form_11k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
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x ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2009.
OR
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o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to .
Commission file number 1-8649.
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A. Full title of the plan and address of the plan if different from that of the issuer named below:
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The Toro Company Profit-Sharing Plan for Plymouth Union Employees
The Toro Company
8111 Lyndale Avenue South
Minneapolis, MN 55420
Attn: Director, Human Resources
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B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
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The Toro Company
8111 Lyndale Avenue South
Minneapolis, MN 55420
THE TORO COMPANY PROFIT-SHARING PLAN
FOR PLYMOUTH UNION EMPLOYEES
Table of Contents
The Plan Administrator
The Toro Company Profit-Sharing Plan
for Plymouth Union Employees:
We have audited the accompanying statements of net assets available for benefits of The Toro Company Profit-Sharing Plan for Plymouth Union Employees (the Plan) as of December 31, 2009 and 2008, and the related statements of changes in net assets available for 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 the standards of the Public Company Accounting Oversight Board (United States). 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 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 of the Plan as of December 31, 2009 and 2008 and the changes in net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.
/s/KPMG LLP
Minneapolis, Minnesota
June 23, 2010
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FOR PLYMOUTH UNION EMPLOYEES
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Statements of Net Assets Available for Benefits
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December 31, 2009 and 2008
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2009
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2008
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Assets:
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Investments at fair value:
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Interest in the Toro Company Master Trust Fund
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$ |
2,728,068 |
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2,099,274 |
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Total investments
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2,728,068 |
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2,099,274 |
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Employee contribution receivable
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2,563 |
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3,002 |
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Employer contribution receivable
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841 |
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1,132 |
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Total receivables
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3,404 |
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4,134 |
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Total assets before adjustment
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2,731,472 |
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2,103,408 |
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Adjustment from fair value to contract value for
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fully benefit-responsive investment contracts
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(650 |
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10,842 |
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Net assets available for benefits
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$ |
2,730,822 |
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2,114,250 |
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See accompanying notes to financial statements.
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FOR PLYMOUTH UNION EMPLOYEES
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Statements of Changes in Net Assets Available for Benefits
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Years Ended December 31, 2009 and 2008
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2009
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2008
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Additions (deductions) to net assets:
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Investment income (loss):
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Plan interest in net investment income (loss) of the Toro
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Company Master Trust Fund
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$ |
503,430 |
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(1,098,931 |
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Net investment income (loss)
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503,430 |
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(1,098,931 |
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Employer contributions
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44,179 |
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45,407 |
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Employee contributions
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210,819 |
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161,293 |
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Total contributions
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254,998 |
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206,700 |
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Total additions (deductions) to net assets
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758,428 |
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(892,231 |
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Deductions from net assets:
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Benefit payments
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(74,514 |
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(250,901 |
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Total deductions from net assets
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(74,514 |
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(250,901 |
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Assets transferred from the Plan
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(67,342 |
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— |
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Net increase (decrease) in net assets available
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for benefits
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616,572 |
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(1,143,132 |
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Net assets available for benefits:
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Beginning of year
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2,114,250 |
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3,257,382 |
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End of year
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$ |
2,730,822 |
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2,114,250 |
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See accompanying notes to financial statements.
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FOR PLYMOUTH UNION EMPLOYEES
Notes to Financial Statements
December 31, 2009 and 2008
(1) Summary Description of Plan
The following description of The Toro Company Profit-Sharing Plan for Plymouth Union Employees (the Plan) is provided for general information purposes only. Participants should refer to the Plan document restated as of May 8, 2009 for more complete information.
Employees are eligible to contribute to the Plan after they have completed 180 consecutive days of employment or one year of eligibility service and must be a member of a collective bargaining unit. Participants are fully vested in the entire balance of their individual accounts attributable to those contributions. The Toro Company (the Company) also makes matching contributions. Participants are eligible for matching contributions after completing one year of qualifying service with the Company. Company contributions, together with the income attributable thereto, vest at a rate of 20% after one year of vesting service, with an additional 20% being accumulated annually thereafter until the participant is 100% vested.
Participants and the Company make contributions to the Plan. The investments of employee and employer contributions are selected by the participants. All contributions under the Plan are made to a trust that holds all of the assets of the Plan.
Benefit payments and transfers of participants’ interests are made by the trustee (Fidelity).
Participants may receive distributions from their vested accounts under the Plan upon termination of employment, retirement, or death in the form of a lump-sum payment or in installments. Participants are allowed to withdraw amounts that they previously rolled into the Plan. Withdrawals are also allowed from selected accounts in the event of a defined financial hardship to the extent necessary to satisfy the financial need. To the extent an account is invested in Company Common Stock, a withdrawal or distribution can be in the form of Common Stock or cash.
Employee contributions to the Plan consist of salary reduction elections under a 401(k) feature, voluntary after tax contributions, and rollover funds from other qualified plans. The Company is required to make a matching contribution equal to 50% of the participants’ contributions to the Plan not to exceed 2% of the participants’ total compensation.
Transfers to/from other funds, represent participant elected rollovers to/from other plans of other employers or other transfers to/from plans.
Forfeited amounts from nonvested accounts totaled $90 and $816 during the Plan years ended December 31, 2009 and 2008, respectively.
The Toro Company (administrator of the plan) designs, manufactures, and markets professional turf maintenance equipment and services, turf and agricultural micro-irrigation systems, landscaping equipment, and residential yard and snow removal products. The Company absorbs all administrative costs of the Plan, with the exception of investment management fees, which are netted against investment income.
THE TORO COMPANY PROFIT-SHARING PLAN
FOR PLYMOUTH UNION EMPLOYEES
Notes to Financial Statements
December 31, 2009 and 2008
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(2)
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Summary of Significant Accounting Policies
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(a)
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Basis of Financial Statement Presentation
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The accompanying financial statements of The Toro Company Profit-Sharing Plan for Plymouth Union Employees are presented in accordance with U.S. generally accepted accounting principles.
The Plan’s investments are in a Master Trust held by Fidelity. 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. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Purchases and sales of securities are recorded on a trade-date basis. Interest is recorded on an accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
The Company maintains one Master Trust for three profit sharing and retirement plans that are sponsored by the Company. The three plans are the Plan, The Toro Company Investment, Savings, and Employee Stock Ownership Plan, and the Hahn Equipment Company Savings Plan for Union Employees. The purpose of the Master Trust is to pool investment transactions and achieve uniform rates of return on comparable funds under all plans. The Master Trust invests in fully benefit-responsive investment contracts stated at fair value which are then adjusted to contract value. Fair value of the contracts is calculated by discounting the related cash flows based on current yields of similar instruments with comparable durations.
The Plan’s proportionate share of net investment income (loss) from the Master Trust is based upon the percentage of the fair value of the Plan’s investment in the Master Trust’s net assets. The Plan’s percentage interest in the net assets of the Master Trust was approximately 1% as of December 31, 2009 and 2008.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of changes in net assets available for benefits during the reporting period. Actual results could differ from those estimates.
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(d)
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Concentrations of Risk
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The Plan has investments in a variety of investment funds. Investments in general are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investments, it is reasonably possible
THE TORO COMPANY PROFIT-SHARING PLAN
FOR PLYMOUTH UNION EMPLOYEES
Notes to Financial Statements
December 31, 2009 and 2008
that changes in the values of the investments will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.
The assets held by the Master Trust include The Toro Company Common Stock. At December 31, 2009 and 2008, approximately 30% of the investments of the Master Trust were invested in Common Stock of the Company. The underlying value of the Company’s Common Stock is entirely dependent upon the performance of the Company and the market’s evaluation of such performance and other factors.
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(e)
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Fully Benefit-Responsive Investment Contracts
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The Plan indirectly invests in investment contracts and security-backed contracts through the Wells Fargo Stable Value Fund E. An investment contract is a contract issued by a financial institution to provide a stated return to the buyer of the contract for a specified period of time. A security-backed contract has similar characteristics as a traditional investment contract and is comprised of two parts: the first part is a fixed-income security or portfolio of fixed-income securities; the second part is a contract value guarantee (wrapper) provided by a third party. The yield earned by the Wells Fargo Stable Value Fund E at December 31, 2009 and 2008 was 3.40% and 5.29%, respectively.
Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The statements of net assets available for benefits present the fair value of the Master Trust, as well as the adjustment of the fully benefit-responsive investment contract from fair value to contract value. The statement of changes in net assets available for benefits is prepared on a contract value basis.
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(3)
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Party-in-interest Transactions
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Fidelity (trustee of the Plan), J.P. Morgan Retirement Plan Services (former trustee of the Plan), and The Toro Company are parties-in-interest with respect to the Plan. The Plan’s investments are held by Fidelity, and some of the investment funds available to participants include mutual funds managed by Fidelity. In the opinion of the Plan’s legal counsel, transactions between the Plan and the trustee are exempt from being considered as “prohibited transactions” under the ERISA Section 408(b).
The 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. Each participant’s interest in the Plan is 100% vested at all times, except for the portion attributable to matching contributions which is vested in a manner described above. Upon termination of the Plan, interests of active participants in the Plan fully vest.
THE TORO COMPANY PROFIT-SHARING PLAN
FOR PLYMOUTH UNION EMPLOYEES
Notes to Financial Statements
December 31, 2009 and 2008
(5) Federal Income Taxes
The Plan obtained its latest determination letter on February 19, 2008, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since the date of this letter. However, the Plan Administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
(6) Subsequent Events
In connection with the preparation of the financial statements in accordance with the provisions of ASC 855, Subsequent Events, the Company evaluated subsequent events after the statement of net assets available for benefits date of December 31, 2009 through June 23, 2010, which was the date the final statements were available to be issued, and determined there are no additional items to disclose.
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, except to the extent the trustee is subject to the discretion of participants, other fiduciaries, or the Company. In accordance with the trust agreement, the assets of the Plan are held together with assets of other plans sponsored by the Company in the Master Trust. Investment income related to the Master Trust is allocated to the individual plans based upon beginning of the month balances invested in the Plan.
Fair values of Master Trust investments at December 31, 2009 and 2008 were as follows:
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2009
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2008
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Common Collective Trusts
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104,183,622 |
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104,389,900 |
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Registered Investment Securities
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193,218,407 |
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150,320,458 |
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Common Stock
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158,746,139 |
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130,120,605 |
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Pooled Funds
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67,136,494 |
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53,263,895 |
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Total Master Trust Investments
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$ |
523,284,662 |
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438,094,858 |
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Plan Interest in Master Trust
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$ |
2,728,068 |
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2,099,274 |
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THE TORO COMPANY PROFIT-SHARING PLAN
FOR PLYMOUTH UNION EMPLOYEES
Notes to Financial Statements
December 31, 2009 and 2008
Net investment income (loss) for the Master Trust for the years-ended December 31, 2009 and 2008 was as follows:
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2009
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2008
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Net realized and unrealized appreciation (depreciation)
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in fair value of investments
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Common Collective Trusts
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9,015,165 |
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(354,839 |
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Registered Investment Securities
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42,330,621 |
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(106,951,020 |
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Common Stock
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35,544,807 |
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(86,099,937 |
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Pooled Funds
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12,281,063 |
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(18,327,833 |
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Net realized and unrealized appreciation (depreciation)
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$ |
99,171,656 |
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(211,733,629 |
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Interest
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- |
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238,302 |
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Dividends
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4,215,433 |
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8,021,144 |
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Net investment income (loss)
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$ |
103,387,089 |
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(203,474,183 |
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The Master Trust categorizes its assets and liabilities into one of three levels based on the assumptions (inputs) used in valuing the asset or liability. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are defined as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Master Trust’s investments in common stock and registered investment securities are classified as Level 1 assets in the fair value hierarchy, while the Master Trust’s investments in common collective trusts and pooled funds are classified as Level 2 assets in the fair value hierarchy.
THE TORO COMPANY PROFIT-SHARING PLAN
FOR PLYMOUTH UNION EMPLOYEES
Notes to Financial Statements
December 31, 2009 and 2008
Assets and liabilities measured at fair value, as of December 31, 2009 and December 31, 2008 are summarized below:
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December 31, 2009
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Level 1
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Level 2
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Level 3
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Total
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Common Stock
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$ |
158,746,139 |
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— |
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— |
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158,746,139 |
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Registered Investment Securities
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193,218,407 |
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— |
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— |
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193,218,407 |
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Common Collective Trusts
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— |
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104,183,622 |
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— |
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104,183,622 |
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Pooled Funds
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— |
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67,136,494 |
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— |
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67,136,494 |
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Total
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$ |
351,964,546 |
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171,320,116 |
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— |
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523,284,662 |
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December 31, 2008
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Level 1
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Level 2
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Level 3
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Total
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Common Stock
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$ |
130,120,605 |
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— |
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— |
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130,120,605 |
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Registered Investment Securities
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150,320,458 |
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— |
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— |
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150,320,458 |
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Common Collective Trusts
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— |
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104,389,900 |
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— |
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104,389,900 |
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Pooled Funds
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— |
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53,263,895 |
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— |
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53,263,895 |
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Total
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$ |
280,441,063 |
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157,653,795 |
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— |
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438,094,858 |
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THE TORO COMPANY PROFIT-SHARING PLAN
FOR PLYMOUTH UNION EMPLOYEES
Notes to Financial Statements
December 31, 2009 and 2008
The following presents investments in the Master Trust as of December 31, 2009 and 2008 that represent 5% or more of the Master Trust’s net assets in either year:
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Description
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2009
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2008
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Wells Fargo Stable Return E
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$ |
91,706,130 |
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92,054,997 |
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Fidelity Diversified International Fund
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36,584,929 |
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28,339,242 |
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Growth Fund of America
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54,973,274 |
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41,181,028 |
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American Century Large Company Value Fund
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1,951 |
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35,190,860 |
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Eaton Vance Large Cap Value I
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38,510,863 |
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— |
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The Toro Company Common Stock
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158,746,139 |
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130,120,605 |
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(8)
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Reconciliation of Differences Between these Financial Statements and the Financial Information Required on Form 5500:
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December 31,
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| |
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2009
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|
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Net assets available for benefits as presented in these financial statements
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$ |
2,730,822 |
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Adjustment from contract value to fair value for
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|
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fully benefit-responsive investment contracts at December 31, 2009
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|
650 |
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| |
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Net assets available for benefits as presented on Form 5500
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$ |
2,731,472 |
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| |
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| |
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Year Ended
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| |
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December 31,
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| |
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|
2009 |
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Net increase in net assets available for benefits as
|
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presented in these financial statements
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$ |
616,572 |
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Adjustment from contract value to fair value for
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|
|
|
|
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fully benefit-responsive investment contracts at December 31, 2009
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|
650 |
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Adjustment from contract value to fair value for
|
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|
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fully benefit-responsive investment contracts at December 31, 2008
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|
10,842 |
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Net increase in net assets available for benefits as
|
|
|
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presented on Form 5500
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|
$ |
628,064 |
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SIGNATURES
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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.
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| |
The Toro Company Profit-Sharing Plan for
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Plymouth Union Employees
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Date: June 23, 2010
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By: /s/ Stephen P. Wolfe
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Stephen P. Wolfe
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Vice President Finance
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and Chief Financial Officer
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| |
of The Toro Company
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Exhibit Index
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Exhibit Number
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Description
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23.1
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Consent of Independent Registered Public Accounting Firm
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