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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended April 28, 2000 Commission File Number 1-8649
THE TORO COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 41-0580470
(State of Incorporation) (I.R.S. Employer Identification Number)
8111 LYNDALE AVENUE SOUTH
BLOOMINGTON, MINNESOTA 55420
TELEPHONE NUMBER: (952) 888-8801
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares of Common Stock outstanding as of May 31, 2000 was
12,652,619.
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THE TORO COMPANY
INDEX TO FORM 10-Q
PAGE NUMBER
PART I. FINANCIAL INFORMATION:
ITEM 1. Condensed Consolidated Statements of Earnings (Unaudited) -
Three and Six Months Ended April 28, 2000 and April 30, 1999......................................3
Condensed Consolidated Balance Sheets (Unaudited) -
April 28, 2000, April 30, 1999 and October 31, 1999...............................................4
Condensed Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended April 28, 2000 and April 30, 1999................................................5
Notes to Condensed Consolidated Financial Statements (Unaudited).....................................6-9
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................................................10-17
PART II. OTHER INFORMATION:
ITEM 4. Submission of Matters to a Vote of Security Holders..................................................18
ITEM 6. Exhibits and Reports on Form 8-K....................................................................18-19
Signatures...........................................................................................20
2
PART I. ITEM 1. FINANCIAL INFORMATION
THE TORO COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER-SHARE DATA)
Three Months Ended Six Months Ended
-----------------------------------------------------------------------------
April 28, April 30, April 28, April 30,
2000 1999 2000 1999
----------------- ----------------- ----------------- -----------------
Net sales...........................................$ 441,799 $ 433,108 $ 722,038 $ 683,869
Cost of sales....................................... 279,850 280,255 460,150 443,072
----------------- ----------------- ----------------- -----------------
Gross profit................................. 161,949 152,853 261,888 240,797
Selling, general, and administrative expenses....... 108,718 106,775 202,718 189,136
----------------- ----------------- ----------------- -----------------
Earnings from operations..................... 53,231 46,078 59,170 51,661
Interest expense.................................... (7,652) (6,697) (13,409) (11,727)
Other income (expense), net......................... (2,860) 78 (1,581) 863
----------------- ----------------- ----------------- -----------------
Earnings before income taxes................. 42,719 39,459 44,180 40,797
Provision for income taxes.......................... 15,799 15,369 16,347 15,911
----------------- ----------------- ----------------- -----------------
Net earnings.................................$ 26,920 $ 24,090 $ 27,833 $ 24,886
================= ================= ================= =================
Basic net earnings per share of common stock........$ 2.11 $ 1.86 $ 2.17 $ 1.91
================= ================= ================= ===================
Dilutive net earnings per share of common stock..... $ 2.08 $ 1.83 $ 2.13 $ 1.88
================= ================= ================= ==================
Weighted average number of shares of common stock
outstanding - Basic.......................... 12,734 12,922 12,826 13,030
Weighted average number of shares of common stock
outstanding - Dilutive....................... 12,958 13,163 13,081 13,241
See accompanying notes to condensed consolidated financial statements.
3
THE TORO COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
April 28, April 30, October 31,
2000 1999 1999
----------------- ----------------- ------------------
ASSETS
Cash and cash equivalents.............................................$ 902 $ 3,341 $ 11,960
Receivables, net...................................................... 456,665 439,423 268,344
Inventories, net...................................................... 241,924 185,699 204,430
Prepaid expenses and other current assets............................. 9,218 8,869 6,116
Deferred income taxes................................................. 40,584 38,526 40,892
----------------- ----------------- ------------------
Total current assets.......................................... 749,293 675,858 531,742
----------------- ----------------- ------------------
Property, plant, and equipment........................................ 365,219 336,990 353,808
Less accumulated depreciation................................. 237,069 214,916 229,636
----------------- ----------------- ------------------
128,150 122,074 124,172
Deferred income taxes................................................. 8,876 3,786 8,876
Goodwill and other assets............................................. 129,712 129,506 122,388
----------------- ----------------- ------------------
Total assets..................................................$ 1,016,031 $ 931,224 $ 787,178
================= ================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt.....................................$ 490 $ 624 $ 637
Short-term debt....................................................... 235,488 183,909 56,461
Accounts payable...................................................... 66,145 57,965 65,543
Other accrued liabilities............................................. 205,100 197,908 183,164
----------------- ----------------- ------------------
Total current liabilities..................................... 507,223 440,406 305,805
----------------- ----------------- ------------------
Long-term debt, less current portion.................................. 195,584 196,758 195,600
Other long-term liabilities........................................... 6,594 5,938 6,110
Stockholders' equity:
Stock, par value $1.00, authorized 35,000,000 shares; issued and outstanding
12,643,274 shares at April 28, 2000 (net of 864,781 treasury shares),
12,916,010 shares at April 30, 1999 (net of 592,045 treasury shares),
and 12,569,309 shares at October 31, 1999 (net of
938,746 treasury shares)...................................... 12,643 12,916 12,569
Additional paid-in capital........................................... 49,298 58,904 45,343
Retained earnings.................................................... 254,321 222,425 229,532
Accumulated comprehensive loss....................................... (9,632) (6,123) (7,781)
----------------- ------------------ -------------------
Total stockholders' equity.................................... 306,630 288,122 279,663
----------------- ----------------- ------------------
Total liabilities and stockholders' equity....................$ 1,016,031 $ 931,224 $ 787,178
================= ================= ===================
See accompanying notes to condensed consolidated financial statements.
4
THE TORO COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
Six Months Ended
-----------------------------------------------
April 28, April 30,
2000 1999
------------------- -------------------
Cash flows from operating activities:
Net earnings................................................................... $ 27,833 $ 24,886
Adjustments to reconcile net earnings to net cash used in operating
activities:
Provision for depreciation and amortization................................. 17,822 17,838
(Gain) loss on disposal of property, plant, and equipment................... (7) 207
Deferred income taxes....................................................... 308 910
Tax benefits related to employee stock option transactions.................. - 198
Changes in operating assets and liabilities:
Receivables, net....................................................... (195,812) (197,997)
Inventories, net....................................................... (30,332) (1,393)
Prepaid expenses and other current assets.............................. (3,090) 5,311
Accounts payable and accrued expenses.................................. 27,095 30,346
------------------- -------------------
Net cash used in operating activities.............................. (156,183) (119,694)
------------------- -------------------
Cash flows from investing activities:
Purchases of property, plant, and equipment................................. (17,719) (10,286)
Proceeds from asset disposals............................................... 1,025 240
Decrease (increase) in investment in affiliates............................. 1,127 (4,908)
Increase in other assets.................................................... (2,591) (1,814)
------------------ -------------------
Net cash used in investing activities.............................. (18,158) (16,768)
------------------- -------------------
Cash flows from financing activities:
Increase in short-term debt................................................. 177,225 152,909
Repayments of long-term debt................................................ (266) (156)
Increase in other long-term liabilities..................................... 419 376
Proceeds from exercise of stock options..................................... 709 1,272
Purchases of common stock................................................... (9,909) (12,021)
Dividends on common stock................................................... (3,044) (3,070)
------------------- -------------------
Net cash provided by financing activities.......................... 165,134 139,310
------------------- -------------------
Foreign currency translation adjustment........................................ (1,851) 403
------------------- -------------------
Net (decrease) increase in cash and cash equivalents........................... (11,058) 3,251
Cash and cash equivalents at beginning of period............................... 11,960 90
------------------- -------------------
Cash and cash equivalents at end of period.....................................$ 902 $ 3,341
=================== ===================
See accompanying notes to condensed consolidated financial statements.
5
THE TORO COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
APRIL 28, 2000
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not include all
the information and notes required by generally accepted accounting principles
for complete financial statements. Unless the context indicates otherwise, the
terms "company" and "Toro" refer to The Toro Company and its subsidiaries. In
the opinion of management, the unaudited condensed consolidated financial
statements include all adjustments, consisting primarily of recurring accruals,
considered necessary for a fair presentation of the financial position and the
results of operations. Since the company's business is seasonal, operating
results for the six months ended April 28, 2000 are not necessarily indicative
of the results that may be expected for the fiscal year ending October 31, 2000.
Certain amounts from prior period's financial statements have been reclassified
to conform to this period's presentation.
For further information, refer to the consolidated financial statements and
notes included in the company's Annual Report on Form 10-K for the year ended
October 31, 1999. The policies described in that report are used for preparing
quarterly reports.
INVENTORIES
The majority of inventories are valued at the lower of cost or net realizable
value with cost determined by the last-in, first-out (LIFO) method for most
inventories.
Inventories were as follows:
(Dollars in thousands) April 28, April 30,
2000 1999
------------- -------------
Raw materials and work in process....................$ 76,716 $ 76,045
Finished goods....................................... 208,875 155,762
------------- -------------
285,591 231,807
Less LIFO and other reserves......................... 43,667 46,108
------------- -------------
Total $ 241,924 $ 185,699
============= =============
RESTRUCTURING AND OTHER UNUSUAL EXPENSE
At April 28, 2000, the company had $1.4 million of restructuring and other
unusual expense remaining in other accrued liabilities The company has utilized
$.9 million of these reserves since October 31, 1999. The company expects the
majority of these reserves to be utilized when the closed facilities available
for sale are sold.
6
COMPREHENSIVE INCOME
Comprehensive income is comprised of two components: net earnings and other
comprehensive (loss) income. Other comprehensive (loss) income refers to
revenues, expenses, gains, and losses that under generally accepted accounting
principles are recorded as an element of stockholders' equity and are excluded
from net earnings. Toro's other comprehensive (loss) income is comprised of
foreign currency translation adjustments from certain foreign subsidiaries.
The components of comprehensive income were as follows:
Three Months Ended Six Months Ended
--------------------------------- ----------------------------
(Dollars in thousands) April 28, April 30, April 28, April 30,
2000 1999 2000 1999
------------- ------------ ------------ ------------
Net earnings..........................................$ 26,920 $ 24,090 $ 27,833 $ 24,886
Other comprehensive (loss) income..................... (1,824) 563 (1,851) 403
------------- ------------ ------------ ------------
Comprehensive income..................................$ 25,096 $ 24,653 $ 25,982 $ 25,289
============= ============ ============ ============
NET EARNINGS PER SHARE
Reconciliations of basic and dilutive weighted average shares of common stock
outstanding are as follows:
Three Months Ended Six Months Ended
------------------------------- ---------------------------
BASIC April 28, April 30, April 28, April 30,
(Shares in thousands) 2000 1999 2000 1999
------------ ------------- ------------ ------------
Weighted average number of shares of common
stock outstanding.................................... 12,734 12,922 12,701 12,775
Assumed issuance of contingent shares ...................... - - 125 255
------------ ------------- ------------ ------------
Weighted average number of shares of common stock
and assumed issuance of contingent shares............ 12,734 12,922 12,826 13,030
============ ============= ============ ============
DILUTIVE
(Shares in thousands)
Weighted average number of shares of common stock
and assumed issuance of contingent shares............ 12,734 12,922 12,826 13,030
Assumed conversion of stock options......................... 224 241 255 211
------------ ------------- ------------ ------------
Weighted average number of shares of common stock,
assumed issuance of contingent shares, and
assumed conversion of stock options.................. 12,958 13,163 13,081 13,241
============ ============= ============ ============
7
SEGMENT DATA
The presentation of segment information reflects the manner in which management
organizes segments for making operating decisions and assessing performance. On
this basis, the company has determined it has two reportable business segments:
Professional and Residential. The other segment consists of company-owned
distributor operations and corporate activities, including corporate financing
activities and elimination of intersegment revenues and expenses.
The following table shows the summarized financial information concerning the
company's reportable segments:
(Dollars in thousands)
THREE MONTHS ENDED APRIL 28, 2000: Professional Residential Other Total
------------ ----------- ----- -----
Net sales......................................................$272,414 $158,387 $10,998 $441,799
Intersegment net sales...........................................25,646 5,635 (31,281) -
Earnings (loss) before income taxes..............................42,278 15,445 (15,004) 42,719
THREE MONTHS ENDED APRIL 30, 1999:
Net sales......................................................$268,622 $163,778 $708 $433,108
Intersegment net sales............................................8,824 1,374 (10,198) -
Earnings (loss) before income taxes..............................49,088 11,835 (21,464) 39,459
(Dollars in thousands)
SIX MONTHS ENDED APRIL 28, 2000: Professional Residential Other Total
------------ ----------- ----- -----
Net sales......................................................$458,305 $255,206 $8,527 $722,038
Intersegment net sales...........................................38,154 9,285 (47,439) -
Earnings (loss) before income taxes..............................60,337 21,360 (37,517) 44,180
Total assets....................................................508,021 182,318 325,692 1,016,031
SIX MONTHS ENDED APRIL 30, 1999:
Net sales......................................................$425,407 $257,416 $1,046 $683,869
Intersegment net sales...........................................14,154 1,936 (16,090) -
Earnings (loss) before income taxes..............................63,684 16,391 (39,278) 40,797
Total assets....................................................440,341 187,704 303,179 931,224
The following table presents the details of the other segment earnings (loss)
before income taxes:
Three Months Ended Six Months Ended
--------------------------------- -----------------------------
(Dollars in thousands) April 28, April 30, April 28, April 30,
2000 1999 2000 1999
------------ ------------- ------------ ------------
Corporate expenses..............................................$(15,561) $(17,635) $(33,183) $(33,252)
Finance charge revenue.............................................1,420 1,056 2,737 2,120
Elimination of corporate financing expense.........................5,181 5,307 8,400 7,876
Interest expense, net.............................................(7,652) (6,697) (13,409) (11,727)
Other..............................................................1,608 (3,495) (2,062) (4,295)
----- ------ ------ ------
Total...........................................................$(15,004) $(21,464) $(37,517) $(39,278)
======== ======== ======== ========
8
NEW ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission (SEC) staff issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
(SAB 101). SAB 101 summarizes certain SEC staff views in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB 101 will be effective for the company in the first quarter of fiscal year
2001. Toro is currently evaluating the impact of SAB 101 on its financial
condition and results of operations.
During fiscal 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
133 establishes new standards for recognizing all derivatives as either assets
or liabilities, and measuring those instruments at fair value. The new standard
will be effective for the company in the first quarter of fiscal year 2001. The
company is in the process of evaluating the impact of SFAS 133 on its financial
condition and results of operations.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD-LOOKING INFORMATION
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. In addition, forward-looking statements may be made orally
or in press releases, conferences, reports, on the company's websites or
otherwise, in the future by or on behalf of the company.
Statements that are not historical are forward-looking. When used by or on
behalf of the company, the words "expect," "anticipate," "estimate," "believe,"
"intend," and similar expressions generally identify forward-looking statements.
Forward-looking statements involve risks and uncertainties. These uncertainties
include factors that affect all businesses operating in a global market, as well
as matters specific to the company and the markets it serves. Particular risks
and uncertainties facing the company at the present include inflationary
pressures and rising interest rates that could slow the economic growth that has
been important to the growth of the company's professional businesses, including
golf, agricultural irrigation, and landscape contractor markets; increasing oil
prices that raise the cost of resin; a slow down in new golf course
construction; a decline in the growth rate in number of new golfers, which
affects new golf course construction; higher average short-term debt costs for
anticipated higher working capital needs; whether the announced 5 by Five profit
improvement program will be successful; the company's ability to develop and
manufacture new and existing products based on anticipated investments in
manufacturing capacity and engineering; market acceptance of existing and new
products relative to expectations and based on current commitments to fund
advertising and promotions; the company's ability to acquire, develop, and
integrate new businesses and manage alliances successfully; success of a
distribution initiative designed to develop a distribution model; increased
competition in the company's businesses from competitors that have greater
financial resources, including competitive pricing pressures; changing buying
patterns affecting the company's residential segment, including but not limited
to a trend away from purchases at dealer outlets to price and value sensitive
purchases at hardware stores, home centers, and mass retailers; potential impact
of the Internet and e-commerce on the company's business; changes in distributor
ownership; loss of, or a significant reduction in, sales through a significant
distribution channel, particularly as the company's residential segment becomes
more dependent on home center sales; the company's expansion into selected home
center markets and effects on other product lines; unforeseen difficulties in
the implementation of strategies to use outside providers for warehousing and
transportation services; changes in distributors', dealers', home centers', or
mass retailers' purchasing practices; the company's ability to cost-effectively
open new and expand existing manufacturing facilities; the company's ability to
manage costs and capacity constraints at its manufacturing facilities;
socio-economic conditions in certain international markets; the degree of
success from restructuring actions undertaken at the Australian subsidiary; the
continuing relative strength of the dollar against the euro, which increases the
cost of the company's products in foreign markets and impairs its ability to
increase prices; the decline of the U.S dollar against the Japanese yen, which
increases costs of certain inventory components that in turn could negatively
affect gross margins; competitive implications and price transparencies related
to the euro conversion; whether the 1998 profit improvement plan will continue
to be successful in reducing costs and improving margins and use of assets; the
ability to retain and hire quality employees; and the impact of new accounting
standards.
In addition, the company is subject to risks and uncertainties facing its
industry in general, including changes in business and political conditions and
the economy in general in both foreign and domestic markets; rising interest
rates; weather conditions affecting demand, including warm winters and wet
spring and dry summer weather; unanticipated problems or costs associated with
the transition of European currencies to the common euro currency; a slowing in
housing starts or new golf course starts; inability to raise prices of products
due to market conditions; changes in market demographics; actions of
competitors; seasonal factors in the company's industry; unforeseen litigation;
government action, including budget levels, regulation, and legislation,
primarily legislation relating to the environment, commerce, infrastructure
spending, health, and safety; availability of raw materials; and the company's
ability to maintain good relations with its union employees.
The company wishes to caution readers not to place undue reliance on any
forward-looking statement and to recognize that the statements are not
predictions of actual future results. Actual results could differ materially
from those anticipated in the forward-looking statements and from historical
results, due to the risks and uncertainties described above, as well as others
not now anticipated. The foregoing statements are not exclusive and further
information concerning the company and its businesses, including factors that
potentially could materially affect the company's financial results, may emerge
from time to time. It is not possible for management to predict all risk factors
or to assess the impact of such risk factors on the company's business.
10
RESULTS OF OPERATIONS
Toro's results for the second quarter of fiscal 2000 were positive with a strong
profitability increase on overall modest sales growth. Fiscal 2000 second
quarter net sales increased 2.0 percent to $441.8 million from $433.1 million
for the second quarter of fiscal 1999. Net earnings increased 11.7 percent to
$26.9 million from $24.1 million for the same quarter in fiscal 1999, and
dilutive earnings per share for the quarter rose 13.7 percent to $2.08 from
$1.83 in fiscal 1999 second quarter. Worldwide sales for the professional
segment rose 1.4 percent compared to last year's second quarter with significant
increases in the landscape contractor market somewhat offset by declines in the
golf market, mainly because of lower irrigation system sales. Worldwide sales
for the residential segment fell 3.3 percent compared to last year's second
quarter due to the divestiture and discontinuance of non-performing product
lines and lower sales of walk power mowers and riding products, offset slightly
by higher sales of electric trimmers and blowers and do-it-yourself irrigation
products. The other segment net sales increased substantially mainly due to
sales contributed by three additional Toro-owned distributorships acquired in
the second half of calendar 1999. The profitability growth was led by improved
gross margins in the residential segment as well as additional profitability
from the newly acquired company-owned distributors, which was slightly offset by
lower profitability from the professional segment due to lower gross margins,
unfavorable currency fluctuations, and a reserve related to an investment in a
technology company.
Year-to-date net sales were $722.0 million compared to $683.9 million last year,
an increase of 5.6 percent. Net earnings were $27.8 million compared to $24.9
million last year, an increase of 11.8 percent, and dilutive earnings per share
for the year were $2.13 compared to $1.88 last year. Worldwide sales for the
professional segment grew 7.7 percent over last year led by significant
increases in sales to the landscape contractor market and higher sales of
residential/commercial irrigation systems, somewhat offset by declines in sales
to the golf irrigation and agricultural irrigation markets. Worldwide sales for
the residential segment were down slightly by 0.9 percent. Snowthrowers,
electric trimmers and blowers, and do-it-yourself irrigation product sales were
up, however, sales of walk power mowers and riding products were down. The
elimination of sales from non-performing product lines due to the divestiture
and discontinuance also contributed to the decrease. Sales for the residential
segment would have been up 4.0 percent without the elimination of these
non-performing product lines. The other segment net sales increased
substantially mainly due to the acquisition of three distributorships in the
second half of calendar 1999. The profitability improvement for the first half
of fiscal 2000 was due to the same reasons noted above in the quarter
comparison.
Toro recently announced a new profit improvement program called "5 by Five." The
goal of this program is to achieve an after tax return on sales of 5 percent by
the year 2003. The major initiatives to achieve this goal include: revising and
transforming how Toro manufactures, purchases, distributes, markets, and
services products; improving lower performing product lines or discontinuing
them; and reviewing the company's expense structure to eliminate low-value
activities.
The following table summarizes net sales by segment:
THREE MONTHS ENDED
(Dollars in thousands) April 28, April 30,
2000 1999 $ CHANGE % CHANGE
---------- ------------- -------------- --------------
Professional...........................................$ 272,414 $ 268,622 $ 3,792 1.4%
Residential............................................ 158,387 163,778 (5,391) (3.3)
Other.................................................. 10,998 708 10,290 1453.4
------------- ------------- --------------
Total *............................................$ 441,799 $ 433,108 $ 8,691 2.0%
============= ============= ==============
* Includes international sales of......................$ 87,952 $ 86,340 $ 1,612 1.9%
SIX MONTHS ENDED
(Dollars in thousands) April 28, April 30,
2000 1999 $ CHANGE % CHANGE
---------- ------------- -------------- --------------
Professional...........................................$ 458,305 $ 425,407 $ 32,898 7.7%
Residential............................................ 255,206 257,416 (2,210) (0.9)
Other.................................................. 8,527 1,046 7,481 715.2
------------- ------------- --------------
Total *............................................$ 722,038 $ 683,869 $ 38,169 5.6%
============= ============= ==============
* Includes international sales of......................$ 155,887 $ 144,979 $ 10,908 7.5%
11
PROFESSIONAL SEGMENT NET SALES
Net sales for the worldwide professional segment in the second quarter of fiscal
2000 were $272.4 million compared to $268.6 million in the second quarter of
fiscal 1999, an increase of 1.4 percent. The landscape contractor market
continues to show significant growth, with good volume increases for both Toro
and Exmark brand zero-turning-radius mowers and the Sitework Systems product
line. Domestic sales of golf and grounds maintenance equipment were down
slightly due to field inventory management. International sales of golf and
grounds maintenance equipment were also down for the quarter due to distributors
purchasing product earlier in the fiscal year as compared to last year. The Toro
brand of residential/commercial irrigation systems posted a strong sales
increase due to better product availability this quarter compared to last year
and higher sales in Asia and Australia due to economic improvement in those
regions. However, sales for the Irritrol brand of residential/commercial
irrigation systems were down because strong sales in the first quarter of fiscal
2000 negatively affected restocking orders in the second quarter. Domestic golf
irrigation systems sales were down due to comparatively high sales level in the
first half of last fiscal year. Domestic dripline agricultural irrigation sales
were also down due to continued aggressive pricing pressures from competitors,
which were offset by higher international sales due mainly to the continued
success of the company's Italian manufacturing operations.
Net sales for the worldwide professional segment in the first half of fiscal
2000 were $458.3 million compared to $425.4 million last year, an increase of
7.7 percent. Domestic sales in the landscape contractor market led this increase
for both Toro and Exmark brand zero-turning-radius mowers and the Sitework
Systems product line. Domestic golf and grounds maintenance markets also
performed well during the first half of fiscal 2000 with increases in equipment
and parts sales due to the ongoing positive reception of products introduced
over the last two years as well as continued strong retail demand. International
sales to the golf and grounds maintenance markets were also up, mainly in
Europe, due to strong retail demand and distributors purchasing product earlier
in the fiscal year compared to last year. The dual brands of Toro and Irritrol
residential/commercial irrigation systems posted very strong sales increases due
to better product availability this year compared to last fiscal year.
Offsetting those increases were weak sales of dripline agricultural irrigation
products because of aggressive pricing pressures from competition. Domestic golf
irrigation system sales were also down due to the same reasons mentioned in the
quarter comparison.
RESIDENTIAL SEGMENT NET SALES
Net sales for the worldwide residential segment in the second quarter of fiscal
2000 were $158.4 million compared to $163.8 million in the second quarter of
fiscal 1999, a decrease of 3.3 percent. The elimination of sales due to the
divestiture and discontinuance of the non-performing outdoor lighting and gas
handheld product lines led this decline. Riding product sales were also down due
to cold spring weather in key markets and continued strong competition. On a
positive note, riding products manufactured for a third party were up due to low
field inventory levels entering the fiscal year, and international riding
product sales were up due to strong demand in Europe and Canada. Walk power
mower sales were also down due to the cold spring weather and reduced placement
in certain home center regions. Offsetting those negative developments were
increased domestic sales of electric trimmers and blowers due to expanded
outlets and placement at mass retailers. Domestic do-it-yourself irrigation
sales also increased over the prior year's second quarter due to the overall
growth of that market, expanded outlets and placement at home centers, and
introduction of new products. Sales were also up for do-it-yourself irrigation
products in Australia due to a comparatively poor sales level in the prior year
due to wet weather.
Year-to-date net sales for the worldwide residential segment in fiscal 2000 were
$255.2 million compared to $257.4 million last year, a slight decline of 0.9
percent. Sales would have been up 4.0 percent after factoring out sales from the
non-performing product lines discussed previously. Riding product sales were
down for the first half of fiscal 2000, however, riding products manufactured
for a third party and international riding product sales were up due to the same
contributing factors discussed in the above quarter comparison. Walk power mower
sales were also down due to the same reasons in the quarter comparison plus last
year sales levels were comparatively high for initial stocking orders from home
center outlets, a new distribution channel in fiscal 1999 for the Toro brand of
walk power mowers. Offsetting those negative variances were increased domestic
sales of electric trimmers and blowers and do-it-yourself irrigation sales due
to the same reasons mentioned in the quarter comparison. In addition,
snowthrower product sales also increased due to historically low field inventory
levels entering the 1999-2000 winter season and a shift in shipments from the
fourth quarter of fiscal 1999 to the first quarter of fiscal 2000.
12
OTHER SEGMENT NET SALES
The other segment net sales in the second quarter of fiscal 2000 were $11.0
million compared to $0.7 million in the second quarter of fiscal 1999. Net sales
in this segment include sales from Toro's wholly owned distribution companies
less sales from the professional and residential segments to those distribution
companies. The significant sales increase was due to additional sales
contributed by three distribution companies acquired in the second half of
calendar 1999, raising the total to four Toro-owned distribution companies in
fiscal 2000 compared to only one during the first half of fiscal 1999.
Year-to-date net sales for the other segment in fiscal 2000 were $8.5 million
compared to $1.0 million last year, an increase of $7.5 million. This increase
is due to the same factors mentioned in the quarter comparison.
GROSS PROFIT
Second quarter gross profit was $161.9 million compared to $152.9 million last
year, an increase of 6.0 percent. As a percentage of net sales, gross profit for
the second quarter was 36.7 percent compared to 35.3 percent last year. The
improvement in gross margin resulted from increased sales of higher margin
products in the residential segment, cost reductions for certain residential
segment products, and additional gross profit contribution from the distribution
companies. In addition, second quarter of fiscal 1999 reflected the elimination
of gross profit previously recorded with respect to sales of Toro products to a
Minnesota-based distributor, which was acquired in fiscal 1999. Partially
offsetting those positive factors were lower margins for agricultural irrigation
products due to price increases for raw materials and aggressive pricing
pressures from competition.
Year-to-date gross profit was $261.9 million compared to $240.8 million last
year, an increase of 8.8 percent. As a percentage of net sales, year-to-date
gross profit was 36.3 percent compared to 35.2 percent last year. The increase
in gross margin was due to the same contributing factors as in the quarter
comparison.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSE
Second quarter selling, general, and administrative expense (SG&A) was $108.7
million compared to $106.8 million last year, an increase of 1.8 percent.
However, as a percentage of net sales, SG&A decreased slightly to 24.6 percent
from 24.7 percent for the same quarter in fiscal 1999. The dollar increase was
due to the acquisition of three distribution companies that added $4.6 million
of incremental SG&A expense. Without the addition of these three distribution
companies, SG&A expense would have decreased $2.7 million and 0.8 percent as a
percentage of net sales due to lower marketing expense for the residential
segment and reduced incentive compensation costs compared to higher levels of
benefits accrued under the prior year's benefit plans.
Year-to-date SG&A expense was $202.7 million compared to $189.1 million last
year, an increase of 7.2 percent. As a percentage of net sales, SG&A increased
slightly to 28.1 percent from 27.7 percent last year. The acquisition of three
distribution companies added $7.6 million of incremental SG&A expense. Without
the addition of these three distribution companies, SG&A expense would have
increased $6.0 million, but decreased 1.0 percent as a percentage of net sales.
The dollar increase was due to higher levels of spending for Internet-based
projects and distribution changes, slightly offset by lower levels of incentive
compensation costs.
INTEREST EXPENSE
Second quarter interest expense was $7.7 million compared to $6.7 million last
year, an increase of 14.3 percent. This increase was due to higher average
short-term debt related to higher levels of working capital as well as increased
interest rates compared to the same prior year period.
Year-to-date interest expense was $13.4 million compared to $11.7 million last
year, an increase of 14.3 percent. This increase in interest expense for the
year was due to the same contributing factors as in the quarter comparison.
Management expects this trend to continue through fiscal 2000 as interest rates
are likely to continue to rise and average short-term debt is planned to be
higher than in fiscal 1999 due to anticipated higher inventory levels resulting
from capacity constraints and property, plant, and equipment additions planned
for fiscal 2000.
13
OTHER INCOME (EXPENSE), NET
Second quarter other expense, net, was $2.9 million compared to other income,
net, of $0.1 million last year, an unfavorable variance of $3.0 million. This
unfavorable variance was due to higher amounts of exchange rate currency losses
and a valuation expense related to an investment in a technology company,
somewhat offset by increased levels of finance charge revenue.
Year-to-date other expense, net, was $1.6 million compared to other income, net,
of $0.9 million last year, an unfavorable variance of $2.5 million. This
unfavorable variance for the year was due to the same contributing factors as in
the quarter comparison.
OPERATING EARNINGS (LOSS) BY SEGMENT
Operating earnings (loss) by segment is defined as earnings (loss) from
operations plus other income (expense), net for the residential and professional
segments. The other segment operating loss includes earnings (loss) from
operations, corporate activities, other income (expense), net, and interest
expense.
PROFESSIONAL SEGMENT OPERATING EARNINGS
Operating earnings for the worldwide professional segment in the second quarter
of fiscal 2000 were $42.3 million compared to $49.1 million in the second
quarter of fiscal 1999, a decrease of 13.9 percent. As a percentage of net
sales, professional segment operating margins decreased to 15.5 percent from
18.3 percent for the same quarter in fiscal 1999. Gross margin as a percent of
sales fell 1.7 percent mainly due to increased costs for resin that have not
been recaptured with price increases for irrigation and agricultural irrigation
products. The decline in operating profit was also due to increased levels of
exchange rate currency losses, lower sales of golf irrigation systems, and a
valuation charge for an investment in a technology company.
Year-to-date operating earnings for the worldwide professional segment in fiscal
2000 were $60.3 million compared to $63.7 million last year, a decrease of 5.3
percent. As a percentage of net sales, professional segment operating margins
decreased to 13.2 percent from 15.0 percent last year. The reasons for the
decrease are the same as in the quarter comparison. On a positive note, SG&A
expense as a percent of sales was slightly lower by 0.1 percent due to
leveraging SG&A costs on higher sales volumes.
RESIDENTIAL SEGMENT OPERATING EARNINGS
Operating earnings for the worldwide residential segment in the second quarter
of fiscal 2000 were $15.4 million compared to $11.8 million in the second
quarter of fiscal 1999, an increase of 30.5 percent. As a percentage of net
sales, residential segment operating margins increased to 9.8 percent from 7.2
percent for the same quarter in fiscal 1999. Gross margin rose 2.4 percent as a
percentage of net sales due to increased sales of higher margin products,
reduced costs for certain products, and the elimination of non-performing
product lines. Also contributing to the increase in operating profits was a 0.2
percent decline in SG&A expense as a percentage of net sales. The Australian
operations are beginning to show signs of improvement related to profit
improvement programs implemented at the end of fiscal 1999.
Year-to-date operating earnings for the worldwide residential segment in fiscal
2000 were $21.4 million compared to $16.4 million last year, an increase of 30.3
percent. As a percentage of net sales, residential segment operating margins
increased to 8.4 percent from 6.4 percent last year. Gross margin increased as a
percentage of net sales by 2.0 due to the same reasons discussed in the above
quarter comparison. SG&A expense as a percentage of net sales was even to the
prior comparable period.
OTHER SEGMENT OPERATING LOSSES
Operating losses for the other segment in the second quarter of fiscal 2000 were
$15.0 million compared to losses of $21.5 million in the second quarter of
fiscal 1999, an improvement of 30.1 percent. This improvement resulted from the
addition of profits from the company-owned distributors, of which three were
acquired during the second half of calendar 1999, and lower incentive
compensation costs. The prior year also included the elimination of gross profit
previously recorded with respect to sales of Toro products to a Minnesota-based
distributor, which was acquired in fiscal 1999. Slightly offsetting these
positive factors were higher interest costs and increased spending for
Internet-based projects.
14
OTHER SEGMENT OPERATING LOSSES (CONTINUED)
Year-to-date operating losses for the other segment in fiscal 2000 were $37.5
million compared to losses of $39.3 million in fiscal 1999, an improvement of
4.5 percent. This improvement was due to the same contributing factors mentioned
in the above quarter comparison.
PROVISION FOR INCOME TAXES
The effective tax rate for fiscal 2000 was 37.0 percent compared to 39.0 percent
for fiscal 1999. The decrease was due to benefits from foreign tax strategies
and tax minimization projects implemented in fiscal 1999.
FINANCIAL POSITION AS OF APRIL 28, 2000
APRIL 28, 2000 COMPARED TO APRIL 30, 1999
Total assets at April 28, 2000 were $1,016.0 million compared to $931.2 million
on April 30, 1999, an increase of $84.8 million. Net accounts receivable
increased by $17.2 million, mainly for international receivables, due to higher
sales levels and lengthened payment terms as compared to last year. Inventory
also increased $56.2 million across most product lines. The three newly acquired
distribution companies added $14.7 million of net incremental inventory.
Finished goods inventory was higher due to prebuilding of inventory to counter
anticipated capacity limitations at certain manufacturing facilities during the
peak-selling season. Service parts inventory also increased because of efforts
to improve fill rates as compared to last year. Net property, plant, and
equipment assets increased $6.1 million due to higher amounts of capital
additions in comparison to depreciation expense.
Total current liabilities at April 28, 2000 were $507.2 million compared to
$440.4 million at April 30, 1999, an increase of $66.8 million. Short-term debt
increased by $51.6 million as a result of higher receivables and inventory
levels discussed above. Accounts payable increased by $8.2 million due to higher
levels of inventory resulting from increased plant utilization. Other accrued
liabilities also increased by $7.2 million due mainly to higher levels of
warranty accruals.
APRIL 28, 2000 COMPARED TO OCTOBER 31, 1999
Total assets at April 28, 2000 were $1,016.0 million compared to $787.2 million
at October 31, 1999, an increase of $228.8 million. Net accounts receivable
increased $188.3 million from October 31, 1999 due to the seasonal increase in
accounts receivable, which historically occurs between January and April.
Inventory increased by $37.5 million due to the normal seasonal buildup of
inventory, plus prebuilding of inventory parts and certain products for the
professional segment meant to overcome manufacturing capacity constraints that
would otherwise occur if manufacturing were scheduled for traditional periods.
Net property, plant, and equipment increased $4.0 million due to higher amounts
of capital additions in comparison to depreciation expense. Goodwill and other
assets increased $7.3 million mainly as a result of the final Exmark contingent
payment.
Total current liabilities at April 28, 2000 were $507.2 million compared to
$305.8 million at October 31, 1999, an increase of $201.4 million. The majority
of this increase was the result of additional short-term debt of $179.0 million,
reflecting the company's strategy of utilizing short-term debt to fund seasonal
working capital needs. These requirements are historically greatest in the
winter and spring months. Other accrued liabilities increased $21.9 million
primarily as a result of higher warranty accruals and accruals for various
seasonal sales and marketing programs, which are at their peak during the spring
selling season.
15
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities for the first six months of fiscal 2000 was
$36.5 million higher than the first six months in fiscal 1999 primarily due to a
higher change in working capital as compared to the prior period. Cash used in
investing activities increased $1.4 million due to more purchases of property,
plant, and equipment during the first half of fiscal 2000 compared to the prior
year, slightly offset by last year's investment in an affiliate. Cash provided
by financing activities increased by $25.8 million due to higher levels of
short-term debt during the first half of fiscal 2000 compared to the first half
of fiscal 1999. The cash used in operating and investing activities was
partially funded with the cash on hand at October 31, 1999.
The company's U.S. seasonal working capital requirements are funded with $267.0
million of committed unsecured bank credit lines. In addition, the company's
non-U.S. operations maintain unsecured short-term lines of credit of
approximately $19.0 million, and one European subsidiary has an uncommitted
credit line of approximately $3.0 million. The company also has banker's
acceptance agreements under which an additional $40.0 million of credit lines
are available. The company's business is seasonal, with peak borrowing under the
working capital lines described above generally occurring between February and
May each year.
Management believes that the combination of funds available through its existing
financing arrangements, coupled with forecasted cash flows, will provide the
necessary capital resources for the company's anticipated working capital,
acquisitions, and property, plant and equipment additions.
INFLATION
The company is subject to the effects of changing prices. In the first half of
fiscal 2000, the company began experiencing some signs of inflationary pressures
for purchases of general commodities. The company is attempting to deal with
these inflationary pressures by actively pursuing internal cost reduction
efforts.
EURO CURRENCY
Beginning in January 1999, the European Monetary Union (EMU) entered into a
three-year transition phase during which a common currency called the euro is
being introduced in participating countries. Initially, this new currency is
being used for financial transactions and it will progressively replace the old
national currencies that will be withdrawn by July 2002. The transition to the
euro currency will involve changing budgetary, accounting, contractual, and
fiscal systems in companies and public administrations, as well as simultaneous
handling of parallel currencies and conversion of legacy data. Uncertainty
exists as to the effects the conversion to the euro currency will have on the
marketplace. One anticipated effect will be more transparent price differences
on goods in European countries.
One of the issues for the company is the competitive impact on Toro distributor
sales and Toro direct sales, and financial support given to distributors in the
countries in the European Union (EU). The company recently discussed a potential
euro list price strategy with a majority of its European distribution affected
by this change. Current concerns include currency swings and instability in the
rate of exchange between the euro and the US dollar. The company is also
researching how other companies are planning to incorporate euros into their
international business operations. Beginning in December 1999, Toro implemented
euro-hedging plans that consolidate the net cash flow from its European
subsidiaries.
The company continued its program to evaluate whether its computer systems and
programs will experience operational problems when the euro is fully
implemented. The company's European subsidiaries' have completed initial testing
of their financial systems and no problems concerning their ability to function
using the euro were discovered. These subsidiaries began disclosing the euro
value on each customer's invoice in January 1999, and have continued that
practice in fiscal 2000. The company is also reviewing other operating business
systems for its European subsidiaries, and therefore, the plan to begin parallel
reporting with the current functional currency of the European subsidiary and
euros in fiscal 2000 has been extended to late fiscal 2001.
Based on evaluation to date, management currently believes that while the
company will incur internal and external costs to adjust to the euro, such costs
are not expected to have a significant impact on operations, cash flows, or the
financial condition of the company and its subsidiaries taken as a whole in
future periods.
16
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FOREIGN CURRENCY
The following forward exchange contracts held by the company have maturity dates
in fiscal year 2000 and 2001. All items are non-trading and stated in U.S.
dollars. The average contracted rate, notional amount, and fair value impact at
April 28, 2000 were as follows:
- ----------------------------------------------- ---------------- ----------------- ----------------
AVERAGE FAIR VALUE
CONTRACTED NOTIONAL IMPACT
DOLLARS IN THOUSANDS RATE AMOUNT GAIN (LOSS)
- ----------------------------------------------- ---------------- ----------------- ----------------
Buy US dollar/Sell Australian dollar .6508 $ 5,696.1 $ 540.5
- ----------------------------------------------- ---------------- ----------------- ----------------
Buy US dollar/Sell British pound 1.5910 2,529.6 21.0
- ----------------------------------------------- ---------------- ----------------- ----------------
Buy US dollar/Sell Canadian dollar 1.4663 8,405.7 (1.2)
- ----------------------------------------------- ---------------- ----------------- ----------------
Buy US dollar/Sell Euro 1.0172 2,110.6 184.4
- ----------------------------------------------- ---------------- ----------------- ----------------
Buy US dollar/Sell Japanese yen 104.6100 955.9 3.1
- ----------------------------------------------- ---------------- ----------------- ----------------
Buy Australian dollar/Sell US dollar .5941 1,710.9 (18.8)
- ----------------------------------------------- ---------------- ----------------- ----------------
Buy Euro/Sell US dollar .9236 2,124.3 1.8
- ----------------------------------------------- ---------------- ----------------- ----------------
Buy German mark/Sell US dollar 1.8349 490.5 (64.4)
- ----------------------------------------------- ---------------- ----------------- ----------------
Buy Japanese yen/Sell US dollar 112.2200 3,208.1 208.8
- ----------------------------------------------- ---------------- ----------------- ----------------
INTEREST RATE RISK
The company is exposed to interest rate risk arising from transactions that are
entered into during the normal course of business. The company's short-term debt
rates are dependent upon the LIBOR rate plus an additional percentage based on
the company's current borrowing level. See the company's most recent annual
report filed on Form 10-K (Item 7A). There has been no material change in this
information.
17
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on March 29, 2000.
(b) The results of the stockholder votes were as follows:
BROKER
FOR AGAINST ABSTAIN NON-VOTES
---------- ---------- ----------- --------------
1. Election of Directors
Janet K. Cooper 10,162,347 778,878 0 0
Kendrick B. Melrose 10,002,792 938,433 0 0
Gregg W. Steinhafel 10,160,515 780,710 0 0
Edwin H. Wingate 9,992,776 948,449 0 0
2. Approval of Amendment of Annual
Management Incentive Plan II. 10,026,842 809,454 104,929 0
3. Approval of Amendment of Performance
Share Plan. 9,763,073 1,075,332 102,820 0
4. Approval of Amendment of Directors Stock
Plan. 9,372,044 1,470,865 98,316 0
5. Approval of Adoption of 2000 Stock Option
Plan. 7,744,862 2,338,217 88,875 769,271
4. Approval of Selection of Independent
Auditors for Fiscal 2000. 10,643,631 178,423 119,171 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(i)(a) and 4(a) Certificate of Incorporation of Registrant
(incorporated by reference to Exhibit 4.2 to Registrant's
Registration Statement on Form S-3, Registration
No. 33-16125).
3(i)(b) and 4(b) Certificate of Amendment to Certificate of Incorporation of
Registrant dated December 9, 1986 (incorporated
by reference to Exhibit 3 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended January 30, 1987, Commission
File No. 1-8649).
3(i)(c) and 4(c) Certificate of Designation to Certificate of
Incorporation of Registrant dated May 28, 1998 (incorporated
by reference to Exhibit (1)(A) to Registrant's Current Report
on Form 8-K dated May 27, 1998).
3(ii)and 4(d) Bylaws of Registrant (incorporated by reference to
Exhibit 3(ii) and 4(d) to Registrant's Quarterly Report on
Form 10-Q for the quarter ended April 30, 1999).
4(e) Specimen form of Common Stock certificate (incorporated by
reference to Exhibit 4(c) to Registrant's Registration
Statement on Form S-8, Registration No. 2-94417).
4(f) Rights Agreement dated as of May 20, 1998, between
Registrant and Norwest Bank Minnesota, National Association
relating to rights to purchase Series B Junior Participating
Voting Preferred Stock, as amended (incorporated by
reference to Registrant's Current Report on Form 8-K dated
May 27, 1998, Commission File No. 1-8649).
18
4(g) Indenture as dated as of January 31, 1997, between
Registrant and First National Trust Association, as Trustee,
relating to the Registrant's 7.125% Notes due June 15, 2007
and its 7.80% Debentures due June 15, 2027 (incorporated by
reference to Exhibit 4(a) to Registrant's Current Report on
Form 8-K for June 24, 1997, Commission File No. 1-8649).
10(a) Form of Employment Agreement in effect for certain officers
of Registrant (incorporated by reference to Exhibit 10(a) to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended July 30, 1999).*
10(b) The Toro Company Directors Stock Plan, as amended.*
10(c) The Toro Company Annual Management Incentive Plan II for
officers of Registrant, as amended.*
10(d) The Toro Company 1985 Incentive Stock Option Plan
(incorporated by reference to Exhibit 10(b) to Registrant's
Annual Report on Form 10-K for the fiscal year ended July
31, 1993).*
10(e) The Toro Company 1989 Stock Option Plan (incorporated by
reference to Exhibit 10(e) to Registrant's Quarterly Report
on Form 10-Q for the quarter ended July 30, 1999).*
10(f) The Toro Company 1993 Stock Option Plan (incorporated by
reference to Exhibit 10(f) to Registrant's Quarterly Report
on Form 10-Q for the quarter ended July 30, 1999).*
10(g) The Toro Company 2000 Stock Option Plan.*
10(h) The Toro Company Performance Share Plan, as amended.*
10(i) The Toro Company Supplemental Management Retirement Plan
(incorporated by reference to Exhibit 10(h) to Registrant's
Quarterly Report on Form 10-Q for the quarter ended July 30,
1999).*
10(j) The Toro Company Supplemental Retirement Plan (incorporated
by reference to Exhibit 10(i) to Registrant's Quarterly
Report on Form 10-Q for the quarter ended July 30, 1999).*
10(k) Chief Executive Officer Incentive Award Agreement, as
amended.*
10(l) The Toro Company Deferred Compensation Plan for Officers
(incorporated by reference to Exhibit 10(j) to Registrant's
Quarterly Report on Form 10-Q for the quarter ended January
29, 1999).*
10(m) The Toro Company Deferred Compensation Plan for
Non-Employee Directors (incorporated by reference to Exhibit
10(k) to Registrant's Quarterly Report on Form 10-Q for the
quarter ended January 29, 1999).*
*Management contract or compensatory plan or arrangement required to be filed as
an exhibit to this Quarterly Report on Form 10-Q pursuant to Item 14(c).
(b) Reports on Form 8-K
None.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE TORO COMPANY
(Registrant)
By /s/ STEPHEN P. WOLFE
-----------------------------
Stephen P. Wolfe
Vice President, Finance
Chief Financial Officer
(principal financial officer)
Date: June 12, 2000
20