<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________
FORM 10-Q
(MARK ONE)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1995 OR
________ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number: 0-17116
Lindsay Manufacturing Co.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 47-0554096
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Box 156, East Highway 91, Lindsay, Nebraska 68644
- ------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
402-428-2131
-------------------------------
(Registrant's telephone number,
including area code)
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_____
Common Stock, $1.00 par value 4,522,308
- ----------------------------- -------------------------------
Title of Class Outstanding as of June 21, 1995
Exhibit index is located on page 2.
Total number of pages 15.
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<PAGE> 2
LINDSAY MANUFACTURING CO. AND CONSOLIDATED SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I - Financial Information
Consolidated Balance Sheets, May 31, 1995 and 1994
and August 31, 1994 3
Consolidated Statements of Operations for the three
months and nine months ended May 31, 1995 and 1994 4
Consolidated Statements of Cash Flows for the nine
months ended May 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6-8
Management's Discussion and Analysis of Results of Operations
and Financial Position 9-12
Part II - Other Information
Item 1. Legal Proceedings 12-13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index
4 - Specimen Form of Common Stock Certificate 13
11 - Statement re Computation of Per Share Earnings 15
</TABLE>
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<PAGE> 3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Lindsay Manufacturing Co.
CONSOLIDATED BALANCE SHEETS
May 31, 1995 and 1994 and August 31, 1994
(in thousands, except share amounts)
<TABLE>
<CAPTION>
(Unaudited)
---------------------
May May August
1995 1994 1994
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................. $ 6,390 $ 5,379 $ 1,712
Marketable securities...................................... 11,005 9,429 11,927
Receivables................................................ 14,139 15,982 11,080
Inventories................................................ 6,220 4,997 6,248
Deferred income taxes...................................... 2,876 3,320 3,543
Other current assets....................................... 2,038 2,103 1,871
---------- ---------- ----------
Total current assets..................................... 42,668 41,210 36,381
Long-term marketable securities.............................. 40,878 39,981 45,378
Property, plant and equipment, net........................... 6,382 5,549 5,596
Other noncurrent assets...................................... 1,151 484 1,085
---------- ---------- ----------
Total assets................................................. $ 91,079 $ 87,224 $ 88,440
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade.................................... $ 4,624 $ 5,799 $ 4,288
Other current liabilities.................................. 12,910 14,270 14,697
---------- ---------- ----------
Total current liabilities................................ 17,534 20,069 18,985
Other noncurrent liabilities................................. 1,342 710 1,371
---------- ---------- ----------
Total liabilities............................................ 18,876 20,779 20,356
---------- ---------- ----------
Stockholders' equity:
Preferred stock, ($1 par value, 2,000,000 shares
authorized, no shares issued and outstanding in
May 1995 and 1994 and August 1994)
Common stock, ($1 par value, 10,000,000 shares
authorized, 4,840,638, 4,818,158 and 4,819,358 shares
issued and outstanding in May 1995 and 1994 and
August 1994)........................................... 4,841 4,818 4,819
Capital in excess of stated value........................ 4,394 3,752 3,841
Retained earnings........................................ 70,584 59,194 60,743
Net unrealized holding gains............................. 1 0 0
Less treasury stock, (at cost, 318,330, 105,630 and
105,630 shares in May 1995 and 1994 and August 1994)... (7,617) (1,319) (1,319)
---------- ---------- ----------
Total stockholders' equity................................... 72,203 66,445 68,084
---------- ---------- ----------
Total liabilities and stockholders' equity................... $ 91,079 $ 87,224 $ 88,440
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE> 4
Lindsay Manufacturing Co.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months and nine months ended May 31, 1995 and 1994
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
------------------------- -------------------------
May May May May
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues.......................... $ 37,451 $ 37,724 $ 89,943 $ 90,847
Cost of operating revenues.................. 28,040 28,709 68,973 70,148
---------- ---------- ---------- ----------
Gross profit................................ 9,411 9,015 20,970 20,699
---------- ---------- ---------- ----------
Operating expenses:
Selling expense........................... 979 1,037 3,064 3,059
General and administrative expense........ 1,701 1,432 4,615 4,213
Engineering and research expense.......... 354 334 979 907
---------- ---------- ---------- ----------
Total operating expenses.................... 3,034 2,803 8,658 8,179
---------- ---------- ---------- ----------
Operating income............................ 6,377 6,212 12,312 12,520
Interest income, net........................ 674 588 2,028 1,659
Other income (expense), net................. 65 43 132 275
---------- ---------- ---------- ----------
Earnings before income taxes and cumulative
effect of accounting change.............. 7,116 6,843 14,472 14,454
Income tax provision........................ 2,277 2,372 4,631 4,770
---------- ---------- ---------- ----------
Earnings before cumulative effect of
accounting change........................ 4,839 4,471 9,841 9,684
Cumulative effect of change in accounting
for income taxes......................... 0 0 0 659
---------- ---------- ---------- ----------
Net earnings................................ $ 4,839 $ 4,471 $ 9,841 $ 10,343
========== ========== ========== ==========
Earnings before cumulative effect of
accounting change per share.............. $ 1.03 $ 0.92 $ 2.07 $ 1.99
Cumulative effect of change in accounting
for income taxes per share............... 0.00 0.00 0.00 0.14
---------- ---------- ---------- ----------
Net earnings per share...................... $ 1.03 $ 0.92 $ 2.07 $ 2.13
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE> 5
Lindsay Manufacturing Co.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended May 31, 1995 and 1994
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
May May
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings........................................................... $ 9,841 $ 10,343
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation........................................................ 920 924
Amortization of marketable securities premiums, net................. 269 216
(Gain) loss on sale of fixed assets................................. (59) 9
Loss on sale of marketable securities held-to-maturity.............. 2 0
Gain on sale of marketable securities available-for-sale............ (1) 0
Provision for uncollectible accounts receivable..................... 45 45
Deferred income taxes............................................... 667 95
Cumulative effect of change in accounting for income taxes.......... 0 (659)
Changes in assets and liabilities:
Receivables......................................................... (3,104) (1,337)
Inventories......................................................... 28 (370)
Other current assets................................................ (167) (228)
Accounts payable.................................................... 336 (1,933)
Other current liabilities........................................... (2,506) (2,283)
Current taxes payable............................................... 719 614
Other noncurrent assets and liabilities............................. (95) (110)
---------- ----------
Net cash flow provided by operating activities......................... 6,895 5,326
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment............................. (1,715) (952)
Proceeds from sale of property, plant and equipment.................... 68 50
Purchases of marketable securities..................................... 0 (13,471)
Proceeds from sale and maturities of marketable securities............. 0 11,807
Purchases of marketable securities held-to-maturity.................... (6,361) 0
Proceeds from sale of marketable securities held-to-maturity........... 2,998 0
Proceeds from maturities of marketable securities held-to-maturity..... 7,515 0
Proceeds from sale of marketable securities available-for-sale......... 1,001 0
---------- ----------
Net cash flow provided by (used in) investing activities............... 3,506 (2,566)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock under stock option plan......... 575 618
Purchases of treasury stock............................................ (6,298) 0
---------- ----------
Net cash flow provided by (used in) financing activities............... (5,723) 618
---------- ----------
Net increase in cash and cash equivalents.............................. 4,678 3,378
Cash and cash equivalents, beginning of period......................... 1,712 2,001
---------- ----------
Cash and cash equivalents, end of period............................... $ 6,390 $ 5,379
========= =========
Supplemental Cash Flow Information:
Income taxes paid...................................................... $ 3,323 $ 4,051
Interest paid.......................................................... $ 8 $ 0
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE> 6
Lindsay Manufacturing Co.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General
The consolidated financial statements included herein are presented in
accordance with the requirements of Form 10-Q and consequently do not include
all of the disclosures normally required by generally accepted accounting
principles or those normally made in the registrant's annual Form 10-K filing.
These consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Lindsay Manufacturing
Co. (Lindsay) August 31, 1994 Annual Report to Stockholders.
In the opinion of management the unaudited consolidated financial statements
of Lindsay reflect all adjustments of a normal recurring nature necessary to
present a fair statement of the results of operations for the respective
interim periods. The results for interim periods are not necessarily
indicative of trends or results expected for a full year.
2. Cash Equivalents, Marketable Securities and Long-Term Marketable Securities
Cash equivalents are included at cost, which approximate market. At May 31,
1995, Lindsay's cash equivalents were held primarily by one financial
institution. Marketable securities and long-term marketable securities are
categorized as held-to-maturity or available-for-sale. Investments in the
held-to-maturity category are carried at amortized cost. Investments in the
available-for-sale category are carried at fair value with unrealized gains and
losses as a separate component of stockholders' equity. Lindsay considers all
highly liquid investments with original maturities of three months or less to
be cash equivalents, while those having maturities in excess of three months
are classified as marketable securities or as long-term marketable securities
when maturities are in excess of one year. Marketable securities and long-term
marketable securities consist of investment-grade municipal bonds.
Lindsay adopted Statement of Financial Accounting Standards (SFAS) 115
"Accounting For Certain Investments in Debt and Equity Securities" September 1,
1994. At September 1, 1994 and the quarter ended November 30, 1994, all
investments in debt securities were classified as held-to-maturity and carried
at amortized cost. The impact of adopting SFAS 115 resulted in no effect to
stockholders' equity or earnings.
During the quarter ended February 28, 1995, Lindsay's board authorized the
repurchase of an additional 750,000 shares of its common stock. Large blocks
of shares became available in the second quarter and were repurchased partially
with the proceeds of the sale of securities maturing June 15, 1995 and
September 1, 1995 from the held-to-maturity portfolio. The total amortized
cost, realized gain and realized loss for sales from securities classified as
held-to-maturity were $3,000,000, $1,500 and $3,750. In order to provide
flexibility for future repurchases of its common stock, Lindsay transferred
securities maturing July 1, 1995 from the held-to-maturity classification to
the available-for-sale classification. The total amortized cost, gross
unrealized holding gains, gross unrealized holding losses and the aggregate
fair value for the transfer were $3,749,000, $4,000, $2,000 and $3,751,000
respectively. Lindsay anticipates that future purchases of its common stock
will be funded out of cash equivalents, available-for-sale securities and cash
flow from operations.
Investments in the available-for-sale category are included in Marketable
securities ($2,751,000). The total amortized cost, gross unrealized holding
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<PAGE> 7
Lindsay Manufacturing Co.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
gains, gross unrealized holding losses and aggregate fair value for
available-for-sale securities are $2,750,000, $1,000, $0 and $2,751,000,
respectively. In the available-for-sale category, $2,751,000 in securities
mature within one year.
Investments in the held-to-maturity category are included in Marketable
securities ($8,254,000) and Long-term marketable securities ($40,878,000). The
total amortized cost, gross unrealized holding gains, gross unrealized holding
losses, and aggregate fair value for held-to-maturity securities are
$49,132,000, $127,000, $131,000 and $49,128,000, respectively. In the
held-to-maturity category, $8,254,000 in securities mature within one year and
$40,878,000 have maturities ranging from one to three years.
3. Income Tax Provision
The Company changed its method of accounting for income taxes from the deferred
method to the liability method required by SFAS 109 in fiscal 1994. This new
standard requires that a deferred tax be recorded to reflect the tax expense
(benefit) resulting from the recognition of temporary differences. Temporary
differences are differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements that will result in
differences between income for tax purposes and income for financial statement
purposes in future years. This standard was adopted September 1, 1993, using
the cumulative catch-up method and increased the first quarter ended November
30, 1993 earnings by $659,000 or $0.14 per share. Management does not believe
there are uncertainties surrounding realization of the net deferred tax asset.
4. Inventories
Inventories are stated at the lower of cost or market. Cost is determined by
the last-in, first-out (LIFO) method for all inventories.
<TABLE>
<CAPTION>
(in thousands)
------------------------------------
May May August
1995 1994 1994
---------- ---------- ----------
<S> <C> <C> <C>
Total manufactured goods
First-in, first-out inventory $10,345 $ 9,504 $10,291
LIFO reserves (3,459) (3,771) (3,283)
Obsolescence reserve (666) (736) (760)
---------- ---------- ----------
Total inventories $ 6,220 $ 4,997 $ 6,248
========== ========== ==========
</TABLE>
The estimated percentage distribution between major classes of inventory before
reserves is as follows:
<TABLE>
<CAPTION>
May May August
1995 1994 1994
---------- ---------- ----------
<S> <C> <C> <C>
Raw materials 21% 15% 21%
Work in process 6% 9% 6%
Purchased parts 20% 26% 20%
Finished goods 53% 50% 53%
</TABLE>
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<PAGE> 8
Lindsay Manufacturing Co.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Property, Plant and Equipment
Property, plant and equipment are stated at cost.
<TABLE>
<CAPTION>
(in thousands)
------------------------------------
May May August
1994 1993 1994
---------- ---------- ----------
<S> <C> <C> <C>
Land $ 66 $ 66 $ 66
Buildings 4,248 4,183 4,183
Equipment 17,879 16,809 17,084
Other 2,532 1,859 1,880
---------- ---------- ----------
24,725 22,917 23,213
Less accumulated depreciation 18,343 17,368 17,617
---------- ---------- ----------
Property, plant and equipment, net $ 6,382 $ 5,549 $ 5,596
========== ========== ==========
</TABLE>
6. Net Earnings Per Share
Primary net earnings per share are calculated by dividing the earnings by the
weighted average number of common and common equivalent (stock options) shares
outstanding of 4,865,314 for the three months and 4,756,612 for the nine months
ended May 31, 1995, as compared to 4,882,525 for the three months and 4,863,553
for the nine months ended May 31, 1994. The difference between shares for
primary and fully diluted earnings per share was not significant in any period.
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<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following table provides highlights for the three month and nine month
periods indicated of Fiscal Year 1995 as compared to the same periods of Fiscal
Year 1994.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ----------------------------
Percent Percent
Increase Increase
($ in thousands) 5/31/95 5/31/94 (Decrease) 5/31/95 5/31/94 (Decrease)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated
- ------------
Operating Revenues .....................$37,451 $37,724 (0.7)% $89,943 $90,847 (1.0%)
Cost of Operating Revenues .............$28,040 $28,709 (2.3) $68,973 $70,148 (1.7)
Gross Profit ...........................$ 9,411 $ 9,015 4.4 $20,970 $20,699 1.3
Gross Margin ........................... 25.1% 23.9% 23.3% 22.8%
Selling, Eng. & Research, and
G&A Expense ..........................$ 3,034 $ 2,803 8.2 $ 8,658 $ 8,179 5.9
Operating Income .......................$ 6,377 $ 6,212 2.7 $12,312 $12,520 (1.7)
Operating Margin ....................... 17.0% 16.5% 13.7% 13.8%
Interest Income, net ...................$ 674 $ 588 14.6 $ 2,028 $ 1,659 22.2
Other Income (Expense), net ............$ 65 $ 43 51.2 $ 132 $ 275 (52.0)
Income Tax Provision ...................$ 2,277 $ 2,372 (4.0) $ 4,631 $ 4,770 (2.9)
Effective Income Tax Rate .............. 32.0% 34.7% 32.0% 33.0%
Earnings Before Cumulative Effect
of Accounting Change .................$ 4,839 $ 4,471 8.2 $ 9,841 $ 9,684 1.6
Cumulative Effect of Accounting
Change For Income Taxes ..............$ 0 $ 0 N/A $ 0 $ 659 N/A
Net Earnings............................$ 4,839 $ 4,471 8.2% $ 9,841 $10,343 (4.9%)
</TABLE>
As the above table displays, operating revenues for both the three and nine
month periods ended May 31, 1995 were slightly lower (0.7 percent and 1.0
percent, respectively) then their comparable periods of the prior year. The
decrease in third quarter revenue was the net result of a 12 percent ($3.7
million) decrease in North American irrigation equipment revenues, being almost
entirely offset by a 248 percent ($2.5 million) increase in export irrigation
equipment revenues and a 20 percent ($1.0 million) increase in revenues from
diversified products and other. For the nine month period, fiscal 1995 North
American irrigation equipment and diversified product and other revenues were
up 1 percent ($.7 million) and 29 percent ($4.4 million), respectively, as
compared to the prior year. Export irrigation equipment revenues for the nine
month period were 46 percent ($6.0 million) lower then the comparable period in
fiscal 1994.
Demand for irrigation equipment in the North American market remained
relatively strong during the first nine months of fiscal 1995. Although fiscal
1995 year to date North American irrigation equipment revenues were up from the
comparable period of fiscal 1994, North American unit volume was down slightly.
Demand was favorably impacted by continued farmer emphasis on conserving water,
energy, and labor and by farmers striving to increase or stabilize crop yields.
Higher interest/financing rates, and projections of reduced federal government
agricultural subsidies and lower net cash farm income have been negative
factors impacting 1995 demand.
-9-
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
Higher export irrigation equipment revenues for the three month period ending
May 31, 1995 were due primarily to increased irrigation equipment sales
activity in Australia and Western Europe and to a reduction in our export
irrigation dealer commission accruals which are netted against sales. For the
nine month period, increased sales activity in Australia, Western Europe and
Latin America and the third quarter reduction in our export irrigation dealer
commission accrual were more then offset by lower sales to our irrigation
equipment dealers in Saudi Arabia.
The increase in diversified products and other revenues during the third
quarter of fiscal 1995 was due entirely to increased sales of outsource
manufactured products. The increase in diversified products and other revenues
for the nine month period ending May 31, 1995 was due to increased sales of
both large diameter steel tubing and of outsourced manufactured products.
Lindsay's primary outsource manufactured products customers continue to be
Caterpillar Inc., Deere & Company, and New Holland North America, Inc.
Gross margin for the three months ended May 31, 1995, as a percent of operating
revenues, was 25.1 percent as compared to 23.9 percent of the prior year's
comparative period. For the nine months ended May 31, 1995, gross margin as a
percent of operating revenues was 23.3 percent, as compared to 22.8 for the
nine months ended May 31, 1994. Continued strong demand for irrigation
equipment in the North American market for both the three and nine month
periods resulted in a favorable pricing environment. Additionally, the third
quarter reduction in our export irrigation dealer commission accrual favorably
impacted our gross margin for both the three and nine month periods. However,
raw material costs were up during both the three and nine month periods of the
current year, primarily due to higher steel, zinc, electrical cable and tire
costs.
Selling, general and administrative, and engineering and research expenses for
the three month period ended May 31, 1995, were $3.0 million as compared to
$2.8 million of the prior year's comparative period. For the nine month
period, fiscal 1995 selling, general and administrative, and engineering and
research expenses totaled $8.7 million as compared to $8.2 million in fiscal
1994. The fiscal 1995 increases are primarily due to higher payroll,
professional and legal fees, retirement benefits and, for the nine month
period, group insurance costs.
The effective tax rate for both the three month and nine month periods ended
May 31, 1995 was 32.0 percent. This compares to effective tax rates of 34.7
and 33.0 percent, respectively, for the comparable three month and nine month
periods of the prior year. Due to the tax free status of interest earned on
municipal bonds (for federal income tax purposes), Lindsay continues to benefit
from an effective tax rate that is lower than the combined federal and state
statutory rates (currently estimated at 39.5 percent).
FINANCIAL CONDITION
Lindsay's equity of $72.2 million at May 31, 1995 increased from $68.1
million at August 31, 1994, due to net earnings of $9.8 million, less $6.3
million used to repurchase 212,700 shares of common stock per Lindsay's
previously announced stock repurchase plan plus the proceeds of $0.6 million
from the issuance of 21,280 shares of common stock under Lindsay's employee
stock option plan. Lindsay's equity at May 31, 1994 was $66.4 million.
-10-
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
Lindsay's cash and short-term marketable securities totaled $17.4 million at
May 31, 1995, as compared to $13.6 million at August 31, 1994, and $14.8
million at May 31, 1994. Receivables of $14.1 million at May 31, 1995
increased $3.0 million from $11.1 million at August 31, 1994 due to the higher
level of North American irrigation equipment sales activity during May 1995.
May 31, 1995 receivables are $1.9 million lower than their $16.0 million
balance at May 31, 1994. Inventories of $6.2 million at May 31, 1995 and
August 31, 1994, increased $1.2 million from $5.0 million at May 31, 1994. At
May 31, 1995, Lindsay had $40.9 million invested in long-term marketable
securities which represent intermediate term (one to three year maturities)
municipal debt. This is down from $45.4 million at August 31, 1994 and up from
$40.0 million at May 31, 1994.
Noncurrent assets at May 31, 1995 and at August 31, 1994 totaled $1.2 million
and $1.1 million, respectively, higher than their $0.5 million balance at May
31, 1994. Other noncurrent liabilities at May 31, 1995 and August 31, 1994
totaled $1.3 million and $1.4 million, respectively, higher than their $0.7
million balance at May 31, 1994 primarily due to an adjustment required to
recognize the minimum liability related to Lindsay's supplemental retirement
plan.
Current liabilities of $17.5 million at May 31, 1995 are lower than their $19.0
million balance at August 31, 1994 and $20.1 million balance at May 31, 1994.
The decrease from August 31, 1994 is principally due to lower accruals for
warranty, environmental remediation and international dealer commissions
partially offset by increased trade payables, international dealer prepayments
and higher accruals for current state and federal income tax. The decrease
from May 31, 1994 is primarily due to decreased trade payables and lower
accruals for warranty, environmental remediation and international dealer
commissions partially offset international dealer prepayments.
Capital expenditures totaling $1.7 million for the first nine months of 1995
were used primarily for upgrading manufacturing plant equipment. Lindsay
expects its 1995 capital expenditures to be approximately $2.0 to $2.5 million
which will be used principally to improve Lindsay's existing facilities and
expand its manufacturing capabilities.
Lindsay believes its capitalization (including cash and marketable securities
balances) and operating cash flow are sufficient to cover expected working
capital needs, planned capital expenditures and repurchase of common stock.
SEASONALITY
Irrigation equipment sales are seasonal by nature. Farmers generally order
systems to be delivered and installed before the growing season. Shipments to
North American customers usually peak during March and April for the spring
planting period. Lindsay's expansion into diversified products complements its
irrigation operations by using available capacity and reducing seasonality.
-11-
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
OTHER FACTORS
Lindsay's domestic and international irrigation equipment sales are highly
dependent upon the need for irrigated agricultural production, which, in turn,
depends upon many factors, including total worldwide crop production,
profitability of agricultural production, commodity prices, aggregate net farm
income, governmental policies regarding the agricultural sector, water and
energy conservation policies, and regularity of rainfall.
Approximately 8 and 14 percent of Lindsay's operating revenues for the first
nine months of 1995 and 1994 respectively, were generated from export sales.
For the full year of 1994, approximately 14 percent of Lindsay's operating
revenues were generated from export sales. Lindsay does not believe it has
significant exposure to foreign currency translation risks. Lindsay's export
sales are all in U.S. dollars and are generally all shipped against prepayments
or backed by irrevocable letters of credit which are confirmed by U.S. banks.
Part II
OTHER INFORMATION
Item 1. Legal Proceedings
Lindsay is a party to a number of lawsuits arising from environmental and other
issues in the ordinary course of its business. Management does not believe
that these lawsuits, either individually or in the aggregate, are likely to
have a material adverse effect on Lindsay's financial condition, results of
operations or cash flows.
Environmental contamination at Lindsay's manufacturing facility occurred in
1982 when a drill, operated by a sub-contractor installing groundwater
monitoring wells, punctured a silt and sand lens and an underlying clay layer
beneath a clay-lined lagoon. The 1982 puncture of the clay layer caused acid
and solvent leachate to enter the sand and gravel aquifer.
Since 1983, Lindsay has worked actively with the Nebraska Department of
Environmental Control ("NDEC") to remediate this contamination by purging and
treating the aquifer. In October 1989, the Environmental Protection Agency
("EPA") added Lindsay to the list of priority Superfund sites. In 1988, a
sampling which was performed in connection with an investigation of the extent
of aquifer groundwater contamination, revealed solvent contamination (volatile
organic compounds) in the soil and shallow groundwater in three locations at
and in the vicinity of the plant. Under a 1988 agreement with the EPA and
NDEC, Lindsay conducted a Remedial Investigation/Feasibility Study ("RI/FS").
This study was completed in June 1990. Lindsay does not believe that there is
any other soil or groundwater contamination at the manufacturing facility.
In September 1990, the EPA issued its Record of Decision ("ROD") selecting a
plan for completing the remediation of both contaminations. The plan selected
for aquifer remediation was in line with Lindsay's expectations. However, the
plan for remediation of the soil and shallow groundwater contamination proposed
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<PAGE> 13
OTHER INFORMATION
(Continued)
a higher degree of remediation than the company had previously expected.
Therefore, Lindsay recognized an additional $2.9 million accrual in the fourth
quarter of Fiscal 1990. The selected plan implementation was delayed until
finalization of the Consent Decree in April 1992. Due to this delay, Lindsay
recognized an additional accrual of $0.6 million in the fourth quarter of
Fiscal 1991 and $0.8 million in the fourth quarter of Fiscal 1992. The final
remediation plans were approved in 1993 and 1994 and the remediation plans are
partially implemented.
The total balance sheet reserve for this remediation was $2.1 million at May
31, 1995 compared to $2.9 million at August 31, 1994, reflecting expenditures
of $0.8 million during fiscal 1995 for the continued implementation of the
plans.
Lindsay believes that the current reserve is sufficient to cover the estimated
total cost for complete remediation of both the aquifer and soil and shallow
groundwater contaminations under the final plans. Lindsay believes that its
insurer should cover costs associated with the contamination of the aquifer
that was caused by the puncture of the clay layer in 1982. However, Lindsay
and Lindsay's insurance carrier are in litigation over the extent of the
insurance coverage. If the EPA or the NDEC require remediation which is in
addition to or different from the current plan or if Lindsay is not successful
in its litigation against its insurance carrier, this reserve could increase or
decrease depending on the nature of the change in events.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
4 - Specimen Form of Common Stock Certificate incorporated by reference
to Exhibit 4 of Amendment No. 3 to the Company's Registration
Statement on Form S-1 (Registration No. 33-23084), filed September
23, 1988.
11 - Statement re Computation of Per Share Earnings.
(b) Reports on Form 8-K -
No Form 8-K was filed during the quarter ended May 31, 1995.
-13-
<PAGE> 14
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.
LINDSAY MANUFACTURING CO.
Date: June 21, 1995 Bruce C. Karsk
---------------------------------------
Bruce C. Karsk
Vice President - Finance, Treasurer and Secretary;
Principal Financial and Accounting Officer
Date: June 21, 1995 Ralph J. Kroenke
---------------------------------------
Ralph J. Kroenke
Controller
-14-
<PAGE> 1
EXHIBIT 11
Lindsay Manufacturing Co.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
For the three months and nine months ended May 31, 1995 and 1994
(Dollars in thousands except per share amounts)
(Unaudited)
----------------------------
COMPUTATION OF PRIMARY PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
May May May May
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1. Weighted average shares outstanding........ 4,526,454 4,707,000 4,603,974 4,688,028
2. Net additional shares outstanding assuming
dilutive stock options exercised and
proceeds used to purchase treasury stock 158,860 175,525 152,638 175,525
------------- ------------ ------------ ------------
3. Average number of common and common
equivalent shares outstanding........... 4,685,314 4,882,525 4,756,612 4,863,553
============ ============ ============ ============
4. Net earnings for per share computation..... $ 4,839 $ 4,471 $ 9,841 $ 10,343
============ ============ ============ ============
5. Net earnings per average common and common
equivalent shares outstanding........... $ 1.03 $ 0.92 $ 2.07 $ 2.13
============ ============ ============ ============
COMPUTATION OF FULLY DILUTED PER SHARE EARNINGS
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
May May May May
1995 1994 1995 1994
------------ ------------ ------------ ------------
1. Weighted average shares outstanding........ 4,526,454 4,707,000 4,603,974 4,688,028
2. Net additional shares outstanding assuming
dilutive stock options exercised and
proceeds used to purchase treasury stock 162,889 178,173 154,522 178,535
------------ ------------ ------------ -----------
3. Average number of common and common
equivalent shares outstanding........... 4,689,343 4,885,173 4,758,496 4,866,563
============ ============ ============ ===========
4. Net earnings for per share computation..... $ 4,839 $ 4,471 $ 9,841 $ 10,343
============ ============ ============ ============
5. Net earnings per average common and common
equivalent shares outstanding........... $ 1.03 $ 0.92 $ 2.07 $ 2.13
============ ============ ============ ============
</TABLE>
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 6,390
<SECURITIES> 11,005
<RECEIVABLES> 14,139
<ALLOWANCES> 0
<INVENTORY> 6,220
<CURRENT-ASSETS> 42,668
<PP&E> 24,725
<DEPRECIATION> 18,343
<TOTAL-ASSETS> 91,079
<CURRENT-LIABILITIES> 17,534
<BONDS> 0
<COMMON> 4,841
0
0
<OTHER-SE> 67,362
<TOTAL-LIABILITY-AND-EQUITY> 91,079
<SALES> 89,943
<TOTAL-REVENUES> 89,943
<CGS> 68,973
<TOTAL-COSTS> 68,973
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,472
<INCOME-TAX> 4,631
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,841
<EPS-PRIMARY> 2.07
<EPS-DILUTED> 2.07
</TABLE>
