<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 November 30, 1997 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, $1.00 par value 9,343,856
- ----------------------------- -----------------------------------
Title of Class Outstanding as of December 18, 1997
Exhibit index is located on page 2.
Total number of pages 19.
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<PAGE> 2
LINDSAY MANUFACTURING CO. AND CONSOLIDATED SUBSIDIARIES
INDEX
Page No.
--------
Part I - Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets, November 30, 1997 and 1996
and August 31, 1997 3
Consolidated Statements of Operations for the three
months ended November 30, 1997 and 1996 4
Consolidated Statements of Cash Flows for the three
months ended November 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Position 9-12
Item 3. Quantitative and Qualitative Disclosures about
Market Risks 12
Part II - Other Information
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Exhibit Index
4 - Specimen Form of Common Stock Certificate 16-17
11 - Statement re Computation of Per Share Earnings 18
27 - Financial Data Schedule 19
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<PAGE> 3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Lindsay Manufacturing Co.
CONSOLIDATED BALANCE SHEETS
November 30, 1997 and 1996 and August 31, 1997
($ in thousands, except par values)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
November November August
1997 1996 1997
ASSETS --------- --------- ---------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 1,989 $ 3,462 $ 4,231
Marketable securities 12,389 19,319 12,077
Receivables 19,307 27,728 18,900
Inventories 9,297 9,084 9,995
Deferred income taxes 4,381 3,444 4,547
Other current assets 623 824 77
--------- --------- ---------
Total current assets 47,986 63,861 49,827
Long-term marketable securities 49,809 28,868 45,802
Property, plant and equipment, net 11,283 10,019 11,294
Other noncurrent assets 1,123 1,131 1,060
--------- --------- ---------
Total assets $ 110,201 $ 103,879 $ 107,983
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 6,257 $ 7,589 $ 4,993
Other current liabilities 14,376 14,335 14,337
Current portion of capital lease obligation 150 0 149
--------- --------- ---------
Total current liabilities 20,783 21,924 19,479
Other noncurrent liabilities 1,057 1,108 1,274
Obligation under capital lease less current portion 224 0 262
--------- --------- ---------
Total liabilities 22,064 23,032 21,015
--------- --------- ---------
Contigencies
Stockholders' equity:
Preferred stock, ($1 par value, 2,000,000 shares
authorized, no shares issued and outstanding in
November 1997 and 1996 and August 1997)
Common stock, ($1 par value, 25,000,000 shares authorized,
11,220,586, 7,341,236 and 11,203,256 shares issued in
November 1997 and 1996 and August 1997 11,221 7,341 11,203
Capital in excess of stated value 1,063 3,382 450
Retained earnings 111,003 92,494 106,639
Less treasury stock, (at cost, 1,876,730, 1,008,320 and
1,794,030 shares in November 1997 and 1996 and August 1997) (35,150) (22,370) (31,324)
--------- --------- ---------
Total stockholders' equity 88,137 80,847 86,968
--------- --------- ---------
Total liabilities and stockholders' equity $ 110,201 $ 103,879 $ 107,983
========= ========= =========
</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 ended November 30, 1997 and 1996
($ in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
November November
1997 1996
---------- ----------
<S> <C> <C>
Operating revenues...................................................... $ 37,448 $ 39,467
Cost of operating revenues.............................................. 27,891 30,003
---------- ----------
Gross profit............................................................ 9,557 9,464
---------- ----------
Operating expenses:
Selling expense....................................................... 1,272 1,033
General and administrative expense.................................... 1,855 1,756
Engineering and research expense...................................... 460 383
---------- ----------
Total operating expenses................................................ 3,587 3,172
---------- ----------
Operating income........................................................ 5,970 6,292
Interest income, net.................................................... 791 774
Other income, net....................................................... 191 7
---------- ----------
Earnings before income taxes............................................ 6,952 7,073
Income tax provision.................................................... 2,260 2,264
---------- ----------
Net earnings............................................................ $ 4,692 $ 4,809
========== ==========
Net earnings per share.................................................. $ 0.48 $ 0.48
========== ==========
Cash dividends per share................................................ $ 0.035 $ 0.033
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended November 30, 1997 and 1996
($ in thousands)
(Unaudited)
<TABLE>
<CAPTION>
November November
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings........................................................... $ 4,692 $ 4,809
Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:
Depreciation and amortization....................................... 554 455
Amortization of marketable securities premiums, net................. 38 68
(Gain) loss on sale of fixed assets................................. (12) 1
Provision for uncollectible accounts receivable..................... 0 15
Deferred income taxes............................................... 166 (75)
Changes in assets and liabilities:
Receivables......................................................... (407) (7,615)
Inventories......................................................... 698 (1,284)
Other current assets................................................ (546) (554)
Accounts payable.................................................... 1,264 1,674
Other current liabilities........................................... (2,533) (810)
Current taxes payable............................................... 2,572 2,363
Other noncurrent assets and liabilities............................. (280) (184)
---------- ----------
Net cash flows provided by (used in) operating activities.............. 6,206 (1,137)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment............................. (543) (799)
Proceeds from sale of property, plant and equipment.................... 12 15
Purchases of marketable securities held-to-maturity.................... (6,572) (1,226)
Proceeds from maturities of marketable securities held-to-maturity..... 2,215 5,043
---------- ----------
Net cash flows (used in) provided by investing activities.............. (4,888) 3,033
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under capital lease obligation...................... (37) 0
Proceeds from issuance of common stock under stock option plan......... 631 443
Dividends paid......................................................... (328) (317)
Purchases of treasury stock............................................ (3,826) (922)
---------- ----------
Net cash flows used in financing activities............................ (3,560) (796)
---------- ----------
Net (decrease) increase in cash and cash equivalents................... (2,242) 1,100
Cash and cash equivalents, beginning of period......................... 4,231 2,362
---------- ----------
Cash and cash equivalents, end of period............................... $ 1,989 $ 3,462
========== ==========
Supplemental Cash Flow Information:
Income taxes paid...................................................... $ 2 $ 7
Interest paid.......................................................... $ 25 $ 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, 1997 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 November
30, 1997, 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. The carrying amounts of
the securities used in computing unrealized and realized gains and losses are
determined by specific identification. 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.
There are no investments in the available-for-sale category included in
marketable securities at November 30, 1997. Investments in the held-to-maturity
category are included in marketable securities ($12.4 million) and long-term
marketable securities ($49.8 million). The total amortized cost, gross
unrealized holding gains, gross unrealized holding losses, and aggregate fair
value for held-to-maturity securities are $62.2 million, $0.4 million, $0.0
million, and $62.6 million, respectively. There have not been any sales of
held-to-maturity securities during the first quarter of fiscal 1998. In the
held-to-maturity category, $12.4 million in securities mature within one year
and $49.8 million have maturities ranging from one to three and two-thirds
years.
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<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)
--------------------------------------
November November August
1997 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Total manufactured goods
First-in, first-out inventory $ 13,344 $ 13,845 $ 14,164
LIFO reserves (3,380) (4,073) (3,500)
Obsolescence reserve (667) (688) (669)
-------- -------- --------
Total inventories $ 9,297 $ 9,084 $ 9,995
======== ======== ========
</TABLE>
The estimated percentage distribution between major classes of inventory before
reserves is as follows:
<TABLE>
<CAPTION>
November November August
1997 1996 1997
-------- -------- ------
<S> <C> <C> <C>
Raw materials 19% 16% 19%
Work in process 6% 8% 6%
Purchased parts 30% 32% 30%
Finished goods 45% 44% 45%
</TABLE>
4. Property, Plant and Equipment
Property, plant and equipment are stated at cost.
<TABLE>
<CAPTION>
(in thousands)
--------------------------------------
November November August
1997 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Plant and equipment:
Land $ 70 $ 70 $ 70
Buildings 5,033 4,757 5,033
Equipment 23,715 22,542 23,769
Other 2,673 2,625 2,135
Capital lease:
Equipment 458 0 458
-------- -------- --------
Total plant, equipment & capital lease 31,949 29,994 31,465
Accumulated depreciation & amortization:
Plant and equipment (20,631) (19,975) (20,145)
Capital lease (35) 0 (26)
-------- -------- --------
Property, plant and equipment, net $ 11,283 $ 10,019 $ 11,294
======== ======== ========
</TABLE>
5. Contingencies
The Company and its subsidiaries are defendants in various legal actions arising
in the course of their business activities. During fiscal 1996, Lindsay
substantially completed certain environmental remediation efforts at its
manufacturing facility. Lindsay believes that its insurer should cover the costs
of certain remediation costs. 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
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<PAGE> 8
Lindsay Manufacturing Co.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Contingencies - Continued
reimbursed remediation costs. In December 1995 the court dismissed Lindsay's
suit against the insurer and entered a judgment in the amount of $2.4 million in
favor of the insurer. In July 1997, the United States Court of Appeals reversed
the judgment of $2.4 million and remanded the case to the district court for
further proceedings. The Company has not made a provision for the previously
reimbursed remediation costs. In the opinion of management, an unfavorable
outcome with respect to any or all of these matters will not result in a
material adverse effect on Lindsay's consolidated financial position, results of
operations or cash flows.
6. Net Earnings Per Share
Primary net earnings per share are calculated by dividing the earnings by the
weighted average number of common and common equivalent (stock options) shares
outstanding of 9,854,473 and 10,091,094 for the three months ended November 30,
1997 and 1996, respectively. The difference between shares for primary and fully
diluted earnings per share was not significant in any period.
7. Stock Split
On February 7, 1997, the Board of Directors declared a three-for-two split of
Lindsay's common stock effective March 10, 1997 to stockholders of record on
March 3, 1997. Accordingly, the average number of shares outstanding and per
share information have been adjusted to reflect the stock split.
-8-
<PAGE> 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following table provides highlights for the first quarter of fiscal year
1998 compared with the first quarter of fiscal year 1997.
<TABLE>
<CAPTION>
For The Three Months Ended
------------------------------------
Percent
----------------------- Increase
($ in thousands) 11/30/97 11/30/96 (Decrease)
- ---------------- -------- -------- ----------
<S> <C> <C> <C>
Consolidated
Operating Revenues .............. $ 37,448 $ 39,467 (5.1)%
Cost of Operating Revenues ...... $ 27,891 $ 30,003 (7.0)
Gross Profit .................... $ 9,557 $ 9,464 1.0
Gross Margin .................... 25.5% 24.0%
Selling, Eng. & Research, and
G&A Expense ................... $ 3,587 $ 3,172 13.1
Operating Income ................ $ 5,970 $ 6,292 (5.1)
Operating Margin ................ 15.9% 15.9%
Interest Income, net ............ $ 791 $ 774 2.2
Other Income, net ............... $ 191 $ 7 N/A
Income Tax Provision ............ $ 2,260 $ 2,264 (.2)
Effective Income Tax Rate ....... 32.5% 32.0%
Net Earnings .................... $ 4,692 $ 4,809 (2.4)%
</TABLE>
As the above table displays, operating revenues for the three month period ended
November 30, 1997, were 5.1 percent ($2.0 million) lower than the first quarter
of fiscal 1997. This decrease was the net result of 3 percent ($0.7 million)
reduction in U.S. irrigation equipment revenues, a 20 percent ($1.9 million)
reduction in export irrigation equipment revenues and a 9 percent ($0.6 million)
increase in diversified products and other revenues.
During the first quarter of fiscal 1998 Lindsay restricted the availability of
and shipped fewer units under its "floor plan" marketing program as compared to
the first quarter of fiscal 1997. The "floor plan" marketing program is a
deferred payment program that encourages Lindsay's dealers in the United States
to purchase and take delivery of center pivots before the peak selling season of
January through May. Lindsay believes that during the past two years it has
expanded manufacturing capacity and efficiency through automation to a point
that allows the Company to reduce its use of the "floor plan" program without
negatively impacting irrigation system deliveries during the peak U.S. selling
season.
Export irrigation equipment revenue for the first quarter of fiscal 1998 was
negatively impacted by lower sales to our irrigation equipment dealers in the
Latin American market due to above average precipitation - particularly in
Argentina. Sales to the Australian, South African, and Western European markets
each expanded modestly during the first quarter of fiscal 1998 as compared to
the first quarter of fiscal 1997.
Lindsay believes that the long term demand drivers of the need for farmers to
conserve water, energy and labor while at the same time improving crop yields
and increasing crop production remain in place both in the U.S. and in its
markets outside of the U.S.
-9-
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
The increase in diversified products and other revenue during the first quarter
of fiscal 1998 as compared to the first quarter of fiscal 1997 was due to an
increase of outsource manufacturing and other revenues partially offset by a
reduction in large diameter steel tubing revenues.
Gross margin for the three months ended November 30, 1997, was 25.5 percent, up
from 24.0 percent of the prior year's comparable period. First quarter gross
margin benefited from the reduction in floor plan unit shipments to the domestic
market as discussed above, strong manufacturing efficiencies and stable raw
material costs.
First quarter fiscal 1998's selling, general and administrative and engineering
and research expenses, in total, increased 13.1 percent from the prior year's
comparative period. Higher product advertising costs and wage and employee
benefit costs accounted for the majority of the increase.
The effective tax rate for the first quarter of fiscal 1998 was 32.5 percent as
compared to 32.0 percent for the comparative period of fiscal 1997. Due to the
federal income tax exempt status of interest income from its municipal bond
investments, the state economic development tax credits and the foreign sales
corporation federal tax provisions as they relate to export sales, Lindsay
benefits from an effective tax rate which is lower than the combined federal and
state statutory rates, currently estimated at 36.7 percent.
FINANCIAL POSITION AND LIQUIDITY
The discussion of financial position and liquidity focuses on the balance sheet
and statement of cash flows. Lindsay requires cash for financing its
receivables, inventories, capital expenditures, stock repurchases and cash
dividends. Over the years, Lindsay has financed its growth through funds
provided by operations. Cash flows provided by operations of $6.2 million for
the first three months of fiscal 1998 compared to cash flows used in operations
of $1.1 million for the first three months of fiscal 1997. The increase in cash
flows provided by operating activities in fiscal 1998 was primarily due to net
earnings of $4.7 million. Fiscal 1997 cash flows used in operating activities
was principally due to increased receivables of $7.6 million, partially offset
by net earnings of $4.8 million.
Receivables of $19.3 million at November 30, 1997 were comparable to $18.9
million at August 31, 1997 and decreased $8.4 million from $27.7 million at
November 30, 1996, due to the lower level of sales and marketing programs that
offered extended payment terms to our dealers and customers. Inventories at
November 30, 1997 totaled $9.3 million, lower than their $10.0 million balance
at August 31, 1997 and higher than their $9.1 million balance at November 30,
1996.
Current liabilities of $20.8 million at November 30, 1997 are comparable to
their $19.5 million balance at August 31, 1997 and $21.9 million balance at
November 30, 1996. The increase from August 31, 1997 is principally due to
increased trade payables and higher accruals for taxes payable partially offset
by lower accruals for payroll and vacation pay. The decrease from November 30,
1996 is primarily due to decreased trade payables.
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<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Continued)
FINANCIAL POSITION AND LIQUIDITY - Continued
Cash flows used in investing activities of $4.9 million for the first three
months of fiscal 1998 compared to cash flows provided by investing activities of
$3.0 million for the first three months of fiscal 1997. The cash flows used in
investing activities in fiscal 1998 was attributable to purchases of marketable
securities and capital expenditures, partially offset by proceeds from
marketable securities. Fiscal 1997 cash flows provided by investing activities
was primarily due to proceeds from marketable securities, partially offset by
purchases of marketable securities and capital expenditures.
Lindsay's cash and short-term marketable securities totaled $14.4 million at
November 30, 1997, as compared to $16.3 million at August 31, 1997, and $22.8
million at November 30, 1996. At November 30, 1997, Lindsay had $49.8 million
invested in long-term marketable securities which represent intermediate term
(one to three and two-thirds year maturities) municipal debt, as compared to
$45.8 million at August 31, 1997 and from $28.9 million at November 30, 1996.
Cash flows used in financing activities of $3.6 million for the first three
months of fiscal 1998 increased from $0.8 million for the first three months of
fiscal 1997 and for both periods was primarily attributable to dividends paid
and to purchases of treasury stock partially offset by proceeds from the
issuance of common stock under the company's stock option plan.
Lindsay's equity increased to $88.1 million at November 30, 1997 from $87.0
million at August 31, 1997, due to its net earnings of $4.7 million, less $3.8
million used to repurchase 82,700 (split adjusted) shares of common stock per
Lindsay's previously announced stock repurchase plan, plus the proceeds of $0.6
million from the issuance of 17,330 shares of common stock under Lindsay's
employee stock option plan, less dividends paid of $0.3 million. Lindsay's
equity at November 30, 1996 was $80.8 million.
Capital expenditures totaling $543,000 for the first quarter of 1998 were used
primarily for upgrading manufacturing plant equipment. Lindsay expects its
fiscal 1998 capital expenditures to total approximately $3.5 to $4.0 million
which will be used primarily 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, dividends and continued repurchases
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 Lindsay's second and third quarters
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, the
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 22 and 26 percent of Lindsay's operating revenues for the first
quarter of 1998 and 1997 respectively, were generated from export sales. For the
full year of 1997, approximately 20 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 irrevocable
letters of credit which are confirmed by a U.S. bank or other secured means.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting standards ("SFAS") No. 128, "Earnings per Share" which,
when adopted, will replace the current methodology for calculating and
presenting earnings per share. Under SFAS No. 128, primary and fully diluted
earnings per share will be replaced with basic and diluted earnings per share.
The statement will be effective beginning in the Company's second quarter ending
February 28, 1998, and accordingly, the financial statements for such quarter
will include a restatement of historical earnings per share to conform to the
requirements of SFAS No. 128. The impact of implementation of SFAS No. 128 is
not expected to be material.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not Applicable.
-12-
<PAGE> 13
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 selected plan
implementation was delayed until finalization of the Consent Decree in April
1992. The final remediation plans were approved in 1993 and 1994 and the
remediation plans were fully implemented during fiscal 1995. The balance sheet
reserve for this remediation was $0.3 million at November 30, 1997 and August
31, 1997.
Lindsay believes that the current reserve is sufficient to cover the estimated
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 judgment in the amount of $2.4 million in favor of the
insurer. In July 1997, the United States Court of Appeals reversed the judgment
of $2.4 million and remanded the case to the district court for further
proceedings. The Company has not made a provision for the previously reimbursed
remediation costs. 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.
-13-
<PAGE> 14
OTHER INFORMATION
(Continued)
Concerning Forward Looking Statements - This Report on Form 10-Q, including the
Management's Discussion and Analysis and other sections, contains forward
looking statements that are subject to risks and uncertainties and which reflect
management's current beliefs and estimates of future economic circumstances,
industry conditions, Company performance and financial results.
Forward looking statements include the information concerning possible or
assumed future results of operations of the Company and those statements
preceded by, followed by or include the words "future", "position",
"anticipate(s)", "expect", "believe(s)", "see", "plan", "further improve",
"outlook", "should", or similar expressions. For these statements, the Company
claims the protection of the safe harbor for forward looking statements
contained in the Private Securities Litigation Reform Act of 1995. Readers of
this Report should understand that the following important factors, in addition
to those discussed elsewhere in this document, could affect the future results
of the Company and could cause those results to differ materially from those
expressed in these forward looking statements; availability of and price of raw
materials, product pricing, competitive environment and related domestic and
international market conditions, operating efficiencies and actions of domestic
and foreign governments. Any changes in such factors could result in
significantly different results.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
4 - Specimen Form of Common Stock Certificate
11 - Statement re Computation of Per Share Earnings.
27 - Financial Data Schedule.
(b) Reports on Form 8-K -
No Form 8-K was filed during the quarter ended November 30, 1997.
-14-
<PAGE> 15
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: December 23, 1997 Bruce C. Karsk
----------------- -------------------------------------
Bruce C. Karsk
Vice President - Finance, Treasurer and Secretary;
Principal Financial and Accounting Officer
Date: December 23, 1997 Ralph J. Kroenke
----------------- -------------------------------------
Ralph J. Kroenke
Controller
-15-
<PAGE> 1
EXHIBIT 4 - SPECIMEN FORM OF COMMON STOCK CERTIFICATE
INCORPORATED UNDER THE LAWS COMMON STOCK
OF THE STATE OF DELAWARE PAR VALUE $1.00
NUMBER SHARES
L
THIS CERTIFICATE IS TRANSFERABLE IN CUSIP 535555 10 6
MINNEAPOLIS, MN OR NEW YORK, NY SEE REVERSE FOR
CERTAIN DEFINITIONS
LINDSAY MANUFACTURING CO.
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
LINDSAY MANUFACTURING CO., transferable on the books of the Corporation by
the holder hereof in person or by his duly authorized attorney upon
surrender of this certificate properly endorsed. This certificate and the
shares represented hereby are issued and shall be held subject to all the
provisions of the Certificate of Incorporation and By-Laws of the
Corporation as from time to time amended, to all of which the holder by
acceptance hereof assents. This certificate is not valid until
countersigned and registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the corporation and the facsimile signatures
of its duly authorized officers.
LINDSAY MANUFACTURING CO.
CORPORATE
LINDSAY SEAL
DELAWARE
Dated:
Countersigned and Registered:
NORWEST BANK MINNESOTA, N.A.
Transfer Agent
And Registrar
BY
B. C. Karsk, Gary D. Parker,
Vice President - Finance Chairman, President
Treasurer and Secretary and Chief Executive
Officer Authorized Signature
<PAGE> 2
LINDSAY MANUFACTURING CO.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS,
THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF OF THE CORPORATION
AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR
RIGHTS, SUCH REQUEST MAY BE MADE TO THE OFFICE OF THE SECRETARY OF THE
CORPORATION OR TO THE TRANSFER AGENT.
-----------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties ..........Custodian..........
(Cust) (Minor)
under Uniform Gifts to Minors
JT TEN - as joint tenants with right of
survivorship and not as tenants Act....................
in common (State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, __________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
Please insert Social Security or other
identifying number of assignee__________________________________________________
________________________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
________________________________________________________________________________
_________________________________________________________________________ SHARES
OF THE CAPITAL STOCK REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT _____________________________________________
________________________________________________________________________________
ATTORNEY TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN NAMED CORPORATION
WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED, _________________________
NOTICE:
The signature(s) to this assignment X__________________________________
must correspond with the name(s) as (Signature)
written upon the face of the certificate
in every particular without alteration or X__________________________________
enlargement or any change whatever. (Signature)
The signatures should be guaranteed by an eligible guarantor institution (Banks,
stockbrokers, savings and loan associations and credit unions with membership in
an approved signature guarantee medallion program), pursuant to S.E.C. Rule
17Ad-15.
SIGNATURES GUARANTEED BY:
<PAGE> 1
EXHIBIT 11
Lindsay Manufacturing Co.
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
For the three months ended November 30, 1997 and 1996
(Dollars in thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
COMPUTATION OF PRIMARY PER SHARE EARNINGS Three Months Ended
----------------------------
November November
1997 1996
----------- -----------
<S> <C> <C>
1. Weighted average shares outstanding ....... 9,390,459 9,523,745
2. Net additional shares outstanding assuming
dilutive stock options exercised and
proceeds used to purchase treasury stock 464,014 567,349
----------- -----------
3. Average number of common and common
equivalent shares outstanding .......... 9,854,473 10,091,094
=========== ===========
4. Net earnings for per share computation .... $ 4,692 $ 4,809
=========== ===========
5. Net earnings per average common and common
equivalent shares outstanding .......... $ 0.48 $ 0.48
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
COMPUTATION OF FULLY DILUTED PER SHARE EARNINGS Three Months Ended
----------------------------
November November
1997 1996
----------- -----------
<S> <C> <C>
1. Weighted average shares outstanding ....... 9,390,459 9,523,745
2. Net additional shares outstanding assuming
dilutive stock options exercised and
proceeds used to purchase treasury stock 464,014 567,349
----------- -----------
3. Average number of common and common
equivalent shares outstanding .......... 9,854,473 10,091,094
=========== ===========
4. Net earnings for per share computation .... $ 4,692 $ 4,809
=========== ===========
5. Net earnings per average common and common
equivalent shares outstanding .......... $ 0.48 $ 0.48
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> NOV-30-1997
<CASH> 1,989
<SECURITIES> 12,389
<RECEIVABLES> 19,307
<ALLOWANCES> 0
<INVENTORY> 9,297
<CURRENT-ASSETS> 47,986
<PP&E> 31,949
<DEPRECIATION> 20,666
<TOTAL-ASSETS> 110,201
<CURRENT-LIABILITIES> 20,783
<BONDS> 0
0
0
<COMMON> 11,221
<OTHER-SE> 76,916
<TOTAL-LIABILITY-AND-EQUITY> 110,201
<SALES> 37,448
<TOTAL-REVENUES> 37,448
<CGS> 27,891
<TOTAL-COSTS> 27,891
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,952
<INCOME-TAX> 2,260
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,692
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.48
</TABLE>
