<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 February 29, 1996 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 6,466,293
- ----------------------------- ----------------------------------
Title of Class Outstanding as of March 13, 1996
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
Page No.
--------
Part I - Financial Information
Consolidated Balance Sheets, February 29, 1996 and
February 28, 1995 and August 31, 1995 3
Consolidated Statements of Operations for the three
months and six months ended February 29, 1996 and
February 28, 1995. 4
Consolidated Statements of Cash Flows for the six
months ended February 29, 1996 and February 28, 1995 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
11 - Statement re Computation of Per Share Earnings 15
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<PAGE> 3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Lindsay Manufacturing Co.
CONSOLIDATED BALANCE SHEETS
February 29, 1996 and February 28, 1995 and August 31, 1995
(in thousands, except share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
February February August
1996 1995 1995
---------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . $ 5,005 $ 2,551 $ 4,514
Marketable securities . . . . . . . . . . . . . . . . . . . . 22,814 10,383 18,792
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 25,297 15,056 10,353
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 7,587 7,672 5,384
Deferred income taxes . . . . . . . . . . . . . . . . . . . . 2,893 2,942 2,804
Other current assets . . . . . . . . . . . . . . . . . . . . 2,154 2,114 1,891
------- ------- --------
Total current assets . . . . . . . . . . . . . . . . . . . 65,750 40,718 43,738
Long-term marketable securities . . . . . . . . . . . . . . . . 22,048 41,917 34,003
Property, plant and equipment, net. . . . . . . . . . . . . . . 8,961 5,871 7,164
Other noncurrent assets . . . . . . . . . . . . . . . . . . . . 1,219 1,148 1,155
------- ------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $97,978 $89,654 $ 86,060
======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade . . . . . . . . . . . . . . . . . . . $ 9,007 $ 7,601 $ 4,295
Other current liabilities . . . . . . . . . . . . . . . . . . 13,435 13,490 11,636
------- ------- --------
Total current liabilities . . . . . . . . . . . . . . . . . 22,442 21,091 15,931
Other noncurrent liabilities . . . . . . . . . . . . . . . . . 1,270 1,251 1,386
------- ------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 23,712 22,342 17,317
------- ------- --------
Commitments and contingencies
Stockholder's equity:
Preferred stock, ($1 par value, 2,000,000 shares
authorized, no shares issued and outstanding in
February 1996 and 1995 and August 1995) . . . . . . . . . .
Common stock, ($1 par value, 10,000,000 shares
authorized, 7,314,513, 4,820,558 and 4,842,805 shares
issued in February 1996 and 1995 and August 1995) . . . . . 7,315 4,821 4,843
Capital in excess of stated value . . . . . . . . . . . . . . 2,700 3,850 4,412
Retained earnings . . . . . . . . . . . . . . . . . . . . . . 80,414 65,745 72,447
Net unrealized holding gains . . . . . . . . . . . . . . . . 0 2 0
Less treasury stock, (at cost, 848,220,301,830 and 474,880
shares in February 1996 and 1995 and August 1995) . . . . . (16,163) (7,106) (12,959)
------- ------- --------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . 74,266 67,312 68,743
------- ------- --------
Total liabilities and stockholders' equity . . . . . . . . . . . $97,978 $89,654 $ 86,060
======= ======= ========
</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 six months ended February 29, 1996 and
February 28, 1995
(in thousands, except per share amounts)
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ ------------------------
February February February February
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating revenues . . . . . . . . . . . $38,140 $30,350 $65,466 $52,492
Cost of operating revenues . . . . . . . 28,336 23,790 49,241 40,933
------- ------- ------- -------
Gross profit . . . . . . . . . . . . . . 9,804 6,560 16,225 11,559
------- ------- ------- -------
Operating expenses:
Selling expense . . . . . . . . . . . 1,106 1,045 2,061 2,085
General and administrative expense . . 1,829 1,507 3,305 2,914
Engineering and research expense . . . 339 316 691 625
------- ------- ------- -------
Total operating expenses . . . . . . . . 3,274 2,868 6,057 5,624
------- ------- ------- -------
Operating income . . . . . . . . . . . . 6,530 3,692 10,168 5,935
Interest income, net . . . . . . . . . . 708 672 1,372 1,354
Other income, net . . . . . . . . . . . 285 52 305 67
------- ------- ------- -------
Earnings before income taxes . . . . . . 7,523 4,416 11,845 7,356
Income tax provision . . . . . . . . . . 2,258 1,413 3,554 2,354
------- ------- ------- -------
Net earnings . . . . . . . . . . . . . . $ 5,265 $ 3,003 $ 8,291 $ 5,002
======= ======= ======= =======
Net earnings per share:
Primary . . . . . . . . . . . . . . . $ 0.78 $ 0.42 $ 1.23 $ 0.70
======= ======= ======= =======
Fully diluted . . . . . . . . . . . . $ 0.77 $ 0.42 $ 1.22 $ 0.70
======= ======= ======= =======
Cash dividends per share . . . . . . . . $ 0.05 $ 0.00 $ 0.05 $ 0.00
======= ======= ======= =======
</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 six months ended February 29, 1996 and February 28, 1995
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
February February
1996 1995
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,291 $ 5,002
Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717 618
Amortization of marketable securities premiums, net . . . . . . . . 167 178
(Gain) loss on sale of fixed assets . . . . . . . . . . . . . . . . (14) (39)
Loss on sale of marketable securities held-to-maturity . . . . . . . 0 2
(Gain) on sale of marketable securities available-for-sale . . . . (8) 0
Provision for uncollectible accounts receivable . . . . . . . . . . 16 30
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . (89) 601
Changes in assets and liabilities:
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,960) (4,006)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,203) (1,424)
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . (263) (243)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 4,712 3,313
Other current liabilities. . . . . . . . . . . . . . . . . . . . . . 454 (1,101)
Current taxes payable. . . . . . . . . . . . . . . . . . . . . . . . 1,021 (106)
Other noncurrent assets and liabilities. . . . . . . . . . . . . . . (180) (183)
---------- ---------
Net cash flows provided by (used in) operating activities . . . . . . . (2,339) 2,642
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment . . . . . . . . . . . . . . (2,537) (900)
Proceeds from sale of property, plant and equipment . . . . . . . . . . 37 46
Purchases of marketable securities held-to-maturity . . . . . . . . . . (1,211) (5,316)
Proceeds from sale of marketable securities held-to-maturity . . . . . 0 2,998
Proceeds from maturities of marketable securities held-to-maturity . . 5,460 7,145
Proceeds from sale of marketable securities available-for-sale . . . . 3,525 0
---------- ---------
Net cash flows used in financing activities . . . . . . . . . . . . . . 5,274 3,973
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock under stock option plan . . . . . 762 11
Three-for-two stock split fractonal shares paid in cash . . . . . . . . (2) 0
Purchases of treasury stock. . . . . . . . . . . . . . . . . . . . . . . (3,204) (5,787)
---------- ---------
Net cash flows used in financing activities. . . . . . . . . . . . . . . (2,444) (5,776)
---------- ---------
Net increases in cash and cash equivalents . . . . . . . . . . . . . . . 491 839
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . 4,514 1,712
---------- ---------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . $ 5,005 $ 2,551
========= =========
Supplemental Cash Flow Information:
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,636 $ 1,923
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1 $ 5
Supplemental schedule of noncash financing activities:
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 324 $ 0
</TABLE>
The accompanying notes are an integral part of the financial statements.
-5-
<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, 1995 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 approximates market. At February
29, 1996, 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 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.
On November 15, 1995 the Financial Accounting Standards Board Staff issued a
special report on statement 115 "Accounting for Certain Investments in Debt and
Equity Securities" that includes special transition provisions for the one-time
reassessment and reclassification of securities from the held-to-maturity
category during the period November 15, 1995 to December 31, 1995. Lindsay
transferred securities maturing July 1, 1996 and August 1, 1996 from the
held-to-maturity classification to the available-for-sale classification
December 20, 1996. The total amortized cost, gross unrealized holding gains,
gross unrealized holding losses and the aggregate fair value for the securities
transferred are $3,518,687, $8,233, $0.0 and $3,526,920, respectively.
There are no investments in the available-for-sale category included in
Marketable securities at February 29, 1996. Investments in the
held-to-maturity category are included in Marketable securities ($22.8 million)
and Long-term marketable securities ($22.1 million). The total amortized cost,
gross unrealized holding gains, gross unrealized holding losses, and aggregate
fair value for held-to-maturity securities are $44.9 million, $0.4 million,
$0.0 million, and $45.3 million, respectively. There have not been any sales
of held-to-maturity securities for the first six months of Fiscal 1996. In the
held-to-maturity category, $22.8 million in securities mature within one year
and $22.1 million have maturities ranging from one to two and one-half years.
-6-
<PAGE> 7
Lindsay Manufacturing Co.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. 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)
------------------------------------
February February August
1996 1995 1995
---------- ---------- ----------
<S> <C> <C> <C>
Total manufactured goods
First-in, first-out inventory $11,219 $11,860 $ 9,626
LIFO reserves (2,987) (3,460) (3,570)
Obsolescence reserve ( 645) ( 728) ( 672)
---------- ---------- ----------
Total inventories $ 7,587 $ 7,672 $ 5,384
========== ========== ==========
</TABLE>
The estimated percentage distribution between major classes of inventory before
reserves is as follows:
<TABLE>
<CAPTION>
February February August
1996 1995 1995
---------- ---------- ----------
<S> <C> <C> <C>
Raw materials 21% 21% 21%
Work in process 7% 6% 7%
Purchased parts 28% 20% 28%
Finished goods 44% 53% 44%
</TABLE>
4. Property, Plant and Equipment
Property, plant and equipment are stated at cost.
<TABLE>
<CAPTION>
(in thousands)
------------------------------------
February February August
1996 1995 1995
---------- ---------- ----------
<S> <C> <C> <C>
Land $ 66 $ 66 $ 66
Buildings 4,345 4,183 4,345
Equipment 19,614 17,256 18,944
Other 4,033 2,475 2,337
---------- ---------- ----------
28,058 23,980 25,692
Less accumulated depreciation 19,097 18,109 18,528
---------- ---------- ----------
Property, plant and equipment, net $ 8,961 $ 5,871 $ 7,164
========== ========== ==========
</TABLE>
5. Commitments and Contingent Liabilities
The consolidated balance sheet reflects a reserve of $2.1 million at February
29, 1996, compared to $1.9 million at August 31, 1995, reflecting an increase
to the reserve of $0.3 million and costs of $0.1 million during the first
quarter of Fiscal 1996 for continued implementation of environmental
remediation plans for aquifer and soil and shallow groundwater contaminations.
Additionally, second quarter costs of $0.2 million were expensed on the
consolidated statements of operations and were not reflected in the reserve on
the consolidated balance sheet. In 1987 the insurer agreed to reimburse
Lindsay for remediation costs incurred by Lindsay. The insurer reduced its
reimbursement of remediation costs in early 1990. In late 1990, Lindsay filed
suit against the insurer. The insurer completely stopped reimbursement of
remediation costs in 1991 and in 1992 the insurer filed a counterclaim against
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<PAGE> 8
Lindsay Manufacturing Co.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Commitments and Contingent Liabilities - Continued
Lindsay for previously reimbursed remediation costs. In December 1995 the
court dismissed Lindsay's suit against the insurer and entered a judgement in
the amount of $2.4 million in favor of the insurer. Lindsay is in the process
of appealing the dismissal of it's case against the insurer and the judgement
against Lindsay. The Company has recorded a probable insurance recovery in
other current assets. In the opinion of management, resolution of these
matters, for which provision has not been made, will not have a material
adverse affect on Lindsay's consolidated financial condition, however, an
adverse outcome of these matters could have a material effect on quarterly or
annual operating results or cash flows when resolved in a future period.
The Company and its subsidiaries are defendants in various legal actions
arising from other issues in the course of their business activities. In the
opinion of management, resolution of these actions will not result in a
material adverse effect on Lindsay's consolidated financial position, results
of operations or cash flows.
Lindsay carries property insurance, with a $10,000 deductible, for replacement
value of all of its buildings and non-auto equipment.
6. Net Earnings Per Share
Primary net earnings per share are calculated by dividing the earnings by the
weighted average number of common and common equivalent (stock options) shares
outstanding of 6,763,111 for the three months and 6,755,010 for the six months
ended February 29, 1996 as compared to 7,081,157 for the three months and
7,188,392 for the six months ended February 28, 1995. The difference between
shares for primary and fully diluted earnings per share was not significant in
any period. On January 29, 1996, the Board of Directors declared a
three-for-two split of Lindsay's common stock effective February 22, 1996, to
stockholders of record on February 7, 1996. Accordingly, the average number of
shares outstanding, per share information and stock option data have been
adjusted to reflect the stock split.
-8-
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following table provides highlights for the three month and six month
periods indicated of Fiscal Year 1996 as compared to the same periods of Fiscal
Year 1995.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------- ----------------------------
Percent Percent
Increase Increase
($ in thousands) 2/29/96 2/28/95 (Decrease) 2/29/96 2/28/95 (Decrease)
- ----------------------------------------------------------------------------------------------------
Consolidated
- ------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues .....................$38,140 $30,350 25.7% $65,466 $52.492 24.7%
Cost of Operating Revenues .............$28,336 $23,790 19.1 $49,241 $40,933 20.3
Gross Profit ...........................$ 9,804 $ 6,560 49.4 $16,225 $11,559 40.4
Gross Margin ........................... 25.7% 21.6% 24.8% 22.0%
Selling, Eng. & Research, and
G&A Expense ..........................$ 3,274 $ 2,868 14.2 $ 6,057 $ 5,624 7.7
Operating Income .......................$ 6,530 $ 3,692 76.9 $10,168 $ 5,935 71.3
Operating Margin ....................... 17.1% 12.2% 15.5% 11.3%
Interest Income, net ...................$ 708 $ 672 5.4 $ 1,372 $ 1,354 1.3
Other Income, net ......................$ 285 $ 52 448.1 $ 305 $ 67 355.2
Income Tax Provision ...................$ 2,258 $ 1,413 59.8 $ 3,554 $ 2,354 51.0
Effective Income Tax Rate .............. 30.0% 32.0% 30.0% 32.0%
Net Earnings............................$ 5,265 $ 3,003 75.3% $ 8,291 $ 5,002 65.8%
</TABLE>
As the above table displays, operating revenues for the three month period
ended February 29, 1996 increased 25.7 percent ($7.8 million) from the
comparable period of the prior year. For the six month period ended February
29, 1996, operating revenues were up 24.7 percent ($13.0 million). The
increase in second quarter revenue was the net result of a 30 percent ($6.6
million) increase in North American irrigation equipment revenues and a 115
percent ($2.2 million) increase in export irrigation equipment revenues being
partially offset by a 15 percent ($1.0 million) decrease in diversified
products and other revenues. For the six month period, fiscal 1996 North
American irrigation equipment and export irrigation equipment revenues were up
24 percent ($8.7 million) and 149 percent ($5.3 million), respectively, as
compared to the prior year. Diversified products and other revenues for the six
month period were down 8 percent ($1.0 million).
North American irrigation equipment revenues for both the three and six month
periods of fiscal 1996 were favorably impacted by the long term demand drivers
of continued farmer emphasis on conserving water, energy, and labor.
Additionally, strong farm commodity prices and effective fall and winter sales
and marketing programs favorably impacted North American activity for the three
and six month periods.
Export irrigation equipment revenues for both the three and six month periods
of fiscal 1996 increased due to stronger sales in Western European and Latin
American markets.
The reduction in diversified products and other revenues for both the three and
six month periods of fiscal 1996 was due primarily to lower sales of large
diameter steel tubing. In addition, outsource manufacturing revenues, in
total, from Caterpillar, Inc., Deere & Company, and New Holland North America,
Inc. were lower for the three month period ending February 29, 1996 as compared
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
to the prior year's comparative period.
Gross margin for the three months ended February 29, 1996, as a percent of
operating revenues, was 25.7 percent as compared to 21.6 percent of the prior
year's comparative period. For the six months ended February 29, 1996, gross
margin, as a percent of operating revenues, was 24.8 percent as compared to
22.0 percent for the six months ended February 28, 1995. Strong demand for
irrigation equipment in the North American market for both the three and six
month periods resulted in a continued favorable pricing environment.
Additionally, raw material costs were, in total, stable during both the three
and six month period of the current year.
Selling, general and administrative, and engineering and research expenses for
the three month period ended February 29, 1996, were $3.3 million as compared
to $2.9 million during the prior year's comparative period. For the six month
period, fiscal 1996 selling, general and administrative, and engineering and
research expenses totaled $6.1 million as compared to $5.6 million in fiscal
1995. Higher wage and salary and retirement program expenditures and
advertising expenditures, offset partially by lower general liability insurance
expenditures, comprise the majority of the increased expenses for both the
three and six month periods.
The effective tax rate for both the three month and six month periods ended
February 29, 1996 was 30.0 percent. This compares to an effective tax rate of
32.0 percent for both the comparable three month and six month periods of the
prior year. Due to the federal income tax exempt status of interest income
from its municipal bond investments and state economic development tax credits,
Lindsay benefits from an effective tax rate that is lower than the combined
federal and state statutory rates, currently estimated at 38.0 percent.
FINANCIAL CONDITION
Lindsay's equity increased to $74.3 million at February 29, 1996 from $68.7
million at August 31, 1995, due to its net earnings of $8.3 million, less $3.2
million used to repurchase 135,900 (split adjusted) shares of common stock per
Lindsay's previously announced stock repurchase plan, plus the proceeds of $0.8
million from the issuance of 44,722 shares of common stock under Lindsay's
employee stock option plan, less dividends payable of $0.3 million. Lindsay
announced the initiation of a regular cash dividend on February 7, 1996. The
5-cent dividend is payable March 15, 1996 to shareholders of record as of
February 29, 1996 on approximately 6.4 million shares. Lindsay's equity at
February 29, 1995 was $67.3 million.
Lindsay's cash and short-term marketable securities totaled $27.8 million at
February 29, 1996, as compared to $23.3 million at August 31, 1995, and $12.9
million at February 28, 1995. Receivables of $25.3 million at February 29,
1996 increased $14.9 million from $10.4 million at August 31, 1995 and $10.2
million from $15.1 million at February 28, 1995 due to the higher level of
North American and export irrigation equipment sales activity during February
1996 and a marketing program that offered extended payment terms to our
dealers. The majority of these extended payment term receivables come due on
April 1, 1996. Inventories at February 29, 1996 totaled $7.6 million, higher
than their $5.4 million balance at August 31, 1995 and comparable to their $7.7
-10-
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
million balance at February 28, 1995, but continuing in an acceptable range.
At February 29, 1996, Lindsay had $22.0 million invested in long-term
marketable securities which represent intermediate term (one to two and
one-half year maturities) municipal debt. This is down from $34.0 million at
August 31, 1995 and $41.2 million at February 28, 1995.
Current liabilities of $22.4 million at February 29, 1996 are higher than their
$15.9 million balance at August 31, 1995 and their $21.1 million balance at
February 28, 1995. The increase from August 31, 1995 is principally due to
increased trade payables and higher accruals for warranty, dividend and taxes
payable. The increase from February 28, 1995 is primarily due to increased
trade payables and higher accruals for warranty, dividend and taxes payable
partially offset by lower accruals for international dealer commission and
legal settlement.
Capital expenditures totaling $2.5 million for the first six months of 1996
were used primarily for upgrading manufacturing plant equipment. Lindsay
expects its Fiscal 1996 capital expenditures to be approximately $3.0 to $3.5
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.
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 13 and 7 percent of Lindsay's operating revenues for the first
six months of 1996 and 1995 respectively, were generated from export sales. For
the full year of 1995, approximately 10 percent of Lindsay's operating revenues
were generated from export sales. Lindsay does not believe it has significant
exposure to foreign currency translation risks because its 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 a U.S. bank.
-11-
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In October 1995, FASB issued statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123
establishes financial accounting and reporting standards for stock-based
employee compensation plans and transactions in which goods or services are the
consideration received for the issuance of equity instruments. This statement
requires that an employer's financial statements include certain disclosures
about stock-based employee compensation regardless of the method used to
account for them. Adoption is required for fiscal years, beginning after
December 15, 1995, Lindsay's Fiscal 1997 or earlier. Lindsay expects to
continue its accounting in accordance with Accounting Principles Board Opinion
No. 25 "Accounting for Stock Issued to Employees".
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
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
-12-
<PAGE> 13
OTHER INFORMATION
(Continued)
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 were
fully implemented during Fiscal 1995.
The total balance sheet reserve for this remediation was $2.1 million at
February 29, 1996 compared to $1.9 million at Fiscal 1995 year end, reflecting
an increase to the reserve of $0.3 million and costs of $0.1 million during
Fiscal 1996 for the continued implementation of the plans. Additionally,
second quarter costs of $0.2 million were expensed on the consolidated
statements of operations and was not reflected in the reserve on the
consolidated balance sheet.
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 the insurer are in litigation over the extent of the insurance coverage.
In 1987 the insurer agreed to reimburse Lindsay for remediation costs incurred
by Lindsay. The insurer reduced its reimbursement of remediation costs in
early 1990. In late 1990, Lindsay filed suit against the insurer. The insurer
completely stopped reimbursement of remediation costs in 1991 and in 1992 the
insurer filed a counterclaim against Lindsay for previously reimbursed
remediation costs. In December 1995 the court dismissed Lindsay's suit against
the insurer and entered a judgement in the amount of $2.4 million in favor of
the insurer. Lindsay is in the process of appealing the dismissal of it's case
against the insurer and the judgement against Lindsay. If the EPA or the NDEC
require remediation which is in addition to or different from the current plan
and depending on the success of Lindsay's litigation against the insurer, 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 February 29, 1996.
-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: March 26, 1996 Bruce C. Karsk
-------------- -------------------------
Bruce C. Karsk
Vice President - Finance, Treasurer and Secretary;
Principal Financial and Accounting Officer
Date: March 26, 1996 Ralph J. Kroenke
-------------- ------------------------
Ralph J. Kroenke
Controller
-14-
<PAGE> 1
EXHIBIT II
Lindsay Manufacturing Co.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
For the three months and six months ended
February 29, 1996 and February 28,1995
(Dollars in thousands except per share amounts)
(Unaudited)
------------------------------------
<TABLE>
<CAPTION>
COMPUTATION OF PRIMARY PER SHARE EARNINGS
Three Months Ended Six Months Ended
---------------------------------- ------------------------------------
February February February February
1996 1995 1996 1995
--------- -------- --------- --------
<S> <C> <C> <C> <C>
1. Weighted average shares
outstanding . . . . . . . . . . 6,449,414 6,857,610 6,464,282 6,964,101
2. Net additional shares outstanding
assuming dilutive stock options
exercised and proceeds used to
purchase treasury stock . . . . 313,697 223,547 290,728 224,291
---------- ---------- ---------- ----------
3. Average number of common and
common equivalent shares
outstanding . . . . . . . . . . 6,763,111 7,081,157 6,755,010 7,188,392
========= ========= ========= =========
4. Net earnings for per share
computation . . . . . . . . . . $ 5,265 $ 3,003 $ 8,291 $ 5,002
========== ========== ========== ==========
5. Net earnings per average common
and common equivalent shares $ 0.78 $ 0.42 $ 1.23 $ 0.70
outstanding . . . . . . . . . . ========== ========== ========== ==========
</TABLE>
COMPUTATION OF FULLY DILUTED PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------------------- ------------------------------------
February February February February
1996 1995 1996 1995
--------- -------- --------- --------
<S> <C> <C> <C> <C>
1. Weighted average shares
outstanding . . . . . . . . . . 6,449,414 6,857,610 6,464,282 6,964,101
2. Net additional shares outstanding
assuming dilute stock options
exercised and proceeds used to
purchase treasury stock . . . . 348,143 223,547 348,143 225,507
---------- ---------- ---------- ----------
3. Average number of common and
common equivalent shares
outstanding . . . . . . . . . . 6,797,557 7,081,157 6,812,425 7,189,608
========= ========= ========= =========
4. Net earnings for per share
computation . . . . . . . . . . $ 5,265 $ 3,003 $ 8,291 $ 5,002
========== ========== ========== ==========
5. Net earnings per average common
equivalent share outstanding. . $ 0.77 $ 0.42 $ 1.22 $ 0.70
========== ========== ========== ==========
</TABLE>
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 5,005
<SECURITIES> 22,814
<RECEIVABLES> 25,297
<ALLOWANCES> 0
<INVENTORY> 7,587
<CURRENT-ASSETS> 65,750
<PP&E> 28,058
<DEPRECIATION> 19,097
<TOTAL-ASSETS> 97,978
<CURRENT-LIABILITIES> 22,442
<BONDS> 0
<COMMON> 7,315
0
0
<OTHER-SE> 66,951
<TOTAL-LIABILITY-AND-EQUITY> 97,978
<SALES> 65,466
<TOTAL-REVENUES> 65,466
<CGS> 49,241
<TOTAL-COSTS> 49,241
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,845
<INCOME-TAX> 3,554
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,291
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.22
</TABLE>
