Form 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 |
For the fiscal year ended August 31, 2010
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 1-13419
Lindsay Corporation
(Exact name of registrant as specified in its charter)
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Delaware
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47-0554096 |
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.) |
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2222 North 111th Street, Omaha, Nebraska
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68164 |
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(Address of principal executive offices)
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(Zip Code) |
402-829-6800
Registrants telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Name of each exchange on which registered |
Common Stock, $1.00 par value
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New York Stock Exchange, Inc. (Symbol LNN) |
Indicate by check mark if the registrant is a well-known seasoned issuer, (as defined in Rule 405
of the Securities Act). Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Exchange Act. Yes o No þ
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
þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
The aggregate market value of Common Stock of the registrant, all of which is voting, held by
non-affiliates based on the closing sales price on the New York Stock Exchange, Inc. on February
26, 2010 was $453,013,823.
As of November 5, 2010, 12,526,451 shares of the registrants Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement pertaining to the Registrants 2011 annual stockholders meeting
are incorporated herein by reference into Part III.
PART I
ITEM 1 Business
INTRODUCTION
Lindsay Corporation (Lindsay or the Company) is a leading designer and manufacturer of
self-propelled center pivot and lateral move irrigation systems which are used principally in the
agricultural industry to increase or stabilize crop production while conserving water, energy, and
labor. The Company has been in continuous operation since 1955, making it one of the pioneers in
the automated irrigation industry. In 2008, the Company entered the market for water pumping
stations and controls which provides further opportunities for integration with irrigation control
systems. The Company also manufactures and markets various infrastructure products, including
moveable barriers for traffic lane management, crash cushions, road marking and other road safety
devices. In addition, the Companys infrastructure segment produces large diameter steel tubing
and railroad signals and structures, and provides outsourced manufacturing and production services
for other companies. Industry segment information about Lindsay is included in Note R to the
consolidated financial statements.
Lindsay, a Delaware corporation, maintains its corporate offices in Omaha, Nebraska, USA. The
Companys principal irrigation manufacturing facility is located in Lindsay, Nebraska, USA. The
Company also has international sales and irrigation production facilities in France, Brazil, South
Africa and China which provide it with important bases of operations in key international markets.
Lindsay Europe SAS, located in La Chapelle, France, manufactures and markets irrigation equipment
for the European market. Lindsay America do Sul Ltda., located in Mogi Mirim, Brazil, manufactures
and markets irrigation equipment for the South American market. Lindsay Manufacturing Africa,
(PTY) Ltd., located in Paarl, South Africa, manufactures and markets irrigation equipment for the
sub-Saharan Africa market. Lindsay (Tianjin) Industry Co., Ltd., located in Tianjin, China, was
organized in June 2009 and manufactures and markets irrigation equipment for the Chinese market.
Watertronics located in Hartland, Wisconsin, designs, manufactures, and services water pumping
stations and controls for the agriculture, golf, landscape and municipal markets. Watertronics has
been in business since 1986 and was acquired by the Company in January 2008.
Lindsay has three additional irrigation operating subsidiaries. Irrigation
Specialists, Inc. (Irrigation Specialists) is a retail irrigation dealership based in Washington
State that operates at three locations. Irrigation Specialists provides a strategic distribution
channel in a key regional irrigation market. Lindsay Transportation, Inc. (LTI), located in
Lindsay, Nebraska, primarily brokers delivery of irrigation equipment in the U.S. Digitec, Inc.
(Digitec), located in Milford, Nebraska and Sioux Falls, South Dakota is an electronics research,
development and manufacturing company. Digitec has been in business since 1987 and was acquired by
the Company in August 2010.
Barrier Systems, Inc. (BSI), located in Rio Vista, California, manufactures moveable barrier
products, specialty barriers and crash cushions. BSI has been in business since 1984 and was
acquired by the Company in June 2006.
Snoline S.P.A. (Snoline), located in Milan, Italy, was acquired in December 2006, and is
engaged in the design, manufacture and sale of road marking and safety equipment for use on
roadways. See Subsidiaries below.
PRODUCTS BY SEGMENT
IRRIGATION SEGMENT
Products The Company markets its center pivot and lateral move irrigation systems in the U.S. and
internationally under its Zimmatic® brand. The Company also manufactures and markets
separate lines of center pivot and lateral move irrigation equipment for use on smaller fields
under its Greenfield® and Stettyn brands, and hose reel travelers under the
Perrot brand (Greenfield® in the United States, Perrot in
Europe, and Stettyn in South Africa). The Company also produces or markets irrigation
controls, chemical injection systems and remote monitoring and control systems which it sells under
its GrowSmart® brand. In addition to whole systems, the Company manufactures and
markets repair and replacement parts for its irrigation systems and controls. The Company also
designs, manufactures and services water pumping stations and controls for the agriculture, golf,
landscape and municipal markets.
The Companys irrigation systems are primarily of the standard sized center pivot type, with a
small portion of its products consisting of the lateral move type. Both are automatic, continuous
move systems consisting of sprinklers
mounted on a water carrying pipeline which is supported approximately 11 feet off the ground by a
truss system suspended between moving towers.
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A typical center pivot for the U.S. market is approximately 1,300 feet long and is designed to
circle within a quarter-section of land, which comprises 160 acres, wherein it irrigates
approximately 130 to 135 acres. A typical center pivot for the international market is somewhat
shorter than that in the U.S. market. A center pivot or lateral move system can also be custom
designed and can irrigate from 25 to 600+ acres. A mini-pivot is a small version of the standard
pivot and is used for smaller fields and/or shorter crops than standard pivots.
A center pivot system represents a significant investment to a farmer. In a dry land
conversion to center pivot irrigation, approximately one-half of the investment is for the pivot
itself and the remainder is attributable to installation of additional equipment such as wells,
pumps, underground water pipes, electrical supply and a concrete pad upon which the pivot is
anchored. Through Watertronics, the Companys enhanced position in water pumping station controls
presents further opportunities for integration with irrigation control systems.
The Company also manufactures and distributes mini-pivots and hose reel travelers. These
systems are considered to be relatively easy to operate, and the hose reel travelers are easily
moved from field to field. They are typically deployed in smaller or irregular fields. Mini-pivots
and hose reel travelers require, on average, a lower investment than a typical standard center
pivot.
The Company also markets pivot monitoring and control systems, which include remote telemetry
and a web or personal computer hosted data acquisition and monitoring application. These systems
allow growers to monitor their pivot system, accumulate data on the operation of the system, and
control the pivot from a remote location by logging onto an internet web site. The pivot
monitoring and control systems are marketed under the GrowSmart® brand and product name
FieldNET®.
Other Types of Irrigation Center pivot and lateral move irrigation systems compete with three
other types of irrigation: flood, drip, and other mechanical devices such as hose reel travelers.
The bulk of the worldwide irrigation is accomplished by the traditional method of flood irrigation.
Flood irrigation is accomplished by either flooding an entire field, or by providing a water
source (ditches or a pipe) along the side of a field, which is planed and slopes slightly away from
the water source. The water is released to the crop rows through gates in the ditch or pipe, or
through siphon tubes arching over the ditch wall into some of the crop rows. It runs down through
the crop row until it reaches the far end of the row, at which time the water source is moved and
another set of rows are flooded. A significant disadvantage or limitation of flood irrigation is
that it cannot be used to irrigate uneven, hilly, or rolling terrain or fields. In drip or low
flow irrigation, perforated plastic pipe or tape is installed on the ground or buried underground
at the root level. Several other types of mechanical devices, such as hose reel travelers, irrigate
the remaining irrigated acres.
Center pivot, lateral move, and hose reel traveler irrigation offers significant advantages
when compared with other types of irrigation. It requires less labor and monitoring; can be used
on sandy ground which, due to poor water retention ability, must have water applied frequently; can
be used on uneven ground, thereby allowing previously unsuitable land to be brought into
production; can also be used for the application of fertilizers, insecticides, herbicides, or other
chemicals (termed chemigation); and conserves water and chemicals through precise control of the
amount and timing of the application.
Markets Water is an essential and critical requirement for crop production, and the extent,
regularity, and frequency of water application can be a critical factor in crop quality and yield.
The fundamental factors which govern the demand for center pivot and lateral move systems are
essentially the same in both the U.S. and international markets. Demand for center pivot and
lateral move systems is determined by whether the value of the increased crop production
attributable to center pivot or lateral move irrigation exceeds any increased costs associated with
purchasing, installing, and operating the equipment. Thus, the decision to purchase a center pivot
or lateral move system, in part, reflects the profitability of agricultural production, which is
determined primarily by the prices of agricultural commodities and other farming inputs.
The current demand for center pivot systems has three sources: conversion to center pivot
systems from less water efficient, more labor intensive types of irrigation; replacement of older
center pivot systems, which are beyond their useful lives or are technologically obsolete; and
conversion of dry land farming to irrigated farming. In addition, demand for center pivots and
lateral move irrigation equipment depends upon the need for the particular operational
characteristics and advantages of such systems in relation to alternative types of irrigation,
primarily flood. More efficient use of the basic natural resources of land, water, and energy
helps drive demand for center pivot and lateral move irrigation equipment. Increasing global
population not only increases demand for agricultural output, but also places additional and
competing demands on land, water, and energy. The Company expects demand for center pivots and
lateral move systems to continue to increase relative to other irrigation methods because center
pivot and lateral
move systems are preferred where the soil is sandy, the terrain is not flat, the land area to be
irrigated is sizeable, there is a shortage of reliable labor, water supply is restricted and
conservation is critical, and/or chemigation will be utilized.
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United States Market In the United States, the Company sells its branded irrigation systems,
including Zimmatic®, to over 200 independent dealer locations, who resell to their
customer, the farmer. Dealers assess their customers requirements, assemble and erect the system
in the field, and provide additional system components, primarily relating to water supply (wells,
pumps, pipes) and electrical supply (on-site generation or hook-up to power lines). Lindsay
dealers generally are established local agri-businesses, many of which also deal in related
products, such as well drilling and water pump equipment, farm implements, grain handling and
storage systems, and farm structures.
International Market Over the years, the Company has sold center pivot and lateral move
irrigation systems throughout the world. The Company has production and sales operations in
France, Brazil, South Africa and China as well as sales operations in Australia, New Zealand,
Central America and the Middle East serving the key European, South American, African, Chinese,
Australian/New Zealand, Central American and Middle Eastern markets, respectively. The Company
also exports some of its equipment from the U.S. to other international markets. The majority of
the Companys U.S. export sales is denominated in U.S. dollars and is shipped against prepayments
or U.S. bank confirmed irrevocable letters of credit or other secured means.
The Companys international markets differ with respect to the need for irrigation, the
ability to pay, demand, customer type, government support of agriculture, marketing and sales
methods, equipment requirements, and the difficulty of on-site erection. The Companys industry
position is such that it believes that it will likely be considered as a potential supplier for
most major international agricultural development projects utilizing center pivot or lateral move
irrigation systems.
Competition The U.S. center pivot irrigation system industry has seen significant
consolidation of manufacturers over the years; four primary U.S. manufacturers remain today. The
international market includes participation and competition by the leading U.S. manufacturers as
well as certain regional manufacturers. The Company competes in certain product lines with several
manufacturers, some of whom may have greater financial resources than the Company. The Company
competes by continuously improving its products through ongoing research and development
activities. The Companys engineering and research expenses related to irrigation totaled
approximately $4.1 million, $3.0 million, and $3.6 million for fiscal years 2010, 2009, and 2008,
respectively. Competition also occurs in areas of price and seasonal programs, product quality,
durability, controls, product characteristics, retention and reputation of local dealers, customer
service, and, at certain times of the year, the availability of systems and their delivery time.
The Company believes it competes favorably with respect to all of these factors.
INFRASTRUCTURE SEGMENT
Products Quickchange® Moveable Barrier
The Companys
Quickchange® Moveable Barrier (QMB®) system is composed of
three parts: 1) T-shaped concrete barriers that are connected to form a continuous wall, 2) a
Barrier Transfer Machine (BTM) capable of moving the barrier laterally
across the pavement, and 3) the variable length barriers necessary for accommodating curves. A
barrier element is approximately 32 inches high, 13-24 inches wide, 3 feet long and weighs 1,500
pounds. The barrier elements are interconnected by very heavy duty steel hinges to form a
continuous barrier. The BTM employs an inverted S-shaped conveyor mechanism that lifts
the barrier, moving it laterally before setting it back on the roadway surface.
In permanent applications, the QMB® systems increase capacity and reduce congestion
by varying the number of traffic lanes to match the traffic demand. Roadways with fixed medians
have a set number of lanes in each direction and cannot adjust to traffic demands that may change
over the course of a day, or to capacity reductions caused by traffic incidents or road repair and
maintenance. Applications include high volume highways where expansion may not be feasible due to
lack of additional right-of-way, environmental concerns, or insufficient funding. The
QMB® system is particularly useful in busy commuter corridors and at choke points such
as bridges and tunnels. QMB® systems can also be deployed at roadway or roadside
construction sites to accelerate construction, improve traffic flow and safeguard work crews and
motorists by positively separating the work area and traffic. Examples of types of work completed
with the help of a QMB® system include highway reconstruction, paving and resurfacing,
road widening, median and shoulder construction, and repairs to tunnels and bridges.
The Company offers a variety of equipment lease options for QMB® systems and
BTM equipment used in construction applications. The leases extend for periods of
three months or more for equipment already existing in inventory. Longer lease periods may be
required for specialty equipment that must be built for specific projects.
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These systems have been in use since 1987. Significant progress has been made introducing the
products into international markets in recent years. Typical sales for a highway safety or road
improvement project range from $2.0-$20.0 million, making them significant capital investments.
Crash Cushions and End Terminals BSI and Snoline offer a complete line of redirective and
non-redirective crash cushions which are used to enhance highway safety at locations such as toll
booths, freeway off-ramps, medians and roadside barrier ends, bridge supports, utility poles and
other fixed roadway hazards. The Companys primary crash cushion products cover a full range of
lengths, widths, speed capacities and application accessories and include the following brand
names: TAU®, Universal TAU-II®, TAU-B_NR, ABSORB 350®
and Walt. In addition to these products the Company also offers guardrail end terminal
products such as the X-Tension and TESI® systems. The crash cushions and
end terminal products compete with other vendors in the world market. These systems are generally
sold through a distribution channel that is domiciled in particular geographic areas.
Specialty Barriers BSI and Snoline also offer specialty barrier products such as the
SAB, ArmorGuard, PaveGuard and DR46 portable
barrier and/or barrier gate systems. These products offer portability and flexibility in setting
up and modifying barriers in work areas and provide quick opening, high containment gates for use
in median or roadside barriers. The gates are generally used to create openings in barrier walls
of various types for both construction and incident management purposes. The DR46 is
an energy absorbing barrier to shield motorcyclists from impacting guardrail posts which is
becoming an area of focus for reducing a significant number of injuries.
Road Marking and Road Safety Equipment Snoline also offers preformed tape and a line of road
safety accessory products. The preformed tape is used primarily in temporary applications such as
markings for work zones, street crossings, and road center lines or boundaries. The road safety
equipment consists of mostly plastic and rubber products used for delineation, slowing traffic, and
signaling. BSI also manages an ISO 17025 certified testing laboratory, Safe Technologies, Inc.,
that performs full-scale impact testing of highway safety products in accordance with the National
Cooperative Highway Research Program (NCHRP) Report 350, the Manual for Assessing Safety Hardware
(MASH), and the European Norms (EN1317) for these types of products. The NCHRP 350 and MASH
guidelines are procedures required by the U.S. Department of Transportation Federal Highway
Administration for the safety performance evaluation of highway features. The EN1317 Norms are
being used to qualify roadway safety products for the European markets.
Other Products The Companys Diversified Manufacturing and Tubing business unit (Diversified
Manufacturing) manufactures and markets large diameter steel tubing and railroad signals and
structures, and provides outsourced manufacturing and production services for other companies. The
Company continues to develop new relationships for infrastructure manufacturing in industries
outside of agriculture and irrigation. The Companys customer base includes certain large
industrial companies and railroads. Each benefit from the Companys design and engineering
capabilities as well as the Companys ability to provide a wide spectrum of manufacturing services,
including welding, machining, painting, forming, galvanizing and assembling hydraulic, electrical,
and mechanical components.
Markets BSIs and Snolines primary market includes moveable concrete barriers, delineation
systems, guardrails and similar protective equipment. The U.S. roadway infrastructure market
includes projects such as new roadway construction, bridges, tunnels, maintenance and resurfacing,
and the purchase of right-of-ways for roadway expansion and development of technologies for relief
of roadway congestion. Much of the U.S. highway infrastructure market is driven by government
(state and federal) spending programs. For example, the U.S. government funds highway and road
improvements through the Federal Highway Trust Fund Program. This program provides funding to
improve the nations roadway system. Matching funding from the various states may be required as a
condition of federal funding. In the long term, the Company believes that the federal program
provides a solid platform for growth in the U.S. market, as it is generally acknowledged that
additional funding will be required for infrastructure development and maintenance in the future.
The European market is presently very different from country to country, but the
standardization in performance requirements and acceptance criteria for highway safety devices
adopted by the European Committee for Standardization is expected to lead to greater uniformity and
a larger installation program. This will also be influenced by the European Unions prevention
program which has the goal to lower highway traffic fatalities.
Competition The Company competes in certain product lines with several manufacturers, some of
whom may have greater financial resources than the Company. The Company competes by continuously
improving its products through ongoing research and development activities. The Companys
engineering and research expenses related to
infrastructure products totaled approximately $3.7 million, $3.0 million and $2.8 for fiscal years
2010, 2009 and 2008, respectively. The Company competes with certain products and companies in its
crash cushion business, but has limited competition in its moveable barrier line, as there is not
another moveable barrier product today comparable to the QMB® system. However, the
Companys barrier product does compete with traditional safety shaped concrete barriers and other
safety barriers.
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Distribution methods and channels The Company has production and sales operations in Nebraska,
California and Italy. BSIs and Snolines sales efforts consist of both direct sales and sales
programs managed by its network of distributors and third-party representatives. The sales teams
have responsibility for new business development and assisting distributors and dealers in
soliciting large projects and new customers. The distributor and dealer networks have exclusive
territories and are responsible for developing sales and providing service, including product
maintenance, repair and installation. The typical dealer sells an array of safety supplies, road
signs, crash cushions, delineation equipment and other highway products. Customers include
Departments of Transportation, municipal transportation road agencies, roadway contractors,
subcontractors, distributors and dealers. Due to the project nature of the roadway construction
and congestion management markets, the Companys customer base changes from year-to-year. Due to
the limited life of projects, it is rare that a single customer will account for a significant
amount of revenues in consecutive years. The customer base also varies depending on the type of
product sold. The Companys moveable barrier products are typically sold to transportation
agencies or the contractors or suppliers serving those agencies. In contrast, distributors account
for a majority of crash cushion sales since those products have lower price points and tend to have
shorter lead times.
GENERAL
Certain information generally applicable to both of the Companys reportable segments is set forth
below.
The following table describes the Companys total irrigation and infrastructure revenues for the
past three years. United States export revenue is included in the region of destination.
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For the years ended August 31, |
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2010 |
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2009 |
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2008 |
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% of Total |
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% of Total |
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% of Total |
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$ in millions |
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Revenues |
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Revenues |
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Revenues |
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Revenues |
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Revenues |
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Revenues |
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United States |
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$ |
204.5 |
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57 |
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$ |
200.6 |
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60 |
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$ |
309.2 |
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65 |
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Europe, Africa,
Australia & Middle
East |
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73.8 |
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20 |
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88.3 |
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26 |
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104.2 |
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22 |
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Mexico & Latin America |
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66.7 |
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19 |
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27.5 |
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8 |
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42.2 |
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9 |
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Other International |
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13.4 |
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4 |
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19.8 |
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6 |
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19.5 |
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4 |
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Total Revenues |
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$ |
358.4 |
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100 |
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$ |
336.2 |
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100 |
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$ |
475.1 |
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100 |
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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 the
Companys second and third fiscal quarters for the spring planting period. Sales of infrastructure
products are traditionally higher during prime construction seasons and lower in the winter. The
primary construction season in North America is from March until late September which corresponds
to the Companys third and fourth fiscal quarters.
CUSTOMERS
The Company is not dependent for a material part of either segments business upon a single
customer or upon a limited number of customers. The loss of any one customer would not have a
material adverse effect on the Companys financial condition, results of operations or cash flow.
6
ORDER BACKLOG
As of August 31, 2010, the Company had an order backlog of $38.4 million compared with $43.6
million on August 31, 2009. Included in the August 31, 2010 backlog is a $14.8 million project for
the Companys QMB® system, which is expected to ship in the first half of fiscal 2011.
The August 31, 2009 backlog included $19.6 million for the Mexico City QMB® system
project completed in the first half of fiscal 2010. The Company expects that the existing backlog
of orders will be filled in fiscal 2011.
Generally, the Company manufactures or purchases the components for its irrigation equipment
from a sales forecast and prepares the equipment for shipment upon the receipt of a U.S. or
international dealers firm order. Irrigation equipment orders from U.S. dealers are generally
accompanied with a down payment unless they are purchased through one of the Companys preferred
vendor financing programs. Irrigation equipment orders being delivered to international markets
from the U.S. are generally shipped against prepayments or receipt of an irrevocable letter of
credit confirmed by a U.S. bank or other secured means, which call for delivery within time periods
negotiated with the customer. Orders delivered from the Companys international irrigation
manufacturing operations are generally shipped according to payment and/or credit terms customary
to that country or region.
Generally, the Company manufactures or purchases the components for its infrastructure
equipment, excluding QMB® systems, from a sales forecast and prepares the equipment for
shipment upon the receipt of a U.S. or international distributors firm order. The Company
manufactures or purchases the components for its QMB® systems once a contract has been
signed. Generally, QMB® system contracts require a down payment before manufacturing of
the QMB® system will begin.
RAW MATERIALS AND COMPONENTS
Raw materials used by the Company include coil steel, angle steel, plate steel, zinc, tires,
gearboxes, concrete, rebar, fasteners, and electrical and hydraulic components (motors, switches,
cable, valves, hose and stators). The Company has, on occasion, faced shortages of certain such
materials. The Company believes it currently has ready access to adequate supplies of raw
materials and components.
CAPITAL EXPENDITURES
Capital expenditures for fiscal 2010, 2009, and 2008 were $5.8 million, $10.5 million and $14.1
million, respectively. Capital expenditures for fiscal 2011, excluding possible expansion of the
leased barrier and barrier-transfer machine fleet, are estimated to be approximately $11.0 to $12.0
million. The planned expenditures include equipment for manufacturing equipment replacement,
tooling, and facilities for identified efficiency improvements. The Companys management does
maintain flexibility to modify the amount and timing of some of the planned expenditures in
response to economic conditions.
PATENTS, TRADEMARKS, AND LICENSES
Lindsays Zimmatic®, Greenfield®, GrowSmart®,
Quickchange® Moveable Barrier, ABSORB 350®, TAU®,
Universal TAU-II®, TAU-B_NR, X-Tension, CableGuard,
TESI, SAB, ArmourGuard, PaveGuard,
DR46, U-MAD, and other trademarks are registered or applied for in the
major markets in which the Company sells its products. Lindsay follows a policy of applying for
patents on all significant patentable inventions in markets deemed appropriate. Although the
Company believes it is important to follow a patent protection policy, Lindsays business is not
dependent, to any material extent, on any single patent or group of patents.
EMPLOYEES
The number of persons employed by the Company and its wholly-owned subsidiaries at fiscal year ends
2010, 2009, and 2008 were 891, 766 and 1,239, respectively. None of the Companys U.S. employees
are represented by a union. Certain of the Companys non-U.S. employees are unionized due to local
governmental regulations.
ENVIRONMENTAL AND HEALTH AND SAFETY MATTERS
Like other manufacturing concerns, the Company is subject to numerous laws and regulations that
govern environmental and occupational health and safety matters. The Company believes that its
operations are substantially in compliance with all such applicable laws and regulations and that
it holds all necessary permits in each jurisdiction in which its facilities are located.
Environmental and health and safety regulations are subject to change and interpretation. In some
cases, compliance with applicable regulations or standards may require the Company to make
additional capital and operational expenditures. The Company, however, is not currently aware of
any material capital expenditures required to comply with such regulations, other than as described
below, and does not believe that these matters, individually or in the aggregate, are likely to
have a material adverse effect on the Companys consolidated financial condition, results of
operations, or cash flows.
7
In 1992, the Company entered into a consent decree with the Environmental Protection Agency of
the United States Government (the EPA) in which the Company committed to remediate environmental
contamination of the groundwater that was discovered in 1982 through 1990 at and adjacent to its
Lindsay, Nebraska facility (the site). The site was added to the EPAs list of priority
superfund sites in 1989. Between 1993 and 1995, remediation plans for the site were approved by
the EPA and fully implemented by the Company. Since 1998, the primary remaining contamination at
the site has been the presence of volatile organic chemicals in the groundwater. The current
remediation process consists of drilling wells into the aquifer and pumping water to the surface to
allow these contaminants to be removed by aeration. In 2008, the Company and the EPA conducted a
periodic five-year review of the status of the remediation of the contamination of the site. In
response to the review, the Company and its environmental consultants have developed a remedial
action work plan that will allow the Company and the EPA to better identify the boundaries of the
contaminated groundwater and determine whether the contaminated groundwater is being contained by
current and planned remediation methods. The Company accrues the anticipated cost of remediation
when the obligation is probable and can be reasonably estimated. During the second quarter of
fiscal 2010, the Company accrued incremental costs of $0.7 million for additional environmental
monitoring and remediation in connection with the current ongoing remedial action work plan.
Amounts accrued and included in balance sheet liabilities related to the remediation actions were
$0.9 million and $1.3 million at August 31, 2010 and 2009, respectively. Although the Company has
accrued all reasonably estimable costs of completing the actions defined in the current ongoing
work plan agreed to between the Company and the EPA, it is possible that additional testing may be
required or additional actions could be requested or mandated by the EPA at any time, resulting in
the recognition of additional related expenses.
SUBSIDIARIES
The Companys primary wholly-owned operating subsidiaries include the following: Lindsay
Manufacturing, LLC, Lindsay Transportation, Inc., Watertronics, LLC, Digitec, Inc., Lindsay Europe
SAS, Irrigation Specialists, Inc., Lindsay America do Sul Ltda., Lindsay Manufacturing Africa (PTY)
Ltd., Lindsay (Tianjin) Industry Co., Ltd., Barrier Systems, Inc., Snoline S.P.A. and Lindsay
Structures, LLC
Lindsay Manufacturing, LLC and its predecessor, Lindsay Manufacturing Co., have manufactured
and marketed irrigation equipment for the North American market and international export market
since 1955. Lindsay Manufacturing, LLC also manufactures certain products for the infrastructure
segment including the Companys outsource manufacturing operation. Lindsay Manufacturing, LLC
operates its primary manufacturing facility in Lindsay, Nebraska and a separate facility in Omaha,
Nebraska.
Lindsay Transportation, Inc. was formed in 1975. It operates as a transportation broker
procuring equipment for delivery of primarily irrigation equipment in the United States and Canada
for the Companys products and the bulk of its inbound raw materials.
Watertronics, LLC, located in Hartland, Wisconsin, designs, manufactures, and services water
pumping stations and controls for the agriculture, golf, landscape and municipal markets.
Watertronics has been in business since 1986 and was acquired by the Company in January 2008.
Digitec, Inc., was formed in 1987 and is an electronics research, development and
manufacturing company supplying a majority of its products to the irrigation markets and was
acquired by the Company in August 2010.
Lindsay Europe SAS, located in La Chapelle, France, was
acquired in March 2001, and is a manufacturer and marketer of irrigation equipment for the European
market.
Irrigation Specialists, Inc., a retail irrigation dealership in Washington State, was acquired
in March 2002.
Lindsay America do Sul Ltda., located in Mogi Mirim, Brazil, was acquired in April 2002 and is
a manufacturer and marketer of irrigation equipment for the South American market.
Lindsay Manufacturing Africa (PTY) Ltd., located in Paarl, South Africa, was organized in
September 2002 and is a manufacturer and marketer of irrigation equipment for the sub-Saharan
Africa market.
Lindsay (Tianjin) Industry Co., Ltd., located in Tianjin, China, was organized in June 2009
and manufactures and markets irrigation equipment for the Chinese market.
Barrier Systems, Inc. is located in Rio Vista, California and manufactures its moveable
barrier products along with other specialty barriers and crash cushions. BSI has been in business
since 1984 and was acquired by Lindsay in June 2006.
Snoline, S.P.A. is located in Milan, Italy and manufactures and markets road safety and road
marking equipment for use on roadways. Snoline has been in business since 1955 and was acquired by
Lindsay in December 2006.
Lindsay Structures, LLC was formed in 2009 to acquire certain assets of GE Transportation
Systems Global Signaling, LLC and is a manufacturer of railroad signals and structures.
8
FINANCIAL INFORMATION ABOUT FOREIGN AND U.S. OPERATIONS
The Companys primary production facilities are located in the United States, but it also has
smaller production facilities in France, Brazil, South Africa, China and Italy. Most of the
Companys financial transactions are in U.S. dollars, although some export sales and sales from the
Companys foreign subsidiaries, which are approximately 20% of total consolidated Company sales in
fiscal 2010, are conducted in local currencies.
A portion of the Companys cash flow is derived from sales and purchases denominated in
currencies other than the designated functional currency. To reduce the uncertainty of foreign
currency exchange rate movements on these sales and purchase commitments, the Company monitors its
risk of foreign currency fluctuations and, at times, may enter into forward exchange or option
contracts for transactions denominated in a currency other than the functional currency for certain
of the Companys operations.
In addition to the transactional foreign currency exposures mentioned above, the Company also
has translation exposure resulting from translating the financial statements of its international
subsidiaries into U.S. dollars. In order to reduce this translation exposure, the Company, at
times, utilizes foreign currency forward contracts to hedge its net investment exposure in its
foreign operations. For information on the Companys foreign currency risks, see Item 7A of Part II
of this report.
INFORMATION AVAILABLE ON THE LINDSAY WEBSITE
The Company makes available free of charge on its website homepage, under the tab Investors SEC
Filings, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, Proxy Statements, and amendments to those reports filed or furnished pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable
after the Company electronically files such material with, or furnishes it to, the SEC. The
Companys internet address is http://www.lindsay.com; however, information posted on its website is
not part of this report on Form 10-K. The following documents are also posted on the Companys
website homepage, under the tab Investors Governance:
Audit Committee Charter
Compensation Committee Charter
Corporate Governance and Nominating Committee Charter
Corporate Governance Principles
Code of Ethical Conduct
Code of Business Conduct and Ethics
Employee Complaint Procedures for Accounting and Auditing Matters
Special Toll-Free Hotline Number, E-mail Address, and Mail Address for Making Confidential or Anonymous Complaints
These documents are also available in print to any shareholder upon request, by sending a letter
addressed to the Secretary of the Company.
New York Stock Exchange Certification
On April 5, 2010, the Companys Chief Executive Officer certified to the New York Stock Exchange
that he was not aware of any violation by the Company of the New York Stock Exchange corporate
governance listing standards as of that date. This certification made by the CEO is an annual
certification required by the New York Stock Exchange.
ITEM 1A Risk Factors
The following are certain of the more significant risks that may affect the Companys business,
financial condition and results of operations.
The Companys U.S. and international irrigation equipment sales are highly dependent on the
agricultural industry. The Companys U.S. and international irrigation equipment sales are highly
dependent upon the need for irrigated agricultural crop production which, in turn, depends upon
many factors, including total worldwide crop production, the profitability of agricultural crop
production, agricultural commodity prices, net cash farm income, availability of financing for
farmers, governmental policies regarding the agricultural sector, water and energy conservation
policies, the regularity of rainfall, regional climate change, and foreign currency exchange rates.
As farm income decreases, farmers may postpone capital expenditures or seek less expensive
irrigation equipment.
9
The Companys infrastructure revenues are highly dependent on government funding of transportation
projects. The demand for the Companys infrastructure products depends to a large degree on the
amount of government spending authorized to improve road and highway systems. For example, the
U.S. government funds highway and road improvements through the Federal Highway Trust Fund Program
and matching funding from states may be required as a condition of federal funding. If highway
funding is reduced or delayed, it may reduce demand for the Companys infrastructure products.
The Companys profitability may be negatively affected by increases in the cost of raw materials,
as well as in the cost of energy. Certain of the Companys input costs, such as the cost of steel,
zinc, and other raw materials, may increase rapidly from time to time. Because there is a level of
price competition in the market for irrigation equipment and certain infrastructure products, the
Company may not be able to recoup increases in these costs through price increases for its
products, which would result in reduced profitability. Whether increased operating costs can be
passed through to the customer depends on a number of factors, including farm income and the price
of competing products. The cost of raw materials can be volatile and is dependent on a number of
factors, including availability, demand, and freight costs.
The Companys international equipment sales are highly dependent on foreign market conditions and
are subject to additional risk and restrictions. For the fiscal year ended August 31, 2010,
approximately 43% of the Companys consolidated revenues were generated from international sales.
Specifically, international revenues are primarily generated from Australia, Canada, Central and
Western Europe, Mexico, the Middle East, South Africa, China, and Central and South America. In
addition to risks relating to general economic and political stability in these countries, the
Companys international sales are affected by international trade barriers, including governmental
policies on tariffs, taxes, import or export licensing requirements, trade sanctions, and foreign
currency exchange rates. International sales are also more susceptible to disruption from
political instability and similar incidents.
Compliance with applicable environmental and health and safety regulations or standards may require
additional capital and operational expenditures. Like other manufacturing concerns, the Company is
subject to numerous laws and regulations which govern environmental and occupational health and
safety matters. The Company believes that its operations are substantially in compliance with all
such applicable laws and regulations and that it holds all necessary permits in each jurisdiction
in which its facilities are located. Environmental and health and safety regulations are subject
to change and interpretation. Compliance with applicable regulations or standards may require the
Company to make additional capital and operational expenditures. The Companys ongoing remediation
activities at its Lindsay, Nebraska facility are described in Note O to the Companys consolidated
financial statements.
The Companys sales and access to credit may be negatively affected by current economic
conditions. The ongoing instability in U.S. and international financial and credit markets along
with the resulting global recessionary concerns and the slow economic recovery has adversely
affected, and is expected to continue to adversely affect, the ability of farmers and government
agencies to buy and finance irrigation equipment and highway infrastructure equipment. It is not
certain how long these factors may affect demand for the Companys products. Disruptions in the
financial and credit markets could also restrict the Companys ability to access credit financing
under its existing credit facilities or to obtain additional financing.
ITEM 1B Unresolved Staff Comments
None.
ITEM 2 Properties
The Companys principal U.S. manufacturing plant is a 300,000 square foot facility consisting of
eight separate buildings located on 43 acres in Lindsay, Nebraska where it manufactures irrigation
and infrastructure products for North American markets as well as certain export markets. The
Company owns this facility as well as an additional 79 acres of undeveloped land adjacent to its
primary property which it uses for research, development and testing purposes.
The Company owns an 83,000 square foot facility located on approximately six acres in Omaha,
Nebraska that primarily serves as a manufacturing location for infrastructure products. The
Company also leases approximately 29,500 square feet of office space in Omaha, Nebraska where it
maintains its executive offices as well as its U.S. and international sales and marketing offices
and engineering laboratory space. The lease expires in February 2019.
10
Lindsay Europe SAS owns a manufacturing plant located in La Chapelle, France where it
manufactures irrigation products for European markets. This facility consists of three separate
buildings containing approximately 72,000 square feet of usable space situated on approximately 3.5
acres.
Lindsay America do Sul, Ltda. leases a manufacturing plant located in Mogi Mirim, Sao Paulo,
Brazil where it manufactures irrigation products for South American markets. This facility
consists of two buildings containing approximately 67,000 square feet of usable space. The lease
on this facility expires in December 2013.
Lindsay Manufacturing Africa (PTY) Ltd. currently leases a manufacturing facility in Paarl,
South Africa where it manufactures irrigation products for the sub-Saharan Africa markets. The
facility contains a total of 61,000 square feet of usable space. The lease on the facility
expires in September 2011 and may be canceled by Lindsay Manufacturing Africa (PTY) Ltd. prior to
that time upon six months notice.
Irrigation Specialists, Inc. conducts its retail operations in leased buildings located in
Pasco, Grandview and Othello, Washington. The buildings range in size from 4,000 square feet to
22,225 square feet. The leases on these retail stores expire in August 2012 for Pasco and Othello,
and August 2014 for Grandview.
Watertronics, LLC owns two commercial buildings totaling approximately 73,000 square feet on
five acres located in Hartland, Wisconsin where it maintains its executive, engineering and
manufacturing offices. It also owns a 4,000 square foot commercial building located in Melbourne,
Florida where it maintains a sales and service office.
Digitec, Inc. leases two buildings located in Milford, Nebraska, which serve as manufacturing
and engineering locations. The buildings range in size from approximately 4,400 square feet to
approximately 10,000 square feet for the engineering and manufacturing buildings, respectively.
The leases for these two buildings expire in August 2015 with a five year renewal option. Digitec
also leases approximately 1,400 square feet of office space in Sioux Falls, South Dakota. This
lease expires in January 2011 and has a month to month option after that.
Lindsay (Tianjin) Industry Co., Ltd. currently leases a manufacturing facility in Tianjin,
China where it manufactures irrigation products for the Chinese markets. The facility contains a
total of 57,000 square feet of leased space and the lease expires in May 2013. In addition, the
Company also leases office space in Beijing, China. The Beijing lease expires in July 2011 with a
two year renewal option. The lease may be canceled by Lindsay (Tianjin) Industry Co., Ltd. prior
to the expiration upon a three-month notice.
BSI owns a 30,000 square foot commercial building located on seven acres in Rio Vista,
California where it manufactures its infrastructure products. BSI leases additional warehouse
space in Rio Vista, California. The lease on this facility expires in April 2018 and may be
terminated by BSI prior to that time upon a sixty day notice and payment of a nominal termination
fee. BSI also leases additional office space in Vacaville, California where it maintains its
executive offices. The lease on this facility expires in July 2013.
Snoline owns a 45,000 square foot commercial building located in Milan, Italy where it
maintains its executive offices and manufactures its infrastructure products.
The Company believes that each of its current facilities is adequate to support normal and
planned operations and intends to renew or commence additional leasing or purchase arrangements as
existing arrangements expire.
ITEM 3 Legal Proceedings
In the ordinary course of its business operations, the Company is involved, from time to time, in
commercial litigation, employment disputes, administrative proceedings, and other legal
proceedings. No such current proceedings, individually or in the aggregate, are expected to have a
material effect on the business or financial condition of the Company.
11
ITEM 4 (Removed and Reserved)
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES OF THE REGISTRANT
The executive officers and significant employees of the Company, their ages, positions and past
five years experience are set forth below. All executive officers of the Company are appointed by
the Board of Directors annually and have employment agreements. There are no family relationships
between any director or executive officer. There are no arrangements or understandings between any
executive officer and any other person pursuant to which they were selected as an officer.
|
|
|
|
|
|
|
|
|
Age |
|
Position |
Richard W. Parod
|
|
|
57 |
|
|
President and Chief Executive Officer |
Eric R. Arneson*
|
|
|
36 |
|
|
Vice President, General Counsel and Secretary |
Steven S. Cotariu
|
|
|
52 |
|
|
President Infrastructure Business |
David B. Downing
|
|
|
55 |
|
|
CFO and President International Operations |
Dan G. Keller*
|
|
|
51 |
|
|
Vice President Human Resources |
Tim J. Paymal
|
|
|
36 |
|
|
Vice President and Chief Accounting Officer |
Mark A. Roth*
|
|
|
35 |
|
|
Vice President Corporate Development and Treasurer |
Barry A. Ruffalo
|
|
|
40 |
|
|
President Irrigation |
Douglas A. Taylor*
|
|
|
47 |
|
|
Vice President and Chief Information Officer |
Lori L. Zarkowski*
|
|
|
35 |
|
|
Corporate Controller |
|
|
|
* |
|
The employee is not an executive officer of the Registrant. |
Mr. Richard W. Parod is President and Chief Executive Officer (CEO) of the Company, and has
held such positions since April 2000. Prior to that time and since 1997, Mr. Parod was Vice
President and General Manager of the Irrigation Division of The Toro Company. Mr. Parod was
employed by James Hardie Irrigation from 1993 through 1997, becoming President in 1994. Mr. Parod
has been a Director since April 2000, when he began his employment with the Company.
Mr. Eric R. Arneson is Vice President, General Counsel and Secretary of the Company and has
held such positions since April 2008. Prior to joining Lindsay and since January 1999, Mr. Arneson
practiced law with the law firm of Kutak Rock LLP, and was most recently a partner of the firm.
Mr. Steven S. Cotariu is President Infrastructure Business of the Company and has held that
position since September 2010 when he joined the Company. Prior to joining Lindsay and since
October 2002, Mr. Cotariu held a variety of positions of increasing responsibility with Pentair,
Inc., most recently as Vice President, Marketing for Pentair Technical Products. Previously, Mr.
Cotariu held marketing and business development positions with Textron, Inc. and was a consultant
with McKinsey & Company.
Mr. David B. Downing is Chief Financial Officer and President International Operations of
the Company and has held such positions since March 2009 and March 2008, respectively. Between
March 2008 and March 2009, Mr. Downing was president International Operations. Previously he was
Senior Vice President-Finance, Chief Financial Officer, Treasurer and Secretary of the Company and
held such position since August 2004, when he joined the Company. Prior to August 2004, Mr.
Downing served as the President of FPM L.L.C., a heat-treating company based in Elk Grove Village,
IL, after joining that company in January 2001 as Vice President and Chief Financial Officer.
Previously, Mr. Downing served as Vice President and Controller for Thermo-King, which manufactured
transport refrigeration equipment.
Mr. Dan G. Keller is Vice President Human Resources of the Company and has held such
position since April 2008, when he joined the Company. Prior to that time and since December 2006,
Mr. Keller was a Director of Human Resources for Johnson & Johnson. Previously, Mr. Keller was
with Pfizer Inc., the last seven years as a Director of Human Resources.
Mr. Tim J. Paymal is Vice President and Chief Accounting Officer of the Company. Mr. Paymal
joined Lindsay in January 2005 as Corporate Controller and was promoted to Vice President and Chief
Accounting Officer in April 2008. Prior to that time and since 1996, Mr. Paymal was most recently
an Audit Senior Manager with Deloitte & Touche LLP.
Mr. Mark A. Roth is Vice President Corporate Development and Treasurer of the Company. Mr.
Roth joined Lindsay in 2004, as Director of Corporate Development and was promoted to Vice
President of Corporate
Development in March 2007, adding Treasurer to his role in April 2008. From March 2001 through
2004 when he joined the Company, Mr. Roth was an Associate with McCarthy Group, Inc., a
Midwest-based investment bank and private equity fund. From January 1998 through February 2001,
Mr. Roth was a Senior Credit Analyst at US Bancorp.
12
Mr. Barry A. Ruffalo is President Irrigation of the Company and has held such position since
March 2007, when he joined the Company. Prior to joining Lindsay and since February 2007, Mr.
Ruffalo was most recently a Director of North American Operations for Joy Global Inc. Prior to
that time and since 1996, Mr. Ruffalo held various positions of increasing responsibility with Case
New Holland; the last five years were spent in Operations Management within the Tractor and the Hay
and Forage divisions for both the Case IH and New Holland brands.
Mr. Douglas A. Taylor is Vice President and Chief Information Officer of the Company. He
joined the Company in May 2005 as the Chief Information Officer and was promoted to Vice President
and Chief Information Officer in October 2006. From 2004 through early 2005, Mr. Taylor was a
Technology Consultant. Prior to that time and since 1999, Mr. Taylor held several positions with
ConAgra Foods, most recently as the Vice President of Process and Systems Integration, Vice
President of Financial Systems, and Director of Information Systems.
Ms. Lori L. Zarkowski is Corporate Controller of the Company, and has held such position since
April 2008. Ms. Zarkowski joined Lindsay in June 2007 as Corporate Reporting Manager and was
promoted to Corporate Controller in April 2008. Prior to joining the Company and since 1997, Ms.
Zarkowski was most recently an Audit Senior Manager with Deloitte & Touche LLP.
PART II
ITEM 5 Market For the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
Lindsay Common Stock trades on the New York Stock Exchange, Inc. (NYSE) under the ticker symbol
LNN. As of September 30, 2010, there were approximately 187 shareholders of record.
The following table sets forth for the periods indicated the range of the high and low stock prices
and dividends paid per share:
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|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
Fiscal 2010 Stock Price |
|
|
Fiscal 2009 Stock Price |
|
|
|
High |
|
|
Low |
|
|
Dividends |
|
|
High |
|
|
Low |
|
|
Dividends |
|
First Quarter |
|
$ |
45.08 |
|
|
$ |
31.20 |
|
|
$ |
0.080 |
|
|
$ |
97.80 |
|
|
$ |
33.02 |
|
|
$ |
0.075 |
|
Second Quarter |
|
|
47.45 |
|
|
|
35.02 |
|
|
|
0.080 |
|
|
|
43.22 |
|
|
|
24.00 |
|
|
|
0.075 |
|
Third Quarter |
|
|
43.92 |
|
|
|
33.00 |
|
|
|
0.080 |
|
|
|
41.52 |
|
|
|
20.89 |
|
|
|
0.075 |
|
Fourth Quarter |
|
|
38.19 |
|
|
|
30.80 |
|
|
|
0.085 |
|
|
|
47.02 |
|
|
|
29.71 |
|
|
|
0.080 |
|
Year |
|
$ |
47.45 |
|
|
$ |
30.80 |
|
|
$ |
0.325 |
|
|
$ |
97.80 |
|
|
$ |
20.89 |
|
|
$ |
0.305 |
|
Purchases of equity securities by the issuer and affiliated purchases The Company made no
repurchases of its common stock under the Companys stock repurchase plan during the fiscal year
ended August 31, 2010; therefore, tabular disclosure is not presented. From time to time, the
Companys Board of Directors has authorized management to repurchase shares of the Companys common
stock. Under this share repurchase plan, management has existing authorization to purchase,
without further announcement, up to 881,139 shares of the Companys common stock in the open market
or otherwise.
13
ITEM 6 Selected Financial Data
|
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|
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|
|
|
|
|
|
|
|
|
|
For the Years Ended August 31, |
|
in millions, except per share amounts |
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
Operating revenues (1) |
|
$ |
358.4 |
|
|
$ |
336.2 |
|
|
$ |
475.1 |
|
|
$ |
281.9 |
|
|
$ |
226.0 |
|
Gross profit |
|
|
98.9 |
|
|
|
80.6 |
|
|
|
123.8 |
|
|
|
69.7 |
|
|
|
48.2 |
|
Operating expenses |
|
|
61.1 |
|
|
|
58.2 |
|
|
|
61.6 |
|
|
|
46.0 |
|
|
|
32.7 |
|
Operating income |
|
|
37.8 |
|
|
|
22.4 |
|
|
|
62.2 |
|
|
|
23.8 |
|
|
|
15.5 |
|
Net earnings |
|
|
24.9 |
|
|
|
13.8 |
|
|
|
39.4 |
|
|
|
15.6 |
|
|
|
11.7 |
|
Net diluted earnings per share |
|
|
1.98 |
|
|
|
1.11 |
|
|
|
3.20 |
|
|
|
1.31 |
|
|
|
1.00 |
|
Cash dividends per share |
|
|
0.325 |
|
|
|
0.305 |
|
|
|
0.285 |
|
|
|
0.265 |
|
|
|
0.245 |
|
Property, plant and equipment, net |
|
|
57.6 |
|
|
|
59.6 |
|
|
|
57.6 |
|
|
|
44.3 |
|
|
|
27.0 |
|
Total assets |
|
|
325.5 |
|
|
|
307.9 |
|
|
|
325.9 |
|
|
|
242.2 |
|
|
|
192.2 |
|
Long-term obligations |
|
|
8.6 |
|
|
|
19.5 |
|
|
|
25.6 |
|
|
|
31.8 |
|
|
|
25.7 |
|
Return on sales |
|
|
6.9 |
% |
|
|
4.1 |
% |
|
|
8.3 |
% |
|
|
5.5 |
% |
|
|
5.2 |
% |
Return on beginning assets (2) |
|
|
8.1 |
% |
|
|
4.2 |
% |
|
|
16.3 |
% |
|
|
8.1 |
% |
|
|
8.7 |
% |
Diluted weighted average shares |
|
|
12.585 |
|
|
|
12.461 |
|
|
|
12.324 |
|
|
|
11.964 |
|
|
|
11.712 |
|
|
|
|
(1) |
|
Fiscal 2010 includes the operating results of the railroad signal and structures business acquired from GE in the fourth quarter of fiscal 2009.
Fiscal 2008 includes the operating results of Watertronics, LLC, which was acquired in the second quarter of fiscal 2008.
Fiscal 2007 includes the operating results of Snoline S.P.A., which was acquired in the second quarter of fiscal 2007.
Fiscal 2006 includes the operating results of Barrier Systems, Inc., which was acquired in the fourth quarter of fiscal 2006. |
|
(2) |
|
Defined as net earnings divided by beginning of period total assets. |
ITEM 7 Managements Discussion and Analysis of Financial Condition and Results of Operations
Concerning Forward-Looking Statements This Annual Report on Form 10-K contains not only
historical information, but also forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements that
are not historical are forward-looking and reflect expectations for future Company performance. In
addition, forward-looking statements may be made orally or in press releases, conferences, reports,
on the Companys worldwide web site, or otherwise, in the future by or on behalf of the Company.
When used by or on behalf of the Company, the words expect, anticipate, estimate, believe,
intend, and similar expressions generally identify forward-looking statements. The entire
section entitled Market Conditions and Fiscal 2011 Outlook should be considered forward-looking
statements. 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.
Forward-looking statements involve a number of risks and uncertainties, including but not
limited to those discussed in the Risk Factors section contained in Item 1A. Readers should not
place undue reliance on any forward-looking statement and should recognize that the statements are
predictions of future results which may not occur as anticipated. Actual results could differ
materially from those anticipated in the forward-looking statements and from historical results,
due to the risks and uncertainties described herein, as well as others not now anticipated. The
risks and uncertainties described herein are not exclusive and further information concerning the
Company and its businesses, including factors that potentially could materially affect the
Companys financial results, may emerge from time to time. Except as required by law, the Company
assumes no obligation to update forward-looking statements to reflect actual results or changes in
factors or assumptions affecting such forward-looking statements.
Overview
The Company manufactures and markets Zimmatic®, Greenfield®,
Stettyn, and Perrot center pivot, lateral move, and hose reel irrigation
systems. The Company also produces irrigation controls, chemical injection systems and remote
monitoring and control systems which it sells under its GrowSmart® brand. These
products are used by farmers to increase or stabilize crop production while conserving water,
energy, and labor. Through its acquisitions, the Company has been able to enhance its capabilities
in providing innovative, turn-key solutions to customers through the integration of its proprietary
pump stations, controls and designs. The Company sells its irrigation products primarily to a
world-wide independent dealer network, who resell to their customer, the farmer. The Companys
principal irrigation manufacturing facilities are located in Lindsay, Nebraska, USA. The Company
also has irrigation production facilities in France, South Africa, Brazil, China and Hartland,
Wisconsin, USA. The
Company also manufactures and markets various infrastructure products, including moveable barriers
for traffic lane management, crash cushions, preformed reflective pavement tapes and other road
safety devices, through its wholly-owned subsidiaries BSI (located in Rio Vista, California) and
Snoline (located in Milan, Italy). In addition, the Companys infrastructure segment produces
large diameter steel tubing and railroad signals and structures, and provides outsourced
manufacturing and production services for other companies.
14
Key factors which impact demand for the Companys irrigation products include agricultural
commodity prices, net cash farm income, crop yields, weather, environmental regulations,
availability of financing and interest rates. A key factor which impacts demand for the Companys
infrastructure products is the amount of spending authorized by governments to improve road and
highway systems. Much of the U.S. highway infrastructure market is driven by government spending
programs. For example, the U.S. government funds highway and road improvements through the Federal
Highway Trust Fund Program. This program provides funding to improve the nations roadway system.
Matching funding from the various states may be required as a condition of federal funding.
The Company will continue to focus on opportunities for growth both organically and through
acquisitions. On August 31, 2010, the Company completed the acquisition of Digitec, Inc., and on
January 24, 2008, the Company completed the acquisition of Watertronics. These acquisitions
reflect the execution of the Companys strategy to grow its irrigation business with additional
proprietary irrigation products. In addition, on August 28, 2009, the Company completed the
acquisition of certain assets of GE Transportation Systems Global Signaling, LLC. The Company sees
opportunities to create shareholder value through the acquisition of product line extensions that
will enhance the Companys highway safety product offering, globally.
Since 2001, the Company has added the operations in Europe, South America, South Africa and
China. The addition of those operations has allowed the Company to strengthen its market position
in those regions, yet they remain relatively small in scale. As a result, none of the
international operations has achieved the operating margin of the United States based irrigation
operations.
Recently Issued Accounting Pronouncements
In October 2009, the FASB issued ASU No. 2009-13 (ASU 2009-13), which addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products or services
(deliverables) separately rather than as a combined unit. ASU 2009-13 is effective prospectively
for revenue arrangements entered into or materially modified in fiscal years beginning on or after
June 15, 2010. The Company is assessing the impact that the adoption of this standard will have on
its consolidated financial statements, but expects the impact to be minimal.
Critical Accounting Policies and Estimates
In preparing the consolidated financial statements in conformity with U.S. generally accepted
accounting principles (GAAP), management must make a variety of decisions which impact the
reported amounts and the related disclosures. Such decisions include the selection of the
appropriate accounting principles to be applied and the assumptions on which to base accounting
estimates. In reaching such decisions, management applies judgment based on its understanding and
analysis of the relevant facts and circumstances. Certain of the Companys accounting policies are
critical, as these policies are most important to the presentation of the Companys consolidated
results of operations and financial condition. They require the greatest use of judgments and
estimates by management based on the Companys historical experience and managements knowledge and
understanding of current facts and circumstances. Management periodically re-evaluates and adjusts
the estimates that are used as circumstances change. There were no significant changes to the
Companys critical accounting policies during fiscal 2010.
Following are the accounting policies management considers critical to the Companys
consolidated results of operations and financial condition:
Inventories Inventories are stated at the lower of cost or market. Cost is determined by the
last-in, first-out (LIFO) method for the Companys Lindsay, Nebraska inventory and two warehouses
in Idaho and Texas. Cost is determined by the first-in, first-out (FIFO) method for inventory at
the Companys Omaha, Nebraska warehouse, BSI, Watertronics, China and non-U.S. warehouse locations.
Cost is determined by the weighted average cost method for inventory at the Companys other
operating locations in Washington State, France, Brazil, Italy and South Africa. At all locations,
the Company reserves for obsolete, slow moving, and excess inventory by estimating the net
realizable value based on the potential future use of such inventory.
Note A to the consolidated financial statements provides a summary of the significant
accounting policies followed in the preparation of the consolidated financial statements. Other
footnotes describe various elements of the financial statements and the assumptions on which
specific amounts were determined. While actual results could
differ from those estimated at the time of the preparation of the consolidated financial
statements, management is committed to preparing financial statements which incorporate accounting
policies, assumptions, and estimates that promote the representational faithfulness, verifiability,
neutrality, and transparency of the accounting information included in the consolidated financial
statements.
15
Results of Operations
The following Fiscal 2010 Compared to Fiscal 2009 and the Fiscal 2009 Compared to Fiscal 2008
sections present an analysis of the Companys consolidated operating results displayed in the
Consolidated Statements of Operations and should be read together with the industry segment
information in Note R to the consolidated financial statements.
Fiscal 2010 Compared to Fiscal 2009
The following table provides highlights for fiscal 2010 compared with fiscal 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended |
|
|
Percent |
|
|
|
August 31, |
|
|
Increase |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
|
(Decrease) |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
358,440 |
|
|
$ |
336,228 |
|
|
|
6.6 |
% |
Cost of operating revenues |
|
$ |
259,540 |
|
|
$ |
255,597 |
|
|
|
1.5 |
% |
Gross profit |
|
$ |
98,900 |
|
|
$ |
80,631 |
|
|
|
22.7 |
% |
Gross margin |
|
|
27.6 |
% |
|
|
24.0 |
% |
|
|
|
|
Operating expenses (1) |
|
$ |
61,058 |
|
|
$ |
58,214 |
|
|
|
4.9 |
% |
Operating income |
|
$ |
37,842 |
|
|
$ |
22,417 |
|
|
|
68.8 |
% |
Operating margin |
|
|
10.6 |
% |
|
|
6.7 |
% |
|
|
|
|
Interest expense |
|
$ |
(1,557 |
) |
|
$ |
(2,030 |
) |
|
|
(23.3 |
)% |
Interest income |
|
$ |
352 |
|
|
$ |
934 |
|
|
|
(62.3 |
)% |
Other income (expense), net |
|
$ |
145 |
|
|
$ |
(782 |
) |
|
|
118.5 |
% |
Income tax provision |
|
$ |
11,920 |
|
|
$ |
6,716 |
|
|
|
77.5 |
% |
Effective income tax rate |
|
|
32.4 |
% |
|
|
32.7 |
% |
|
|
|
|
Net earnings |
|
$ |
24,862 |
|
|
$ |
13,823 |
|
|
|
79.9 |
% |
Irrigation Equipment Segment (See
Note R) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
258,666 |
|
|
$ |
255,507 |
|
|
|
1.2 |
% |
Operating income (2) |
|
$ |
40,869 |
|
|
$ |
35,504 |
|
|
|
15.1 |
% |
Operating margin (2) |
|
|
15.8 |
% |
|
|
13.9 |
% |
|
|
|
|
Infrastructure Products Segment |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
99,774 |
|
|
$ |
80,721 |
|
|
|
23.6 |
% |
Operating income (2) |
|
$ |
11,083 |
|
|
$ |
(36 |
) |
|
|
N/A |
|
Operating margin (2) |
|
|
11.1 |
% |
|
|
0.0 |
% |
|
|
|
|
|
|
|
(1) |
|
Includes $14.1 million and $13.1 million of unallocated general and
administrative expenses for fiscal 2010 and
fiscal 2009, respectively. |
|
(2) |
|
Excludes unallocated corporate general and administrative expenses. |
Revenues
Operating revenues for fiscal 2010 increased by $22.2 million or 7% from fiscal 2009. The increase
was attributable to a 24% increase in infrastructure product revenues and a 1% increase in
irrigation equipment revenues.
U.S. irrigation revenues decreased $3.3 million or 2% compared to fiscal 2009. This decrease
in revenues was primarily due to a decrease of $20.9 million in U.S. irrigation revenues in the
first quarter of fiscal 2010 as compared to the same prior year period due to record backlog from
the end of fiscal 2008. Offsetting this decrease was an increase in the number of irrigation
systems sold in the remaining fiscal quarters of fiscal 2010 compared to the same prior year
periods. This was tempered by a decrease in the average selling price per unit. Commodity prices
rose during the fourth quarter of fiscal 2010 with corn up approximately 70%, soybeans up
approximately 26% and wheat up over 60% since early June 2010. The August update to the USDA
projections for 2010 Net Farm Income indicates a 24% increase compared to 2009 and projects it to
be the fourth highest on record, creating generally positive economic conditions for U.S. farmers.
International irrigation revenues increased $6.4 million or 6% compared to fiscal 2009.
The Companys international irrigation business units in South America, South Africa and Europe, as
well as exports to Mexico, all achieved solid growth in fiscal 2010, partially offset by lower
revenues in other regions.
16
Infrastructure products segment revenues of $99.8 million increased by $19.1 million or 24%
compared to the prior fiscal year. The increase in infrastructure revenues is attributable to
revenues increasing primarily from sales of quick-change moveable barrier systems. The Company
continues to see strong interest in its moveable barrier products which are a very cost effective
way to add lane capacity. This increase was partially offset by smaller decreases at the Companys
Snoline and Diversified Manufacturing business units.
Gross Margin
Gross profit was $98.9 million for fiscal 2010, an increase of $18.3 million compared to fiscal
2009. Gross margin was 27.6% for fiscal 2010 compared to 24.0% for the prior fiscal year. Gross
margin on irrigation products was favorably impacted by improved factory efficiencies at the
Companys Lindsay, Nebraska facility and a favorable regional sales mix. Gross margin on
infrastructure products improved due to increased revenues of higher margin moveable barrier
product.
Operating Expenses
The Companys operating expenses of $61.1 million for fiscal 2010 increased $2.8 million compared
to fiscal 2009. The increase in operating expenses for fiscal 2010 was primarily attributable to
increased investments in product development and higher incentive compensation resulting from
improved financial performance. This was partially offset by lower personnel related costs.
Interest, Other Income (Expense), net
Interest expense for fiscal 2010 of $1.6 million decreased $0.5 million compared to the prior
fiscal year. The decrease in interest expense is primarily due to principal reductions on the
Companys outstanding term notes. This includes the $7.1 million repayment of the Snoline Term
Note in its entirety during the third fiscal quarter.
Interest income for fiscal 2010 decreased by $0.6 million compared to fiscal 2009. The
decrease in interest income is due to earning a lower interest rate on investment of the Companys
cash balances.
Other income (expense), net during fiscal 2010 increased to income of $0.1 million from an
expense of $0.8 million during the prior fiscal year. The higher expense for fiscal 2009 resulted
primarily from foreign currency transaction losses realized from the volatility of exchange rates.
Income Taxes
The Company recorded income tax expense of $11.9 million and $6.7 million for fiscal 2010 and 2009,
respectively. The effective tax rate was 32.4% and 32.7%, respectively. For fiscal 2010, the
Company recorded discrete items that resulted in a net reduction to income tax expense. The
discrete items included a benefit of $0.9 million related to state income tax credits earned in
fiscal 2010, a benefit of $0.6 million related to the section 199 domestic production activities
deduction, a benefit of $0.3 million for an immaterial correction of previously recorded tax
expense and a benefit of $0.3 million for the reversal of previously recorded liabilities for
uncertain tax positions. This reversal was recorded due to the expiration of the statute of
limitations in the applicable tax jurisdictions without any actual tax liability being assessed.
These benefits were slightly offset by additional expense of $0.2 million in the first quarter of
fiscal 2010 relating to a tax ruling impacting Lindsay Europe SAS, the Companys French subsidiary.
For fiscal 2009, the Company recorded discrete items that reduced income tax expense for the
period. These included a benefit of $0.1 million related to the reversal of previously recorded
liabilities for uncertain tax positions due to the expiration of the statute of limitations as well
as a benefit of $0.4 million resulting from finalizing the fiscal 2008 income tax return
calculation that was less than the estimated fiscal 2008 income tax provision. The last item was a
benefit of $0.4 million related to the section 199 domestic production activities deduction.
Net Earnings
Net earnings were $24.9 million or $1.98 per diluted share for fiscal 2010 compared with $13.8
million or $1.11 per diluted share for the same prior year period. The Companys operating income
increased to $37.8 million for fiscal 2010 compared to $22.4 million for fiscal 2009 due primarily
to an increase in revenues and in gross margin, which were partially offset by higher operating
costs.
17
Fiscal 2009 Compared to Fiscal 2008
The following table provides highlights for fiscal 2009 compared with fiscal 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended |
|
|
Percent |
|
|
|
August 31, |
|
|
Increase |
|
$ in thousands |
|
2009 |
|
|
2008 |
|
|
(Decrease) |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
336,228 |
|
|
$ |
475,087 |
|
|
|
(29.2 |
)% |
Cost of operating revenues |
|
$ |
255,597 |
|
|
$ |
351,255 |
|
|
|
(27.2 |
)% |
Gross profit |
|
$ |
80,631 |
|
|
$ |
123,832 |
|
|
|
(34.9 |
)% |
Gross margin |
|
|
24.0 |
% |
|
|
26.1 |
% |
|
|
|
|
Operating expenses (1) |
|
$ |
58,214 |
|
|
$ |
61,593 |
|
|
|
(5.5 |
)% |
Operating income |
|
$ |
22,417 |
|
|
$ |
62,239 |
|
|
|
(64.0 |
)% |
Operating margin |
|
|
6.7 |
% |
|
|
13.1 |
% |
|
|
|
|
Interest expense |
|
$ |
(2,030 |
) |
|
$ |
(3,035 |
) |
|
|
(33.1 |
)% |
Interest income |
|
$ |
934 |
|
|
$ |
1,735 |
|
|
|
(46.2 |
)% |
Other income (expense), net |
|
$ |
(782 |
) |
|
$ |
172 |
|
|
|
(554.7 |
)% |
Income tax provision |
|
$ |
6,716 |
|
|
$ |
21,706 |
|
|
|
(69.1 |
)% |
Effective income tax rate |
|
|
32.7 |
% |
|
|
35.5 |
% |
|
|
|
|
Net earnings |
|
$ |
13,823 |
|
|
$ |
39,405 |
|
|
|
(64.9 |
)% |
Irrigation Equipment Segment
(See Note R) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
255,507 |
|
|
$ |
374,906 |
|
|
|
(31.8 |
)% |
Operating income (2) |
|
$ |
35,504 |
|
|
$ |
66,848 |
|
|
|
(46.9 |
)% |
Operating margin (2) |
|
|
13.9 |
% |
|
|
17.8 |
% |
|
|
|
|
Infrastructure Products Segment |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
80,721 |
|
|
$ |
100,181 |
|
|
|
(19.4 |
)% |
Operating income (2) |
|
$ |
(36 |
) |
|
$ |
9,624 |
|
|
|
(100.4 |
)% |
Operating margin (2) |
|
|
0.0 |
% |
|
|
9.6 |
% |
|
|
|
|
|
|
|
(1) |
|
Includes $13.1 million and $14.2 million of unallocated general and administrative expenses for
fiscal 2009 and
fiscal 2008, respectively. |
|
(2) |
|
Excludes unallocated corporate general and administrative expenses. Beginning in fiscal 2009,
segment-specific
general & administrative expenses have been allocated to each of the Companys reporting segments.
|
|
|
|
Prior year disclosures have been modified accordingly. |
Revenues
Operating revenues for fiscal 2009 decreased by $138.9 million or 29% from fiscal 2008. This
decrease was attributable to a 32% decrease in irrigation equipment revenues and a 19% decrease in
infrastructure product revenues.
U.S. irrigation revenues decreased $81.1 million or 34% compared to fiscal 2008. The decline
in U.S. irrigation equipment revenues was mostly due to a decline in the number of systems shipped
compared to fiscal 2008. The Company generally did not reduce prices for its irrigation equipment
in order to maintain sales volume or market share. Near-record projected harvests continued to
keep commodity prices lower than fiscal 2008. Commodity prices for corn, soybeans, and wheat were
lower when compared to the same time in fiscal 2008. USDA projections for 2009 Net Farm Income
showed a 38% decline when compared to 2008 estimates and 15% below the ten year average.
Throughout the traditional selling season in fiscal 2009, and in the typically slower fourth
quarter, farmers remained cautious about making investments in capital goods. International
irrigation revenues decreased $38.3 million or 28% compared to fiscal 2008. Export shipments
decreased to Australia, Central America, Mexico and the Mideast, but were partially offset by
increased exports to China. The net decrease in export irrigation sales was driven by general
economic conditions, lower commodity prices and funding availability in developing markets.
Revenue from the Companys international irrigation business units in Brazil, South Africa, and
France were also significantly lower as compared to fiscal 2008 for similar reasons. While global
farmer sentiment regarding capital goods purchases was impacted by general economic conditions and
lower commodity prices, the long-term market drivers remained positive. A growing world-wide
population, the benefits of mechanized irrigation in expanding yields and improving water use
efficiencies remain a very compelling proposition for farmers.
18
Infrastructure products segment revenues decreased by $19.5 million or 19% compared to the
prior fiscal year. The decrease in infrastructure revenues was primarily attributable to revenues
decreasing in the Companys BSI and Diversified Manufacturing business units. The decrease in
revenues for BSI was due to lower sales of moveable barrier projects compared to fiscal 2008.
While BSI had anticipated significant revenues in 2009 from an order for a large road project in
Mexico City, this project was delayed and was completed in the first half of fiscal 2010. Road
infrastructure projects from Federal stimulus funds have been implemented, but it appears that
those projects have
had minimal incremental effect on demand as States faced reduced tax revenues, resulting in
curtailing other planned infrastructure projects. In addition, the early stimulus funds have been
applied to shovel ready maintenance projects, versus more significant road widening or new road
construction projects, which are more likely to use the Companys moveable barrier and crash
cushion products. The decrease in revenues for the Diversified Manufacturing business unit was due
to lower sales of tubing to manufacturers of grain handling equipment, also affected by farmers
sentiment regarding equipment purchases. Diversified Manufacturing revenues were also lower on
shipments of railroad signals and structures sold to GE Transportation Systems. During the fourth
quarter of fiscal 2009, the Company purchased this product line from GE Transportation Systems and
transitioned from contract manufacturing these products to direct sales to the railroads.
Gross Margin
Gross profit was $80.6 million for fiscal 2009 a decrease of $43.2 million compared to fiscal 2008.
Gross margin was 24.0% for fiscal 2009 compared to 26.1% for the prior fiscal year. Manufacturing
efficiency decreased on irrigation products during fiscal 2009 resulting from significantly reduced
factory volume. Gross margin on infrastructure products decreased primarily as a result of
unfavorable product mix, manufacturing variances on lower volume, and higher steel costs.
Operating Expenses
The Companys operating expenses of $58.2 million for fiscal 2009 decreased $3.4 million as
compared to fiscal 2008. The decrease in operating expenses for fiscal 2009 was primarily
attributable to lower personnel related costs.
Interest, Other Income (Expense), net
Interest expense for fiscal 2009 of $2.0 million decreased by $1.0 million compared to the prior
fiscal year. The decrease in interest expense was due to principal reductions on the Companys two
outstanding term notes. In addition, the Company had an outstanding balance of $15.0 million on
its revolving line of credit for a portion of fiscal 2008 compared to having no outstanding
balances during fiscal 2009.
Interest income for fiscal 2009 decreased by $0.8 million compared to fiscal 2008. The
decrease in interest income was primarily due to earning a lower interest rate on investments of
the Companys cash balances.
Other expense, net during fiscal 2009 increased by $1.0 million compared with the same prior
year period. This primarily resulted from foreign currency transaction losses realized from the
volatility of exchange rates during fiscal 2009.
Income Taxes
The Company recorded income tax expense of $6.7 million and $21.7 million for fiscal 2009 and 2008,
respectively. The effective tax rate was 32.7% and 35.5% for fiscal 2009 and 2008, respectively.
The effective tax rate for the fiscal year 2009 was lower than the U.S. statutory tax rate
primarily due to three items that reduced income tax expense for the period. The first item was a
benefit of $0.1 million due to the reversal of previously recorded liabilities for uncertain tax
positions relating to taxation of the Companys Brazilian subsidiary. This reversal was recorded
due to the expiration of the statute of limitations without any actual tax liability being
assessed. The second item was a benefit of $0.4 million resulting from finalizing the fiscal 2008
income tax return calculation that was less than the estimated fiscal 2008 income tax provision.
The third item was a benefit of $0.4 million related to the section 199 domestic production
activities deduction.
Net Earnings
Net earnings were $13.8 million or $1.11 per diluted share for fiscal 2009 compared with $39.4
million or $3.20 per diluted share for the same prior year period. The Companys operating income
fell to $22.4 million for fiscal 2009 compared to $62.2 million for fiscal 2008 due primarily to a
decline in revenues and in gross margins, which were partially offset by lower operating costs.
19
Liquidity and Capital Resources
The Company requires cash for financing its receivables and inventories, paying operating costs and
capital expenditures, and for dividends. The Company meets its liquidity needs and finances its
capital expenditures from its available cash and funds provided by operations along with borrowings
under three credit arrangements that are described below.
The Companys cash and cash equivalents totaled $83.4 million at August 31, 2010 compared with
$85.9 million at August 31, 2009.
The Company currently maintains a bank line of credit with Wells Fargo Bank, N.A. and another
with Societe Generale to provide additional working capital or to fund acquisitions, if needed.
The Company has an unsecured $30.0 million Revolving Credit Note and Credit Agreement with Wells
Fargo Bank, N.A. (the Revolving Credit Agreement). The Company entered into the First Amendment
to the Revolving Credit Agreement (the Amended Revolving Credit Agreement), effective as of
January 23, 2010, in order to extend the Revolving Credit Agreements termination date from January
23, 2010 to January 23, 2012. As of August 31, 2010 and 2009, there were no outstanding balances
on the Amended Revolving Credit Agreement.
Borrowings under the Amended Revolving Credit Agreement bear interest at a rate equal to LIBOR
plus 120 basis points compared to LIBOR plus 50 basis points under the previous Revolving Credit
Agreement, subject to adjustment as set forth in the Amended Revolving Credit Agreement. Interest
is repaid on a monthly or quarterly basis depending on loan type. The Company also pays an annual
commitment fee of 0.25% on the unused portion of the Amended Revolving Credit Agreement. Unpaid
principal and interest is due by January 23, 2012, which is the termination date of the Amended
Revolving Credit Agreement.
The Companys wholly-owned European subsidiary, Lindsay Europe, has an unsecured revolving
line of credit with Societe Generale, a European commercial bank, under which it could borrow up to
2.3 million Euros, which equates to approximately $2.9 million as of August 31, 2010, for working
capital purposes (the Euro Line of Credit). At August 31, 2010 and 2009, there were no
borrowings outstanding under the Euro Line of Credit. Under the terms of the Euro Line of Credit,
borrowings, if any, bear interest at a floating rate in effect from time to time designated by the
commercial bank as the Euro Interbank Offered Rate plus 150 basis points (all inclusive, 1.98% at
August 31, 2010). Unpaid principal and interest is due by January 31, 2011, which is the
termination date of the Euro Line of Credit. The Companys management expects to obtain a similar
line of credit prior to termination.
The Company entered into an unsecured $30.0 million Term Note and Credit Agreement, each
effective as of June 1, 2006, with Wells Fargo Bank, N.A. (collectively, the BSI Term Note) to
partially finance the acquisition of BSI. Borrowings under the BSI Term Note bear interest at a
rate equal to LIBOR plus 50 basis points. However, this variable interest rate has been converted
to a fixed rate of 6.05% through an interest rate swap agreement with the lender. Principal is
repaid quarterly in equal payments of $1.1 million over a seven-year period that commenced in
September, 2006. The BSI Term Note is due in June of 2013.
On December 27, 2006, the Companys wholly-owned Italian subsidiary entered into an unsecured
$13.2 million seven-year Term Note and Credit Agreement (the Snoline Term Note) with Wells Fargo
Bank, N.A. On May 17, 2010, the Company repaid the $7.1 million outstanding balance on the Snoline
Term Note in its entirety. In conjunction with the repayment of the Snoline Term Note, the Company
exited the cross currency swap associated with this term note at zero fair value.
The BSI Term Note and the Amended Revolving Credit Agreement (collectively, the Notes) each
contain the same covenants, including certain covenants relating to Lindsays financial condition.
These include maintaining a funded debt to EBITDA ratio, a fixed charge coverage ratio, and a
current ratio (all as defined in the Notes) at specified levels. In connection with entering into
the Amended Revolving Credit Agreement during the second quarter of fiscal 2010, the covenants for
each of the Notes were modified by adding a tangible net worth requirement. Upon the occurrence of
any event of default of these covenants specified in the Notes, including a change in control of
the Company (as defined in the Notes), all amounts due under the Notes may be declared to be
immediately due and payable. At August 31, 2010, the Company was in compliance with all loan
covenants.
The Company believes its current cash resources, projected operating cash flow, and remaining
capacity under its bank lines of credit are sufficient to cover all of its expected working capital
needs, planned capital expenditures, dividends, and other cash requirements, excluding potential
acquisitions.
Cash
flows provided by operations totaled $23.8 million for fiscal 2010 compared to $57.5 million provided by operations during the prior year. Cash provided by operations decreased by
$33.7 million primarily due to an increase in cash used for working capital items partially offset
by an increase in cash provided by net earnings.
Cash
flows used in investing activities totaled $9.7 million for fiscal 2010 compared to cash
flows used in investing activities of $12.7 million during fiscal 2009. The decrease in cash used
for investing activities was primarily due to a decrease of $4.7 million of purchases of property,
plant and equipment and an increase of $1.4 million from
proceeds from a note receivable. This was partially offset by an increase of $3.4 million in cash used for an
acquisition of a business.
20
Cash flows used in financing activities totaled $16.2 million for fiscal 2010 compared to cash
flows used in financing activities of $9.8 million during the same prior year period. The increase
in cash used in financing activities was primarily due to the $7.1 million repayment of the Snoline
Term Note during the third quarter of fiscal 2010. This was partially offset by a decrease of $1.6
million in net payments on revolving lines of credit.
Inflation
The Company is subject to the effects of changing prices. During fiscal 2010, the Company realized
pricing volatility for purchases of certain commodities, in particular steel and zinc products,
used in the production of its products. While the cost outlook for commodities used in the
production of the Companys products is not certain, management believes it can manage these
inflationary pressures by introducing appropriate sales price adjustments and by actively pursuing
internal cost reduction efforts, while further refining the Companys inventory and raw materials
risk management system. However, competitive market pressures may affect the Companys ability to
pass price adjustments along to its customers.
Contractual Obligations and Commercial Commitments
In the normal course of business, the Company enters into contracts and commitments which obligate
the Company to make future payments. The table below sets forth the Companys significant future
obligations by time period. Where applicable, information included in the Companys consolidated
financial statements and notes is cross-referenced in this table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
More |
|
$ in thousands |
|
Note |
|
|
|
|
|
Less than |
|
|
2-3 |
|
|
4-5 |
|
|
than 5 |
|
Contractual Obligations |
|
Reference |
|
Total |
|
|
1 Year |
|
|
Years |
|
|
Years |
|
|
Years |
|
Leases |
|
O |
|
$ |
9,161 |
|
|
$ |
2,111 |
|
|
$ |
3,329 |
|
|
$ |
1,430 |
|
|
$ |
2,291 |
|
Term Note Obligation |
|
L |
|
|
12,857 |
|
|
|
4,286 |
|
|
|
8,571 |
|
|
|
|
|
|
|
|
|
Interest Expense |
|
L |
|
|
1,264 |
|
|
|
681 |
|
|
|
583 |
|
|
|
|
|
|
|
|
|
Unrecognized Tax Benefits (1) |
|
E |
|
|
1,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,112 |
|
Supplemental Retirement Plan |
|
P |
|
|
6,957 |
|
|
|
557 |
|
|
|
1,082 |
|
|
|
1,065 |
|
|
|
4,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$ |
31,351 |
|
|
$ |
7,635 |
|
|
$ |
13,565 |
|
|
$ |
2,495 |
|
|
$ |
7,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Future cash flows for unrecognized tax benefits reflect the recorded
liability, including interest and penalties, in accordance with FIN 48 as
of August 31, 2010. Amounts for which the
year of settlement
cannot be reasonably
estimated have been
included in the More than
5 years column. |
Market Conditions and Fiscal 2011 Outlook
Commodity prices have risen during the Companys fourth fiscal quarter with corn up approximately
70%, soybeans up approximately 26% and wheat up over 60% since early June 2010. The August 2010
update for USDA projections for 2010 Net Farm Income indicates a 24% increase compared to 2009
estimates which puts the projected 2010 Net Farm Income as the fourth highest on record. The
Companys management believes that farmer sentiment has improved over last year due to increased
commodity prices. Although the decision on equipment purchases for next season is a few months
away for the Companys primary irrigation markets, management expects higher equipment demand if
commodity prices remain strong.
In the infrastructure segment the Company continues to experience strong interest in its
QMB® systems which provide a cost effective method for safely managing traffic
congestion. Because of the project nature and uniqueness of the moveable barrier product line, it
is difficult to estimate the global market size. For planning purposes, the Company maintains a
list of potential projects in the moveable barrier product line for traffic mitigation that remains
very strong. Management believes stimulus spending has supported increased road safety product
sales and quote activity; however, the outlook for infrastructure spending remains uncertain with a
multi-year highway bill not expected until sometime in 2011.
Overall, the Company continues to focus on working capital management in all of the Companys
operations. The Companys focus on improving cash flow has resulted in improving its net cash
position by $10.3 million from $60.3 million at August 31, 2009 to $70.6 million at August 31,
2010.
As of August 31, 2010, the Company has an order backlog of $38.4 million compared with $33.9
million at May 31, 2010 and $43.6 million at August 31, 2009. Included in the August 31, 2010
backlog is a $14.8 million project for the Companys QMB® system, which is expected to
ship in the first half of fiscal 2011. The August 31, 2009 backlog included $19.6 million for the
Mexico City QMB® system project completed in the first half of fiscal 2010. The
Companys backlog can fluctuate from period to period due to the seasonality, cyclicality, timing
and execution of contracts. Typically, the Companys backlog at any point in time usually
represents only a portion of the revenue it expects to realize during the following three month
period.
21
In the long term, the global drivers of increasing food production, improving water-use
efficiency, expanding bio-fuel production, expanding interest in reducing environmental impacts and
improving transportation
infrastructure, continue to be positive drivers of demand for the Companys products. The
Companys strong balance sheet has well-positioned the Company to invest in growth initiatives both
organically and through acquisitions.
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk
The Company uses certain financial derivatives to mitigate its exposure to volatility in interest
rates and foreign currency exchange rates. The Company uses these derivative instruments to hedge
exposures in the ordinary course of business and does not invest in derivative instruments for
speculative purposes. The credit risk under these interest rate and foreign currency agreements is
not considered to be significant.
The Company has manufacturing operations in the United States, France, Brazil, Italy, South
Africa and China. The Company has sold products throughout the world and purchases certain of its
components from third-party international suppliers. Export sales made from the United States are
principally U.S. dollar denominated. At times, export sales may be denominated in a currency other
than the U.S. dollar. A majority of the Companys revenue generated from operations outside the
United States is denominated in local currency. Accordingly, these sales are not typically subject
to significant foreign currency transaction risk. The Companys most significant transactional
foreign currency exposures are the Euro, the Brazilian real, the South African rand and the Chinese
renminbi in relation to the U.S. dollar. Fluctuations in the value of foreign currencies create
exposures, which can adversely affect the Companys results of operations.
In order to reduce exposures related to changes in foreign currency exchange rates, the
Company, at times, may enter into forward exchange or option contracts for transactions denominated
in a currency other than the functional currency for certain of our operations. This activity
primarily relates to economically hedging against foreign currency risk in purchasing inventory,
sales of finished goods, and future settlement of foreign denominated assets and liabilities. At
August 31, 2010, the Company had outstanding forward exchange contracts with cash flow hedging
relationships totaling less than $0.1 million included in other current liabilities.
In order to reduce translation exposure resulting from translating the financial statements of
its international subsidiaries into U.S. dollars, the Company, at times, utilizes Euro foreign
currency forward contracts to hedge its Euro net investment exposure in its foreign operations. At
August 31, 2010, the Company had one outstanding Euro foreign currency forward contract to sell 5.0
million Euro on November 24, 2010 at a fixed price of $1.2581 USD per Euro. The forward spot rate
at August 31, 2010 was 1.2664 USD per Euro. The Companys foreign currency forward contract
qualifies as a hedge of net investments in foreign operations. Subsequent to August 31, 2010, the
Company terminated its one outstanding Euro foreign currency forward
contract, resulting in an
after-tax net loss of $0.5 million which will be recognized in other comprehensive income as part
of the currency translation adjustment, net of tax in its first quarter of fiscal 2011.
In order to reduce interest rate risk on the $30 million BSI Term Note, the Company has
entered into an interest rate swap agreement with Wells Fargo Bank, N.A. that is designed to
convert the variable interest rate on the entire amount of this borrowing to a fixed rate of 6.05%
per annum. Under the terms of the interest rate swap, the Company receives variable interest rate
payments and makes fixed interest rate payments on an amount equal to the outstanding balance of
the BSI Term Note, thereby creating the equivalent of fixed-rate debt.
22
ITEM 8 Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Lindsay Corporation:
We have audited the accompanying consolidated balance sheets of Lindsay Corporation and
subsidiaries (the Company) as of August 31, 2010 and 2009, and the related consolidated statements
of operations, shareholders equity and comprehensive income, and cash flows for each of the years
in the three-year period ended August 31, 2010. In connection with our audits of the consolidated
financial statements, we have also audited the financial statement schedule listed in Item 15(a)(2)
of this Form 10-K. These consolidated financial statements and financial statement schedule are the
responsibility of the Companys management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Lindsay Corporation and subsidiaries as of August 31,
2010 and 2009, and the results of their operations and their cash flows for each of the years in
the three-year period ended August 31, 2010, in conformity with U.S. generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
As discussed in the notes to the accompanying consolidated financial statements, the Company
adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48,
Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109, effective
September 1, 2007.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Companys internal control over financial reporting as of August 31,
2010, based on criteria established in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated
November 10, 2010 expressed an unqualified opinion on the effectiveness of the Companys internal
control over financial reporting.
/s/ KPMG LLP
Omaha, Nebraska
November 10, 2010
23
Lindsay
Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended August 31, |
|
(in thousands, except per share amounts) |
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
358,440 |
|
|
$ |
336,228 |
|
|
$ |
475,087 |
|
Cost of operating revenues |
|
|
259,540 |
|
|
|
255,597 |
|
|
|
351,255 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
98,900 |
|
|
|
80,631 |
|
|
|
123,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling expense |
|
|
23,070 |
|
|
|
22,361 |
|
|
|
25,177 |
|
General and administrative expense |
|
|
30,196 |
|
|
|
29,816 |
|
|
|
30,010 |
|
Engineering and research expense |
|
|
7,792 |
|
|
|
6,037 |
|
|
|
6,406 |
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
61,058 |
|
|
|
58,214 |
|
|
|
61,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
37,842 |
|
|
|
22,417 |
|
|
|
62,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(1,557 |
) |
|
|
(2,030 |
) |
|
|
(3,035 |
) |
Interest income |
|
|
352 |
|
|
|
934 |
|
|
|
1,735 |
|
Other income (expense), net |
|
|
145 |
|
|
|
(782 |
) |
|
|
172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
|
36,782 |
|
|
|
20,539 |
|
|
|
61,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision |
|
|
11,920 |
|
|
|
6,716 |
|
|
|
21,706 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
24,862 |
|
|
$ |
13,823 |
|
|
$ |
39,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings per share |
|
$ |
2.00 |
|
|
$ |
1.12 |
|
|
$ |
3.30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings per share |
|
$ |
1.98 |
|
|
$ |
1.11 |
|
|
$ |
3.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
12,451 |
|
|
|
12,294 |
|
|
|
11,936 |
|
Diluted effect of stock equivalents |
|
|
134 |
|
|
|
167 |
|
|
|
388 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
assuming dilution |
|
|
12,585 |
|
|
|
12,461 |
|
|
|
12,324 |
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
24
Lindsay
Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
|
August 31, |
|
($ in thousands, except par values) |
|
2010 |
|
|
2009 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
83,418 |
|
|
$ |
85,929 |
|
Receivables, net of allowance of $2,244, and $1,864, respectively |
|
|
63,629 |
|
|
|
42,862 |
|
Inventories, net |
|
|
45,296 |
|
|
|
46,255 |
|
Deferred income taxes |
|
|
6,722 |
|
|
|
6,881 |
|
Other current assets |
|
|
8,946 |
|
|
|
7,602 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
208,011 |
|
|
|
189,529 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
57,646 |
|
|
|
59,641 |
|
Other intangible assets, net |
|
|
27,715 |
|
|
|
29,100 |
|
Goodwill, net |
|
|
27,395 |
|
|
|
24,174 |
|
Other noncurrent assets |
|
|
4,714 |
|
|
|
5,453 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
325,481 |
|
|
$ |
307,897 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
26,501 |
|
|
$ |
20,008 |
|
Current portion of long-term debt |
|
|
4,286 |
|
|
|
6,171 |
|
Other current liabilities |
|
|
36,295 |
|
|
|
33,008 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
67,082 |
|
|
|
59,187 |
|
|
|
|
|
|
|
|
|
|
Pension benefits liabilities |
|
|
6,400 |
|
|
|
6,407 |
|
Long-term debt |
|
|
8,571 |
|
|
|
19,454 |
|
Deferred income taxes |
|
|
10,816 |
|
|
|
10,391 |
|
Other noncurrent liabilities |
|
|
3,005 |
|
|
|
4,800 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
95,874 |
|
|
|
100,239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity: |
|
|
|
|
|
|
|
|
Preferred stock, ($1 par value, 2,000,000 shares authorized,
no shares
issued and outstanding) |
|
|
|
|
|
|
|
|
Common stock, ($1 par value, 25,000,000 shares authorized,
18,184,820 and 18,128,743 shares issued
at August 31, 2010 and 2009, respectively) |
|
|
18,185 |
|
|
|
18,129 |
|
Capital in excess of stated value |
|
|
30,756 |
|
|
|
28,944 |
|
Retained earnings |
|
|
270,272 |
|
|
|
249,588 |
|
Less treasury stock (at cost, 5,698,448 and 5,763,448 shares
at August 31, 2010 and 2009, respectively) |
|
|
(90,961 |
) |
|
|
(91,998 |
) |
Accumulated other comprehensive income, net |
|
|
1,355 |
|
|
|
2,995 |
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
229,607 |
|
|
|
207,658 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
325,481 |
|
|
$ |
307,897 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
25
Lindsay
Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in |
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Shares of |
|
|
Shares of |
|
|
|
|
|
|
excess of |
|
|
|
|
|
|
|
|
|
|
other |
|
|
Total |
|
|
|
Common |
|
|
Treasury |
|
|
Common |
|
|
stated |
|
|
Retained |
|
|
Treasury |
|
|
comprehensive |
|
|
Shareholders |
|
(in thousands, except per share amounts) |
|
stock |
|
|
stock |
|
|
stock |
|
|
value |
|
|
earnings |
|
|
stock |
|
|
income (loss) |
|
|
equity |
|
|
Balance at August 31, 2007 |
|
|
17,744,458 |
|
|
|
5,998,448 |
|
|
$ |
17,744 |
|
|
$ |
11,734 |
|
|
$ |
204,750 |
|
|
$ |
(95,749 |
) |
|
$ |
2,549 |
|
|
$ |
141,028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adoption of FIN 48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(756 |
) |
|
|
|
|
|
|
|
|
|
|
(756 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 1, 2007 |
|
|
17,744,458 |
|
|
|
5,998,448 |
|
|
$ |
17,744 |
|
|
$ |
11,734 |
|
|
$ |
203,994 |
|
|
$ |
(95,749 |
) |
|
$ |
2,549 |
|
|
$ |
140,272 |
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,405 |
|
|
|
|
|
|
|
|
|
|
|
39,405 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,544 |
|
|
|
2,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,949 |
|
Cash dividends ($0.285) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,419 |
) |
|
|
|
|
|
|
|
|
|
|
(3,419 |
) |
Exercise of employee stock options |
|
|
310,834 |
|
|
|
(155,000 |
) |
|
|
311 |
|
|
|
4,048 |
|
|
|
(304 |
) |
|
|
2,474 |
|
|
|
|
|
|
|
6,529 |
|
Stock option tax benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,263 |
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2008 |
|
|
18,055,292 |
|
|
|
5,843,448 |
|
|
$ |
18,055 |
|
|
$ |
26,352 |
|
|
$ |
239,676 |
|
|
$ |
(93,275 |
) |
|
$ |
5,093 |
|
|
$ |
195,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,823 |
|
|
|
|
|
|
|
|
|
|
|
13,823 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,098 |
) |
|
|
(2,098 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,725 |
|
Cash dividends ($0.305) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,754 |
) |
|
|
|
|
|
|
|
|
|
|
(3,754 |
) |
Exercise of employee stock options |
|
|
73,451 |
|
|
|
(80,000 |
) |
|
|
74 |
|
|
|
225 |
|
|
|
(157 |
) |
|
|
1,277 |
|
|
|
|
|
|
|
1,419 |
|
Stock option tax benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
293 |
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2009 |
|
|
18,128,743 |
|
|
|
5,763,448 |
|
|
$ |
18,129 |
|
|
$ |
28,944 |
|
|
$ |
249,588 |
|
|
$ |
(91,998 |
) |
|
$ |
2,995 |
|
|
$ |
207,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,862 |
|
|
|
|
|
|
|
|
|
|
|
24,862 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,640 |
) |
|
|
(1,640 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,222 |
|
Cash dividends ($0.325) per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,051 |
) |
|
|
|
|
|
|
|
|
|
|
(4,051 |
) |
Exercise of employee stock options |
|
|
56,077 |
|
|
|
(65,000 |
) |
|
|
56 |
|
|
|
(417 |
) |
|
|
(127 |
) |
|
|
1,037 |
|
|
|
|
|
|
|
549 |
|
Stock option tax benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127 |
|
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at August 31, 2010 |
|
|
18,184,820 |
|
|
|
5,698,448 |
|
|
$ |
18,185 |
|
|
$ |
30,756 |
|
|
$ |
270,272 |
|
|
$ |
(90,961 |
) |
|
$ |
1,355 |
|
|
$ |
229,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the consolidated financial statements.
26
Lindsay
Corporation and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended August 31, |
|
($ in thousands) |
|
2010 |
|
|
2009 |
|
|
2008 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
24,862 |
|
|
$ |
13,823 |
|
|
$ |
39,405 |
|
Adjustments to reconcile net earnings to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
10,710 |
|
|
|
10,442 |
|
|
|
9,253 |
|
Provision for uncollectible accounts receivable |
|
|
732 |
|
|
|
558 |
|
|
|
75 |
|
Deferred income taxes |
|
|
(1,500 |
) |
|
|
(1,226 |
) |
|
|
(886 |
) |
Stock-based compensation expense |
|
|
2,206 |
|
|
|
2,140 |
|
|
|
3,516 |
|
(Gain) loss on disposal of fixed assets |
|
|
(519 |
) |
|
|
55 |
|
|
|
(9 |
) |
Other, net |
|
|
120 |
|
|
|
1,302 |
|
|
|
(3 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
|
(22,294 |
) |
|
|
43,316 |
|
|
|
(37,267 |
) |
Inventories |
|
|
827 |
|
|
|
7,726 |
|
|
|
(7,959 |
) |
Other current assets |
|
|
(2,862 |
) |
|
|
1,009 |
|
|
|
113 |
|
Accounts payable |
|
|
6,739 |
|
|
|
(12,116 |
) |
|
|
12,038 |
|
Other current liabilities |
|
|
1,388 |
|
|
|
(6,965 |
) |
|
|
10,748 |
|
Current taxes payable |
|
|
5,287 |
|
|
|
(3,140 |
) |
|
|
3,357 |
|
Other noncurrent assets and liabilities |
|
|
(1,863 |
) |
|
|
571 |
|
|
|
(1,868 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
23,833 |
|
|
|
57,495 |
|
|
|
30,513 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(5,784 |
) |
|
|
(10,500 |
) |
|
|
(14,093 |
) |
Proceeds from sale of property, plant and equipment |
|
|
606 |
|
|
|
21 |
|
|
|
93 |
|
Acquisition of business, net of cash acquired |
|
|
(6,436 |
) |
|
|
(3,076 |
) |
|
|
(21,028 |
) |
Proceeds from note receivable |
|
|
1,409 |
|
|
|
|
|
|
|
|
|
Proceeds from settlement of net investment hedge |
|
|
518 |
|
|
|
859 |
|
|
|
1,124 |
|
Purchases of marketable securities available-for-sale |
|
|
|
|
|
|
|
|
|
|
(13,860 |
) |
Proceeds from maturities of marketable securities available-for-sale |
|
|
|
|
|
|
|
|
|
|
41,490 |
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(9,687 |
) |
|
|
(12,696 |
) |
|
|
(6,274 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock under stock compensation plan |
|
|
549 |
|
|
|
1,419 |
|
|
|
6,530 |
|
Proceeds from issuance of long-term debt |
|
|
|
|
|
|
|
|
|
|
15,000 |
|
Principal payments on long-term debt |
|
|
(12,769 |
) |
|
|
(6,171 |
) |
|
|
(21,171 |
) |
Net borrowing (payments) on revolving line of credit |
|
|
|
|
|
|
(1,633 |
) |
|
|
1,032 |
|
Excess tax benefits from stock-based compensation |
|
|
76 |
|
|
|
344 |
|
|
|
7,263 |
|
Dividends paid |
|
|
(4,051 |
) |
|
|
(3,754 |
) |
|
|
(3,419 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(16,195 |
) |
|
|
(9,795 |
) |
|
|
5,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
(462 |
) |
|
|
165 |
|
|
|
264 |
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
|
(2,511 |
) |
|
|
35,169 |
|
|
|
29,738 |
|
Cash and cash equivalents, beginning of period |
|
|
85,929 |
|
|
|
50,760 |
|
|
|
21,022 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
83,418 |
|
|
$ |
85,929 |
|
|
$ |
50,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid |
|
$ |
8,368 |
|
|
$ |
11,081 |
|
|
$ |
12,262 |
|
Interest paid |
|
$ |
1,648 |
|
|
$ |
2,146 |
|
|
$ |
3,066 |
|
The accompanying notes are an integral part of the condensed consolidated financial statements.
27
Lindsay Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Lindsay Corporation (the Company or Lindsay) manufactures automated agricultural irrigation
systems and water pumping station controls and sells these products in both U.S. and international
markets. The Company also manufactures and markets various infrastructure products, including
moveable barriers for traffic lane management, crash cushions, road marking and other road safety
devices. In addition, the Companys infrastructure segment produces large diameter steel tubing
and railroad signals and structures, and provides outsourced manufacturing and production services
for other companies. The Companys corporate office is located in Omaha, Nebraska. The
Companys primary U.S. irrigation sales and production facilities are located in Nebraska and
Wisconsin. The Companys international irrigation sales and production facilities are located in
France, Brazil, South Africa and China. The Company also owns a retail irrigation dealership
with three separate retail locations based in the eastern Washington state region. The Companys
primary infrastructure locations include Rio Vista, California, Omaha, Nebraska and Milan, Italy.
These locations manufacture and market moveable and specialty barriers, crash cushions, road
marking and safety equipment for use on roadways and railroad signals and structures.
Notes to the consolidated financial statements describe various elements of the financial
statements and the accounting policies, estimates, and assumptions applied by management. While
actual results could differ from those estimated at the time of preparation of the consolidated
financial statements, management believes that the accounting policies, assumptions, and estimates
applied promote the representational faithfulness, verifiability, neutrality, and transparency of
the accounting information included in the consolidated financial statements.
The significant accounting policies of the Company are as follows:
(1) Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries.
Significant intercompany balances and transactions are eliminated in consolidation.
(2) Reclassifications
Certain reclassifications have been made to prior financial statements to conform to the
current-year presentation.
(3) Stock Based Compensation
The Company recognizes compensation expense for all share-based payment awards made to employees
and directors based on estimated fair values. The Company uses the straight-line amortization
method over the vesting period of the awards. The Company has historically issued shares upon
exercise of stock options or vesting of restricted stock units or performance stock units from new
stock issuances, except for certain non-plan option shares granted in March 2000 that are issued
from Treasury Stock upon exercise. At August 31, 2010 there are no remaining non-plan option
shares outstanding.
(4) Revenue Recognition
Revenues from the sale of the Companys irrigation products to its U.S. independent dealers are
recognized when the products ship from the factory. The Company generally has no post delivery
obligations to its independent dealers other than standard warranties. Revenues from the sale of
the Companys irrigation products to international locations and sales by its international
locations are recognized based on the delivery terms in the sales contract. Revenues for retail
sales of irrigation products are recognized when the product or service is delivered to the
end-user customers. Revenues from the sale of infrastructure products are recognized when the
product is delivered to the customer. The Company also leases certain infrastructure products to
customers. Revenues for the lease of infrastructure products are recognized on a straight-line
basis over the lease term. Revenues and gross profits on intercompany sales are eliminated in
consolidation.
The costs related to revenues are recognized in the same period in which the specific revenues
are recorded. Shipping and handling revenue is reported as a component of operating revenues.
Shipping and handling costs are reported as a component of cost of operating revenues. Shipping
and handling revenues and costs are not significant to total operating revenues or cost of
operating revenues. Customer rebates, cash discounts, and other sales incentives are recorded as a
reduction of revenues at the time of the original sale. Estimates used in the recognition of
operating revenues and cost of operating revenues include, but are not limited to, estimates for
rebates payable and cash discounts expected.
28
(5) Receivables and Allowances
Trade receivables are reported on the balance sheet net of any doubtful accounts. Allowances for
doubtful accounts are maintained in amounts considered to be appropriate in relation to the
receivables outstanding based on collection experience, economic conditions and credit risk
quality.
(6) Warranty Costs
The Companys provision for product warranty reflects managements best estimate of probable
liability under its product warranties. At the time a sale is recognized, the company records the
estimated future warranty costs. The Company generally determines its total future warranty
liability by applying historical claims rate experience to the amount of equipment that has been
sold and is still within the warranty period. In addition, the Company records provisions for
known warranty claims. This provision is periodically adjusted to reflect actual experience.
Warranty costs were $3.8 million, $3.6 million, and $3.5 million for the fiscal years ended
August 31, 2010, 2009 and 2008, respectively.
(7) Cash and Cash Equivalents
Cash equivalents consist of investments with original maturities of three months or less.
(8) Inventories
Inventories are stated at the lower of cost or market. Cost is determined by the last-in,
first-out (LIFO) method for the Companys Lindsay, Nebraska inventory and two warehouses in Idaho
and Texas. Cost is determined by the first-in, first-out (FIFO) method for inventory at the
Companys Omaha, Nebraska warehouse, BSI, Watertronics, China and non-U.S. warehouse locations.
Cost is determined by the weighted average cost method for inventory at the Companys other
operating locations in Washington State, France, Brazil, Snoline, and South Africa. At all
locations, the Company reserves for obsolete, slow moving, and excess inventory by estimating the
net realizable value based on the potential future use of such inventory.
(9) Property, Plant and Equipment
Property, plant, equipment, and capitalized assets held for lease are stated at cost. The Company
capitalizes major expenditures and charges to operating expenses the cost of current maintenance
and repairs. Provisions for depreciation and amortization have been computed principally on the
straight-line method for buildings and equipment. Rates used for depreciation are based
principally on the following expected lives: buildings 15 to 30 years; temporary structures 5
years; equipment 3 to 10 years; leased Barrier Transfer Machines 8 to 10 years; leased
barriers 12 years; other 2 to 20 years and leasehold improvements shorter of the economic
life or term of the lease. All of the Companys long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. If the sum of the expected future cash flows is less than the carrying amount of the
asset, an impairment loss is recognized based upon the difference between the fair value of the
asset and its carrying value. During fiscal 2010, 2009 and 2008 no impairment losses were
recognized. The cost and accumulated depreciation relating to assets retired or otherwise disposed
of are eliminated from the respective accounts at the time of disposition. The resulting gain or
loss is included in operating income in the consolidated statements of operations.
(10) Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in
a business combination. Acquired intangible assets are recognized separately from goodwill.
Goodwill and intangible assets with indefinite useful lives are tested for impairment at least
annually at the reporting unit level using a two-step impairment test. The Company updated its
impairment evaluation of goodwill and intangible assets with indefinite useful lives at August 31,
2010. No impairment losses were indicated as a result of the annual impairment testing for fiscal
years 2010, 2009, and 2008. The estimates of fair value of its reporting units and related
goodwill depend on a number of assumptions, including forecasted sales growth and operating expense
ratios. To the extent that the reporting unit is unable to achieve these assumptions, impairment
losses may emerge. Intangible assets which have identifiable useful lives are amortized over the
term of their useful lives and are tested for impairment upon the occurrence of events that would
indicate the assets may be impaired. No impairment losses were recorded in fiscal years 2010,
2009, and 2008.
29
(11) Income Taxes
Income taxes are accounted for utilizing the asset and liability method of accounting for income
taxes. Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the
financial statement carrying value of existing assets and liabilities and their respective tax
bases. These expected future tax consequences are measured based on currently enacted tax rates.
The effect of tax rate changes on deferred tax assets and liabilities is recognized in income
during the period that includes the enactment date.
When the Company has claimed tax benefits that may be challenged by a tax authority, the
Company recognizes tax benefits only for tax positions that are more likely than not to be
sustained upon examination by tax authorities. The amount recognized is measured as the largest
amount of benefit that is greater than 50 percent likely to be realized upon settlement. A
liability for unrecognized tax benefits is recorded for any tax benefits claimed in the Companys
tax returns that do not meet these recognition and measurement standards.
(12) Net Earnings per Share
Basic net earnings per share is computed using the weighted-average number of common shares
outstanding during the period. Diluted net earnings per share is computed using the
weighted-average number of common shares outstanding plus dilutive potential common shares
outstanding during the period. Dilutive potential common shares consist of stock options and
restricted stock units to the extent that they are not anti-dilutive. Performance stock units are
included in the calculation of dilutive potential common shares once the threshold performance
conditions have been satisfied. At August 31, 2010, the threshold performance conditions for the
November 16, 2007 grants had been satisfied resulting in the inclusion of 13,395 performance stock
units in the calculation of diluted net earnings per share. The threshold performance conditions
for the Companys outstanding performance stock units that were granted on November 3, 2008 and
November 12, 2009 had not been satisfied as of August 31, 2010, resulting in the exclusion of
70,693 performance stock units from the calculation of diluted net earnings per share.
Employee equity share options, nonvested shares and similar equity instruments granted by the
Company are treated as potential common shares outstanding in computing diluted net earnings per
share. The Companys diluted common shares outstanding reported in each period include the
dilutive effect of restricted stock units, in-the-money options, and performance stock units for
which threshold performance conditions have been satisfied and is calculated based on the average
share price for each fiscal period using the treasury stock method. Under the treasury stock
method, the amount the employee must pay for exercising stock options, the amount of compensation
cost for future service that the Company has not yet recognized, and the amount of excess tax
benefits that would be recorded in additional paid-in-capital when exercised are assumed to be used
to repurchase shares.
There were 476 and 24,204 restricted stock units excluded from the calculation of diluted net
earnings per share since their inclusion would have been anti-dilutive for the years ended August
31, 2010 and 2009, respectively. There were no anti-dilutive options or restricted stock units for
the year ended August 31, 2008.
(13) Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(14) Derivative Instruments and Hedging Activities
The Company uses certain financial derivatives to mitigate its exposure to volatility in interest
rates and foreign currency exchange rates. All derivative instruments are recorded on the balance
sheet at their respective fair values. On the date a derivative contract is entered into, the
Company may elect to designate the derivative as a fair value hedge, a cash flow hedge, or the
hedge of a net investment in a foreign operation.
When an election to apply hedge accounting is made, the Company formally documents the hedging
relationship and its risk-management objective and strategy for undertaking the hedge, the hedging
instrument, the hedged item, the nature of the risk being hedged, how the hedging instruments
effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and
a description of the method of measuring ineffectiveness at the inception of the hedge.
The Company also formally assesses, both at the hedges inception and on an ongoing basis,
whether the derivative that is used in the hedging transaction is highly effective. Changes in the
fair value of a derivative that is highly effective and that is designated and qualifies as a cash
flow hedging instrument are recorded in accumulated other comprehensive income, net of related
income tax effects, to the extent that the derivative is effective as a hedge, until earnings are
affected by the variability in cash flows of the designated hedged item. The ineffective portion of
the change in fair value of a derivative instrument that qualifies as a cash-flow hedge is reported
in earnings. Changes in fair value of a derivative that is designated and qualifies as a hedge of
a net investment in foreign operations are recorded as part of the cumulative translation
adjustment included in accumulated other comprehensive income, net of related income tax effects.
30
The Company discontinues hedge accounting prospectively when it is determined that the
derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the
derivative expires or is sold, terminated, or exercised, or management determines that designation
of the derivative as a hedging instrument is no longer appropriate.
In situations in which the Company does not elect hedge accounting or hedge accounting is
discontinued and the derivative is retained, the Company carries or continues to carry the
derivative at its fair value on the balance sheet and recognizes any subsequent changes in its fair
value through earnings.
(15) Treasury Stock
When the Company repurchases its outstanding stock, it records the repurchased shares at cost as a
reduction to shareholders equity. The weighted average cost method is then utilized for share
re-issuances. The difference between the cost and the re-issuance price is charged or credited to
a capital in excess of stated value treasury stock account to the extent that there is a
sufficient balance to absorb the charge. If the treasury stock is sold for an amount less than its
cost and there is not a sufficient balance in the capital in excess of stated value treasury
stock account, the excess is charged to retained earnings.
(16) Contingencies
The Companys accounting for contingencies covers a variety of business activities including
contingencies for legal exposures and environmental exposures. The Company accrues these
contingencies when its assessments indicate that it is probable that a liability has been incurred
and an amount can be reasonably estimated. The Companys estimates are based on currently available
facts and its estimates of the ultimate outcome or resolution. Actual results may differ from the
Companys estimates resulting in an impact, positive or negative, on earnings.
(17) Translation of Foreign Currency
The Companys portion of the assets and liabilities related to foreign investments are translated
into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses
are translated at the average rates of exchange prevailing during the year. Unrealized gains or
losses are reflected within common shareholders equity as accumulated other comprehensive income
or loss.
(18) Recently Issued Accounting Pronouncements
In October 2009, the FASB issued ASU No. 2009-13 (ASU 2009-13), which addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products or services
(deliverables) separately rather than as a combined unit. ASU 2009-13 is effective prospectively
for revenue arrangements entered into or materially modified in fiscal years beginning on or after
June 15, 2010. The Company is assessing the impact that the adoption of this standard will have on
its consolidated financial statements, but expects the impact to be minimal.
B. ACQUISITIONS
In December 2007, the FASB issued guidance amending the accounting and reporting standards for how
an acquirer in a business combination recognizes and measures in its financial statements the
identifiable assets acquired, liabilities assumed, and noncontrolling interest in the acquiree. In
addition, the amended guidance requires that direct costs associated with an acquisition be
expensed as incurred. The provisions of this guidance were effective for the Companys business
combinations that took place on or after September 1, 2009.
Digitec, Inc.
On August 31, 2010, the Company completed the acquisition of all outstanding shares of stock of
Digitec, Inc., (Digitec) based in Milford, Nebraska. Digitec is an electronics research,
development and manufacturing company. The addition of Digitec enhances the Companys capabilities
in providing electronic design and integration. Total consideration paid to the selling
shareholders was $6.4 million which was financed with cash on hand. The purchase price has been
allocated to the tangible and intangible assets and liabilities acquired based on managements
estimates of current fair values. The Companys preliminary
allocation of purchase price was based on the estimated fair value on
the date of acquisition and consisted
of current assets of $1.2 million (including $0.1 million of cash), fixed assets of $0.8 million,
intangible assets of $1.5 million, goodwill of $3.9 million
and liabilities of $1.0 million. The fair value assigned to the
assets and liabilities acquired is subject to revision as the Company
completes its analysis of fair value. Goodwill related to the acquisition of Digitec primarily relates to intangible assets that do not
qualify for separate recognition, including the experience and knowledge of Digitec management, its
assembled workforce, and its intellectual capital and specialization within the
Irrigation industry. Goodwill recorded in connection with this acquisition is non-deductible for
income tax purposes. Proforma data is not presented for this acquisition, as it was not considered
material.
31
GE Transportation Systems Global Signaling, LLC
On August 28, 2009, the Company completed the acquisition of certain assets of GE Transportation
Systems Global Signaling, LLC (GE Transportation Systems). The assets acquired are inventory and
product technology for the design and production of structures and lights for railroad signaling.
Total consideration was $3.1 million which was financed with cash on hand. The purchase price has
been allocated to the tangible and intangible assets acquired based on managements estimates of
current fair values. The Companys allocation of purchase price consisted of inventory of $1.5
million, fixed assets of $0.1 million, and intangible assets of $1.5 million. No goodwill was
recorded in connection with this acquisition. Proforma data is not presented for this acquisition,
as it was not considered material.
C. COMPREHENSIVE INCOME
Comprehensive income (loss) was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Net Income |
|
$ |
24,862 |
|
|
$ |
13,823 |
|
|
$ |
39,405 |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized net gain on available for sale securities |
|
|
|
|
|
|
|
|
|
|
14 |
|
Defined benefit pension plan |
|
|
(50 |
) |
|
|
(501 |
) |
|
|
(72 |
) |
Cash flow hedges |
|
|
1,201 |
|
|
|
(145 |
) |
|
|
(1,065 |
) |
Foreign currency translation, net of hedging activities |
|
|
(2,791 |
) |
|
|
(1,452 |
) |
|
|
3,667 |
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income (loss), net of tax
expense (benefit) of $1,104, ($81) and $11 |
|
|
(1,640 |
) |
|
|
(2,098 |
) |
|
|
2,544 |
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income |
|
$ |
23,222 |
|
|
$ |
11,725 |
|
|
$ |
41,949 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income is included in the accompanying Consolidated Balance Sheets
in the shareholders equity section, and consists of the following components:
|
|
|
|
|
|
|
|
|
|
|
For the years ended |
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Accumulated other comprehensive income (loss): |
|
|
|
|
|
|
|
|
Defined benefit pension plan, net of tax of
$1,348 and $1,317 |
|
|
(2,208 |
) |
|
|
(2,158 |
) |
Cash flow hedges, net of tax of $348 and $867 |
|
|
(572 |
) |
|
|
(1,773 |
) |
Foreign currency translation, net of hedging activities, net of tax of $1,368 and $752 |
|
|
4,135 |
|
|
|
6,926 |
|
|
|
|
|
|
|
|
Total accumulated other comprehensive income |
|
$ |
1,355 |
|
|
$ |
2,995 |
|
|
|
|
|
|
|
|
D. OTHER INCOME (EXPENSE), NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash surrender value of life insurance |
|
$ |
42 |
|
|
$ |
78 |
|
|
$ |
87 |
|
Foreign currency transaction (loss)
gain, net |
|
|
45 |
|
|
|
(1,044 |
) |
|
|
603 |
|
All other, net |
|
|
58 |
|
|
|
184 |
|
|
|
(518 |
) |
|
|
|
|
|
|
|
|
|
|
Total other income (expense), net |
|
$ |
145 |
|
|
$ |
(782 |
) |
|
$ |
172 |
|
|
|
|
|
|
|
|
|
|
|
32
E. INCOME TAXES
For financial reporting purposes earnings before income taxes include the following components:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
|
2008 |
|
United States |
|
$ |
34,165 |
|
|
$ |
18,385 |
|
|
$ |
56,550 |
|
Foreign |
|
|
2,617 |
|
|
|
2,154 |
|
|
|
4,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
36,782 |
|
|
$ |
20,539 |
|
|
$ |
61,111 |
|
|
|
|
|
|
|
|
|
|
|
Significant components of the income tax provision are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
11,077 |
|
|
$ |
6,479 |
|
|
$ |
19,505 |
|
State |
|
|
770 |
|
|
|
489 |
|
|
|
1,379 |
|
Foreign |
|
|
1,573 |
|
|
|
974 |
|
|
|
1,708 |
|
|
|
|
|
|
|
|
|
|
|
Total current |
|
|
13,420 |
|
|
|
7,942 |
|
|
|
22,592 |
|
|
|
|
|
|
|
|
|
|
|
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
Federal |
|
|
501 |
|
|
|
(938 |
) |
|
|
(295 |
) |
State |
|
|
(1,364 |
) |
|
|
(52 |
) |
|
|
(217 |
) |
Foreign |
|
|
(637 |
) |
|
|
(236 |
) |
|
|
(374 |
) |
|
|
|
|
|
|
|
|
|
|
Total deferred |
|
|
(1,500 |
) |
|
|
(1,226 |
) |
|
|
(886 |
) |
|
|
|
|
|
|
|
|
|
|
Total income tax provision |
|
$ |
11,920 |
|
|
$ |
6,716 |
|
|
$ |
21,706 |
|
|
|
|
|
|
|
|
|
|
|
Total income tax provision resulted in effective tax rates differing from that of the statutory
United States Federal income tax rates. The reasons for these differences are:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended August 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
$ in thousands |
|
Amount |
|
|
% |
|
|
Amount |
|
|
% |
|
|
Amount |
|
|
% |
|
U.S. statutory rate |
|
$ |
12,874 |
|
|
|
35.0 |
|
|
$ |
7,189 |
|
|
|
35.0 |
|
|
$ |
21,389 |
|
|
|
35.0 |
|
State and local taxes, net of federal
tax benefit |
|
|
35 |
|
|
|
0.1 |
|
|
|
275 |
|
|
|
1.3 |
|
|
|
795 |
|
|
|
1.3 |
|
State tax credits |
|
|
(888 |
) |
|
|
(2.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign tax rate differences |
|
|
(122 |
) |
|
|
(0.3 |
) |
|
|
(302 |
) |
|
|
(1.5 |
) |
|
|
(123 |
) |
|
|
(0.2 |
) |
Domestic production activities deduction |
|
|
(608 |
) |
|
|
(1.7 |
) |
|
|
(385 |
) |
|
|
(1.9 |
) |
|
|
(438 |
) |
|
|
(0.7 |
) |
Tax-exempt interest income |
|
|
(7 |
) |
|
|
(0.0 |
) |
|
|
(37 |
) |
|
|
(0.1 |
) |
|
|
(119 |
) |
|
|
(0.2 |
) |
R&D, Phone, and Fuel tax credits |
|
|
(28 |
) |
|
|
(0.1 |
) |
|
|
(96 |
) |
|
|
(0.5 |
) |
|
|
(265 |
) |
|
|
(0.4 |
) |
Non-deductible officers compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(463 |
) |
|
|
(0.8 |
) |
Other |
|
|
664 |
|
|
|
1.8 |
|
|
|
72 |
|
|
|
0.4 |
|
|
|
930 |
|
|
|
1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective rate |
|
$ |
11,920 |
|
|
|
32.4 |
|
|
$ |
6,716 |
|
|
|
32.7 |
|
|
$ |
21,706 |
|
|
|
35.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the second quarter of fiscal 2010, the Company recognized investment tax credits from the
state of Nebraskas economic development program, the Nebraska
Advantage Act. These credits which expire in 2018, reduced income tax expense by $0.9 million. The Company uses the deferral method of accounting for
its investment tax credits.
During its fiscal year 2008, the Company determined that it erroneously recognized income tax
expense of $0.5 million in the fourth quarter of fiscal 2007 relating to the exercise of stock
options by an executive officer of the Company. The Company incorrectly increased income tax
expense by this amount to reflect the effect of non-deductible officer compensation under Section
162(m) of the Internal Revenue Code related to these stock options. However, because these options
were initially accounted for under APB No. 25, there should not have been an increase to income tax
expense in the financial statements. The Company concluded that the impact of this error was not
material to its previously issued financial statements. As a result, the Company corrected the
error in the third quarter of fiscal 2008. The correction resulted in a reduction in income tax
expense of $0.5 million for the year ended August 31, 2008, which added $0.04 to earnings per
diluted share.
33
Deferred income taxes reflect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for income
tax purposes. Significant components of the Companys deferred tax assets and liabilities are as
follows:
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Deferred tax assets: |
|
|
|
|
|
|
|
|
Deferred rental revenue |
|
$ |
2,148 |
|
|
$ |
2,202 |
|
Employee benefits liability |
|
|
1,273 |
|
|
|
1,324 |
|
Net operating loss carryforwards |
|
|
137 |
|
|
|
66 |
|
Defined benefit pension plan |
|
|
1,348 |
|
|
|
1,317 |
|
Share-based compensation |
|
|
1,515 |
|
|
|
1,633 |
|
State tax credits |
|
|
934 |
|
|
|
|
|
Inventory |
|
|
744 |
|
|
|
495 |
|
Warranty |
|
|
592 |
|
|
|
610 |
|
Vacation |
|
|
765 |
|
|
|
684 |
|
Accrued expenses and allowances |
|
|
3,731 |
|
|
|
4,173 |
|
|
|
|
|
|
|
|
Total deferred tax assets |
|
$ |
13,187 |
|
|
$ |
12,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Intangible assets |
|
|
(6,972 |
) |
|
|
(7,444 |
) |
Property, plant and equipment |
|
|
(8,760 |
) |
|
|
(7,448 |
) |
Inventory |
|
|
(130 |
) |
|
|
(119 |
) |
Other |
|
|
(1,273 |
) |
|
|
(927 |
) |
|
|
|
|
|
|
|
Total deferred tax liabilities |
|
|
(17,135 |
) |
|
|
(15,938 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities |
|
$ |
(3,948 |
) |
|
$ |
(3,434 |
) |
|
|
|
|
|
|
|
The Companys foreign net operating loss carryforwards include approximately $0.1 million that will
begin to expire in fiscal 2015.
In assessing the ability to realize deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and
tax planning strategies in making this assessment. Based upon the level of historical taxable
income and projections for future taxable income over the periods in which the deferred tax assets
are deductible, management believes it is more likely than not that the Company will realize the
benefits of these deductible differences. Accordingly, a valuation allowance for deferred tax
assets at August 31, 2010 and 2009 has not been established.
The Company does not intend to repatriate earnings of its non-U.S. subsidiaries and
accordingly, has not provided a U.S. deferred income tax liability for cumulative earnings on
non-U.S. affiliates and associated companies that have been reinvested indefinitely. The Company
continues to analyze the potential tax impact should it elect to repatriate non-U.S. earnings and
would recognize a deferred income tax liability if the Company were to determine that such earnings
are no longer indefinitely reinvested.
The Company recognizes tax benefits only for tax positions that are more likely than not to be
sustained upon examination by tax authorities. The amount recognized is measured as the largest
amount of benefit that is greater than 50 percent likely to be realized upon settlement.
Unrecognized tax benefits are tax benefits claimed in the Companys tax returns that do not meet
these recognition and measurement standards. The Company adopted the current accounting standard
related to unrecognized tax benefits on September 1, 2007. At adoption, the Company had $1.5
million of unrecognized tax benefits. The Company recorded the cumulative effect of a change in
accounting principle by recognizing a net increase in the liability for unrecognized tax benefits
of $1.1 million, of which $0.7 million relates to the Companys international subsidiaries. This
increase in the liability was offset by a reduction in beginning retained earnings of $0.8 million,
an increase in goodwill of $0.1 million and an increase to
other long-term assets of $0.2 million. The remaining $0.4 million had been previously accrued in
current taxes payable under the previous accounting standard.
34
A reconciliation of changes in pre-tax unrecognized tax benefits is as follows:
|
|
|
|
|
|
|
|
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Unrecognized Tax Benefits at September 1 |
|
$ |
1,464 |
|
|
$ |
1,684 |
|
Increases for positions taken in current year |
|
|
42 |
|
|
|
|
|
Increases for positions taken in prior years |
|
|
63 |
|
|
|
86 |
|
Decreases for positions taken in current year |
|
|
|
|
|
|
|
|
Decreases for positions taken in prior years |
|
|
|
|
|
|
(40 |
) |
Settlements with taxing authorities |
|
|
|
|
|
|
|
|
Reduction resulting from lapse of applicable statute
of limitations |
|
|
(460 |
) |
|
|
(141 |
) |
Other increases (decreases) |
|
|
3 |
|
|
|
(125 |
) |
|
|
|
|
|
|
|
Unrecognized Tax Benefits at August 31 |
|
$ |
1,112 |
|
|
$ |
1,464 |
|
|
|
|
|
|
|
|
The net amount of unrecognized tax benefits at August 31, 2010 and 2009 that, if recognized, would
impact the Companys effective tax rate was $1.1 million and $1.4 million, respectively.
Recognition of these tax benefits would have a favorable impact on the Companys effective tax
rate.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in
income tax expense. Total accrued pre-tax liabilities for interest and penalties included in the
unrecognized tax benefits liability were $0.4 million and $0.6 million for the years ended August
31, 2010 and 2009, respectively.
The Company files income tax returns in the U.S. federal jurisdiction, and various state and
foreign jurisdictions. The U.S. Internal Revenue Service has closed examination of the Companys
income tax returns through 2006. In addition, with regard to a number of state and foreign tax
jurisdictions, the Company is no longer subject to examination by tax authorities for years prior
to 2005.
While it is expected that the amount of unrecognized tax benefits will change in the next
twelve months as a result of the expiration of statutes of limitations, the Company does not expect
this change to have a significant impact on its results of operations or financial position.
The American Jobs Creation Act of 2004 (the Jobs Act)
On October 22, 2004, the Jobs Act was enacted, which created a manufacturing deduction that
allows for a deduction from taxable income of up to 9% of qualified production activities income
not to exceed taxable income. The deduction is phased in over a nine-year period, with the
eligible percentage increasing from 3% in 2005 to 9% in 2010. The Company reported a $1.7 million,
$1.1 million and $1.3 million manufacturing deduction for fiscal years 2010, 2009 and 2008,
respectively.
F. RECEIVABLES
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Receivables: |
|
|
|
|
|
|
|
|
Trade accounts and current portion of notes
receivable |
|
$ |
65,873 |
|
|
$ |
44,726 |
|
Allowance for doubtful accounts |
|
|
(2,244 |
) |
|
|
(1,864 |
) |
|
|
|
|
|
|
|
Net receivables |
|
$ |
63,629 |
|
|
$ |
42,862 |
|
|
|
|
|
|
|
|
35
G. INVENTORIES
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Inventory: |
|
|
|
|
|
|
|
|
FIFO inventory |
|
$ |
19,218 |
|
|
$ |
16,561 |
|
LIFO reserves |
|
|
(6,263 |
) |
|
|
(7,190 |
) |
|
|
|
|
|
|
|
LIFO inventory |
|
|
12,955 |
|
|
|
9,371 |
|
|
|
|
|
|
|
|
|
|
Weighted average inventory |
|
|
15,854 |
|
|
|
14,762 |
|
Other FIFO inventory |
|
|
18,532 |
|
|
|
23,765 |
|
Obsolescence reserve |
|
|
(2,045 |
) |
|
|
(1,643 |
) |
|
|
|
|
|
|
|
Total inventories |
|
$ |
45,296 |
|
|
$ |
46,255 |
|
|
|
|
|
|
|
|
During fiscal 2009, reductions in inventory levels resulted in liquidations of LIFO inventory
layers. The effect of the LIFO liquidation on fiscal 2009 results was to reduce cost of goods sold
by $0.7 million.
The estimated percentage distribution between major classes of inventory before reserves is as
follows:
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
|
|
2010 |
|
|
2009 |
|
Raw materials |
|
|
12 |
% |
|
|
7 |
% |
Work in process |
|
|
8 |
% |
|
|
8 |
% |
Finished goods and purchased parts |
|
|
80 |
% |
|
|
85 |
% |
H. PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
August, 31 |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Operating property, plant and equipment: |
|
|
|
|
|
|
|
|
Land |
|
$ |
2,757 |
|
|
$ |
2,271 |
|
Buildings |
|
|
28,294 |
|
|
|
28,622 |
|
Equipment |
|
|
66,754 |
|
|
|
60,717 |
|
Other |
|
|
3,830 |
|
|
|
6,863 |
|
|
|
|
|
|
|
|
Total operating property, plant and equipment |
|
|
101,635 |
|
|
|
98,473 |
|
Accumulated depreciation |
|
|
(58,429 |
) |
|
|
(55,077 |
) |
|
|
|
|
|
|
|
Total operating property, plant and equipment, net |
|
$ |
43,206 |
|
|
$ |
43,396 |
|
|
|
|
|
|
|
|
|
|
Leased property: |
|
|
|
|
|
|
|
|
Machines |
|
|
4,360 |
|
|
|
4,248 |
|
Barriers |
|
|
16,215 |
|
|
|
16,253 |
|
|
|
|
|
|
|
|
Total leased property |
|
$ |
20,575 |
|
|
$ |
20,501 |
|
Accumulated depreciation |
|
|
(6,135 |
) |
|
|
(4,256 |
) |
|
|
|
|
|
|
|
Total leased property, net |
|
$ |
14,440 |
|
|
$ |
16,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
$ |
57,646 |
|
|
$ |
59,641 |
|
|
|
|
|
|
|
|
Depreciation expense was $8.1 million, $7.6 million and $6.3 million for the years ended August 31,
2010, 2009, and 2008, respectively.
36
I. OTHER NONCURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Other noncurrent assets: |
|
|
|
|
|
|
|
|
Cash surrender value of life insurance policies |
|
$ |
2,335 |
|
|
$ |
2,293 |
|
Deferred income taxes |
|
|
145 |
|
|
|
76 |
|
Notes receivable |
|
|
248 |
|
|
|
1,772 |
|
Split dollar life insurance |
|
|
929 |
|
|
|
929 |
|
Other |
|
|
1,057 |
|
|
|
383 |
|
|
|
|
|
|
|
|
Total noncurrent assets |
|
$ |
4,714 |
|
|
$ |
5,453 |
|
|
|
|
|
|
|
|
J. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The carrying amount of goodwill by reportable segment for the year ended August 31, 2010 and 2009
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands |
|
Irrigation |
|
|
Infrastructure |
|
|
Total |
|
Balance as of September 1, 2008 |
|
$ |
7,077 |
|
|
$ |
17,353 |
|
|
$ |
24,430 |
|
Foreign currency translation |
|
|
(99 |
) |
|
|
(157 |
) |
|
|
(256 |
) |
|
|
|
|
|
|
|
|
|
|
Balance as of August 31, 2009 |
|
|
6,978 |
|
|
|
17,196 |
|
|
|
24,174 |
|
Acquisition of Digitec |
|
|
3,913 |
|
|
|
|
|
|
|
3,913 |
|
Foreign currency translation |
|
|
(10 |
) |
|
|
(682 |
) |
|
|
(692 |
) |
|
|
|
|
|
|
|
|
|
|
Balance as of August 31, 2010 |
|
$ |
10,881 |
|
|
$ |
16,514 |
|
|
$ |
27,395 |
|
|
|
|
|
|
|
|
|
|
|
Other Intangible Assets
The components of the Companys identifiable intangible assets at August 31, 2010 and 2009 are
included in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
Gross |
|
|
|
|
|
|
Gross |
|
|
|
|
|
|
Carrying |
|
|
Accumulated |
|
|
Carrying |
|
|
Accumulated |
|
$ in thousands |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
Amortization |
|
Amortizable Intangible Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compete agreements |
|
$ |
543 |
|
|
$ |
(196 |
) |
|
$ |
2,497 |
|
|
$ |
(2,142 |
) |
Licenses |
|
|
|
|
|
|
|
|
|
|
699 |
|
|
|
(695 |
) |
Patents |
|
|
24,520 |
|
|
|
(6,479 |
) |
|
|
23,925 |
|
|
|
(4,800 |
) |
Customer relationships |
|
|
5,813 |
|
|
|
(2,112 |
) |
|
|
5,657 |
|
|
|
(1,537 |
) |
Plans and specifications |
|
|
75 |
|
|
|
(33 |
) |
|
|
75 |
|
|
|
(29 |
) |
Other |
|
|
26 |
|
|
|
(23 |
) |
|
|
56 |
|
|
|
(49 |
) |
Unamortizable Intangible
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tradenames |
|
|
5,581 |
|
|
|
|
|
|
|
5,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
36,558 |
|
|
$ |
(8,843 |
) |
|
$ |
38,352 |
|
|
$ |
(9,252 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense for amortizable intangible assets was $2.6 million, $2.8 million and $3.0
million for 2010, 2009, and 2008, respectively. Amortizable intangible assets are being amortized
using the straight-line method over an average term of approximately 13.1 years.
37
Future estimated amortization of intangible assets is as follows:
|
|
|
|
|
Fiscal Years |
|
$ in thousands |
|
2011 |
|
$ |
2,592 |
|
2012 |
|
|
2,577 |
|
2013 |
|
|
2,487 |
|
2014 |
|
|
2,431 |
|
2015 |
|
|
2,191 |
|
K. OTHER CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Other current liabilities: |
|
|
|
|
|
|
|
|
Payroll, vacation and retirement plans |
|
$ |
12,192 |
|
|
$ |
7,643 |
|
Taxes, other than income |
|
|
2,156 |
|
|
|
1,205 |
|
Workers compensation and product liability |
|
|
1,148 |
|
|
|
1,287 |
|
Deferred revenue |
|
|
5,813 |
|
|
|
5,706 |
|
Dealer related liabilities |
|
|
1,650 |
|
|
|
1,524 |
|
Warranty liability |
|
|
1,862 |
|
|
|
1,736 |
|
Income tax liability |
|
|
2,829 |
|
|
|
496 |
|
Derivative liability |
|
|
503 |
|
|
|
1,027 |
|
International freight liability |
|
|
173 |
|
|
|
593 |
|
Customer deposits |
|
|
1,454 |
|
|
|
4,518 |
|
Environmental remediation liability |
|
|
900 |
|
|
|
1,315 |
|
Other |
|
|
5,615 |
|
|
|
5,958 |
|
|
|
|
|
|
|
|
Total other current liabilities |
|
$ |
36,295 |
|
|
$ |
33,008 |
|
|
|
|
|
|
|
|
L. CREDIT ARRANGEMENTS
Euro Line of Credit
The Companys wholly-owned European subsidiary, Lindsay Europe, has an unsecured revolving line of
credit with Societe Generale, a European commercial bank, under which it could borrow up to 2.3
million Euros, which equates to approximately USD $2.9 million as of August 31, 2010, for working
capital purposes (the Euro Line of Credit). There were no borrowings outstanding on this credit
agreement at August 31, 2010 or 2009. Under the terms of the Euro line of Credit, borrowings, if
any, bear interest at a floating rate in effect from time to time designated by the commercial bank
as Euro Interbank Offered Rate plus 150 basis points, (1.98% at August 31, 2010). Unpaid principal
and interest is due by January 31, 2011, which is the termination date of the Euro Line of Credit.
BSI Term Note
The Company entered into an unsecured $30.0 million Term Note and Credit Agreement, effective June
1, 2006, with Wells Fargo Bank, N.A. (the BSI Term Note) to partially finance the acquisition of
BSI. Borrowings under the BSI Term Note bear interest at a rate equal to LIBOR plus 50 basis
points. The Company has fixed the interest rate at 6.05 percent through an interest rate swap as
described in Note M, Financial Derivatives. Principal is repaid
quarterly in equal payments of $1.1 million over a seven year period that began in September, 2006.
The BSI term note is due in June of 2013.
38
Snoline Term Note
The Companys wholly-owned Italian subsidiary, Snoline S.P.A. (Snoline) had an unsecured $13.2
million seven-year Term Note and Credit Agreement with Wells Fargo Bank, N.A. that was effective on
December 27, 2006 (the Snoline Term Note). Borrowings under the Snoline Term Note were
guaranteed by the Company and had interest at a rate equal to LIBOR plus 50 basis points. In
connection with the Snoline Term Note, the Company entered into a cross currency swap transaction
obligating the Company to make quarterly payments of 0.4 million Euros per quarter over the same
seven-year period as the Snoline Term Note and to receive payments of $0.5 million per quarter over
a seven year period commencing March 27, 2007. This was approximately equivalent to converting the
$13.2 million seven-year Snoline Term Note into a 10.0 million Euro seven-year note at a fixed rate
of 4.7% as described in Note M, Financial Derivatives. On May 17, 2010, the Company repaid the
$7.1 million outstanding balance on the Snoline Term Note in its entirety.
Revolving Credit Agreement
The Company has an unsecured $30.0 million Revolving Credit Note and Credit Agreement with Wells
Fargo Bank, N.A. (the Revolving Credit Agreement). The Company entered into the First Amendment
to the Revolving Credit Agreement, effective January 23, 2010 in order to extend the Revolving
Credit Agreements termination date from January 23, 2010 to January 23, 2012. The Revolving
Credit Agreement, as amended, is hereinafter referred to as the Amended Revolving Credit
Agreement. The borrowings from the Amended Revolving Credit Agreement will primarily be used for
working capital purposes and funding acquisitions. At August 31, 2010 and 2009, there was no
outstanding balance on the Amended Revolving Credit Agreement.
Borrowings under the Amended Revolving Credit Agreement bear interest at a rate equal to LIBOR
plus 120 basis points compared to LIBOR plus 50 basis points under the previous Revolving Credit
Agreement, subject to adjustment as set forth in the Amended Revolving Credit Agreement. Interest
is paid on a monthly to quarterly basis depending on loan type. The Company also pays an annual
commitment fee of 0.25% on the unused portion of the Amended Revolving Credit Agreement. Unpaid
principal and interest is due by January 23, 2012, which is the termination date of the Amended
Revolving Credit Agreement.
The BSI Term Note and the Amended Revolving Credit Agreement (collectively, the Notes) each
contain the same covenants, including certain covenants relating to the Companys financial
condition. These include maintaining a funded debt to EBITDA ratio, a fixed charge coverage ratio,
and a current ratio (all as defined in the Notes) at specified levels. In connection with entering
into the Amended Revolving Credit Agreement during the second quarter of fiscal 2010, these
covenants for each of the Notes were modified, at the lenders request, by adding a tangible net
worth requirement to the already existing covenants. Upon the occurrence of any event of default
of these covenants specified in the Notes, including a change in control of the Company (as defined
in the Notes), all amounts due thereunder may be declared to be immediately due and payable. At
August 31, 2010, the Company was in compliance with these financial covenants.
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
BSI Term Note |
|
$ |
12,857 |
|
|
$ |
17,143 |
|
Snoline Term Note |
|
|
|
|
|
|
8,482 |
|
Revolving Credit Agreement |
|
|
|
|
|
|
|
|
Less current portion |
|
|
(4,286 |
) |
|
|
(6,171 |
) |
|
|
|
|
|
|
|
Total long-term debt |
|
$ |
8,571 |
|
|
$ |
19,454 |
|
|
|
|
|
|
|
|
Interest expense was $1.6 million, $2.0 million and $3.0 million for the years ended August 31,
2010, 2009 and 2008, respectively.
Principal payments due on the term note are as follows:
|
|
|
|
|
Due within: |
|
|
|
|
1 year |
|
$ |
4,286 |
|
2 years |
|
|
4,286 |
|
3 years |
|
|
4,285 |
|
|
|
|
|
|
|
$ |
12,857 |
|
|
|
|
|
39
M. FINANCIAL DERIVATIVES
The Company uses certain financial derivative instruments to mitigate its exposure to volatility in
interest rates and foreign currency exchange rates. The Company uses these derivative instruments
only to hedge exposures in the ordinary course of business and does not invest in derivative
instruments for speculative purposes. Each derivative is designated as a cash flow hedge, a hedge
of a net investment or remains undesignated. The Company records the fair value of these
derivative instruments on the balance sheet. For those instruments that are designated as a cash
flow hedge and meet certain documentary and analytical requirements to qualify for hedge accounting
treatment, changes in the fair value for the effective portion are reported in other comprehensive
income (OCI), net of related income tax effects, and are reclassified to the income statement
when the effects of the item being hedged are recognized in the income statement. Changes in fair
value of derivative instruments that qualify as hedges of a net investment in foreign operations
are recorded as a component of accumulated currency translation adjustment in accumulated other
comprehensive income (AOCI), net of related income tax effects. Changes in the fair value of
undesignated hedges are recognized currently in earnings. All changes in derivative fair values
due to ineffectiveness are recognized currently in income.
Financial derivatives consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Values of Derivative Instruments |
|
|
|
Asset (Liability) Derivatives |
|
|
|
|
|
August 31, |
|
|
August 31, |
|
$ in thousands |
|
Balance Sheet Location |
|
2010 |
|
|
2009 |
|
Derivatives designated as hedging
instruments: |
|
|
|
|
|
|
|
|
|
|
Foreign currency option contract |
|
Other current assets |
|
$ |
16 |
|
|
$ |
|
|
Foreign currency forward contracts |
|
Other current liabilities |
|
|
(66 |
) |
|
|
|
|
Interest rate swap |
|
Other current liabilities |
|
|
(437 |
) |
|
|
(602 |
) |
Interest rate swap |
|
Other noncurrent liabilities |
|
|
(484 |
) |
|
|
(732 |
) |
Cross currency swap |
|
Other current liabilities |
|
|
|
|
|
|
(425 |
) |
Cross currency swap |
|
Other noncurrent liabilities |
|
|
|
|
|
|
(847 |
) |
|
|
|
|
|
|
|
|
|
Total derivatives designated as hedging
instruments |
|
|
|
$ |
(971 |
) |
|
$ |
(2,606 |
) |
|
|
|
|
|
|
|
|
|
In addition, accumulated other comprehensive income included (gains) losses, net of related income
tax effects of ($1.0) million and $0.5 million at August 31, 2010 and 2009, respectively, related
to derivative contracts designated as hedging instruments.
Cash Flow Hedging Relationships
In order to reduce interest rate risk on the BSI Term Note, the Company entered into an interest
rate swap agreement with Wells Fargo Bank, N.A. that is designed to convert the variable interest
rate on the entire amount of this borrowing to a fixed rate of 6.05% per annum. Under the terms of
the interest rate swap, the Company receives variable interest rate payments and makes fixed
interest rate payments on an amount equal to the outstanding balance of the BSI Term Note, thereby
creating the equivalent of fixed-rate debt (see Note L, Credit Arrangements). Changes in the fair
value of the interest rate swap designated as the hedging instrument that effectively offset the
variability of cash flows associated with the variable-rate, long-term debt obligation are reported
in AOCI, net of related income tax effects.
Similarly, the Company entered into a cross currency swap transaction with Wells Fargo Bank,
N.A fixing the conversion rate of Euros to U.S. dollars for the Snoline Term Note at 1.3195 and
obligating the Company to make quarterly payments of 0.4 million Euros per quarter over the same
seven-year period as the Snoline Term Note and to receive payments of $0.5 million per quarter. In
addition, the variable interest rate was converted to a fixed rate of 4.7% per annum. This was
approximately equivalent to converting the $13.2 million seven-year Snoline Term Note into a 10.0
million Euro seven-year term note at a fixed rate of 4.7%. Under the terms of the cross currency
swap, the Company received variable interest rate payments and made fixed interest rate payments on
an amount equal to the outstanding balance of the Snoline Term Note, thereby creating the
equivalent of fixed-rate debt. Changes in the fair value of the cross currency swap designated as
a hedging instrument that effectively offset the hedged risks were reported in AOCI, net of related
income tax effects. On May 17, 2010, in conjunction with repaying the Snoline Term Note, the
Company exited the cross currency swap transaction with a zero fair value.
40
In order to reduce exposures related to changes in foreign currency exchange rates, the
Company, at times, may enter into forward exchange or option contracts for transactions denominated
in a currency other than the functional currency for certain of its operations. This activity
primarily relates to economically hedging against foreign currency risk in purchasing inventory,
sales of finished goods, and future settlement of foreign denominated
assets and liabilities. Changes in fair value of the forward exchange contracts or option
contracts designated as hedging instruments that effectively offset the hedged risks are reported
in AOCI, net of related income tax effects. At August 31, 2010, the Company had forward exchange
contracts with cash flow hedging relationships totaling less than $0.1 million included in other
current liabilities. The Company had no forward exchange contracts or option contracts with cash
flow hedging relationships outstanding at August 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain/(Loss) Recognized in OCI |
|
|
|
For the years ended August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Interest rate swap |
|
$ |
289 |
|
|
$ |
(2 |
) |
|
$ |
(483 |
) |
Cross currency swap |
|
|
922 |
|
|
|
(143 |
) |
|
|
(582 |
) |
Foreign currency
forward contracts |
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total1 |
|
$ |
1,201 |
|
|
$ |
(145 |
) |
|
$ |
(1,065 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
Net of tax expense (benefit) of $519, ($54) and ($426) for the years ended August 31,
2010, 2009 and 2008, respectively. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain (Loss) Reclassified from |
|
|
|
Location of Gain/(Loss) |
|
AOCI into Income |
|
|
|
Reclassified from AOCI |
|
For the years ended August 31, |
|
$ in thousands |
|
into Income |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Interest rate swap |
|
Interest Expense |
|
$ |
(850 |
) |
|
$ |
(974 |
) |
|
$ |
(542 |
) |
Cross currency swap |
|
Interest Expense |
|
|
(884 |
) |
|
|
(346 |
) |
|
|
(273 |
) |
Foreign currency
forward contracts |
|
Revenue |
|
|
(8 |
) |
|
|
|
|
|
|
(15 |
) |
Foreign currency
forward contracts |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
(49 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(1,742 |
) |
|
$ |
(1,320 |
) |
|
$ |
(879 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain/(Loss) Recognized in Income on |
|
|
|
Location of Gain/(Loss) |
|
Derivatives (Ineffectiveness) |
|
|
|
Recognized in Income |
|
For the years ended August 31, |
|
$ in thousands |
|
(Ineffectiveness) |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Interest rate swap |
|
Other income (expense) |
|
$ |
(52 |
) |
|
$ |
99 |
|
|
$ |
(23 |
) |
Cross currency swap |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
forward contracts |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(52 |
) |
|
$ |
99 |
|
|
$ |
(23 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
41
Net Investment Hedging Relationships
In order to reduce translation exposure resulting from translating the financial statements of its
international subsidiaries into U.S. dollars, the Company, at times, utilizes Euro foreign currency
forward contracts to hedge its Euro net investment exposure in its foreign operations. These
foreign currency forward contracts qualify as a hedge of net investments in foreign operations.
Changes in fair value of the net investment hedge contracts are reported in OCI as part of the
currency translation adjustment, net of tax.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain/(Loss) Recognized in OCI |
|
|
|
on Derivatives |
|
|
|
For the years ended August 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
Foreign currency
forward
contracts1 |
|
$ |
296 |
|
|
$ |
455 |
|
|
$ |
776 |
|
|
|
|
(1) |
|
Net of tax expense of $181, $279 and $473 for the years ended August 31, 2010, 2009 and 2008, respectively. |
During fiscal 2010, the Company entered into and settled Euro foreign currency forward contracts
resulting in after-tax net gains of $0.3 million which was included in OCI as part of a currency
translation adjustment. There were no amounts recorded in the consolidated statement of operations
related to ineffectiveness of Euro foreign currency forward contracts for the years ended August
31, 2010, 2009 and 2008. Accumulated currency translation adjustment in AOCI at August 31, 2010,
2009 and 2008 reflected after-tax gains of $1.6 million, $1.2 million and $0.7 million, net of
related income tax effects of $0.9 million, $0.8 million and $0.4 million, respectively, related to
settled foreign currency forward contracts.
At August 31, 2010, the Company had one outstanding Euro foreign currency forward contract to
sell 5.0 million Euro on November 24, 2010 at a fixed price of $1.2581 USD per Euro. The forward
spot rate at August 31, 2010 was $1.2664 USD per Euro. The Companys foreign currency forward
contract qualifies as a hedge of a net investment in foreign operations. Subsequent to August 31,
2010, the Company terminated its one outstanding Euro foreign currency forward contract resulting
in an after-tax net loss of $0.5 million which will be recognized in other comprehensive income as
part of the currency translation adjustment, net of tax in its first quarter of fiscal 2011.
At August 31, 2009, the Company had no outstanding Euro foreign currency forward contracts
with net investment hedging relationships.
Derivatives Not Designated as Hedging Instruments
In order to reduce exposures related to changes in foreign currency exchange rates, the Company, at
times, may enter into forward exchange or option contracts for transactions denominated in a
currency other than the functional currency for certain of the Companys operations. This activity
primarily relates to economically hedging against foreign currency risk in purchasing inventory,
sales of finished goods, and future settlement of foreign denominated assets and liabilities. The
Company may choose whether or not to designate these contracts as hedges. For those contracts not
designated, changes in fair value are recognized currently in the income statement. At August 31,
2010, the Company had one outstanding option contract outstanding that was not designated as a
hedging instrument. At August 31, 2009, the Company had no undesignated hedges outstanding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Gain/(Loss) Recognized in Income |
|
|
|
|
|
on Derivatives |
|
|
|
Location of Gain/(Loss) |
|
For the years ended August 31, |
|
$ in thousands |
|
Recognized in Income |
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
Foreign currency
forward contracts |
|
Other income (expense) |
|
$ |
|
|
|
$ |
68 |
|
|
$ |
|
|
Foreign currency
option contracts |
|
Operating revenues |
|
|
(17 |
) |
|
|
|
|
|
|
|
|
42
N. FAIR VALUE MEASUREMENTS
The Financial Accounting Standards Boards guidance on fair value measurements that establishes a
framework for measuring fair value, and expands disclosures about fair value measurements was
adopted by the Company for its financial assets and liabilities, effective September 1, 2008. In
addition, the Company adopted this guidance for its nonfinancial assets and liabilities effective
September 1, 2009. These nonfinancial assets and liabilities requiring nonrecurring fair value
measurements include long-lived assets, goodwill and certain other intangible assets. These items
are recognized at fair value when they are considered other than temporarily impaired. There were
no required fair value adjustments for assets and liabilities measured at fair value on a
non-recurring basis for the year ended August 31, 2010.
The fair value measurements guidance establishes the fair value hierarchy that prioritizes
inputs to valuation techniques based on observable and unobservable data and categorizes the inputs
into three levels, with the highest priority given to Level 1 and the lowest priority given to
Level 3. The levels are described below.
|
|
|
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. |
|
|
|
Level 2 Significant observable pricing inputs other than quoted prices included within
Level 1 that are either directly or indirectly observable as of the reporting date.
Essentially, this represents inputs that are derived principally from or corroborated by
observable market data. |
|
|
|
Level 3 Generally unobservable inputs, which are developed based on the best
information available and may include the Companys own internal data. |
The following table presents the Companys financial assets and liabilities measured at fair value
based upon the level within the fair value hierarchy in which the fair value measurements fall, as
of August 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Cash and cash equivalents |
|
$ |
83,418 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
83,418 |
|
Derivative Assets |
|
|
|
|
|
|
16 |
|
|
|
|
|
|
|
16 |
|
Derivative Liabilities |
|
|
|
|
|
|
(987 |
) |
|
|
|
|
|
|
(987 |
) |
The following table presents the Companys financial assets and liabilities measured at fair value
based upon the level within the fair value hierarchy in which the fair value measurements fall, as
of August 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
Cash and cash equivalents |
|
$ |
85,929 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
85,929 |
|
Derivative Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities |
|
|
|
|
|
|
(2,606 |
) |
|
|
|
|
|
|
(2,606 |
) |
The carrying amount of long-term debt (including current portion) was $12.9 million as of August
31, 2010. The fair value of this debt at August 31, 2010 was estimated at $12.6 million. Fair
value of long-term debt (including current portion) is estimated by discounting the future
estimated cash flows of each instrument at current market interest rates for similar debt
instruments of comparable maturities and credit quality.
O. COMMITMENTS AND CONTINGENCIES
In 1992, the Company entered into a consent decree with the Environmental Protection Agency of the
United States Government (the EPA) in which the Company committed to remediate environmental
contamination of the groundwater that was discovered in 1982 through 1990 at and adjacent to its
Lindsay, Nebraska facility (the site). The site was added to the EPAs list of priority
superfund sites in 1989. Between 1993 and 1995, remediation plans for the site were approved by
the EPA and fully implemented by the Company. Since 1998, the primary remaining contamination at
the site has been the presence of volatile organic chemicals in the groundwater. The current
remediation process consists of drilling wells into the aquifer and pumping water to the surface to
allow these contaminants to be removed by aeration. In 2008, the Company and the EPA conducted a
periodic five-year review of the status of the remediation of the contamination of the site. In
response to the review, the Company and its environmental consultants have developed a remedial
action work plan that will allow the Company and the EPA to better identify the boundaries of the
contaminated groundwater and determine whether the contaminated groundwater is being contained by
current and planned remediation methods. The Company accrues the anticipated cost of remediation
where the obligation is probable and can be reasonably estimated. During the second quarter of
fiscal 2010, the Company accrued incremental costs of $0.7 million for additional environmental
monitoring and remediation in connection with the current ongoing remedial action work plan.
Amounts accrued and included in balance sheet liabilities related to the remediation actions were
$0.9 million and $1.3 million at August 31, 2010 and 2009, respectively. Although the Company has
accrued all reasonably estimable costs of completing the actions defined in the current ongoing
work plan agreed to between the Company and the EPA, it is possible that additional testing may be
required or additional actions could be requested or mandated by the EPA at any time, resulting in
the recognition of additional related expenses.
43
In the ordinary course of its business operations, the Company is involved, from time to time,
in commercial litigation, employment disputes, administrative proceedings, and other legal
proceedings. No such current proceedings, individually or in the aggregate, are expected to have a
material effect on the business or financial condition of the Company.
The Company leases land, buildings, machinery, equipment, and computer equipment under various
noncancelable operating lease agreements. At August 31, 2010, future minimum lease payments under
noncancelable operating leases were as follows:
|
|
|
|
|
Fiscal Years |
|
$ in thousands |
|
2011 |
|
$ |
2,111 |
|
2012 |
|
|
1,862 |
|
2013 |
|
|
1,467 |
|
2014 |
|
|
778 |
|
2015 |
|
|
652 |
|
Thereafter |
|
|
2,291 |
|
|
|
|
|
|
|
$ |
9,161 |
|
|
|
|
|
Lease expense was $2.8 million, $2.8 million and $2.2 million for the years ended August 31, 2010,
2009, and 2008, respectively.
P. RETIREMENT PLANS
The Company has a defined contribution profit-sharing plan covering substantially all of its
full-time U.S. employees. Participants may voluntarily contribute a percentage of compensation,
but not in excess of the maximum allowed under the Internal Revenue Code. The plan provides for a
matching contribution by the Company. The Companys total contributions charged to expense under
this plan were $0.6 million, $0.6 million, and $0.5 million for the years ended August 31, 2010,
2009, and 2008, respectively.
A supplementary non-qualified, non-funded retirement plan for six former executives is also
maintained. Plan benefits are based on the executives average total compensation during the three
highest compensation years of employment. This unfunded supplemental retirement plan is not
subject to the minimum funding requirements of ERISA. The Company has purchased life insurance
policies on certain executives named in this supplemental retirement plan to provide funding for
this liability.
As of August 31, 2010 and 2009, the funded status of the supplemental retirement plan was
recorded in the consolidated balance sheets. The Company utilizes an August 31 measurement date
for plan obligations related to the supplemental retirement plan. As this is an unfunded
retirement plan, the funded status is equal to the benefit obligation. The funded status of the
plan and the net amount recognized in the accompanying balance sheets as of August 31 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Change in benefit obligation: |
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year |
|
$ |
6,964 |
|
|
$ |
6,029 |
|
Interest cost |
|
|
351 |
|
|
|
347 |
|
Actuarial loss |
|
|
259 |
|
|
|
982 |
|
Benefits paid |
|
|
(617 |
) |
|
|
(394 |
) |
|
|
|
|
|
|
|
Benefit obligation at end of year |
|
$ |
6,957 |
|
|
$ |
6,964 |
|
|
|
|
|
|
|
|
Amounts recognized in the statement of financial position consist of:
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Other current liabilities |
|
$ |
557 |
|
|
$ |
557 |
|
Pension benefit liability |
|
|
6,400 |
|
|
|
6,407 |
|
|
|
|
|
|
|
|
Net amount recognized |
|
$ |
6,957 |
|
|
$ |
6,964 |
|
|
|
|
|
|
|
|
44
The before-tax amounts recognized in accumulated other comprehensive loss as of August 31 consists
of:
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Net actuarial loss |
|
$ |
(3,556 |
) |
|
$ |
(3,448 |
) |
Transition obligation |
|
|
|
|
|
|
(27 |
) |
|
|
|
|
|
|
|
Total |
|
$ |
(3,556 |
) |
|
$ |
(3,475 |
) |
|
|
|
|
|
|
|
The assumptions used for the determination of the liability as of years ended:
|
|
|
|
|
|
|
|
|
|
|
August 31, |
|
|
|
2010 |
|
|
2009 |
|
Discount rate |
|
|
5.00 |
% |
|
|
5.25 |
% |
Assumed rates of compensation increases |
|
|
N/A |
|
|
|
N/A |
|
Rate of return on underlying 401(k) investments |
|
|
N/A |
|
|
|
7.50 |
% |
The assumptions used to determine benefit obligations and costs are selected based on current and
expected market conditions. The discount rate is based on a hypothetical portfolio of long-term
corporate bonds with cash flows approximating the timing of expected benefit payments.
The components of the net periodic benefit cost for the supplemental retirement plan for the years
ended August 31 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Service cost |
|
$ |
|
|
|
$ |
|
|
|
$ |
41 |
|
Interest cost |
|
|
351 |
|
|
|
347 |
|
|
|
334 |
|
Net amortization and deferral |
|
|
178 |
|
|
|
176 |
|
|
|
162 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
529 |
|
|
$ |
523 |
|
|
$ |
537 |
|
|
|
|
|
|
|
|
|
|
|
The estimated actuarial loss for the supplemental retirement plan that will be amortized, on a
pre-tax basis, from accumulated other comprehensive loss into net periodic benefit cost during
fiscal 2011 will be $164,000.
The assumptions used for the determination of the net periodic benefit cost were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended August 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
Discount rate |
|
|
6.00 |
% |
|
|
6.00 |
% |
|
|
6.00 |
% |
Assumed rates of compensation |
|
|
N/A |
|
|
|
3.50 |
% |
|
|
3.50 |
% |
The following net benefit payments are expected to be paid:
|
|
|
|
|
Fiscal Years |
|
$ in thousands |
|
2011 |
|
|
557 |
|
2012 |
|
|
543 |
|
2013 |
|
|
539 |
|
2014 |
|
|
535 |
|
2015 |
|
|
530 |
|
2016 - 2020 |
|
|
2,509 |
|
45
Q. WARRANTIES
Product Warranties
The Company generally warrants its products against certain manufacturing and other defects. These
product warranties are provided for specific periods and/or usage of the product. The accrued
product warranty costs are for a combination of specifically identified items and other incurred,
but not identified, items based primarily on historical experience of actual warranty claims. This
reserve is classified within other current liabilities.
The following tables provide the changes in the Companys product warranties:
|
|
|
|
|
|
|
|
|
|
|
For the years ended |
|
|
|
August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
Warranties: |
|
|
|
|
|
|
|
|
Product warranty accrual balance, beginning of
period |
|
$ |
1,736 |
|
|
$ |
2,011 |
|
Liabilities accrued for warranties during the period |
|
|
3,820 |
|
|
|
3,607 |
|
Warranty claims paid during the period |
|
|
(3,694 |
) |
|
|
(3,882 |
) |
|
|
|
|
|
|
|
Product warranty accrual balance, end of period |
|
$ |
1,862 |
|
|
$ |
1,736 |
|
|
|
|
|
|
|
|
R. INDUSTRY SEGMENT INFORMATION
The Company manages its business activities in two reportable segments:
Irrigation: This segment includes the manufacture and marketing of center pivot, lateral
move, and hose reel irrigation systems as well as various water pumping stations and controls. The
irrigation segment consists of nine operating segments that have similar economic characteristics
and meet the aggregation criteria, including similar products, production processes, type or class
of customer and methods for distribution.
Infrastructure: This segment includes the manufacture and marketing of moveable barriers,
specialty barriers and crash cushions; providing outsource manufacturing services and the
manufacturing and selling of large diameter steel tubing and railroad signals and structures. The
infrastructure segment consists of three operating segments that have similar economic
characteristics and meet the aggregation criteria.
The accounting policies of the two reportable segments are described in the Accounting
Policies section of Note A. The Company evaluates the performance of its reportable segments
based on segment sales, gross profit, and operating income, with operating income for segment
purposes excluding unallocated corporate general and administrative expenses, interest income,
interest expense, other income and expenses, and income taxes. Operating income for segment
purposes does include general and administrative expenses, selling expenses, engineering and
research expenses and other overhead charges directly attributable to the segment. There are no
inter-segment sales. Other segment reporting proscribed by current accounting standards is not
shown as this information cannot be reasonably disaggregated by segment and is not utilized by the
Companys management.
The Company has no single major customer representing 10% or more of its total revenues during
fiscal 2010, 2009, or 2008.
46
Summarized financial information concerning the Companys reportable segments is shown in the
following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Irrigation |
|
$ |
258,666 |
|
|
$ |
255,507 |
|
|
$ |
374,906 |
|
Infrastructure |
|
|
99,774 |
|
|
|
80,721 |
|
|
|
100,181 |
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues |
|
$ |
358,440 |
|
|
$ |
336,228 |
|
|
$ |
475,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
Irrigation |
|
$ |
40,869 |
|
|
$ |
35,504 |
|
|
$ |
66,848 |
|
Infrastructure |
|
|
11,083 |
|
|
|
(36 |
) |
|
|
9,624 |
|
|
|
|
|
|
|
|
|
|
|
Segment operating income |
|
$ |
51,952 |
|
|
$ |
35,468 |
|
|
|
76,472 |
|
Unallocated general and administrative
expenses |
|
|
(14,110 |
) |
|
|
(13,051 |
) |
|
|
(14,233 |
) |
Interest and other income (expense), net |
|
|
(1,060 |
) |
|
|
(1,878 |
) |
|
|
(1,128 |
) |
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes |
|
$ |
36,782 |
|
|
$ |
20,539 |
|
|
$ |
61,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital Expenditures: |
|
|
|
|
|
|
|
|
|
|
|
|
Irrigation |
|
$ |
3,125 |
|
|
$ |
5,681 |
|
|
$ |
4,362 |
|
Infrastructure |
|
|
2,659 |
|
|
|
4,819 |
|
|
|
9,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,784 |
|
|
$ |
10,500 |
|
|
$ |
14,093 |
|
|
|
|
|
|
|
|
|
|
|
Total Depreciation and Amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
Irrigation |
|
$ |
4,597 |
|
|
$ |
4,191 |
|
|
$ |
3,862 |
|
Infrastructure |
|
|
6,113 |
|
|
|
6,251 |
|
|
|
5,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
10,710 |
|
|
$ |
10,442 |
|
|
$ |
9,253 |
|
|
|
|
|
|
|
|
|
|
|
Total Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Irrigation |
|
$ |
206,885 |
|
|
$ |
186,558 |
|
|
$ |
200,535 |
|
Infrastructure |
|
|
118,596 |
|
|
|
121,339 |
|
|
|
125,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
325,481 |
|
|
$ |
307,897 |
|
|
$ |
325,890 |
|
|
|
|
|
|
|
|
|
|
|
Summarized financial information concerning the Companys geographical areas is shown in the
following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
$ in thousands |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Geographic area revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
204,465 |
|
|
$ |
200,625 |
|
|
$ |
309,241 |
|
Europe, Africa, Australia & Middle
East |
|
|
73,781 |
|
|
|
88,324 |
|
|
|
104,179 |
|
Mexico & Latin America |
|
|
66,710 |
|
|
|
27,521 |
|
|
|
42,164 |
|
Other International |
|
|
13,484 |
|
|
|
19,758 |
|
|
|
19,503 |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
358,440 |
|
|
$ |
336,228 |
|
|
$ |
475,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Geographic area long-lived assets: |
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
$ |
89,935 |
|
|
$ |
88,335 |
|
|
$ |
87,167 |
|
Europe, Africa, Australia & Middle
East |
|
|
18,741 |
|
|
|
22,442 |
|
|
|
24,315 |
|
Mexico & Latin America |
|
|
2,500 |
|
|
|
1,154 |
|
|
|
1,327 |
|
Other International |
|
|
1,580 |
|
|
|
984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-lived assets |
|
$ |
112,756 |
|
|
$ |
112,915 |
|
|
$ |
112,809 |
|
|
|
|
|
|
|
|
|
|
|
47
S. SHARE BASED COMPENSATION
Share Based Compensation Program
Share based compensation is designed to reward employees for their long-term contributions to the
Company and provide incentives for them to remain with the Company. The number and frequency of
share grants are based on
competitive practices, operating results of the Company, and individual performance. As of August
31, 2010, the Companys share-based compensation plan was the 2010 Long-Term Incentive Plan (the
2010 Plan). The 2010 Plan was approved by the stockholders of the Company, and became effective
on January 25, 2010, and replaced the Companys 2006 Long Term Incentive Plan. At August 31, 2010
the Company had share based awards outstanding under its 2001 and 2006 Long-Term Incentive Plans.
The 2010 Plan provides for awards of stock options, restricted shares, restricted stock units,
stock appreciation rights, performance shares and performance stock units to employees and
non-employee directors of the Company. The maximum number of shares as to which stock awards may
be granted under the 2010 Plan is 435,000 shares, exclusive of any forfeitures from the 2001 and
2006 Long Term Incentive Plans. At August 31, 2010, 443,710 shares of common stock (including
forfeitures from prior plans) remained available for issuance under the 2010 Plan. All stock
awards will be counted against the 2010 Plan in a 1 to 1 ratio. If options, restricted stock units
or performance stock units awarded under the 2006 Plan or the 2001 Plan terminate without being
fully vested or exercised, those shares will be available again for grant under the 2010 Plan. The
2010 Plan also limits the total awards that may be made to any individual. Any options granted
under the 2010 Plan would have an exercise price equal to the fair market value of the underlying
stock on the grant date and expire no later than ten years from the grant date. The restricted
stock units granted to employees and directors under the 2010 Plan have a grant date fair value
equal to the fair market value of the underlying stock on the grant date less present value of
expected dividends. The restricted stock units granted to employees vest over a three-year period
at approximately 33% per year. The restricted stock units granted to non-employee directors
generally vest over a nine-month period. The performance stock units granted to employees under
the 2010 Plan have a grant date fair value equal to the fair market value of the underlying stock
on the grant date less present value of expected dividends. The performance stock units granted to
employees cliff vest after a three-year period and a specified number of shares of common stock
will be awarded under the terms of the performance stock units, if performance measures relating to
three-year average revenue growth and a three-year average return on net assets are achieved.
Accounting for Share Based Compensation
The Company is required to estimate the fair value of share-based compensation awards on the date
of grant. The value of the portion of the award that is ultimately expected to vest is recognized
as expense in the Companys Consolidated Statement of Operations over the periods during which the
employee or director is required to perform service in exchange for the award.
The Company uses the Black-Scholes option-pricing model (Black-Scholes model) as its
valuation method for stock option awards. Under the Black-Scholes model, the fair value of stock
option awards on the date of grant is estimated using an option-pricing model that is affected by
the Companys stock price as well as assumptions regarding a number of highly complex and
subjective variables. These variables include, but are not limited to the Companys expected stock
price volatility over the term of the awards and actual and projected employee stock option
exercise behaviors. Restricted stock, restricted stock units, performance shares and performance
stock units issued under the 2010 Plan will have a grant date fair value equal to the fair market
value of the underlying stock on the grant date less present value of expected dividends.
48
Share Based Compensation Information
The following table summarizes information about stock options outstanding as of and for the years
ended August 31, 2010, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining |
|
|
|
|
|
|
|
|
|
|
Average |
|
|
Contractual |
|
|
Aggregate |
|
|
|
Number of |
|
|
Exercise |
|
|
Term |
|
|
Intrinsic |
|
|
|
Shares |
|
|
Price |
|
|
(years) |
|
|
Value (000s) |
|
Outstanding at
August 31, 2008 |
|
|
506,334 |
|
|
$ |
20.62 |
|
|
|
4.5 |
|
|
$ |
31,034 |
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(122,222 |
) |
|
$ |
17.30 |
|
|
|
|
|
|
$ |
3,270 |
|
Forfeitures |
|
|
(14,013 |
) |
|
$ |
23.74 |
|
|
|
|
|
|
|
|
|
Outstanding at
August 31, 2009 |
|
|
370,099 |
|
|
$ |
21.60 |
|
|
|
3.9 |
|
|
$ |
7,370 |
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
(78,324 |
) |
|
$ |
15.50 |
|
|
|
|
|
|
$ |
2,042 |
|
Forfeitures |
|
|
(150 |
) |
|
$ |
24.29 |
|
|
|
|
|
|
|
|
|
Outstanding at
August 31, 2010 |
|
|
291,625 |
|
|
$ |
23.23 |
|
|
|
3.7 |
|
|
$ |
3,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at
August 31, 2008 |
|
|
349,706 |
|
|
$ |
20.72 |
|
|
|
4.3 |
|
|
$ |
21,400 |
|
Exercisable at
August 31, 2009 |
|
|
336,084 |
|
|
$ |
21.51 |
|
|
|
3.8 |
|
|
$ |
6,720 |
|
Exercisable at
August 31, 2010 |
|
|
284,875 |
|
|
$ |
23.33 |
|
|
|
3.7 |
|
|
$ |
3,858 |
|
There were 27,115, 109,450 and 94,965 outstanding stock options that vested during the fiscal
years ended August 31, 2010, 2009 and 2008, respectively. The intrinsic value of options exercised
for the fiscal years ended August 31, 2010, 2009 and 2008 was $2.0 million, $3.3 million and $32.6
million, respectively.
Cash received from option exercises for the fiscal years ended August 31, 2010, 2009 and 2008
was $0.5 million, $1.4 million and $6.5 million, respectively. The actual tax benefit realized for
the tax deductions from option exercises totaled $0.2 million, $0.2 million and $8.0 million for
fiscal 2010, 2009 and 2008, respectively.
The following table summarizes information about restricted stock units as of and for the years
ended August 31, 2010, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
Average |
|
|
|
Number of |
|
|
Grant-Date |
|
|
|
Shares |
|
|
Fair Value |
|
Restricted stock units at August 31, 2008 |
|
|
88,546 |
|
|
$ |
39.64 |
|
Granted |
|
|
51,543 |
|
|
|
39.91 |
|
Vested |
|
|
(50,322 |
) |
|
|
36.42 |
|
Forfeited |
|
|
(13,040 |
) |
|
|
41.65 |
|
|
|
|
|
|
|
|
Restricted stock units at August 31, 2009 |
|
|
76,727 |
|
|
$ |
41.52 |
|
|
|
|
|
|
|
|
Granted |
|
|
45,583 |
|
|
|
34.17 |
|
Vested |
|
|
(41,376 |
) |
|
|
39.25 |
|
Forfeited |
|
|
(5,841 |
) |
|
|
35.38 |
|
|
|
|
|
|
|
|
Restricted stock units at August 31, 2010 |
|
|
75,093 |
|
|
$ |
38.61 |
|
|
|
|
|
|
|
|
Restricted stock units are generally settled with the issuance of shares with the exception of
certain restricted stock units awarded to internationally-based employees that are settled in cash.
At August 31, 2010, 2009 and 2008, outstanding restricted stock units included 7,546, 6,097 and
7,689 units, respectively, that will be settled in cash. The vesting date fair value of restricted
stock units that vested was $1.6 million and $1.8 million for the years ended August 31, 2010 and
2009, respectively.
49
The table below summarizes the status of the Companys performance stock units as of and for the
year ended August 31, 2010, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
Average |
|
|
|
Number of |
|
|
Grant-Date |
|
|
|
Units |
|
|
Fair Value |
|
Performance stock units at August 31, 2008 |
|
|
35,191 |
|
|
$ |
40.15 |
|
Granted |
|
|
28,637 |
|
|
|
43.11 |
|
Vested |
|
|
|
|
|
|
|
|
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance stock units at August 31, 2009 |
|
|
63,828 |
|
|
$ |
41.48 |
|
|
|
|
|
|
|
|
Granted |
|
|
45,608 |
|
|
|
32.81 |
|
Vested |
|
|
(18,183 |
) |
|
|
33.49 |
|
Forfeited |
|
|
(3,552 |
) |
|
|
32.81 |
|
|
|
|
|
|
|
|
Performance stock units at August 31, 2010 |
|
|
87,701 |
|
|
$ |
38.98 |
|
|
|
|
|
|
|
|
In connection with the performance stock units, the performance goals are based upon a three-year
average revenue growth and a three-year average return on net assets over the performance period.
The awards actually earned will range from zero to two hundred percent of the targeted number of
performance stock units and will be paid in shares of common stock. Shares earned will be
distributed upon vesting on the first day of November following the end of the three-year
performance period. The Company is accruing compensation expense based on the estimated number of
shares expected to be issued utilizing the most current information available to the Company at the
date of the financial statements. If defined performance goals are not met, no compensation cost
will be recognized and any previously recognized compensation expense will be reversed.
Performance stock units that vested in fiscal 2010 represented 24,964 actual shares of common stock
issued. The vesting date fair value of performance stock units that vested was $0.8 million for
the year ended August 31, 2010.
As of August 31, 2010, there was $2.4 million pre-tax of total unrecognized compensation cost
related to nonvested share-based compensation arrangements which is expected to be recognized over
a weighted-average period of 1.1 years.
The following table summarizes share-based compensation expense for the fiscal years ended August
31, 2010, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended August 31, |
|
$ in thousands |
|
2010 |
|
|
2009 |
|
|
2008 |
|
Share-based compensation expense included
in cost of
operating revenues |
|
$ |
123 |
|
|
$ |
145 |
|
|
$ |
218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
60 |
|
|
|
131 |
|
|
|
225 |
|
Sales and marketing |
|
|
360 |
|
|
|
437 |
|
|
|
747 |
|
General and administrative |
|
|
1,663 |
|
|
|
1,427 |
|
|
|
2,326 |
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense included in
operating expenses |
|
|
2,083 |
|
|
|
1,995 |
|
|
|
3,298 |
|
|
|
|
|
|
|
|
|
|
|
Total share-based compensation expense |
|
|
2,206 |
|
|
|
2,140 |
|
|
|
3,516 |
|
Tax benefit |
|
|
(836 |
) |
|
|
(811 |
) |
|
|
(1,333 |
) |
|
|
|
|
|
|
|
|
|
|
Share-based compensation expense, net of tax |
|
$ |
1,370 |
|
|
$ |
1,329 |
|
|
$ |
2,183 |
|
|
|
|
|
|
|
|
|
|
|
50
T. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First |
|
|
Second |
|
|
Third |
|
|
Fourth |
|
$ in thousands, except per share amounts |
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
|
Quarter |
|
Year ended August 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
85,970 |
|
|
$ |
85,196 |
|
|
$ |
100,073 |
|
|
$ |
87,201 |
|
Cost of operating revenues |
|
|
60,166 |
|
|
|
63,067 |
|
|
|
74,818 |
|
|
|
61,489 |
|
Earnings before income taxes |
|
|
10,928 |
|
|
|
6,556 |
|
|
|
9,636 |
|
|
|
9,662 |
|
Net earnings |
|
|
6,677 |
|
|
|
5,978 |
|
|
|
6,248 |
|
|
|
5,959 |
|
Diluted net earnings per share |
|
$ |
0.53 |
|
|
$ |
0.48 |
|
|
$ |
0.49 |
|
|
$ |
0.48 |
|
Market price (NYSE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
|
$ |
45.08 |
|
|
$ |
47.45 |
|
|
$ |
43.92 |
|
|
$ |
38.19 |
|
Low |
|
$ |
31.20 |
|
|
$ |
35.02 |
|
|
$ |
33.00 |
|
|
$ |
30.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended August 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
113,121 |
|
|
$ |
65,146 |
|
|
$ |
84,578 |
|
|
$ |
73,383 |
|
Cost of operating revenues |
|
|
84,472 |
|
|
|
51,870 |
|
|
|
63,509 |
|
|
|
55,746 |
|
Earnings (loss) before income
taxes |
|
|
9,781 |
|
|
|
(466 |
) |
|
|
7,908 |
|
|
|
3,316 |
|
Net earnings |
|
|
6,322 |
|
|
|
150 |
|
|
|
5,269 |
|
|
|
2,082 |
|
Diluted net earnings per share |
|
$ |
0.51 |
|
|
$ |
0.01 |
|
|
$ |
0.42 |
|
|
$ |
0.17 |
|
Market price (NYSE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High |
|
$ |
97.80 |
|
|
$ |
43.22 |
|
|
$ |
41.52 |
|
|
$ |
47.02 |
|
Low |
|
$ |
33.02 |
|
|
$ |
24.00 |
|
|
$ |
20.89 |
|
|
$ |
29.71 |
|
51
ITEM 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
NONE
ITEM 9A Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried out an evaluation,
under the supervision and with the participation of the Companys management, including the
Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design
and operation of the Companys disclosure controls and procedures, as defined in Exchange Act Rules
13a-15 (e) and 15d-15(e) and internal control over financial reporting, as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f). Based upon that evaluation, the Companys Chief Executive Officer
and Chief Financial Officer concluded that the Companys disclosure controls and procedures are
effective in enabling the Company to record, process, summarize and report information required to
be included in the Companys periodic SEC filings within the required time period.
Managements Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over
financial reporting for the Company. The Companys internal control system was designed to provide
reasonable assurance to the Companys management and board of directors regarding the preparation
and fair presentation of published financial statements.
Management has assessed the effectiveness of the Companys internal control over financial
reporting as of August 31, 2010, based on the criteria for effective internal control described in
Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on its assessment, management concluded that the Companys internal
control over financial reporting was effective as of August 31, 2010.
The Audit Committee has engaged KPMG LLP, the independent registered public accounting firm
that audited the consolidated financial statements included in this Annual Report on Form 10-K, to
attest to and report on managements evaluation of the Companys internal control over financial
reporting. The report of KPMG LLP is included herein.
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Lindsay Corporation:
We have audited Lindsay Corporations (the Company) internal control over financial reporting as of
August 31, 2010, based on criteria established in Internal Control Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Companys
management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in
the accompanying managements report on internal control over financial reporting. Our
responsibility is to express an opinion on the Companys internal control over financial reporting
based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
52
A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with U.S. generally accepted accounting principles.
A companys internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of the companys assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Lindsay Corporation maintained, in all material respects, effective internal
control over financial reporting as of August 31, 2010, based on criteria established in Internal
Control Integrated Framework issued by the COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of the Company as of August 31, 2010 and
2009, and the related consolidated statements of operations, shareholders equity and comprehensive
income, and cash flows for each of the years in the three-year period ended August 31, 2010, and
our report dated November 10, 2010 expressed an unqualified opinion on those consolidated financial
statements.
/s/ KPMG LLP
Omaha, Nebraska
November 10, 2010
Changes in Internal Control over Financial Reporting
There were no changes in the Companys internal controls over financial reporting that occurred
during the quarter ended August 31, 2010, that have materially affected, or are reasonably likely
to materially affect, the Companys internal control over financial reporting.
53
ITEM 9B Other Information
The graph below compares the cumulative 5-year total return provided shareholders on the Companys
common stock relative to the cumulative total returns of the S&P Small Cap 600 Index and the S&P
600 Construction, Farm Machinery and Heavy Truck index for the five-year period ended August 31,
2010. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in
the Companys common stock and in each of the indexes on August 31, 2005 and its relative
performance through August 31, 2010.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Lindsay Corporation, the S&P Smallcap 600 Index and the
S&P SmallCap 600 Construction, Farm Machinery and Heavy Truck Index
|
|
|
* |
|
$100 invested on 8/31/05 in stock or index, including reinvestment of dividends. |
Fiscal year ending August 31.
Copyright© 2010 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.
54
PART III
ITEM 10 Directors, Executive Officers and Corporate Governance
The Company will file with the Securities and Exchange Commission a definitive Proxy Statement for
its 2011 Annual Meeting of Stockholders (the Proxy Statement) not later than 120 days after the
close of its fiscal year ended August 31, 2010. Information about the Board of Directors required
by Items 401 and 407 of Regulation S-K is incorporated by reference to the discussion responsive
thereto under the captions Board of Directors and Committees and Corporate Governance in the
Proxy Statement. Information about Executive Officers is shown on pages 12 and 13 of this filing.
Section 16(a) Beneficial Ownership Reporting Compliance - Item 405 of Regulation S-K calls for
disclosure of any known late filing or failure by an insider to file a report required by Section
16 of the Securities Exchange Act. The information required by Item 405 is incorporated by
reference to the discussion responsive thereto under the caption Section 16(a) Beneficial Ownership
Reporting Compliance in the Proxy Statement.
Code of Ethics Item 406 of Regulation S-K calls for disclosure of whether the Company has
adopted a code of ethics applicable to the principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing similar functions. The
Company has adopted a code of ethics applicable to the Companys principal executive officer and
senior financial officers known as the Code of Ethical Conduct (Principal Executive Officer and
Senior Financial Officers). The Code of Ethical Conduct (Principal Executive Officer and Senior
Financial Officers) is available on the Companys website. In the event that the Company amends or
waives any of the provisions of the Code of Ethical Conduct applicable to the principal executive
officer and senior financial officers, the Company intends to disclose the same on the Companys
website at www.lindsay.com. No waivers were provided for the fiscal year ended August 31, 2010.
ITEM 11 Executive Compensation
The information required by this Item is incorporated by reference to the discussion responsive
thereto under the captions Executive Compensation, Compensation Discussion and Analysis,
Pension Benefits, Nonqualified Deferred Compensation, Report of the Compensation Committee on
Executive Compensation, Compensation of Directors and Compensation Committee Interlocks and
Insider Participation in the Proxy Statement.
ITEM 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information required by this Item relating to security ownership of certain beneficial owners
and management is incorporated by reference to the discussion responsive thereto under the caption
Voting Securities and Beneficial Ownership Thereof by Principal Stockholders, Directors and
Officers in the Proxy Statement.
Equity Compensation Plan Information The following equity compensation plan information
summarizes plans and securities approved by security holders as of August 31, 2010 (there were no
equity compensation plans not approved by security holders as of August 31, 2010):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
|
Number of securities |
|
|
Weighted-average |
|
|
Number of securities remaining |
|
|
|
to be issued upon |
|
|
exercise price of |
|
|
available for future issuance |
|
|
|
exercise of |
|
|
outstanding |
|
|
under equity compensation |
|
|
|
outstanding options, |
|
|
options, warrants, |
|
|
plans (excluding securities |
|
PLAN CATEGORY |
|
warrants, and rights |
|
|
and rights |
|
|
reflected in column (a)) |
|
|
Equity compensation plans
approved by security
holders (1)
(2) |
|
|
446,873 |
|
|
$ |
23.23 |
|
|
|
443,710 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
446,873 |
|
|
$ |
23.23 |
|
|
|
443,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Plans approved by shareholders include the Companys 2001, 2006 and 2010 Long-Term
Incentive Plans. While certain share based awards remain outstanding under the Companys 2001 and
2006 Long-Term Incentive Plans, no future equity compensation awards may be granted under such
plans. |
|
(2) |
|
Column (a) includes (i) 87,701 shares that could be issued under performance stock
units (PSU) outstanding at August 31, 2010, and (ii) 67,547 shares that could be issued under
restricted stock units (RSU) outstanding at August 31, 2010. The PSUs are earned and common
stock issued if certain predetermined performance criteria are met. Actual shares issued may be
equal to, less than or greater than (but not more than 200% of) the number of outstanding PSUs
included in column (a), depending on actual performance. The RSUs vest and are payable in common
stock after the expiration of the time periods set forth in the related agreements. Column (b)
does not take these PSU and RSU awards into account because they do not have an exercise price. |
55
ITEM 13 Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated by reference to the discussion responsive
thereto under the captions Corporate Governance and Corporate Governance Related Party
Transactions in the Proxy Statement.
ITEM 14 Principal Accounting Fees and Services
The information required by this Item is incorporated by reference to the discussion responsive
thereto under the caption Ratification of Appointment of Independent Auditor in the Proxy
Statement.
PART IV
ITEM 15 Exhibits, Financial Statement Schedules
a(1) Financial Statements
The following financial statements of Lindsay Corporation and Subsidiaries are included in
Part II Item 8.
|
|
|
|
|
|
|
Page |
|
|
|
|
|
|
|
|
|
23 |
|
|
|
|
|
|
|
|
|
24 |
|
|
|
|
|
|
|
|
|
25 |
|
|
|
|
|
|
|
|
|
26 |
|
|
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
|
28-51 |
|
|
|
|
|
|
|
|
|
57 |
|
Financial statements and schedules other than those listed are omitted for the reason that
they are not required, are not applicable or that equivalent information has been included in the
financial statements or notes thereto.
56
a(2) Exhibit
Lindsay Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
Years ended August 31, 2010, 2009 and 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
|
|
|
|
|
|
|
|
|
|
Balance at |
|
|
Charges to |
|
|
Charged to |
|
|
|
|
|
|
Balance at |
|
|
|
beginning |
|
|
costs and |
|
|
other |
|
|
|
|
|
|
end of |
|
(in thousands) |
|
of period |
|
|
expenses |
|
|
accounts |
|
|
Deductions |
|
|
period |
|
Year ended August 31, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deducted in the balance sheet from the
assets to which they apply: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for guarantee losses (a) |
|
$ |
36 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
32 |
|
|
$ |
4 |
|
Allowance for doubtful accounts (b) |
|
|
1,864 |
|
|
|
732 |
|
|
|
4 |
|
|
|
356 |
|
|
|
2,244 |
|
Allowance for inventory
obsolescence (c) |
|
|
1,643 |
|
|
|
984 |
|
|
|
60 |
|
|
|
642 |
|
|
|
2,045 |
|
Year ended August 31, 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deducted in the balance sheet from the
assets to which they apply: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for guarantee losses (a) |
|
$ |
21 |
|
|
$ |
28 |
|
|
$ |
|
|
|
$ |
13 |
|
|
$ |
36 |
|
Allowance for doubtful accounts (b) |
|
|
1,457 |
|
|
|
554 |
|
|
|
|
|
|
|
147 |
|
|
|
1,864 |
|
Allowance for inventory
obsolescence (c) |
|
|
1,409 |
|
|
|
492 |
|
|
|
|
|
|
|
258 |
|
|
|
1,643 |
|
Year ended August 31, 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deducted in the balance sheet from the
assets to which they apply: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserve for guarantee losses (a) |
|
$ |
112 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
91 |
|
|
$ |
21 |
|
Allowance for doubtful accounts (b) |
|
|
946 |
|
|
|
75 |
|
|
|
510 |
|
|
|
74 |
|
|
|
1,457 |
|
Allowance for inventory
obsolescence (c) |
|
|
711 |
|
|
|
618 |
|
|
|
100 |
|
|
|
20 |
|
|
|
1,409 |
|
|
|
|
(a) |
|
Represents estimated losses on financing guarantees. |
|
(b) |
|
Deductions consist of uncollectible items written off, less recoveries of items
previously written off. |
|
(c) |
|
Deductions consist of obsolete items sold or scrapped. |
57
a(3) EXHIBIT INDEX
|
|
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
|
|
|
|
|
3.1 |
|
|
Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit
3.1 to the Companys Current Report on Form 8-K filed on December 14, 2006. |
|
|
|
|
|
|
3.2 |
|
|
Restated By-Laws of the Company, incorporated by reference to Exhibit 3.1 to the Companys
Current Report on Form 8-K filed on November 6, 2007. |
|
|
|
|
|
|
4.1 |
|
|
Specimen Form of Common Stock Certificate incorporated by reference to Exhibit 4(a) to the
Companys Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2006. |
|
|
|
|
|
|
10.1 |
|
|
Lindsay Corporation 2010 Long-Term Incentive Plan and forms of award agreements, incorporated
by reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the fiscal
quarter ended May 31, 2010. |
|
|
|
|
|
|
10.2 |
|
|
Lindsay Manufacturing Co. 2006 Long-Term Incentive Plan and forms of award agreements,
incorporated by reference to Exhibit 10(a) to the Companys Annual Report on Form 10-K for the
fiscal year ended August 31, 2007. |
|
|
|
|
|
|
10.3 |
|
|
Lindsay Manufacturing Co. 2001 Amended and Restated Long-Term Incentive Plan, incorporated by
reference to Exhibit 10(i) of the Companys Annual Report on Form 10-K for the fiscal year
ended August 31, 2001. |
|
|
|
|
|
|
10.4 |
|
|
Amendment to Lindsay Manufacturing Co. 2001 Amended and Restated Long-Term Incentive Plan,
incorporated by reference to Exhibit 10(k) to the Companys Annual Report on Form 10-K for the
fiscal year ended August 31, 2005. |
|
|
|
|
|
|
10.5 |
|
|
Lindsay Corporation Management Incentive Umbrella Plan, incorporated by reference to Exhibit
10.1 to the Companys Quarterly Report on Form 10-Q for the fiscal quarter ended February 28,
2009. |
|
|
|
|
|
|
10.6 |
** |
|
Lindsay Corporation Management Incentive Plan (MIP), 2010 Plan Year, incorporated by
reference to Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the fiscal
quarter ended November 30, 2009. |
|
|
|
|
|
|
10.7 |
|
|
Form of Indemnification Agreement between the Company and its Officers and Directors, incorporated by reference to Exhibit 10.2 to the Companys Quarterly Report on Form 10-Q for
the fiscal quarter ended November 30, 2008. |
|
|
|
|
|
|
10.8 |
|
|
Employment Agreement between the Company and Richard W. Parod effective March 8, 2000,
incorporated by reference to Exhibit 10(a) to the Companys Report on Form 10-Q for the fiscal
quarter ended May 31, 2000. |
|
|
|
|
|
|
10.9 |
|
|
First Amendment to Employment Agreement, dated May 2, 2003, between the Company and Richard
W. Parod, incorporated by reference to Exhibit 10 (a) of Amendment No. 1 to the Companys
Report on Form 10-Q for the fiscal quarter ended May 31, 2003. |
|
|
|
|
|
|
10.10 |
|
|
Second Amendment to Employment Agreement, dated December 22, 2004, between the Company and
Richard W. Parod, incorporated by reference to Exhibit 10(a) to the Companys Current Report
on Form 8-K filed on December 27, 2004. |
|
|
|
|
|
|
10.11 |
|
|
Third Amendment to Employment Agreement, dated March 20, 2007, between the Company and
Richard W. Parod, incorporated by reference to Exhibit 10.1 to the Companys Current Report on
Form 8-K filed on March 22, 2007. |
58
|
|
|
|
|
Exhibit |
|
|
Number |
|
Description |
|
|
|
|
|
|
10.12 |
|
|
Fourth Amendment to Employment Agreement, dated December 22, 2008, between the Company and
Richard W. Parod, incorporated by reference to Exhibit 10.2 of the Companys Current Report on
Form 8-K filed on January 30, 2009. |
|
|
|
|
|
|
10.13 |
|
|
Fifth Amendment to Employment Agreement, dated January 26, 2009, between the Company and
Richard W. Parod, incorporated by reference to Exhibit 10.1 of the Companys Current Report on
Form 8-K filed on January 30, 2009. |
|
|
|
|
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10.14 |
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Restated Sixth Amendment, effective February 25, 2010, by and between the Company and
Richard W. Parod, incorporated by reference to Exhibit 10.2 of the Companys Quarterly Report
on Form 10-Q for the fiscal quarter ended February 28, 2010. |
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10.15 |
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Employment Agreement dated February 19, 2009, by and between the Company and David B.
Downing, incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K
filed on February 25, 2009. |
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10.16 |
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Employment Agreement, dated February 19, 2009, by and between the Company and Barry A.
Ruffalo, incorporated by reference to Exhibit 10.2 of the Companys Current Report on Form 8-K
filed on February 25, 2009. |
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10.17 |
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Employment Agreement, dated February 19, 2009, by and between the Company and Timothy J.
Paymal, incorporated by reference to Exhibit 10.3 of the Companys Current Report on Form 8-K
filed on February 25, 2009. |
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10.18 |
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Employment Agreement, dated June 11, 2009, by and between the Company and Thomas D. Spears,
incorporated by reference to Exhibit 10.16 to the Companys Annual Report on Form 10-K for the
fiscal year ended August 31, 2009. |
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10.19 |
* |
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Employment Agreement, dated August 13, 2010, by and between the Company and Steve Cotariu. |
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10.20 |
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Term Note, dated June 1, 2006, by and between the Company and Wells Fargo Bank, N.A.,
incorporated by reference to Exhibit 10.2 to the Companys Current Report on Form 8-K filed on
June 2, 2006. |
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10.21 |
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Amended and Restated Credit Agreement, dated June 1, 2006, by and between the Company and
Wells Fargo Bank, N.A., incorporated by reference to Exhibit 10.5 to the Companys Quarterly
Report on Form 10-Q for the fiscal quarter ended on February 28, 2010. |
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10.22 |
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Amended and Restated ISDA Confirmation dated May 8, 2006, by and between the Company and
Wells Fargo Bank, N.A., incorporated by reference to Exhibit 10.4 to the Companys Current
Report on Form 8-K filed on June 2, 2006. |
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10.23 |
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ISDA Master Agreement, dated May 5, 2006, by and between the Company and Wells Fargo Bank,
N.A., incorporated by reference to Exhibit 10.5 to the Companys Current Report on Form 8-K
filed on June 2, 2006. |
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10.24 |
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Schedule to the ISDA Master Agreement, dated May 5, 2006, by and between the Company and
Wells Fargo Bank, N.A., incorporated by reference to Exhibit 10.6 to the Companys Current
Report on Form 8-K filed on June 2, 2006. |
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10.25 |
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Term Note, dated December 27, 2006, by Snoline S.pA. (successor in interest to Lindsay
Italia, S.r.l.) in favor of Wells Fargo Bank, N.A., incorporated by reference to Exhibit 10.2
of the Companys Current Report on Form 8-K filed on December 29, 2006. |
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10.26 |
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Credit Agreement, dated December 27, 2006, by and between Snoline S.pA. (successor in
interest to Lindsay Italia, S.r.l.) and Wells Fargo Bank, N.A., incorporated by reference to
Exhibit 10.3 of the Companys Current Report on Form 8-K filed on December 29, 2006. |
59
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Exhibit |
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Number |
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Description |
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10.27 |
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|
Restated First Amendment to Credit Agreement, dated January 23, 2010, by and between Snoline
S.p.A. and Wells Fargo Bank, N.A., incorporated by reference to Exhibit 10.4 to the Companys
Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2010. |
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10.28 |
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First Bank Guarantee, dated December 27, 2006, by the Company in favor of Wells Fargo Bank,
N.A., incorporated by reference to Exhibit 10.4 of the Companys Current Report on Form 8-K
filed on December 29, 2006. |
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10.29 |
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|
Revolving Credit Note, dated January 24, 2008, by and between the Company and Wells Fargo
Bank, N.A., incorporated by reference to Exhibit 10.1 to the Companys Current Report on Form
8-K filed on January 30, 2008. |
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10.30 |
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|
Revolving Credit Agreement, dated January 24, 2008, by and between the Company and Wells
Fargo Bank, N.A., incorporated by reference to Exhibit 10.2 to the Companys Current Report on
Form 8-K filed on January 30, 2008. |
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10.31 |
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|
First Amendment to Revolving Credit Agreement, dated January 23, 2010, by and between the
Company and Wells Fargo Bank, N.A., incorporated by reference to Exhibit 10.1 of the Companys
Current Report on Form 8-K filed on January 26, 2010. |
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10.32 |
|
|
Lindsay Corporation Policy on Payment of Directors Fees and Expenses, incorporated by
reference to Exhibit 10.22 to the Companys Annual Report on Form 10-K for the fiscal year
ended August 31, 2008. |
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21 |
* |
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Subsidiaries of the Company |
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23 |
* |
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Consent of KPMG LLP |
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24 |
* |
|
The Power of Attorney authorizing Richard W. Parod to sign the Annual Report on Form 10-K for
fiscal 2010 on behalf of non-management directors. |
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31.1 |
* |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 18 U.S.C. Section 1350. |
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31.2 |
* |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 18 U.S.C. Section 1350. |
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32 |
* |
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350. |
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* |
|
- filed herein |
|
** |
|
- certain confidential portions of this Exhibit were omitted by means of redacting a portion of
the text. This Exhibit has been filed separately with the Secretary of the Commission with the
redacted text pursuant to the Companys application requesting confidential treatment under Rule
24b-2 of the Securities and Exchange Act of 1934. |
60
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 10th day of November, 2010.
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LINDSAY CORPORATION
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By: |
/s/ DAVID B. DOWNING
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Name: |
David B. Downing |
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Title: |
Chief Financial Officer and
President-International Operations |
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|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities indicated
on this 10th day of November, 2010.
|
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|
/s/ RICHARD W. PAROD
Richard W. Parod
|
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|
Director, President and Chief Executive Officer |
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/s/ DAVID B. DOWNING
David B. Downing
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Chief Financial Officer and President-International Operations |
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/s/ TIMOTHY J. PAYMAL
Timothy J. Paymal
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|
Vice President and Chief Accounting Officer |
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/s/ Michael N. Christodolou (1)
Michael N. Christodolou
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|
Chairman of the Board of Directors |
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/s/ Howard G. Buffett (1)
Howard G. Buffett
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Director |
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/s/ W. Thomas JAGODINSKI (1)
W. Thomas Jagodinski
|
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|
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Director |
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/s/ J.David McIntosh (1)
J. David McIntosh
|
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|
|
Director |
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|
|
/s/ Michael C. Nahl (1)
Michael C. Nahl
|
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|
|
Director |
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|
/s/ Michael D.Walter (1)
Michael D. Walter
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|
|
Director |
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|
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/s/ William f. welsh ii (1)
William F. Welsh II
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Director |
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(1) By:
|
|
/s/ Richard W. Parod
Richard W. Parod, Attorney-In-Fact
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61