceed $2,400 in
any Plan year.
The Company will make contributions to the Plan on behalf of each
participant who makes pre-tax or after-tax contributions to the
Plan.These Company matching contributions consist of basic matching
contributions and performance-based matching contributions, as
described below.
The Company's basic matching contribution will be equal to 25% of the sum
of the amounts contributed by a participant to the Plan.
If the Company meets certain financial goals as defined by its Board of
Directors, the Company may make performance based matching
contributions to the Plan. If the specified financial goals are
achieved, the performance-based matching contribution may be equal to
an additional 25% of a participant's compensation which is contributed
to the Plan.
(Continued)
3
TORO COMPANY MATCHING STOCK PLAN
(2) DESCRIPTION OF PLAN (Continued)
A participant is eligible to receive a performance-based matching
contribution only if he or she is enrolled in the Plan on the last day
of the Plan year.
Company matching contributions and performance-based matching contributions
together with income attributable thereto will vest at the rate of 20%
after two years of vesting service, with an additional 20% being
accumulated annually thereafter until the employee is 100% vested.
Plan earnings are allocated to participants based on individual
account balances. Forfeitures are applied towards future Company
contributions.
Contributions and benefit payments are made under control of the plan
administrator.
(3) FUNDING POLICY
The Company's funding policy is to make monthly basic contributions and
annual performance-based matching contributions to the Plan up to
amounts allowed by the Internal Revenue Service. The
performance-based contribution is determined by the Board of Directors
of The Toro Company and is based on the specified financial goals.
The employee contributions consist of salary reduction elections under a
401(k) plan, as well as after-tax contributions.
(4) PARTY-IN-INTEREST TRANSACTIONS
The First Trust National Association (trustee) is a party-in-interest with
respect to the Plan. In the opinion of the Plan's legal counsel,
transactions between the Plan, the trustee and The Toro 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 Toro Company has voluntarily agreed to make contributions to the Plan.
Although the Company has not expressed any intent to terminate the
Plan, it may do so at any time. Upon the termination of the plan, the
interest of the participants in the Trust Fund shall fully vest. The
trustee shall liquidate the Trust Fund, distributing benefits to the
Participants or their beneficiaries. The Trustee shall reserve
amounts as may be required to pay any expenses of termination,
liquidation and distribution and shall then segregate each
Participant's Trust Fund Share in a special account.
(Continued)
4
THE TORO COMPANY MATCHING STOCK PLAN
(6) MASTER TRUST
Under the terms of the Trust Agreement, the Trustee manages Trust Funds on
behalf of the Plan. 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. The Trustee has been
granted discretionary authority concerning the purchases and sales of
the investments of the Trust Funds.
The net assets available for plan benefits of the Master Trust at July 31,
1994 were as follows:
Toro Toro Toro
Investment Investment Investment
Fund A Fund B Fund C
---------- ---------- ----------
Investments:
Short term investment funds $ 2,113,024 4,692 18,267
Guaranteed investment contracts 65,342,674 - -
IAI Stable Income Fund 2,944,590 - -
Common stocks - 5,670,892 3,810,789
------------- --------- ---------
Total Investments 70,400,288 5,675,584 3,829,056
Accrued investment income 1,524,052 33 40
---------- --------- ---------
Total assets available for benefits $ 71,924,340 5,675,617 3,829,096
----------- --------- ---------
----------- --------- ---------
The net assets available for plan benefits of the Master Trust at July 31,
1993 were as follows:
Toro Toro Toro
Investment Investment Investment
Fund A Fund B Fund C
---------- ---------- ----------
Investments:
Short term investment funds $ 1,692,328 32,065 7,479
Guaranteed investment contracts 62,847,694 - -
Common stocks - 4,735,545 3,217,709
------------- --------- ---------
Total Investments 64,540,022 4,767,610 3,225,188
Accrued investment income 1,501,368 21 16
------------ ---------- ----------
Total assets available for benefits $ 66,041,390 4,767,631 3,225,204
------------ --------- ---------
------------ --------- ---------
(Continued)
5
THE TORO COMPANY MATCHING STOCK PLAN
(6) MASTER TRUST (CONTINUED)
The changes in net assets available for plan benefits of the Master Trust
for the year ended July 31, 1994 were as follows:
Toro Toro Toro
Investment Investment Investment
Fund A Fund B Fund C
---------- ---------- ----------
Investment income:
Interest and dividends $ 4,686,208 928 1,273
Net appreciation (depreciation) in the
fair value of investments (9,782) 224,011 198,125
Gain on sales of investments 158,380 47,336 61,490
------------- ------- -------
Total investment income 4,834,806 272,275 260,888
Commissions, fees and expenses 43,382 7,940 13,892
------------- -------- -------
Net investment income 4,791,424 264,335 246,996
Deposits by participating plans 2,835,846 643,651 769,205
Withdrawals by participating plans (1,744,320) - (412,309)
---------- --------- ---------
Increase in net assets 5,882,950 907,986 603,892
Net assets available for pension benefits:
Beginning of period 66,041,390 4,767,631 3,225,204
---------- --------- ---------
End of period $ 71,924,340 5,675,617 3,829,096
----------- --------- ---------
----------- --------- ---------
(Continued)
6
THE TORO COMPANY MATCHING STOCK PLAN
(6) MASTER TRUST (CONTINUED)
The changes in net assets available for plan benefits of the Master Trust
for the year ended July 31, 1993 were as follows:
Toro Toro Toro
Investment Investment Investment
Fund A Fund B Fund C
---------- ---------- ----------
Investment income:
Interest and dividends $ 4,640,295 1,448 938
Net appreciation in the fair
value of investments 25,185 357,559 230,806
Gain (loss) on sales of investments (71,375) 21,909 810
--------- --------- ---------
Total investment income 4,594,105 380,916 232,554
Commissions, fees and expenses 50,892 16,497 21,002
--------- --------- ---------
Net investment income 4,543,213 364,419 211,552
Deposits by participating plans - 502,566 166,971
Withdrawals by participating plans (1,724,286) - -
---------- --------- ---------
Increase in net assets 2,818,927 866,985 378,523
Net assets available for pension benefits:
Beginning of period 63,222,463 3,900,646 2,846,681
---------- --------- ---------
End of period $ 66,041,390 4,767,631 3,225,204
----------- --------- ---------
----------- --------- ---------
The plans 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 each Toro Investment Fund assets to the total Toro
Investment Fund assets.
The plan's percentage interest in the net assets of the Master Trust are as
follows:
July 31, 1994 July 31, 1993
------------- -------------
Toro Investment Fund A 0.010% 0.002%
Toro Investment Fund B 0.300% 0.001%
Toro Investment Fund C 0.000% 0.000%
The data presented above have been derived from information certified as
complete and accurate by the Trustee.
(Continued)
7
THE TORO COMPANY MATCHING STOCK PLAN
(7) FEDERAL INCOME TAXES
The plan administrator anticipates filing for a determination letter from
the Internal Revenue Service stating that the Plan and all amendments
to the Plan are 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 the Plan and all amendments to the Plan will
qualify under the provisions of Sections 401(a) and 501(a) of the
Code and be exempt from Federal income taxes.
(8) INVESTMENTS
The following investments represent 5% or more of the Plan's net assets
available for plan benefits at July 31, 1994 and 1993:
Market Value
--------------------
1994 1993
--------- ---------
Toro Company Common Stock 8,435,135 6,410,554
SCHEDULE 1
THE TORO COMPANY
MATCHING STOCK PLAN
Item 27a - Schedule of Assets Held For Investment Purposes
July 31, 1994
Face Amount Market
Description or shares Cost value
- ----------- ----------- ------- --------
*First Common Short Term Investment Fund 12,058 $ 12,058 $ 12,058
Toro Investment Fund A 1,359 71,556 71,543
Toro Investment Fund B 231 16,153 16,480
*The Toro Company Common Stock 372,859 7,084,969 8,435,935
---------- ---------
Total Investments $7,184,736 $8,536,016
--------- ---------
--------- ---------
*Party-in-interest
See accompanying independent auditors' report.
SCHEDULE 2
THE TORO COMPANY
MATCHING STOCK PLAN
Item 27d - Schedule of Reportable Transactions
Year Ended July 31, 1994
Series of transactions involving a single security which, in the aggregate,
involves an amount more than 5% of beginning of year Plan assets at current
value.
Number of Total dollar amount Net gain
---------------- -------------------
Security issue Purchases Sales Purchases Sales (loss)
- -------------- --------- ----- --------- ----- --------
*First Common Short Term
Investment Fund 56 34 $2,036,717 $2,039,868 $ -
*The Toro Company
Common Stock 13 - 1,687,977 - -
*Party-in-interest
See accompanying independent auditors' report.
INDEPENDENT AUDITORS' REPORT
The Plan Administrator
The Toro Company Matching Stock Plan:
We have audited the accompanying statements of net assets available for benefits
of The Toro Company Matching Stock Plan (the Plan) as of July 31, 1994 and 1993,
and the related statements of changes in net assets available for benefits for
each of the years in the three-year period ended July 31, 1994. 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 benefits as of July 31, 1994
and 1993, and the changes in net assets available for benefits for each of the
years in the three-year period ended July 31, 1994 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 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
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. The supplemental schedules 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.
KPMG Peat Marwick LLP
December 29, 1994
