Investor Relations

John Wright

Director, Investor Relations

(952) 887-8865, invest@toro.com

Media Relations

Branden Happel

Manager, Public Relations

(952) 887-8930, pr@toro.com

www.thetorocompany.com

For Immediate Release

TORO REPORTS SECOND QUARTER RESULTS

·   Company reports net earnings per share of $1.60

·   Significant improvement in channel inventory

·   Board authorizes repurchase of 4 million additional shares and declares quarterly dividend

BLOOMINGTON, Minn. (May 22, 2008) – The Toro Company (NYSE: TTC) today reported net earnings of $62.8 million, or $1.60 per share, on net sales of $638.5 million for its fiscal second quarter ended May 2, 2008.  In the comparable fiscal 2007 period, the company reported net earnings of $75.0 million, or $1.77 per share, on net sales of $686.7 million.

For the year to date, Toro reported net earnings of $81.4 million, or $2.07 per share, on net sales of $1,044.3 million.  In the first half of fiscal 2007, the company reported net earnings of $93.4 million, or $2.21 per share, on net sales of $1,065.7 million.

“Fiscal 2008 has been a challenging year due to a weakening domestic economy, late spring and cautious ordering,” said Michael J. Hoffman, Toro’s chairman and chief executive officer. “As a result, we have taken prudent actions to adjust production levels, control costs, and work with our channel partners on field inventory – which is significantly lower compared to last year. Our financial condition remains strong and we will keep investing to grow our business for the long term.”

The company’s continued strong cash flow prompted its board of directors to authorize the repurchase of up to 4 million additional shares of common stock. The Board also declared a regular quarterly cash dividend of $0.15 per common share, payable July 11, 2008 to shareholders of record on June 20, 2008.

SEGMENT RESULTS

Professional

·   Professional segment net sales for the fiscal 2008 second quarter decreased 4.0 percent to $429.9 million.  Sales declined in nearly all product categories domestically, but increased modestly in most categories outside the United States. Cautious ordering by customers, challenging domestic economic conditions and distribution changes resulted in lower quarterly sales for most domestic businesses. For the year to date, professional segment net sales increased 0.4 percent to $723.1 million.

·   Professional segment earnings for the fiscal 2008 second quarter were $96.6 million, down 10.9 percent compared with the fiscal 2007 second quarter.  For the year to date, professional segment earnings totaled $149.1 million, down 4.9 percent.

Residential

·   Residential segment net sales for the fiscal 2008 second quarter declined 11.8 percent to $201.3 million.  Sales declined in most domestic product categories due to weak economic conditions and a late-arriving spring that affected customer purchases.  For the year to date, residential segment net sales declined 6.2 percent to $309.5 million.

·   Residential segment earnings for the fiscal 2008 second quarter were $21.1 million, down 23.2 percent compared with the fiscal 2007 second quarter.  For the year to date, residential segment earnings totaled $23.9 million, down 24.9 percent.

REVIEW OF OPERATIONS

Gross margin for the fiscal 2008 second quarter was 35.7 percent compared with 35.6 percent in the comparable fiscal 2007 period.  For the year to date, gross margin was 36.1 percent and flat as a percent of sales with the first half of fiscal 2007.  Higher commodity and fuel costs were offset by favorable product mix and currency, and the continued focus on cost reductions and productivity improvements achieved through the company’s GrowLean initiative.

Selling, general and administrative (SG&A) expenses for the fiscal 2008 second quarter declined $0.9 million, but increased to 19.6 percent of net sales from 18.3 percent in the fiscal 2007 second quarter.  For the year to date, SG&A expenses were 23.2 percent of net sales compared with 22.3 percent in the prior year’s first half.  Despite lower sales, the company continued to increase spending for marketing and engineering investments.

Interest expense for the second quarter was down $0.4 million, a decrease of 6.4 percent, compared to the prior year’s second quarter.  For the year to date, interest expense totaled $10.3 million – essentially flat compared to the first half of fiscal 2007.

The effective tax rate for the second quarter of fiscal 2008 was 35.0 percent compared with 34.6 percent in the fiscal 2007 second quarter. This year’s second quarter tax rate was higher due to the expiration of the federal Research and Engineering Tax Credit on December 31, 2007.

Accounts receivable as of the end of the fiscal 2008 second quarter totaled $547.2 million, down $30.0 million or 5.2 percent, on a sales decrease of $48.2 million, or 7 percent.  Net inventories increased by $17.5 million, or 7.1 percent compared with the end of the fiscal 2007 second quarter.  Cash used in operating activities improved by $9 million in spite of lower year to date net earnings.

BUSINESS OUTLOOK

Commenting on the company’s outlook for the remainder of fiscal 2008, Hoffman said:  “We remain focused on managing our business in light of these difficult conditions, and will continue to drive customer demand for our innovative products. Field inventories are in good shape, our strategic direction is sound, and our cash flow remains strong. Additionally, we are encouraged by the tremendous efforts of all our employees and channel partners around the world.”

Looking ahead, the company expects fiscal 2008 net sales to be roughly equal to fiscal 2007 net sales of $1,876.9 million with net earnings per share flat to down 5 percent from the $3.40 per share reported for fiscal 2007.

The Toro Company is a leading worldwide provider of outdoor maintenance and beautification products for home, recreation and commercial landscapes.

LIVE CONFERENCE CALL

May 22, 10:00 a.m. CST

www.thetorocompany.com/invest

The Toro Company will conduct a conference call and webcast for investors beginning at 10:00 a.m. Central Time (CST) on May 22, 2008.  The webcast will be available at www.streetevents.com or at www.thetorocompany.com/invest. Webcast participants will need to complete a brief registration form and should allocate extra time before the webcast begins to register and, if necessary, download and install audio software.

Safe Harbor

Statements made in this news release, which are forward-looking, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or implied. These uncertainties include factors that affect all businesses operating in a global market as well as matters specific to Toro. Particular risks and uncertainties that may affect the company’s operating results or overall financial position at the present include: slow growth rates in global and domestic economies, resulting in rising unemployment and weakened consumer confidence; the threat of further terrorist acts and war, which may result in contraction of the U.S. and worldwide economies; fluctuations in the cost and availability of raw materials, including steel, resins and other commodities; rising fuel and other costs of transportation; the impact of abnormal weather patterns and natural disasters; the level of growth in our markets, including the golf market; reduced government spending for grounds maintenance equipment due to reduced tax revenue and tighter government budgets; dependence on The Home Depot as a customer for the residential segment; elimination of shelf space for our products at retailers; inventory adjustments or changes in purchasing patterns by our customers; market acceptance of existing and new products; increased competition; our ability to achieve the goals for our current three-year growth, profit and asset management initiative called “GrowLean” which is intended to improve our revenue growth, after-tax return on sales and working capital efficiency; our increased dependence on international sales and the risks attendant to international operations; interest rates and currency movements including, in particular,

our exposure to foreign currency risk; our relationships with our distribution channel partners, including the financial viability of distributors and dealers; our ability to successfully achieve our plans for and integrate acquisitions and manage alliances; the costs and effects of complying with changes in tax, fiscal, government and other regulatory policies, including rules relating to environmental, health and safety matters; unforeseen product quality problems in the development, production and usage of new and existing products; loss of or changes in executive management or key employees; ability of management to manage around unplanned events; our reliance on our intellectual property rights and the absence of infringement of the intellectual property rights of others;  the occurrence of litigation or claims, including the previously disclosed pending litigation against the company and other defendants that challenges the horsepower ratings of lawnmowers, of which the company is currently unable to assess whether the litigation would have a material adverse effect on the company’s consolidated operating results or financial condition, although an adverse result might be material to operating results in a particular reporting period.  In addition to the factors set forth in this paragraph, market, economic, financial, competitive, weather, production and other factors identified in Toro's quarterly and annual reports filed with the Securities and Exchange Commission, could affect the forward-looking statements in this press release. Toro undertakes no obligation to update forward-looking statements made in this release to reflect events or circumstances after the date of this statement.

(Financial tables follow)

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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
	May 2, 2008			May 4, 2007			May 2, 2008			May 4, 2007
Net sales	$	638,510		$	686,653		$	1,044,309		$	1,065,741
Gross profit		227,766			244,716			376,903			384,781
Gross profit percent		35.7	%		35.6	%		36.1	%		36.1	%
Selling, general, and administrative expense		124,943			125,843			242,060			238,124
Earnings from operations		102,823			118,873			134,843			146,657
Interest expense		(5,419	)		(5,789	)		(10,302	)		(10,276	)
Other (expense) income, net		(798	)		1,476			900			3,867
Earnings before income taxes		96,606			114,560			125,441			140,248
Provision for income taxes		33,822			39,594			44,030			46,832
Net earnings	$	62,784		$	74,966		$	81,411		$	93,416
Basic net earnings per share	$	1.64		$	1.82		$	2.12		$	2.27
Diluted net earnings per share	$	1.60		$	1.77		$	2.07		$	2.21
Weighted average number of shares of common stock outstanding – Basic		38,239			41,098			38,313			41,119
Weighted average number of shares of common stock outstanding – Diluted		39,126			42,253			39,263			42,255

Segment Data (Unaudited)

(Dollars in thousands)

	Three Months Ended				Six Months Ended
Segment Net Sales	May 2, 2008		May 4, 2007		May 2, 2008		May 4, 2007
Professional	$	429,884	$	447,857	$	723,080	$	719,999
Residential		201,315		228,204		309,491		330,062
Other		7,311		10,592		11,738		15,680
Total  *	$	638,510	$	686,653	$	1,044,309	$	1,065,741
* Includes international sales of	$	197,770	$	188,861	$	356,227	$	321,474

	Three Months Ended						Six Months Ended
Segment Earnings (Loss) Before Income Taxes	May 2, 2008			May 4, 2007			May 2, 2008			May 4, 2007
Professional	$	96,616		$	108,490		$	149,126		$	156,850
Residential		21,073			27,430			23,897			31,809
Other		(21,083	)		(21,360	)		(47,582	)		(48,411	)
Total	$	96,606		$	114,560		$	125,441		$	140,248

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THE TORO COMPANY AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)

	May 2, 2008		May 4, 2007
ASSETS
Cash and cash equivalents	$	32,053	$	40,797
Receivables, net		547,192		577,223
Inventories, net		265,428		247,906
Prepaid expenses and other current assets		13,698		12,904
Deferred income taxes		56,633		58,042
Total current assets		915,004		936,872
Property, plant, and equipment, net		172,203		169,123
Deferred income taxes		6,508		1,861
Goodwill and other assets, net		110,172		98,405
Total assets	$	1,203,887	$	1,206,261
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	$	2,341	$	75,000
Short-term debt		151,500		45,825
Accounts payable		117,425		120,642
Accrued liabilities		275,911		280,069
Total current liabilities		547,177		521,536
Long-term debt, less current portion		227,753		223,141
Deferred revenue and other long-term liabilities		16,813		9,681
Stockholders’ equity		412,144		451,903
Total liabilities and stockholders’ equity	$	1,203,887	$	1,206,261

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THE TORO COMPANY AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

	Six Months Ended
	May 2, 2008			May 4, 2007
Cash flows from operating activities:
Net earnings	$	81,411		$	93,416
Adjustments to reconcile net earnings to net cash used in operating activities:
Equity losses from investments		324			125
Provision for depreciation and amortization		21,836			20,393
Gain on disposal of property, plant, and equipment		(81	)		(99	)
Gain on sale of a business		(113	)		-
Stock-based compensation expense		3,281			3,828
Increase in deferred income taxes		(1,463	)		(1,982	)
Changes in operating assets and liabilities:
Receivables		(260,988	)		(282,982	)
Inventories		(13,920	)		(5,628	)
Prepaid expenses and other assets		(2,870	)		(2,322	)
Accounts payable, accrued liabilities, deferred revenue, and otherlong-term liabilities		61,291			54,941
Net cash used in operating activities		(111,292	)		(120,310	)
Cash flows from investing activities:
Purchases of property, plant, and equipment		(22,479	)		(21,752	)
Proceeds from asset disposals		871			117
Increase in investment in affiliates		(250	)		-
Increase in other assets		(279	)		(48	)
Proceeds from sale of a business		1,048			-
Acquisitions, net of cash acquired		(1,000	)		(1,088	)
Net cash used in investing activities		(22,089	)		(22,771	)
Cash flows from financing activities:
Increase in short-term debt		151,128			45,455
Issuance of long-term debt, net of costs		-			121,436
Repayments of long-term debt, net of costs		(750	)		-
Excess tax benefits from stock-based awards		339			5,464
Proceeds from exercise of stock options		1,718			6,992
Purchases of Toro common stock		(36,906	)		(41,912	)
Dividends paid on Toro common stock		(11,478	)		(9,865	)
Net cash provided by financing activities		104,051			127,570
Effect of exchange rates on cash		(664	)		785
Net decrease in cash and cash equivalents		(29,994	)		(14,726	)
Cash and cash equivalents as of the beginning of the period		62,047			55,523
Cash and cash equivalents as of the end of the period	$	32,053		$	40,797