<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, 2000 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-17116
Lindsay Manufacturing Co.
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(Exact name of registrant as specified in its charter)
DELAWARE 47-0554096
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
BOX 156, 214 EAST 2ND STREET, LINDSAY, NEBRASKA 68644
- ----------------------------------------------- ------
(Address of principal executive offices) (Zip Code)
402-428-2131
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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[ ]
At March 17, 2000, 12,312,756 shares of common stock, $1.00 par value, of the
registrant were outstanding.
Exhibit index is located on page 2.
Total number of pages 14.
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LINDSAY MANUFACTURING CO. AND CONSOLIDATED SUBSIDIARIES
INDEX FORM 10-Q
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Balance Sheets, February 29, 2000 and February 28, 1999
and August 31, 1999 3
Consolidated Statements of Operations for the three months and six
months ended February 29, 2000 and February 28, 1999 4
Consolidated Statements of Cash Flows for the six
months ended February 29, 2000 and February 28, 1999 5
Notes to Consolidated Financial Statements 6-8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION 9-11
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 12
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS 12
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
EXHIBIT INDEX
27 - Financial Data Schedule 14
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
LINDSAY MANUFACTURING CO.
CONSOLIDATED BALANCE SHEETS
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999 AND AUGUST 31, 1999
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
FEBRUARY FEBRUARY AUGUST
($ IN THOUSANDS, EXCEPT PAR VALUES) 2000 1999 1999
- ----------------------------------- ----------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................... $ 5,837 $ 647 $ 14,232
Marketable securities ............................................... 23,982 21,260 18,236
Receivables ......................................................... 23,842 17,625 12,909
Inventories ......................................................... 9,430 9,677 7,659
Deferred income taxes ............................................... 3,204 3,523 3,803
Other current assets ................................................ 541 511 85
----------- ------------ -----------
Total current assets ............................................. 66,836 53,243 56,924
Long-term marketable securities ..................................... 20,560 31,616 27,229
Property, plant and equipment, net .................................. 15,653 14,365 15,416
Other noncurrent assets ............................................. 837 1,017 820
----------- ------------ -----------
Total assets ........................................................... $ 103,886 $ 100,241 $ 100,389
=========== ============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade ............................................. $ 7,482 $ 6,186 $ 4,081
Other current liabilities ........................................... 13,216 10,756 12,580
Current portion of capital lease obligation ......................... 15 157 95
----------- ------------ -----------
Total current liabilities ........................................ 20,713 17,099 16,756
Other noncurrent liabilities ........................................ 781 970 935
Obligation under capital lease less current portion ................. 0 28 0
----------- ------------ -----------
Total liabilities ...................................................... 21,494 18,097 17,691
----------- ------------ -----------
Contingencies
Shareholders' equity:
Preferred stock, ($1 par value, 2,000,000 shares
authorized no shares issued and outstanding
in February 2000 and 1999 and August 1999)
Common stock, ($1 par value, 25,000,000 shares authorized,
17,306,593, 17,055,920 and 17,074,491 shares
issued in February 2000 and 1999 and August 1999) ................ 17,307 17,056 17,074
Capital in excess of stated value ................................... 2,406 1,441 2,118
Retained earnings ................................................... 139,602 127,629 134,708
Less treasury stock, at cost, 4,993,837, 4,267,050 and 4,650,237
shares in February 2000 and 1999 and August 1999 ................. (76,923) (63,982) (71,202)
----------- ------------ -----------
Total shareholders' equity .......................................... 82,392 82,144 82,698
----------- ------------ -----------
Total liabilities and shareholders' equity .......................... $ 103,886 $ 100,241 $ 100,389
=========== ============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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LINDSAY MANUFACTURING CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- -------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2000 1999 2000 1999
- ---------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating revenues .............................. $ 34,996 $ 31,087 $ 59,499 $ 52,729
Cost of operating revenues ...................... 26,058 23,426 44,821 40,390
----------- ----------- ----------- -----------
Gross profit .................................... 8,938 7,661 14,678 12,339
----------- ----------- ----------- -----------
Operating expenses:
Selling expense .............................. 1,366 1,159 2,727 2,420
General and administrative expense ........... 1,889 1,839 4,118 3,661
Engineering and research expense ............. 492 477 964 872
----------- ----------- ----------- -----------
Total operating expenses ........................ 3,747 3,475 7,809 6,953
----------- ----------- ----------- -----------
Operating income ................................ 5,191 4,186 6,869 5,386
Interest income, net ............................ 613 671 1,332 1,412
Other (expense) income, net ..................... (8) 68 28 230
----------- ----------- ----------- -----------
Earnings before income taxes .................... 5,796 4,925 8,229 7,028
Income tax provision ............................ 1,739 1,576 2,469 2,249
----------- ----------- ----------- -----------
Net earnings .................................... $ 4,057 $ 3,349 $ 5,760 $ 4,779
=========== =========== =========== ===========
Basic net earnings per share .................... $ 0.33 $ 0.26 $ 0.46 $ .36
=========== =========== =========== ===========
Diluted net earnings per share .................. $ 0.32 $ 0.25 $ 0.45 $ .35
=========== =========== =========== ===========
Average shares outstanding ...................... 12,380 13,040 12,400 13,197
Diluted effect of stock options ................. 270 359 348 380
----------- ----------- ----------- -----------
Average shares outstanding assuming dilution .... 12,650 13,399 12,748 13,577
=========== =========== =========== ===========
Cash dividends per share ........................ $ 0.035 $ 0.035 $ 0.070 $ 0.070
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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LINDSAY MANUFACTURING CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
FEBRUARY FEBRUARY
($ IN THOUSANDS) 2000 1999
- ---------------- ----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings .......................................................... $ 5,760 $ 4,779
Adjustments to reconcile net earnings to net cash
(used in) provided by operating activities:
Depreciation and amortization ...................................... 1,431 1,279
Amortization of marketable securities premiums, net ................ 31 96
(Gain) on sale of fixed assets ..................................... (57) (28)
Loss (gain) on maturities of marketable securities
held-to-maturity ................................................ 8 (5)
Provision for uncollectible accounts receivable .................... (276) (2)
Deferred income taxes .............................................. 599 338
Changes in assets and liabilities:
Receivables ........................................................ (10,657) (3,557)
Inventories ........................................................ (1,771) 521
Other current assets ............................................... (456) (419)
Accounts payable ................................................... 3,401 1,250
Other current liabilities .......................................... 234 (2,202)
Current taxes payable .............................................. 402 1,235
Other noncurrent assets and liabilities ............................ (171) (208)
----------- -----------
Net cash (used in) provided by operating activities ................ (1,522) 3,077
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment ............................ (1,668) (1,595)
Proceeds from sale of property, plant and equipment ................... 57 50
Purchases of marketable securities held-to-maturity ................... (10,256) 0
Proceeds from maturities of marketable securities held-to-maturity .... 11,140 8,901
----------- -----------
Net cash (used in) provided by investing activities ................... (727) 7,356
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments under capital lease obligation ..................... (80) (65)
Proceeds, net from issuance of common
stock under stock option plan ...................................... 521 648
Dividends paid ........................................................ (866) (914)
Purchases of treasury stock ........................................... (5,721) (13,249)
----------- -----------
Net cash used in financing activities ................................. (6,146) (13,580)
----------- -----------
Net decrease in cash and cash equivalents ............................. (8,395) (3,147)
Cash and cash equivalents, beginning of period ........................ 14,232 3,794
----------- -----------
Cash and cash equivalents, end of period .............................. $ 5,837 $ 647
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid ..................................................... $ 1,459 $ 737
Interest paid ......................................................... $ 32 $ 4
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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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, 1999 Annual Report to Shareholders.
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, 2000, Lindsay's cash equivalents were held primarily by one financial
institution. Marketable securities and long-term marketable securities are
categorized as held-to-maturity. Investments in the held-to-maturity category
are carried at amortized cost. 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.
The total amortized cost, gross unrealized holding gains, gross
unrealized holding losses, and aggregate fair value for held-to-maturity
securities are $44,542,000, $45,000, $196,000 and $44,391,000, respectively. In
the held-to-maturity category at February 29, 2000, $23,982,000 in marketable
securities mature within one year and $20,560,000 in long term marketable
securities have maturities ranging from 12 to 42 months. The Company is not
subject to material market risks with respect to its marketable securities.
(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>
FEBRUARY FEBRUARY AUGUST
$ IN THOUSANDS 2000 1999 1999
- --------------- -------- -------- --------
<S> <C> <C> <C>
First-in, first-out (FIFO) inventory .................................... $ 14,050 $ 13,964 $ 11,983
LIFO reserves ........................................................... (3,685) (3,352) (3,389)
Obsolescence reserve .................................................... (935) (935) (935)
-------- --------- --------
Total Inventories ....................................................... $ 9,430 $ 9,677 $ 7,659
======== ========= ========
</TABLE>
The estimated percentage distribution between major classes of inventory before
reserves is as follows:
<TABLE>
<CAPTION>
FEBRUARY FEBRUARY AUGUST
2000 1999 1999
-------- -------- --------
<S> <C> <C> <C>
Raw materials ........................................................... 12% 18% 12%
Work in process ......................................................... 5% 6% 5%
Purchased parts ......................................................... 38% 35% 38%
Finished goods .......................................................... 45% 41% 45%
</TABLE>
6
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(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant, equipment and capitalized lease assets are stated at cost.
<TABLE>
<CAPTION>
FEBRUARY FEBRUARY AUGUST
$ IN THOUSANDS 2000 1999 1999
- --------------- -------- -------- --------
<S> <C> <C> <C>
Plant and equipment:
Land ............................................................... $ 70 $ 70 $ 70
Buildings .......................................................... 5,865 5,043 5,781
Equipment .......................................................... 28,413 26,644 27,841
Other .............................................................. 5,750 4,908 5,004
Capital lease:
Equipment .......................................................... 458 458 458
-------- -------- --------
Total plant, equipment and capital lease ................................ 40,556 37,123 39,154
Accumulated depreciation and amortization:
Plant and equipment ................................................ (24,633) (22,593) (23,520)
Capital lease ...................................................... (270) (165) (218)
-------- -------- --------
Property, plant and equipment, net ...................................... $ 15,653 $ 14,365 $ 15,416
======== ======== ========
</TABLE>
(5) CREDIT ARRANGEMENTS
Lindsay entered into an agreement with a commercial bank in December 1999 for a
$10.0 million unsecured revolving line of credit through December 31, 2000.
Proceeds from this line of credit, if any, are to be used for working capital
and general corporate purposes including stock repurchases. Borrowings will bear
interest at a rate equal to one percent per annum under the rate in effect from
time to time and designated by the commercial bank as its National Base Rate. No
covenants limit the ability of Lindsay to merge or consolidate, to encumber
assets, to sell significant portions of its assets, to pay dividends, or to
repurchase common stock.
(6) CONTINGENCIES
The Company and its subsidiaries are defendants in various legal actions arising
in the ordinary course of their business activities. In the opinion of
management, resolution of these legal actions will not result in a material
adverse effect on Lindsay's consolidated financial position, results of
operations or cash flows.
(7) NET EARNINGS PER SHARE
Basic net earnings per share is computed by dividing net earnings by the
weighted average number of shares outstanding. Diluted net earnings per share
includes the dilutive effect of stock options.
Options to purchase 159,486 shares of common stock at a weighted
average price of $24.06 per share were outstanding during the second quarter of
fiscal year 2000, but were not included in the computation of diluted EPS
because the options' exercise price was greater than the average market price of
the common shares. These options expire between September 3, 2007 and September
3, 2009.
7
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(8) INDUSTRY SEGMENT INFORMATION
The Company adopted SFAS No. 131 "Disclosures About Segments of an Enterprise
and Related Information" in fiscal year 1999 which changes the way the Company
reports information about its operating segments.
The Company manages its business activities in two reportable segments:
Irrigation: This segment includes the manufacture and marketing of
center pivot and lateral move irrigation equipment.
Diversified Products: This segment includes providing outsource
manufacturing services and selling large diameter steel tubing.
The accounting policies of the two reportable segments are the same as
those described in the "Accounting Policies" in Note A. of the financial
statements included in the Form 10-K for the fiscal year ended August 31, 1999.
The Company evaluates the performance of its operating segments based on segment
sales, gross profit and operating income and does not include general or
administrative expenses (which include corporate expenses) or engineering and
research expenses, interest income net, non-operating income and expenses,
income taxes, and assets. Operating income does include selling and other
overhead charges directly attributable to the segment. There are no intersegment
sales.
Summarized financial information concerning the Company's reportable segments is
shown in the following table:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------- --------------------------
FEBRUARY FEBRUARY FEBRUARY FEBRUARY
$ IN THOUSANDS 2000 1999 2000 1999
- -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues:
Irrigation ............................... $ 31,345 $ 26,630 $ 53,501 $ 44,341
Diversified products ..................... 3,651 4,457 5,998 8,388
---------- ---------- ---------- ----------
Total operating revenues .................... $ 34,996 $ 31,087 $ 59,499 $ 52,729
========== ========== ========== ==========
Operating income:
Irrigation ............................... $ 6,912 $ 5,946 $ 10,870 $ 8,297
Diversified products ..................... 660 556 1,081 1,622
---------- ---------- ---------- ----------
Segment operating income .................... 7,572 6,502 11,951 9,919
Unallocated general & administrative and
engineering & research expenses .......... 2,381 2,316 5,082 4,533
Interest and other (expense) income, net .... 605 739 1,360 1,642
---------- ---------- ---------- ----------
Earnings before income taxes ................ $ 5,796 $ 4,925 $ 8,229 $ 7,028
========== ========== ========== ==========
Geographic area revenues:
United States ............................ $ 29,638 $ 26,847 $ 49,040 $ 43,479
Europe & Africa .......................... 2,743 1,821 3,432 3,009
Mexico & Latin America ................... 1,275 714 2,942 2,631
Other export ............................. 1,340 1,705 4,085 3,610
---------- ---------- ---------- ----------
Total revenues ........................... $ 34,996 $ 31,087 $ 59,499 $ 52,729
========== ========== ========== ==========
</TABLE>
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following table provides highlights for the three month and six month
periods of fiscal year 2000 as compared to the same periods of fiscal year 1999
of Lindsay's consolidated operating results displayed in the Consolidated
Statements of Operations and should be read together with the industry segment
information in Note (8) to the consolidated financial statements.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
------------------------------- --------------------------------
PERCENT PERCENT
INCREASE INCREASE
($ IN THOUSANDS) 02/29/00 02/28/99 (DECREASE) 02/29/00 02/28/99 (DECREASE)
- ---------------- -------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Consolidated
Operating Revenues.................................. $ 34,996 $ 31,087 12.6% $ 59,499 $ 52,729 12.8%
Cost of Operating Revenues.......................... $ 26,058 $ 23,426 11.2 $ 44,821 $ 40,390 11.0
Gross Profit........................................ $ 8,938 $ 7,661 16.7 $ 14,678 $ 12,339 19.0
Gross Margin........................................ 25.5% 24.6% 24.7% 23.4%
Selling, Eng. & Research, and G&A Expense........... $ 3,747 $ 3,475 7.8 $ 7,809 $ 6,953 12.3
Operating Income.................................... $ 5,191 $ 4,186 24.0 $ 6,869 $ 5,386 27.5
Operating Margin.................................... 14.8% 13.5% 11.6% 10.2%
Interest Income, net................................ $ 613 $ 671 (8.6) $ 1,332 $ 1,412 (5.7)
Other (Expense) Income, net......................... $ (8) $ 68 (111.8) $ 28 $ 230 (87.8)
Income Tax Provision................................ $ 1,739 $ 1,576 10.3 $ 2,469 $ 2,249 9.8
Effective Income Tax Rate........................... 30.0% 32.0% 30.0% 32.0
Net Earnings........................................ $ 4,057 $ 3,349 21.1 $ 5,760 $ 4,779 20.5
Irrigation Equipment Segment (See Note (8))
Operating Revenues.................................. $ 31,345 $ 26,630 17.7 $ 53,501 $ 44,341 20.7
Operating Income.................................... $ 6,912 $ 5,946 16.2 $ 10,870 $ 8,297 31.0
Operating Margin.................................... 22.1% 22.3% 20.3% 18.7%
Diversified Products Segment (See Note (8))
Operating Revenues.................................. $ 3,651 $ 4,457 (18.1) $ 5,998 $ 8,388 (28.5)
Operating Income.................................... $ 660 $ 556 18.7% $ 1,081 $ 1,622 (33.4%)
Operating Margin.................................... 18.1% 12.5% 18.0% 19.3%
</TABLE>
As the above table displays, operating revenues for the three month
period ended February 29, 2000 increased 12.6 percent ($3.9 million) from the
comparable period of the prior year. The increase in second quarter revenue was
the net result of a 15 percent ($3.3 million) increase in U.S. irrigation
equipment revenues, a 26 percent ($1.1 million) increase in export irrigation
equipment revenues and a 9 percent ($.5 million) decrease in diversified
products and other revenues.
For the six month period ended February 29, 2000, operating revenues
were 12.8 percent ($6.8 million) higher than the comparable period of the prior
year. U.S. irrigation equipment revenue was 23 percent ($7.7 million) higher,
export irrigation equipment revenue was 13 percent ($1.2 million) higher, while
diversified products and other revenues for the six month period were 22 percent
($2.1 million) lower than the second quarter of fiscal year 1999.
Lindsay believes that the long-term demand drivers for higher
irrigation equipment consisting 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 in both its U.S. market and in its markets
outside the U.S. However, these long-term demand drivers continue to be somewhat
muted by low agricultural commodity prices both in the U.S. and in our export
markets. These low agricultural commodity prices are due to near record 1998 and
1999 production in the U.S. (increased supply) occurring concurrently with the
economic downturn in Asia and other developing economic regions leading to a
reduced ability in those regions for the purchase and importation of grain and
meat commodities (reduced demand). Agricultural commodity prices have stabilized
within the last six months however, and farmer confidence has improved leading
to our increase in center pivot sales.
Domestic irrigation equipment pricing (net of discounts and promotional
program allowances) on units shipped and sold during the three months ended
February 29, 2000 was, on average, approximately equal to that of the prior
year's
9
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comparative three month period. Irrigation equipment costs (at standard cost and
before warranty expenses) on units shipped and sold during the second quarter of
fiscal year 2000 were on average, also equal to that of the prior year's second
quarter.
Export irrigation equipment revenues for the three month period ended
February 29, 2000, were favorably affected by a third shipment of equipment to
Romania. This shipment had an unfavorable effect to gross margin, however.
Both year-to-date and second quarter fiscal year 2000 diversified
products and other revenues were lower primarily due to reduced sales of
outsource manufacturing products to Deere & Company and Caterpillar, Inc. Large
diameter tubing revenues during the second quarter of fiscal year 2000 were
about equal to the prior year's comparative period.
Gross margin for the three months ended February 29, 2000, as a percent
of operating revenues, was 25.5 percent, up from 24.6 percent of the prior
year's comparative period. For the six months ended February 29, 2000, gross
margin as a percent of operating revenues was 24.7 percent as compared to 23.4
percent for the six months ended February 28, 1999. Increased manufacturing
throughput resulted in favorable manufacturing overhead variances as compared to
the prior year's comparable period which had a favorable effect on the Company's
gross margin.
Selling, general and administrative, and engineering and research
expenses for the three month period ended February 29, 2000, were $3.7 million
as compared to $3.5 million during the prior year's comparative period. For the
six month period, fiscal year 2000 selling, general and administrative, and
engineering and research expenses totaled $7.8 million as compared to $7.0
million in fiscal year 1999. Higher group and comprehensive general and
liability insurance costs, and professional and legal fees were responsible for
the majority of the increase in selling general and administrative and
engineering and research 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, 2000 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 the foreign sales corporation federal tax
provisions as they relate to export sales, Lindsay benefits from an effective
tax rate that is lower than the combined federal and state statutory rates,
currently estimated at 36.0 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 dividends.
Over the years, Lindsay has financed its growth through funds provided by
operations. Cash flows used in operations totaled $1.5 million for the first six
months of fiscal year 2000 compared to cash flows provided by operations of $3.1
million for the first six months of fiscal year 1999. The use of cash flows in
operating activities for fiscal year 2000 were primarily due to increased
receivables and increased inventories partially offset by net earnings and
increased payables. Fiscal year 1999 cash flows provided by operating activities
were principally due to net earnings and increased current taxes payable
partially offset by increased receivables and decreased other current
liabilities.
Receivables of $23.8 million at February 29, 2000 increased $10.9
million from $12.9 million at August 31, 1999 and increased $6.2 million from
$17.6 million at February 28, 1999. The increases were principally due to the
higher level of U.S. and export irrigation equipment sales activity during
February 2000 and increased use of a marketing program that offered deferred
payment terms on some transactions to our dealers, as compared to August 1999
and February 1999. Inventories at February 29, 2000 totaled $9.4 million which
is higher than their $7.7 million balance at August 31, 1999 and lower than
their $9.7 million balance at February 28, 1999. Inventory was reduced from
February 1999 by using improved inventory planning systems and criteria.
Current liabilities of $20.7 million at February 29, 2000 are higher
than their $16.8 million balance at August 31, 1999 and their $17.1 million
balance at February 28, 1999. The increase from August 31, 1999 is principally
due to increased trade payables and international dealer prepayments partially
offset by a lower accrual for payroll and vacation. The increase from February
28, 1999 is primarily due to increased trade payables and international dealer
prepayments.
Cash flows used in investing activities of $0.8 million for the first
six months of fiscal year 2000 compared to cash flows provided by investing
activities of $7.4 million for the first six months of fiscal year 1999. The
cash flows used in investing activities in fiscal year 2000 were attributable to
capital expenditures and purchases of marketable securities partially offset by
proceeds from maturities of marketable securities. Fiscal year 1999 cash flows
provided by investing activities was primarily due to proceeds from maturities
of marketable securities, partially offset by capital expenditures.
Lindsay's cash and short-term marketable securities totaled $29.8
million at February 29, 2000, as compared to $32.5 million at August 31, 1999
and $21.9 million at February 28, 1999. At February 29, 2000, Lindsay had $20.6
million
10
<PAGE> 11
invested in long-term marketable securities which represent intermediate term
(12 to 42 months maturities) municipal debt, as compared to $27.2 million at
August 31, 1999 and from $31.6 million at February 28, 1999.
Cash flows used in financing activities of $6.1 million for the first
six months of fiscal year 2000 decreased from $13.6 million for the six months
of fiscal year 1999 and for both periods was primarily attributable to purchases
of treasury stock and dividends paid partially offset by proceeds from the
issuance of common stock under Lindsay's employee stock option plan.
Lindsay's equity decreased to $82.4 million at February 29, 2000 from
$82.7 million at August 31, 1999 due to its net earnings of $5.8 million, less
$5.7 million used to repurchase 343,600 shares of common stock per Lindsay's
previously announced stock repurchase plan, plus $0.5 million from the proceeds,
(net) issuance of common stock under Lindsay's employee stock option plan, less
dividends paid of $0.9 million. Lindsay's equity at February 28, 1999 was $82.1
million.
Capital expenditures of $1.7 million during the first six months of
fiscal year 2000 compared to $1.6 million during the first six months of fiscal
year 1999. Fiscal year 2000 capital expenditures were used primarily for
upgrading manufacturing plant and equipment and to further automate Lindsay's
facility. Capital expenditures for fiscal year 2000 are expected to be
approximately $3.0 to $4.0 million and will be used to improve the company's
existing facilities, expand its manufacturing capabilities and increase
productivity.
Lindsay believes its capitalization (including cash and marketable
securities balances), operating cash flow and line of credit 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
U.S. 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.
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, agricultural commodity prices,
aggregate net cash farm income, governmental policies regarding the agricultural
sector, water and energy conservation policies and the regularity of rainfall.
Approximately 18% of Lindsay's operating revenues for both the first
six months of fiscal year 2000 and 1999 were generated from export sales. For
the full year of 1999 approximately 19% 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 U.S. bank
confirmed irrevocable letters of credit or other secured means.
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 including 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. You 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.
11
<PAGE> 12
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is not subject to material market risks with respect to its
marketable securities.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Lindsay is a party to a number of lawsuits 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
consolidated financial condition, results of operations or cash flows.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Lindsay's annual shareholder's meeting was held on January 25, 2000. The
shareholders voted to elect a director, and to ratify the appointment of
PricewaterhouseCoopers LLP as independent accountants for the fiscal year ending
August 31, 2000. There were 12,408,614 shares of common stock entitled to vote
at the meeting and a total of 11,135,260 shares (89.74%) were represented at the
meeting.
<TABLE>
<S> <C> <C> <C>
1. Election of Director: For Against Withheld
Larry H. Cunningham 11,095,149 3,673 36,438
2. Auditors. Ratification of the appointment of PricewaterhouseCoopers
LLP as independent auditors for the fiscal year ended August 31,
2000.
For - 11,122,918 Against - 7,421 Abstain - 4,921 Broker non-vote - 0
</TABLE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
4 - Specimen Form of Common Stock Certificate incorporated by
reference to Exhibit 4 to the Company's Report on Form 10-Q for
the fiscal quarter ended November 30, 1997
27 - Financial Data Schedule
(b) Reports on Form 8-K -
The registrant filed a report on Form 8-K dated December 1, 1999,
reporting under Item 5. Other Events, which included a copy of a press
release announcing that its Chairman, President and CEO, Gary D. Parker
will be retiring from the Company by the conclusion of the fiscal year
ending August 31, 2000 or upon the naming of a successor.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on this 27th day of
March, 2000.
LINDSAY MANUFACTURING CO.
By: /s/ BRUCE C. KARSK
------------------------------------
Name: Bruce C. Karsk
Title: Director, Vice President-Finance, Treasurer
and Secretary; Principal Financial and
Accounting Officer
By: /s/ RALPH J. KROENKE
------------------------------------
Name: Ralph J. Kroenke
Title: Controller
13
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<FISCAL-YEAR-END> AUG-31-2000
<PERIOD-START> SEP-01-1999
<PERIOD-END> FEB-29-2000
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0
0
<COMMON> 17,307
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