20 13 ANNUAL REPORT
I
L
I
N
D
S
A
Y
C
O
R
P
O
R
A
T
O
N
2
0
1
3
A
N
N
U
A
L
R
E
P
O
R
T
DEVELOPING SOLUTIONS FOR GLOBAL MARKETS
750
500
250
0
18
12
6
0
18
12
6
0
F I N A N C I A L A N D O PE R AT I N G H I G H L I G H T S
L I N D S AY CO R P O R AT I O N
Revenue ($ in millions)
(In thousands, except per share amounts)
2013
2012
% Change
Income Statement Data
(for the fiscal years ended August 31)
Operating revenues
Gross profit
Operating expenses
Operating income
Net earnings
$ 690,848
$ 551,255
$ 194,834
$ 148,518
$ 87,773
$ 83,008
$ 107,061
$ 65,510
$ 70,570
$ 43,277
04 05 06 07 08 09 10 11 12 13
Average diluted shares outstanding
12,901
12,810
Diluted net earnings per share
$
5.47
$
3.38
Led by significant growth in both U.S. and
international irrigation equipment sales, we
achieved record revenues in fiscal 2013.
Operating Margin (percentage)
Cash and cash equivalents
$ 151,927
$ 143,444
Balance Sheet Data
(at August 31)
Current assets
Fixed assets, net
Total assets
Current liabilities
$ 368,791
$ 298,865
$ 65,064
$ 56,180
$ 512,296
$ 415,531
$ 102,092
$ 80,438
25%
31%
6%
63%
63%
62%
1%
6%
23%
16%
23%
27%
04 05 06 07 08 09 10 11 12 13
Our record operating margin in fiscal
2013 increased primarily from improved
leverage on operating expenses.
Return on Net Assets
(percentage)
04 05 06 07 08 09 10 11 12 13
By using our assets and working
capital efficiently and effectively, we
achieved an increase in fiscal 2013
return on net assets.
Current and long-term debt
$
–
$
4,285
-100%
Shareholder’s equity
$ 380,638
$ 310,838
Shares outstanding at year end
12,873
12,723
22%
1%
Cash Flow Data
(for the fiscal years ended August 31)
Cash flows provided by
operating activities
$ 57,505
$ 52,439
Capital expenditures
$ 11,136
Cash flows used in investing activities $ 41,081
Cash flows used in financing activities $
7,995
Cash dividends per share
$
0.475
$
$
$
$
9,890
6,849
8,803
0.385
10%
13%
500%
-9%
23%
Performance Ratios
Annual revenue growth
Operating margin
Return on net assets
25.3%
15.5%
19.0%
15.1%
11.9%
13.4%
NA
NA
NA
2 013 A N N UA L R E P O R T
For the long term,
population growth is the
primary driver for the global
agricultural market.
1
FINANCIAL OVERVIEW
TO OUR SH A REHO LDERS
I am pleased to report that
Lindsay Corporation has continued
to generate outstanding results.
Led by significant growth in both
U.S. and international irrigation
equipment sales, Lindsay achieved
record levels of revenue and earnings
in fiscal 2013.
FINANCIAL PERFORMANCE
Total revenues for the fiscal year
ended August 31, 2013 reached
$690.8 million, a 25 percent increase
from the previous Company record
of $551.3 million in fiscal 2012.
Irrigation segment revenues were
$626.0 million, a 32 percent increase
from $475.3 million in fiscal 2012.
Domestic irrigation sales rose 26
percent to $385.7 million, up from
$305.4 million in the prior year.
International operations continued
to be an important part of our
growth strategy and management
focus; international irrigation
equipment sales increased to $240.3
million, up 41 percent over $169.9
million in fiscal 2012.
Infrastructure segment revenues were
$64.8 million, a 15 percent decrease
from $76.0 million in fiscal 2012.
Operating income rose 63 percent
to $107.1 million, up from $65.5
million in the prior year. Net
earnings increased to $70.6 million,
a 63 percent increase from $43.3
million in fiscal 2012. Earnings per
diluted share grew 62 percent to
$5.47 compared to $3.38 in fiscal
2012. The Company generated $57.5
million in cash flow from operations.
Fiscal 2013 operating expenses were
$87.8 million, or 12.7 percent of
sales, compared to $83.0 million
and 15.1 percent of sales in the prior
year. Fiscal 2012 operating costs
included $7.2 million of expenses, or
$0.37 per diluted share on an after
tax basis, relating to an increase in
the Company’s estimated liability
for environmental remediation at its
Lindsay, Nebraska facility.
Gross margin increased to 28.2
percent compared to 26.9 percent for
fiscal 2012 due to higher productivity,
lower input costs, and a favorable
pricing environment, particularly in
the first half of the year.
We continued to strengthen our
balance sheet. As of August 31,
2013, cash and cash equivalents of
$151.9 million represented an $8.5
For the fiscal year 2013,
Lindsay’s revenues increased
25% from the previous
record in fiscal 2012.
2
The following acquisitions
are examples of
products and services
that have been added
to strengthen Lindsay’s
competitive positioning
over the past six years:
• Watertronics
• IRZ
• Lakos
million increase from $143.4 million
in the prior year. During the year, the
Company’s long-term debt of $4.3
million was retired.
As our cash position has grown,
we have further defined our cash
allocation plan and best uses of our
balance sheet strength to improve
returns to shareholders. Organic
growth is our first priority. We expect
to increase our capital expenditures
from $20 million to $25 million
in fiscal 2014, largely focused on
manufacturing capacity expansion
and productivity improvements.
Synergistic water-related acquisitions
that provide attractive returns for
shareholders is the next priority
for cash use. The acquisitions over
the last few years of Watertronics,
IRZ and Claude Laval Corporation
(Lakos) are examples of products
and services that have been added
to strengthen our competitive
positioning while providing
additional opportunities for growth.
In addition, we consider cash
return to shareholders as another
attractive use for our cash position.
In 2013, our Board of Directors
voted to increase the regular
quarterly cash dividend by 13
percent to an annual indicated
rate of $0.52 per share. This marks
our eleventh consecutive year of
dividend increases. In addition, we
plan to opportunistically repurchase
Company stock, particularly in
recognition of the cyclicality of the
agriculture industry.
3
IRRIGATION SEGMENT REVIEW
Lakos, recently
acquired in 2013,
offers water
filtration systems
that add to Lindsay’s
existing capabilities
for integrated
irrigation solutions.
Lindsay Corporation is one of the
world’s leading providers of irrigation
and water management systems. Our
product lines include center pivot
and lateral move irrigation systems,
hose reel travelers, integrated
water-pumping stations, irrigation
controls, chemical injection systems,
water filtration systems, and remote
monitoring and control systems.
Lindsay’s irrigation products are sold
through more than 200 dealers in
the U.S. and more than 140 dealers
in international markets.
Lindsay’s irrigation segment
generates revenue from three
primary sources: 1) conversion of
dry land to irrigation; 2) conversion
from less efficient irrigation methods
to mechanized systems; and 3) sales
of replacement systems and parts.
RECORD SEGMENT RESULTS
Robust growth in both the domestic
and international markets led to
record irrigation equipment sales in
fiscal 2013. The irrigation segment
provided 91 percent of Lindsay
revenue compared to 86 percent
in fiscal 2012. Segment operating
margin was 20.0 percent compared
to 16.9 percent the prior year.
U.S. growth continued to be driven
by positive farmer sentiment toward
capital investments, and by strong
farm incomes and balance sheets.
In addition, the drought of 2012 led
to high demand in 2013. According
to U.S. Department of Agriculture
forecasts, 2013 net farm income of
$120.6 billion would be the highest
on record and 63 percent above the
10-year average. Through most of
4
2013 including the primary selling
season, commodity prices remained
near historic highs. In the second
half of calendar 2013, corn and
soybean prices declined significantly;
although record grain harvests in
the Midwest helped to offset the
lower prices.
Global demand also grew
significantly, due to healthy
commodity prices as well as
continued focus on the need for
increased crop yields and efficient
water use, particularly in developing
countries for a growing population.
Revenues increased most notably in
the Middle East and South America.
LAKOS ACQUISITION
In August of 2013 Lindsay acquired
the Claude Laval Corporation,
the manufacturer and marketer of
the highly regarded Lakos brand of
filters and separators. We are very
pleased to have added this excellent
company. Its line of filtration
products fits well with our efficient
irrigation product solutions and
adds an additional growth path in
industrial filtration and water use
efficiency applications. Due to the
timing of the acquisition, it had little
impact on our fiscal 2013 results,
but we expect the acquisition to be
accretive in fiscal 2014.
SOLUTION SELLING – A
COMPETITIVE ADVANTAGE
Due to the breadth of our product
lines and our range of value-
added services, Lindsay is able
to offer integrated solutions that
differentiate us from competitors
in the marketplace. We lead
The long-term drivers for
irrigation remain positive,
especially for growth in
international markets.
5
IRRIGATION SEGMENT REVIEW (CONT.)
LINDSAY’S RUGGED EQUIPMENT, INTEGRATED TECHNOLOGIES AND PLUG-AND-PLAY ADD-ONS
FORM A BROAD LINE OF IRRIGATION SOLUTIONS
PIVOTS
& LATERALS
IRRIGATION ENGINEERING
DESIGN & MANAGEMENT
CUSTOM PUMPING
SOLUTIONS
WIRELESS IRRIGATION
MANAGEMENT
PLUG-AND-PLAY
ADD-ONS
BROADBAND
SOLUTIONS
the industry in customer-valued
technological innovations and by
offering comprehensive services
including field layout and system
design, irrigation system weather and
field monitoring services, and design
and installation of in-field broadband
communication infrastructure. In
addition, we provide full-service
solutions to improve water use
efficiency, make farmers more
productive, and reduce costs such as
fuel and labor.
Our strategic acquisitions in recent
years have added to our capabilities
and continue to be further integrated
into our sales offering.
• Watertronics, acquired in fiscal
2008, provides pump stations for
a variety of uses. We have seen
significant growth in agricultural
applications for efficient water
management.
• IRZ, acquired in fiscal 2011,
provides sophisticated,
comprehensive irrigation
engineering design that is
especially beneficial for large farms.
• Lakos, acquired near the end of
fiscal 2013, offers water filtration
systems that add to our existing
capabilities for integrated
irrigation solutions.
In fiscal 2013, we also brought to
market FieldNET® 3.0, the latest
version of our award-winning web-
based control product. FieldNET 3.0
upgrades the previous web browser
version to a true mobile app that
makes it faster and easier to use,
particularly with marginal cellular
coverage often typical in farming
areas. The powerful upgrade features
a patent-pending user interface that
integrates pivot and pump controls,
soil moisture stations, and weather
stations, thus reducing energy costs,
downtime risk, and irrigation waste.
The Company made project
solution sales for a number of large
agricultural projects in fiscal 2013,
including in Russia, Sudan, and Iraq.
These projects utilized all of our
skillsets to provide comprehensive
solutions for our customers, and
further developed those skillsets for
future projects.
6
Converting to an efficient pivot
irrigation system or retrofitting
a high pressure system to low
pressure can conserve precious
water, boost agricultural production,
and reduce energy used in pump
systems. Outside of North America,
mechanized irrigation still has very
low market penetration, creating
excellent long-term opportunities.
ALTERNATIVE FUELS CONTINUE
TO BE A FACTOR WORLDWIDE FOR
CORN AND SUGAR CANE USE.
Historically the ethanol industry
has been an important consumer
of corn and sugar cane, crops that
benefit significantly from efficient
irrigation. Last year’s drought and
its resulting high crop prices caused
a decrease in ethanol production,
which has been forecasted to
rebound. However, changes have
been proposed to the Renewable
Fuel Standard that make the future
demand for ethanol less certain.
The long-term drivers for irrigation
remain positive, especially for growth
in international markets. With a solid
global footprint and by continuing
to expand our capabilities, our
efficiency, and our capacity in the
international markets, Lindsay is well
positioned to take advantage of these
global trends.
IRRIGATION MARKET
OUTLOOK
While Lindsay experienced
record sales in our domestic and
international irrigation markets in
fiscal 2013, we anticipate the robust
harvest will potentially result in
further reduced corn and soybean
prices, negatively affecting U.S.
demand for fiscal 2014. However,
we are very optimistic for the future
of mechanized irrigation globally.
International irrigation markets
appear to remain quite strong at this
time, driven by continuing concern
regarding food security globally. Large
international projects remain difficult
to predict, due to the complexity
of projects including government
approvals and funding availability.
For the long term, population
growth is the primary driver for
the global agricultural market. The
United Nations projects that the
world’s population will grow from
approximately 7.2 billion in 2013
to over 9 billion by 2050. In order
to adequately feed that growing
population, the U.N. Food and
Agriculture Organization (FAO)
projects that food production will
have to increase by 70 percent. With
fixed quantities of land and water, the
only way this can be accomplished
is to achieve higher crop yields and
more efficient use of water.
Worldwide, only 17 percent of
cropland is irrigated, yet irrigated
land produces 40 percent of the
world’s food supply. By far the world’s
most common irrigation method
is flood or gravity irrigation, which
consumes twice as much water as
an efficient mechanical system.
INFRASTRUCTURE SEGMENT REVIEW
Population
growth and essential
transportation needs
will continue to
fuel expansion in
demand for Lindsay’s
infrastructure
products.
Lindsay’s infrastructure segment is
an international group of companies
producing a wide range of products
that aid in roadway maintenance
and transportation safety. We
manufacture moveable road barriers
and barrier transfer machines, energy-
absorbing crash cushions, specialty
barriers for work areas or construction
zones, road marking materials,
railroad signaling structures, and
other safety-related products.
Lindsay’s roadway infrastructure
products are sold through 35 dealers
in the U.S. and 35 international
dealers, while railroad products are
sold directly to the major railroad
companies in the U.S.
Lindsay’s patented QuickChange®
Moveable Barrier, commonly known
as the Road Zipper SystemTM, is one
of the few ways to manage congestion
without the major investment
required to build new roads. Road
Zipper Systems provide a way to
divert traffic around construction
areas or work zones, increasing safety
for work crews and motorists alike.
On a permanent basis, Road Zipper
Systems are used to vary the number
of lanes available to accommodate
rush-hour (tidal) traffic flow, thus
permitting more efficient use of
available roadway. More than 200
Road Zipper Systems are in use in the
U.S. and internationally.
INFRASTRUCTURE
OPERATING RESULTS
In an environment characterized by
reduced government infrastructure
spending and project delays, our
infrastructure segment experienced
a 15 percent decline in revenue
in fiscal 2013. Infrastructure sales
8
generated 9 percent of Company
revenue in 2013 compared to 14
percent in fiscal 2012. Of course,
the shift in proportion was also due
in part to the tremendous growth
of irrigation revenue. For the year,
the infrastructure segment had a
disappointing operating loss of $0.8
million with an operating margin
loss of 1.3 percent compared to
breakeven in fiscal 2012.
We recently restructured the
management of the infrastructure
business and expect improvements
in our global market position in
road safety products, growth in Road
Zipper System sales, and continued
improvements in operations and
processes in fiscal 2014.
INFRASTRUCTURE
MARKET OUTLOOK
In the near term, we expect that
infrastructure demand will continue
to be challenging and uncertain
until the U.S. and foreign
governments commit to more
consistent investment in roads and
other infrastructure. We do feel
that with the recent restructuring,
coupled with our global footprint
and product line, we are positioned
for profitable growth as those
markets improve.
For the long term, the factors that
drive our infrastructure sales remain
positive and enduring.
Population growth and essential
transportation needs will continue
to fuel expansion in demand for
our infrastructure products. Today,
more than half of the world’s
infrastructure investment is being
Lindsay’s Road Zipper
SystemTM will soon be
used to improve safety
and ease congestion on
the Golden Gate Bridge
in San Francisco.
made in emerging nations that
have a rapidly growing number of
vehicles. There is also a continuing
emphasis globally on reducing traffic
mortality rates through investment
in highway safety products. Lindsay’s
infrastructure segment is working
with agencies throughout the world
to make their roadways safer with the
use of lane barriers, energy-absorbing
crash cushions, and clear markings.
ROADWAY CONGESTION
CARRIES A COST OF APPROXIMATELY
$121 BILLION TO THE
U.S. ECONOMY ANNUALLY.
Developed nations have ongoing
needs for infrastructure expansion
and renovation. In addition, traffic
congestion is much more than a mere
inconvenience. Roadway congestion
carries a cost of approximately
$121 billion to the U.S. economy
annually, in the form of 5.5 billion
hours lost in traffic and 2.9 billion
gallons of fuel wasted (Source: Texas
Transportation Institute – 2012
Urban Mobility Report). Traffic
and congestion also have a strong
negative impact on the environment.
In many situations, Lindsay’s Road
Zipper System will be the most cost-
effective solution available.
We believe strongly in the
long-term value of the infrastructure
business and are committed to
achieving profitable growth.
9
A PROVEN STRATEGY
Our management team follows
a proven strategy that leverages
Lindsay’s position as a market leader
to achieve even greater success. Our
blueprint for earnings growth and
shareholder returns includes:
• Increasing Market Share through
superior technology, dealer
performance, and product line
expansion;
• Protecting Margins by
differentiating our offerings,
improving manufacturing
efficiency, and optimizing the
supply chain;
• Expanding Internationally by
placing manufacturing and sales
functions in key areas and using
distribution centers advantageously;
• Expanding After-Market
Revenues by building our parts and
replacement business globally; and
• Synergistic Acquisitions that add
to the total solution offering in
water-use efficiency and provide
attractive returns to shareholders.
In fiscal 2013, Lindsay delivered
strong performance in all of these
facets of our business. In addition, we
have added Returning Excess Cash
to Shareholders as a key element in
our blueprint for earnings growth
and shareholder returns. During the
buildup of our cash balance in the
past few years, we have strived to
achieve an optimal capital structure
for our business through dividend
increases and acquisitions, which we
believe can provide the best returns
for shareholders. However, true
value-creating acquisitions have
proven more difficult to find and
bring to completion. While we will
continue to aggressively pursue
synergistic water-related acquisitions,
we are preparing to more aggressively
return cash to shareholders to
improve the return on invested
capital, which is in the best interest of
management and all shareholders.
LONG-TERM
GOALS AND
PERFORMANCE
Lindsay’s goals of
providing solid
financial performance
have not changed.
GOAL
FY13
FY12
5-Year Average
Generate revenue growth of 10 to 15 percent annually
25%
15%
Realize operating margins of 9 to 14 percent
15%
12%
Produce a return on net assets of 9 to 15 percent
19%
13%
10%
11%
12%
These figures exclude acquired companies in the year of acquisition.
FOR THE LONGER TERM, WE ARE CONFIDENT
THAT THE KEY DRIVERS FOR OUR BUSINESS
WILL REMAIN GLOBAL PRIORITIES.
10
LOOKING AHEAD
Coming off another record year
for our Company, we look forward
from a position of strength and
confidence. We have entered fiscal
2014 with a market-leading portfolio
of products and services. We are
prepared and equipped to manage
the Company through the cycles of
the agriculture industry. We have a
strong balance sheet that positions
us to advantageously pursue growth
both organically and through
acquisitions as well as continue to
return cash to shareholders.
For the longer term, we are confident
that the key drivers for our business
will remain global priorities. We
anticipate:
• Increasing global pressure for water
conservation;
• Long-term positive demand factors –
alternative fuels, improved diets,
and population growth;
• Continued drive for increased
yields, agricultural product quality,
and increased system automation
for a reduction in labor; and
• Global focus on improvements
for transportation infrastructure,
road safety, reduced pollution, and
reduction of traffic congestion.
We will capitalize on these by
following our proven, effective
strategy for growth. We will continue
to develop solutions that enable
more efficient and environmentally
friendly use of resources, increase
agricultural production, improve
road safety, and improve the quality
of life for people around the world.
In conclusion, I want to extend
my thanks and appreciation to
our employees, channel partners,
suppliers, customers, shareholders,
and Board of Directors. You have
each played an important role in
Lindsay Corporation’s success.
Sincerely,
Richard W. Parod
President and
Chief Executive Officer
11
COMING OFF ANOTHER RECORD YEAR FOR OUR COMPANY,
WE LOOK FORWARD FROM A POSITION OF STRENGTH AND CONFIDENCE.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
(cid:95)(cid:95)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended August 31, 2013
or
(cid:134)
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)
Delaware
(State or other jurisdiction of
incorporation or organization)
2222 North 111th Street, Omaha, Nebraska
(Address of principal executive offices)
402-829-6800
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
47-0554096
(I.R.S. Employer
Identification No.)
68164
(Zip Code)
Title of each class
Common Stock, $1.00 par value
Name of each exchange on which registered
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 (cid:134) No (cid:95)
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(cid:134) No(cid:95)
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 (cid:95) No(cid:134)
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 (cid:95) No(cid:134)
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 registrant's 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 (cid:95)
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.
Large accelerated filer (cid:95)
Smaller reporting company (cid:134)
Non-accelerated filer (cid:134)
Accelerated filer (cid:134)
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:134) No (cid:95)
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 28, 2013 was $1,073,694,887.
As of October 11, 2013, 12,872,801 shares of the registrant’s Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement pertaining to the Registrant’s 2013 annual stockholders' meeting are incorporated herein by
reference into Part III.
TABLE OF CONTENTS
Page(s)
Part I
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Mine Safety Disclosures
Part II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Item 6.
Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10.
Directors, Executive Officers and Corporate Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Item 14.
Principal Accounting Fees and Services
Part IV
Item 15.
Exhibits, Financial Statement Schedules
SIGNATURES
3-9
10-11
11
12
13
13
13-14
15
15-26
27
28-57
58
58-59
59
60-61
62
62
62
62
63-64
65
2
ITEM 1 – Business
PART I
INTRODUCTION
Lindsay Corporation, along with its subsidiaries (collectively called "Lindsay" or the "Company"), is a global leader
in providing a variety of proprietary water management and road infrastructure products and services. The Company
has been involved in the manufacture and distribution of agricultural equipment since 1955 and has grown from a
regional company to an international agribusiness and highway infrastructure firm with worldwide sales and
distribution. Lindsay, a Delaware corporation, maintains its corporate offices in Omaha, Nebraska. The Company
has operations which are categorized into two major reporting segments. Industry segment information about
Lindsay is included in Note Q to the consolidated financial statements.
Irrigation Segment – The Company’s irrigation segment includes the manufacture and marketing of center pivot,
lateral move, and hose reel irrigation systems which are used principally in the agricultural industry to increase or
stabilize crop production while conserving water, energy and labor. The irrigation segment also manufactures and
markets repair and replacement parts for its irrigation systems and controls, and designs and manufactures water
pumping stations and controls for the agriculture, golf, landscape and municipal markets. The Company continues to
strengthen irrigation product offerings through innovative technology such as GPS positioning and guidance,
variable rate irrigation, wireless irrigation management, and smartphone applications. On August 16, 2013, the
Company acquired Claude Laval Corporation, which manufactures and distributes LAKOS® separators and filtration
solutions for groundwater, agriculture, industrial and heat transfer markets, worldwide. The Company’s principal
irrigation manufacturing facilities are located in Lindsay, Nebraska, Hartland, Wisconsin, and Fresno, California.
Internationally, the Company has production operations in Brazil, France, China, and South Africa as well as
distribution operations in Australia and New Zealand. The Company also exports equipment from the U.S. to other
international markets.
Infrastructure Segment – The Company’s infrastructure segment includes the manufacture and marketing of
moveable barriers, specialty barriers, crash cushions and end terminals, road marking and road safety equipment, large
diameter steel tubing, railroad signals and structures, and outsourced manufacturing services. The principal
infrastructure manufacturing facilities are located in Rio Vista, California, Milan, Italy, and Omaha, Nebraska.
PRODUCTS BY SEGMENT
IRRIGATION SEGMENT
Products - The Company manufactures and 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® brand, and hose reel
travelers under the Perrot™ and Greenfield® brands in Europe and 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 and manufactures water
pumping stations and controls for the agriculture, golf, landscape and municipal markets and filtration solutions for
groundwater, agriculture, industrial and heat transfer markets, worldwide.
The Company's 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.
A typical center pivot 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 center pivot or lateral move system can
also be custom designed and can irrigate from 25 to 600+ acres.
3
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. The Company’s center pivot and lateral move irrigation systems can be
enhanced with a family of integrated proprietary products such as water pumping station controls.
The Company also manufactures and distributes hose reel travelers. Hose reel travelers are typically deployed in
smaller or irregular fields and usually are easy to operate, easy to move from field to field, and 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 available through the Company’s subscription-
based service. These systems allow growers to monitor their pivot systems, accumulate data on the operation of the
systems, and control the pivots from a remote location by logging onto an internet web site. The pivot monitoring and
control systems are marketed under the FieldNET® product name.
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 and solid set sprinklers. 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 "fertigation" or "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 fertigation or chemigation
will be utilized.
4
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 customer’s
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 agribusinesses, 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 Brazil, France, China, and South Africa as
well as distribution and sales operations in Australia and New Zealand serving the key South American, European,
Chinese, African, Australian, and New Zealand markets. The Company also exports equipment from the U.S. to other
international markets. Although the majority of the Company’s U.S. export sales are denominated in U.S. dollars, there
are approximately 19 percent of total Company sales conducted in local currencies outside of the U.S. dollar in fiscal
2013 and 2012. The Company generally ships against prepayments or U.S. bank confirmed irrevocable letters of credit
or other secured means.
The Company’s 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 Company’s 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 – Four primary manufacturers control a substantial majority of the U.S. center pivot irrigation system
industry. The international irrigation market includes participation and competition by the leading U.S. manufacturers
as well as various 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 Company continues
to strengthen irrigation product offerings through innovative technology such as GPS positioning and guidance,
variable rate irrigation, wireless irrigation management, and smartphone applications as well as through acquisition
of products and services that allow the Company to provide a more comprehensive solution to growers’ needs. The
Company’s engineering and research expenses related to irrigation totaled approximately $8.1 million, $6.0 million,
and $6.1 million for fiscal years 2013, 2012, and 2011, 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 Company’s Quickchange® Moveable Barrier™ system, commonly
known as the Road Zipper 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 Road Zipper System™ increases capacity and reduces 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 Road Zipper
System™ is particularly useful in busy commuter corridors and at choke points such as bridges and tunnels. Road
Zipper 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 Road Zipper System™ include highway reconstruction, paving and
resurfacing, road widening, median and shoulder construction, and repairs to tunnels and bridges.
5
The Company offers a variety of equipment lease options for Road Zipper Systems™ and BTM™ equipment used in
construction applications. The leases extend for periods of three months or more for equipment already existing in the
Company’s lease fleet. Longer lease periods may be required for specialty equipment that must be built for specific
projects.
These systems have been in use since 1987. 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 – The Company offers 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 Company’s 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-II-R™, 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 – The Company also offers 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 an area of focus for reducing the amount and severity of injuries.
Road Marking and Road Safety Equipment – The Company 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. The Company also manages an ISO 17025 certified
testing laboratory 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 Norms”) for these types of products. The NCHRP Report 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 Company’s Diversified Manufacturing and Tubing business unit 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 Company’s customer base includes certain
large industrial companies and railroads. Each customer benefits from the Company’s design and engineering
capabilities as well as the Company’s ability to provide a wide spectrum of manufacturing services, including
welding, machining, painting, forming, galvanizing and assembling hydraulic, electrical, and mechanical
components.
Markets – The Company’s primary infrastructure market includes moveable concrete barriers, delineation systems,
crash cushions and similar protective equipment. The U.S. roadway infrastructure market includes projects such as
new roadway construction, bridges, tunnels, maintenance and resurfacing, the purchase of rights-of-way 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 nation’s 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.
6
The global market for the Company’s infrastructure products continues to be driven by population growth and the need
for improved road safety. The international market is presently very different from country to country. 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.
Prevention programs put in place in various countries to lower highway traffic fatalities may also lead to greater
demand. The Company has recently started distributing infrastructure products in South America, the Middle East and
Asia. The Company will continue expanding in markets as populations grow and markets become more established.
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 Company’s engineering and research expenses related to
infrastructure products totaled approximately $3.3 million, $3.5 million and $4.3 million for fiscal years 2013, 2012
and 2011, 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 Road Zipper System™. However, the Company’s barrier product does compete with traditional
“safety shaped” concrete barriers and other safety barriers.
Distribution methods and channels – The Company has production and sales operations in the United States and Italy.
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 Company’s 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 Company’s 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 Company’s reportable segments is set forth below.
The following table describes the Company’s total irrigation and infrastructure revenues for the past three years.
United States export revenue is included in International based on the region of destination.
$ in millions
United States
International
Total Revenues
2013
For the years ended August 31,
2012
2011
% of Total
Revenues Revenues
% of Total
Revenues Revenues
% of Total
Revenues Revenues
$ 428.9
$ 261.9
$ 690.8
62 $ 354.6
38 $ 196.7
100 $ 551.3
64 $ 307.7
36 $ 171.2
100 $ 478.9
64
36
100
SEASONALITY
Irrigation equipment sales are seasonal by nature. Farmers generally order systems to be delivered and installed before
the growing season. Shipments to customers located in Northern Hemisphere countries usually peak during the
Company's second and third fiscal quarters for the spring planting period. Sales of infrastructure products are
traditionally higher during prime road construction seasons and lower in the winter. The primary construction season
for Northern Hemisphere countries is from March until late September which corresponds to the Company’s third and
fourth fiscal quarters.
CUSTOMERS
The Company is not dependent for a material part of either segment’s 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
Company’s financial condition, results of operations or cash flow.
7
ORDER BACKLOG
As of August 31, 2013, the Company has an order backlog of $66.5 million compared with $57.1 million at August 31,
2012. The Company’s backlog can fluctuate from period to period due to the seasonality, cyclicality, timing and
execution of contracts. Typically, the Company’s backlog of firm orders at any point in time represents only a portion
of the revenue it expects to realize during the following three-month period. However, the timing related to certain
project oriented contracts may extend longer than three months.
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 2013, 2012, and 2011 were $11.1 million, $9.9 million and $8.4 million, respectively.
Capital expenditures for fiscal 2014 are estimated to be approximately $20.0 million to $25.0 million largely focused
on manufacturing capacity expansion and productivity improvements. The Company’s 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
Lindsay’s Zimmatic®, Greenfield®, GrowSmart®, Perrot™, Road Zipper System™, Quickchange® Moveable Barrier™,
ABSORB 350®, FieldNET®, TAU®, Universal TAU-II®, TAU-II-R™, TAU-B_NR™, X-Tension™, CableGuard™, TESI™,
SAB™, ArmourGuard™, PaveGuard™, DR46™, U-MAD™, LAKOS® 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, Lindsay's 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 2013, 2012,
and 2011 were 1,262, 1,082 and 999, respectively. None of the Company's U.S. employees are represented by a union.
Certain of the Company’s 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 in Note N, Commitments and
Contingencies, to the Company’s consolidated financial statements and does not believe that these matters,
individually or in the aggregate, are likely to have a material adverse effect on the Company’s consolidated financial
condition.
8
FINANCIAL INFORMATION ABOUT FOREIGN AND U.S. OPERATIONS
The Company's primary production facilities are located in the United States. The Company has smaller production
and sales operations in Brazil, France, Italy, China, and South Africa as well as distribution and sales operations in
Australia and New Zealand. Most of the Company’s financial transactions are in U.S. dollars, although some export
sales and sales from the Company's foreign subsidiaries are conducted in local currencies. Approximately 19 percent
of total consolidated Company sales were conducted in local currencies in fiscal 2013 and 2012. To reduce the
uncertainty of foreign currency exchange rate movements on these sales and purchase commitments conducted in
local currencies, 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
of the Company’s 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 Company’s 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 “Investor Relations – 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 Company’s internet address is http://www.lindsay.com; however,
information posted on its website is not part of this Annual Report on Form 10-K. The following documents are also
posted on the Company’s website homepage, under the tabs “Investor Relations – Governance – Committees” and
“Investor Relations – Governance – Ethics”:
Audit Committee Charter
Compensation Committee Charter
Corporate Governance and Nominating Committee Charter
Code of Business Conduct and Ethics
Corporate Governance Principles
Code of Ethical Conduct
Employee Complaint Procedures for Accounting and Auditing Matters
Special Toll-Free Hotline Number and E-mail Address for Making Confidential or Anonymous Complaints
These documents are also available in print to any stockholder upon request, by sending a letter addressed to the
Secretary of the Company.
9
ITEM 1A - Risk Factors
The following are certain of the more significant risks that may affect the Company’s business, financial condition
and results of operations.
The Company’s irrigation revenues are highly dependent on the agricultural industry and weather conditions.
The Company’s irrigation revenues 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 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 alternatives.
Weather conditions, particularly during the planting and early growing season, can significantly affect the
purchasing decisions of purchasers of irrigation equipment. Natural calamities such as regional floods, hurricanes or
other storms, and droughts can have significant effects on seasonal irrigation demand. Drought conditions, which
generally impact irrigation equipment demand positively over the long term, can adversely affect demand if water
sources become unavailable or if governments impose water restriction policies to reduce overall water availability.
The Company’s infrastructure revenues are highly dependent on government funding of transportation projects.
The demand for the Company’s 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
Company’s infrastructure products.
The Company’s profitability may be negatively affected by increases in the cost of raw materials, as well as in the
cost of energy. Certain of the Company’s 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 Company’s profitability may be negatively affected by the disruption or termination of the supply of parts,
materials, and components from third-party suppliers. The Company uses a limited number of suppliers for certain
parts, materials, and components in the manufacturing process. Disruptions or delays in supply or significant price
increases from these suppliers could adversely affect the Company’s operations and profitability. Such disruptions,
terminations or cost increases could result in cost inefficiencies, delayed sales or reduced sales.
The Company’s 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, 2013, approximately 38 percent of the
Company’s consolidated revenues were generated from international sales and United States export revenue to
international regions. Specifically, international revenues are primarily generated from Australia, New Zealand,
Canada, Central and Western Europe, Mexico, the Middle East, Africa, China, Russia/Ukraine, and Central and
South America. In addition to risks relating to general economic and political stability in these countries, the
Company’s 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. Although the
Company generally ships against prepayments or U.S. bank confirmed irrevocable letters of credit or other secured
means, the ability to execute against these contracts in certain markets and local laws can affect the Company’s ability
to collect amounts when due. The Company does business in a number of countries that are particularly susceptible
to disruption from changing social economic conditions as well as terrorism, political hostilities, sanctions, war and
similar incidents.
10
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 Company’s Lindsay, Nebraska site was added to the list of priority superfund sites of the U.S. Environmental
Protection Agency (the “EPA”) in 1989. The Company and its environmental consultants have developed a
remedial action work plan, under which the Company continues to work with the EPA to define and implement
steps to better contain and remediate the remaining contamination. Although the Company has accrued all reasonably
estimable costs associated with remediation of the site, it is expected that additional testing and environmental
monitoring and remediation could be required in the future as part of the Company’s ongoing discussions with the EPA
regarding the development and implementation of the remedial action plans. In addition, the current investigation has
not yet been completed and does not include all potentially affected areas on the site. Due to the current stage of
discussions with the EPA and the uncertainty of the remediation actions that may be required with respect to these
affected areas, the Company believes that meaningful estimates of costs or range of costs cannot currently be made and
accordingly have not been accrued. The Company’s ongoing remediation activities at its Lindsay, Nebraska facility
are described in Note N, Commitments and Contingencies, to the Company’s consolidated financial statements.
The Company’s consolidated financial results are reported in U.S. dollars while certain assets and other reported
items are denominated in the currencies of other countries, creating currency translation risk. The reporting
currency for the Company’s consolidated financial statements is the U.S. dollar. Certain of the Company’s assets,
liabilities, expenses and revenues are denominated in other countries’ currencies. Those assets, liabilities, expenses
and revenues are translated into U.S. dollars at the applicable exchange rates to prepare the Company’s consolidated
financial statements. Therefore, increases or decreases in exchange rates between the U.S. dollar and those other
currencies affect the value of those items as reflected in the Company’s consolidated financial statements.
Substantial fluctuations in the value of the U.S. dollar compared to those other currencies could have a significant
impact on the Company’s results.
Expansion of the Company’s business may result in unanticipated adverse consequences. The Company
routinely considers possible expansions of the business, both domestically and in foreign locations. Acquisitions,
partnerships, joint ventures or other similar major investments require significant managerial resources, which may
be diverted from the Company’s other business activities. The risks of any expansion of the business through
investments, acquisitions, partnerships or joint ventures are increased due to the significant capital and other
resources that the Company may have to commit to any such expansion, which may not be recoverable if the
expansion initiative to which they were devoted is not fully implemented or is ultimately unsuccessful. As a result of
these risks and other factors, including general economic risk, the Company may not be able to realize projected
returns from any recent or future acquisitions, partnerships, joint ventures or other investments.
ITEM 1B – Unresolved Staff Comments
None.
11
ITEM 2 - Properties
The Company’s facilities are well maintained, in good operating condition and are suitable for present purposes. These
facilities, together with both short-term and long-term planned capital expenditures, are expected to meet the
Company’s manufacturing needs in the foreseeable future. The Company does not anticipate any difficulty in retaining
occupancy of any leased facilities, either by renewing leases prior to expiration or by replacing them with equivalent
leased facilities. The following are the Company’s significant properties.
Segment
Geographic
Location (s)
Own/
Lease
Lease
Expiration
Square
Feet
Property Description
Corporate
Omaha, Nebraska
Lease
2019
30,000
Corporate headquarters
Irrigation
Lindsay, Nebraska
Own
N/A
300,000
Principal U.S. manufacturing plant consists of eight separate
buildings located on 122 acres
Irrigation
Fresno, California
Own
N/A
94,000
Infrastructure
Omaha, Nebraska
Own
N/A
83,000
Irrigation
Hartland, Wisconsin
Own
N/A
73,000
Irrigation
La Chapelle, France
Own
N/A
72,000
Manufacturing plant consists of three separate buildings for
filtration products
Manufacturing plant for infrastructure products located on six
acres
Two commercial buildings on five acres for the design and
manufacture of water pumping stations and controls for the
agriculture, golf, landscape and municipal markets
Manufacturing plant for irrigation products for the European
markets, consists of three separate buildings situated on 3.5 acres
Irrigation
Irrigation
Mogi Mirim, Sao Paulo,
Brazil
Tianjin, China and
Beijing, China
Lease
2014
67,000
Manufacturing plant for irrigation products for the Brazilian
market, consists of two buildings
Lease
2015
58,400
Manufacturing plant and office facilities for irrigation products
for the Chinese market
Infrastructure
Milan, Italy
Own
N/A
45,000
Manufacturing plant for infrastructure products
Infrastructure
Rio Vista, California
Own
N/A
30,000
Manufacturing plant for infrastructure products located on seven
acres
Irrigation
Pasco, Grandview, and
Othello, Washington;
Hermiston, Oregon
Lease
2014 -
2022
28,900
Retail irrigation operations in four leased buildings
Irrigation
Amarillo, Texas
Lease
2017
22,000
Warehouse facility for irrigation products
Irrigation
Kraaifontein, South Africa Lease
2016
23,900
Manufacturing and warehouse facility for the sub-Saharan Africa
markets
Irrigation
Milford, Nebraska; Sioux
Falls, South Dakota
Lease
2015
16,400
Manufacturing, engineering, and office locations related to
Digitec, Inc.
Irrigation
Pasco, Washington;
Hermiston, Oregon;
Portland, Oregon
Lease
2014 -
2018
22,500
Office and warehouse locations related to IRZ Consulting, LLC
Irrigation
Paul, Idaho
Lease
2017
11,400
Warehouse facility for irrigation products
Irrigation
Toowoomba, Queensland,
Australia; Feilding, New
Zealand
Lease
2014
8,000
Warehouse facilities for the Australian and New Zealand markets
12
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.
ITEM 4 – Mine Safety Disclosures
Not applicable
PART II
ITEM 5 - Market For the Registrant's 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
October 3, 2013, there were approximately 178 stockholders 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:
Fiscal 2013 Stock Price
Fiscal 2012 Stock Price
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year
High
Low
Dividends
High
Low
Dividends
$
$
$
$
$
80.48 $
94.90 $
94.50 $
82.23 $
94.90 $
64.52 $
73.86 $
73.43 $
72.54 $
64.52 $
0.115 $
0.115 $
0.115 $
0.130 $
0.475 $
63.40 $
67.27 $
70.13 $
74.62 $
74.62 $
46.03 $
49.17 $
52.98 $
52.68 $
46.03 $
0.090
0.090
0.090
0.115
0.385
The Company currently expects that cash dividends comparable to those paid historically will continue to be paid in
the future, although there can be no assurance as to future dividends as they depend on future earnings, capital
requirements and financial condition.
Purchases of equity securities by the issuer and affiliated purchases - The Company made no repurchases of its
Common Stock under the Company’s stock repurchase plan during the fiscal year ended August 31, 2013; therefore,
tabular disclosure is not presented. From time to time, the Company’s Board of Directors has authorized
management to repurchase shares of the Company’s Common Stock. Under this share repurchase plan,
management has existing authorization to purchase, without further announcement, up to 881,139 shares of the
Company’s Common Stock in the open market or otherwise.
13
Peer Performance Table - The graph below compares the cumulative 5-year total return attained by stockholders on
the Company’s 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, 2013.
An investment of $100 (with the reinvestment of all dividends) is assumed to have been made in the Company’s
Common Stock and in each of the indexes on August 31, 2008 and the graph shows its relative performance through
August 31, 2013.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Lindsay Corporation, the S&P Smallcap 600 Index,
and S&P SmallCap 600 Construction, Farm Machinery and Heavy Truck Index
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
8/08
8/09
8/10
8/11
8/12
8/13
Lindsay Corporation
S&P Smallcap 600
S&P SmallCap 600 Construction, Farm Machinery and Heavy Truck Index
*$100 invested on 8/31/08 in stock or index, including reinvestment of dividends.
Fiscal year ending August 31.
Copyright© 2013 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.
8/31/2008
8/31/2009
8/31/2010
8/31/2011
8/31/2012
8/31/2013
Lindsay Corporation
S&P Smallcap 600
S&P SmallCap 600 Construction, Farm
Machinery and Heavy Truck Index
100.00
100.00
100.00
51.11
79.27
63.48
45.81
85.46
74.61
77.70
106.34
82.15
124.32
96.11
157.50
95.23
107.45
138.14
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
14
ITEM 6 – Selected Financial Data
$ in millions, except per share amounts
Operating revenues
Gross profit
Gross margin
Operating expenses
Operating income
Operating margin
Net earnings
Net margin
Diluted net earnings per share
Cash dividends per share
Property, plant and equipment, net
Total assets
Long-term obligations
Return on beginning assets (1)
Diluted weighted average shares
2009
2013
27.1%
28.2%
15.5%
11.9%
26.9%
27.6%
For the Years Ended August 31,
2010
2011
2012
$ 690.8 $ 551.3 $ 478.9 $ 358.4 $ 336.2
$ 194.8 $ 148.5 $ 129.8 $ 98.9 $ 80.6
24.0%
$ 87.8 $ 83.0 $ 73.2 $ 61.1 $ 58.2
$ 107.1 $ 65.5 $ 56.6 $ 37.8 $ 22.4
6.7%
$ 70.6 $ 43.3 $ 36.8 $ 24.9 $ 13.8
4.1%
$ 5.47 $ 3.38 $ 2.90 $ 1.98 $ 1.11
$ 0.475 $ 0.385 $ 0.345 $ 0.325 $ 0.305
$ 65.1 $ 56.2 $ 58.5 $ 57.6 $ 59.6
$ 512.3 $ 415.5 $ 381.1 $ 325.5 $ 307.9
$ - $ - $ 4.3 $ 8.6 $ 19.5
4.2%
12,461
12,585
12,810
12,901
12,692
10.6%
11.4%
11.3%
17.0%
10.2%
11.8%
8.1%
6.9%
7.9%
7.7%
(1) Defined as net earnings divided by beginning of period total assets.
ITEM 7 - Management's 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 Company's 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 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 Company's 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.
15
Overview
The Company manufactures and markets Zimmatic®, Greenfield® and Perrot™ center pivot, lateral move, and hose
reel irrigation systems. The Company also produces and markets 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
Company's primary production facilities are located in the United States. The Company has smaller production and
sales operations in Brazil, France, China, and South Africa as well as distribution and sales operations in Australia and
New Zealand. 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 production facilities in the United States and Italy and has produced road safety products in
irrigation manufacturing facilities in China and Brazil. In addition, the Company’s infrastructure segment produces
large diameter steel tubing and railroad signals and structures, and provides outsourced manufacturing and
production services for other companies.
For the business overall, the global, long-term drivers of water conservation, population growth, increasing
importance of biofuels, and the need for safer, more efficient transportation solutions remain positive. Key factors
which impact demand for the Company’s irrigation products include agricultural commodity prices, net farm income,
worldwide agricultural crop production, the profitability of agricultural crop production, availability of financing,
governmental policies regarding the agricultural sector, water and energy conservation policies, the regularity of
rainfall, regional climate change, and foreign currency exchange rates. A key factor which impacts demand for the
Company’s 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 nation’s roadway system. Matching funding from the
various states may be required as a condition of federal funding.
The Company continues to have an ongoing, structured, acquisition process that it expects to generate additional
growth opportunities throughout the world in water and infrastructure. Lindsay is committed to achieving earnings
growth by global market expansion, improvements in margins, and strategic acquisitions. On August 16, 2013, the
Company acquired 100 percent of the outstanding common shares of Claude Laval Corporation, a California
corporation that manufactures and distributes LAKOS® separators and filtration solutions for groundwater,
agriculture, industrial and heat transfer markets, worldwide. Since 2001, the Company has added to its operations in
Europe, South America, South Africa, Australia, New Zealand 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.
16
New Accounting Standards Issued But Not Yet Adopted
See Note B, New Accounting Pronouncements, to the Company’s consolidated financial statements for information
regarding recently issued accounting pronouncements.
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 Company’s
accounting policies are critical, as these policies are most important to the presentation of the Company’s
consolidated results of operations and financial condition. They require the greatest use of judgments and estimates
by management based on the Company’s historical experience and management’s knowledge and understanding of
current facts and circumstances. Management periodically re-evaluates and adjusts the estimates that are used as
circumstances change.
Following are the accounting policies management considers critical to the Company’s consolidated results of
operations and financial condition:
Revenue Recognition
The Company’s revenue recognition accounting policy is critical because it can significantly impact the Company’s
consolidated results of operations and financial condition. The Company’s basic criteria necessary for revenue
recognition are: 1) evidence of a sales arrangement exists, 2) delivery of goods has occurred, 3) the seller's price to
the buyer is fixed or determinable, and 4) collectability is reasonably assured. The Company recognizes revenue
when these criteria have been met and when title and risk of loss transfers to the customer. The Company generally
has no post-delivery obligations to its independent dealers other than standard warranties. Revenues and gross
profits on intercompany sales are eliminated in consolidation.
Revenues from the sale of the Company’s products are recognized based on the delivery terms in the sales contract.
If an arrangement involves multiple deliverables, the delivered items are considered separate units of accounting if
the items have value on a stand-alone basis and there is objective and reliable evidence of their fair values. Revenues
from the arrangement are allocated to the separate units of accounting based on their objectively determined fair
value.
The Company offers a subscription-based service for wireless management and recognizes subscription revenue on
a straight-line basis over the contract term. The Company leases certain infrastructure property held for lease to
customers such as moveable concrete barriers and Road Zipper SystemsTM. Revenues for the lease of infrastructure
property held for lease are recognized on a straight-line basis over the lease term. If an infrastructure project is
completed ahead of schedule and prior to the lease term end date, the Company accelerates the lease term and the
timing of recognized revenue once the Company is no longer required to perform under the lease contract.
The costs related to revenues are recognized in the same period in which the specific revenues are recorded.
Shipping and handling fees billed to customers are reported in revenue. Shipping and handling costs incurred by the
Company are included in cost of sales. 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 product warranties, product rebates, cash
discounts and fair value of separate units of accounting on multiple deliverables.
17
Inventories
The Company’s accounting policy on inventories is critical because the valuation and costing of inventory is
essential to the presentation of the Company’s consolidated results of operations and financial condition. Inventories
are stated at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for the Company’s
Lindsay, Nebraska inventory and two warehouses in Idaho and Texas. Cost is determined by the first-in, first-out
(FIFO) method for inventory at operating locations in Nebraska, California, Wisconsin, China and Australia. Cost is
determined by the weighted average cost method for inventory at the Company’s other operating locations in
Washington, Brazil, France, 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.
Environmental Remediation Liabilities
The Company’s accounting policy on environmental remediation is critical because it requires significant judgments
and estimates by management, involves changing regulations and approaches to remediation plans, and any revisions
could be material to the operating results of any fiscal quarter or fiscal year. The Company is subject to an array of
environmental laws and regulations relating to the protection of the environment. In particular, the Company
committed to remediate environmental contamination of the groundwater at and adjacent to its Lindsay, Nebraska
facility (the “site”) with the EPA. The Company and its environmental consultants have developed a remedial action
work plan, under which the Company continues to work with the EPA to define and implement steps to better
contain and remediate the remaining contamination.
Environmental remediation liabilities include costs directly associated with site investigation and clean up, such as
materials, external contractor costs and incremental internal costs directly related to the remedy. Estimates used to
record environmental remediation liabilities are based on the Company’s best estimate of probable future costs
based on site-specific facts and circumstances. Estimates of the cost for the likely remedy are developed using
internal resources or by third-party environmental engineers or other service providers. The Company records the
undiscounted environmental remediation liabilities that represent the points in the range of estimates that are most
probable or the minimum amount when no amount within the range is a better estimate than any other amount.
In fiscal 2013, the Company and the EPA conducted a periodic five-year review of the status of the remediation of the
contamination of the site. The Company intends to complete additional investigation of the soil and groundwater on
the site during the first half of fiscal 2014. The Company will then assess whether it will need to revise its remediation
plan in order to come to an agreement with the EPA on how to proceed. The Company anticipates there could be
revisions to the current remediation plan as a result of these activities and as additional information is obtained. Any
revisions could be material to the operating results of any fiscal quarter or fiscal year. The Company does not expect
such additional expenses would have a material adverse effect on its liquidity or financial condition.
The Company accrues the anticipated cost of environmental remediation when the obligation is probable and can be
reasonably estimated. Although the Company has accrued all reasonably estimable costs associated with remediation of
the site, it is expected that additional testing and environmental monitoring and remediation could be required in the
future as part of the Company’s ongoing discussions with the EPA regarding the development and implementation of
the remedial action plans. In addition, the current investigation has not yet been completed and does not include all
potentially affected areas on the site. Due to the current stage of discussions with the EPA and the uncertainty of the
remediation actions that may be required with respect to these affected areas, the Company believes that meaningful
estimates of costs or range of costs cannot currently be made and accordingly have not been accrued.
18
Valuation of Goodwill and Identifiable Intangible Assets
The Company’s accounting policy on valuation of goodwill and identifiable intangible assets is critical because it
requires significant judgments and estimates by management and can significantly impact the Company’s
consolidated results of operations and financial condition. Assessment of the potential impairment of goodwill and
identifiable intangible assets is an integral part of the Company's normal ongoing review of operations. Testing for
potential impairment of these assets is significantly dependent on numerous assumptions and reflects management's
best estimates at a particular point in time. The dynamic economic environments in which the Company's businesses
operate and key economic and business assumptions related to projected selling prices, market growth, inflation
rates and operating expense ratios, can significantly affect the outcome of impairment tests. Estimates based on
these assumptions may differ significantly from actual results. Changes in factors and assumptions used in assessing
potential impairments can have a significant impact on the existence and magnitude of impairments, as well as the
time in which such impairments are recognized.
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 August 31 and whenever triggering events
or changes in circumstances indicate its carrying value may not be recoverable. The Company performs the
impairment analysis at the reporting unit level using a two-step impairment test. Fair value is typically estimated
using a discounted cash flow analysis, which requires the Company to estimate the future cash flows anticipated to
be generated by the particular assets being tested for impairment as well as to select a discount rate to measure the
present value of the anticipated cash flows. When determining future cash flow estimates, the Company considers
historical results adjusted to reflect current and anticipated operating conditions. Estimating future cash flows
requires significant judgment and assumptions by management in such areas as future economic conditions,
industry-specific conditions, product pricing, and necessary capital expenditures. To the extent that the reporting
unit is unable to achieve these assumptions, impairment losses may emerge. The Company updated its impairment
evaluation of goodwill and intangible assets with indefinite useful lives at August 31, 2013.
The estimated fair value of each of the Company’s reporting units exceeded the respective carrying values by more
than 10 percent. Accordingly, no impairment losses were indicated as a result of the annual impairment testing for
fiscal years 2013, 2012, and 2011. If assumptions on discount rates and future cash flows change as a result of
events or circumstances, and the Company believes that the long-term profitability may have declined in value, then
the Company may record impairment charges, resulting in lower profits. Sales and profitability of each of the
Company’s reporting units may fluctuate from year to year and within a year. In the evaluation of the fair value of
reporting units, the Company looks at the long-term prospects for the reporting unit and recognizes that current
performance may not be the best indicator of future prospects or value, which requires management judgment.
Indefinite life intangible assets primarily consist of tradenames/trademarks. The fair value of these assets are
determined using a “relief from royalty” analysis that determines the fair value of each trademark through use of a
discounted cash flow model that incorporates an estimated “royalty rate” the Company would be able to charge a
third party for the use of the particular trademark. When determining the future cash flow estimates, the Company
must estimate future net sales and a fair market royalty rate for each applicable tradename at an appropriate discount
rate to measure the present value of the anticipated cash flows. Estimating future net sales requires significant
judgment by management in such areas as future economic conditions, industry-specific conditions, product pricing,
and consumer trends.
19
Executive Overview
Operating revenues for the year ended August 31, 2013 increased by 25 percent to $690.8 million compared with
$551.3 million for the year ended August 31, 2012. The trend for fiscal 2013 included higher demand for irrigation
systems stimulated by positive drivers in the agricultural economy and lower demand for infrastructure products due to
government funding issues and project delays. The record sales in U.S. and international irrigation markets have led
to record results driven by positive farmer sentiment toward capital investments, increased farm income, and
concern over drought conditions. As drought conditions in the 2012 growing season across the U.S. pushed
commodity prices higher, the recognition of the importance of efficient, mechanical irrigation rose, creating greater
demand for irrigation equipment in fiscal 2013.
Gross margin was 28.2 percent for fiscal 2013 compared to 26.9 percent for the prior fiscal year as higher gross
margins were realized in the irrigation segment, while infrastructure gross margins were relatively flat year over
year. Irrigation segment gross margins increased by 1.0 percentage point primarily due to a strong pricing
environment combined with increased manufacturing productivity and leverage.
Net earnings were $70.6 million or $5.47 per diluted share for the year ended August 31, 2013 compared with $43.3
million or $3.38 per diluted share for the same prior year period. The prior year period included a $7.2 million
accrual for environmental remediation at the Company’s Lindsay, Nebraska facility, which lowered earnings by
$0.37 per diluted share.
Market Conditions and Outlook
Farm commodity prices declined during the fourth quarter of fiscal 2013 on indications of strong yields in the
current growing season and a decreasing impact of drought conditions in the U.S. Corn Belt. Despite these
influences, order volumes remained high by historical fourth quarter standards, although less than those during the
same time of the prior year. As of August 27, 2013, the U.S. Department of Agriculture (“USDA”) forecasted U.S.
2013 net farm income to be $120.6 billion, which would be the highest on record and 63 percent higher than the ten-
year average. At this point, the Company believes farmer sentiment regarding capital goods purchases is becoming
more conservative than in fiscal 2013 due to lower commodity prices and the anticipated expiration of the Section
179 tax deduction, but this shift in sentiment is offset in part by strong balance sheets and high net farm income.
Irrigation equipment demand for 2014 and beyond is currently unclear and will be driven by farmer sentiment and
influenced by weather conditions, commodity prices, stock-to-use ratios, and farm income potential. Demand for the
Company’s irrigation equipment is closely aligned with net farm income and commodity prices and can fluctuate
significantly on a quarterly or annual basis. Changing farm subsidies and capital investment tax benefits by the U.S.
federal government may positively or adversely impact irrigation equipment demand.
The Company believes the most significant opportunities for growth over the next several years are in international
markets, where irrigation use is significantly less developed, and demand is driven primarily by food security, water
scarcity and population growth. In most of these international markets, mechanized irrigation represents substantial
yield enhancement opportunities, while still having minimal market penetration. While the irrigation revenues in the
developing regions are more variable and project based, they represent substantial long-term growth opportunities,
facilitated by the Company’s global presence.
Infrastructure demand, including for Road Zipper SystemTM projects, has proven to be challenging due to constricted
government funding and project delays. The infrastructure segment continues to experience revenue and profit
volatility due to the project nature of the Road Zipper SystemsTM and the fixed nature of some operating expenses. The
Company believes in the opportunity for Road Zipper SystemsTM to drive significant profitability over the long term
as a superior solution to worldwide traffic congestion, lost productivity and energy waste.
Although the environment for infrastructure sales continues to be constrained by longer-term funding uncertainty, the
Company remains focused on taking appropriate actions to rationalize its cost base and improve sales and marketing
activities to improve profitability if and when the market eventually strengthens. The Company does not anticipate a
strong turnaround in government infrastructure spending in fiscal 2014. However, the Company believes it has
sizeable market penetration opportunities for road safety products and Road Zipper SystemsTM in the future. Demand
for the Company’s transportation safety products continues to be driven by population growth and the need for
improved road safety.
20
As of August 31, 2013, the Company has an order backlog of $66.5 million compared with $57.1 million at August 31,
2012. The increase in current year backlog from August 31, 2012 reflects $4.7 million carryover volume from the Iraq
order announced in the second fiscal quarter. Backlog has increased year over year in international irrigation and
infrastructure, while backlog in U.S. irrigation has decreased. The Company’s backlog can fluctuate from period to
period due to the seasonality, cyclicality, timing and execution of contracts. Typically, the Company’s backlog at any
point in time represents only a portion of the revenue it expects to realize during the following three month period.
However, the timing related to certain project oriented contracts may extend longer than three months.
For the business overall, the global, long-term drivers of water conservation, population growth, increasing
importance of biofuels, and the need for safer, more efficient transportation solutions remain positive. The Company
is focused on seeking accretive, synergistic acquisitions. The Company is committed to creating value for
shareholders through multiple strategies, including continual investment in core businesses, strategic acquisitions,
dividends and share repurchases.
Results of Operations
The following “Fiscal 2013 Compared to Fiscal 2012” and the “Fiscal 2012 Compared to Fiscal 2011” sections present
an analysis of the Company’s consolidated operating results displayed in the Consolidated Statements of Operations
and should be read together with the information in Note Q, Industry Segment Information, to the consolidated
financial statements.
Fiscal 2013 Compared to Fiscal 2012
The following table provides highlights for fiscal 2013 compared with fiscal 2012:
$ in thousands
Consolidated
Operating revenues
Cost of operating revenues
Gross profit
Gross margin
Operating expenses (1)
Operating income
Operating margin
Other income (expense), net
Income tax expense
Effective income tax rate
Net earnings
Irrigation Equipment Segment (See Note Q)
Operating revenues
Operating income (2)
Operating margin (2)
Infrastructure Products Segment (See Note Q)
Operating revenues
Operating loss (2)
Operating margin (2)
For the Years Ended
August 31,
2013
2012
Percent
Increase
(Decrease)
$
$
$
$
$
$
$
$
$
$
$
$
690,848
496,014
194,834
28.2%
87,773
107,061
15.5%
246
36,737
34.2%
70,570
625,996
125,395
20.0%
64,852
(811)
(1.3%)
$
$
$
$
$
$
$
$
$
$
$
$
551,255
402,737
148,518
26.9%
83,008
65,510
11.9%
(402)
21,831
33.5%
43,277
475,299
80,259
16.9%
75,956
(11)
(0.0%)
25.3%
23.2%
31.2%
5.7%
63.4%
161.2%
68.3%
63.1%
31.7%
56.2%
(14.6%)
(7272.7%)
(1) Includes $17.5 million and $14.7 million of unallocated general and administrative expenses for fiscal 2013
and fiscal 2012, respectively.
(2) Excludes unallocated corporate general and administrative expenses.
21
Revenues
Operating revenues in fiscal 2013 increased by 25 percent to $690.8 million compared with $551.3 million in fiscal
2012. The increase is attributable to a $150.6 million increase in irrigation revenues offset in part by an $11.1
million decrease in infrastructure revenues. The irrigation segment provided 91 percent of Company revenue in
fiscal 2013 as compared to 86 percent of the same prior year period, due to growth in irrigation equipment revenues
and the decline in infrastructure revenues.
U.S. irrigation revenues of $385.7 million increased $80.3 million or 26 percent compared to fiscal 2012. The increase
in U.S. irrigation equipment revenues is primarily due to a 28 percent increase in the number of irrigation systems sold
compared to the prior fiscal year, with the largest increases in the U.S. Corn Belt. Favorable economic conditions in
U.S. agriculture markets continued to drive strong demand for irrigation equipment. Higher commodity prices and
planted acres contributed to strong net farm income in 2012, which was projected to continue into 2013. As of August
27, 2013, the USDA projected 2013 net farm income to be $120.6 billion, which would be 63 percent higher than the
ten-year average, creating positive economic conditions for U.S. farmers.
International irrigation revenues of $240.3 million increased $70.3 million or 41 percent compared to fiscal 2012. The
increase in international irrigation revenues is primarily due to a 35 percent increase in the number of irrigation systems
sold compared to the prior year. Operating revenues increased in nearly all markets and most significantly in the
Middle East and South America. In fiscal 2013, the Company recognized revenues of $33.4 million on the Iraq contract
consisting of irrigation machines and ancillary related equipment. In South America, irrigation equipment revenues in
Brazil doubled over the prior year, fueled by proven success from mechanized irrigation and attractive interest rates
offered by the Brazilian government for agricultural equipment.
Infrastructure products segment revenues of $64.8 million decreased by $11.1 million or 15 percent compared to the
prior fiscal year. The decrease in infrastructure revenues was primarily due to lower sales across all product lines.
Infrastructure demand, including for Road Zipper SystemTM projects, has proven to be challenging due to constricted
government funding and project delays.
Gross Margin
Gross profit was $194.8 million for fiscal 2013, an increase of $46.3 million compared to fiscal 2012. The increase
in gross profit was primarily attributable to a $37.6 million increase on higher sales volume and an $8.7 million
gross profit increase from improvement in gross margin. Gross margin was 28.2 percent for fiscal 2013 compared
to 26.9 percent for the prior fiscal year as higher gross margins were realized in the irrigation segment, while
infrastructure gross margins were relatively flat year over year. Irrigation segment gross margins increased by 1.0
percentage point primarily due to a strong pricing environment combined with increased manufacturing productivity
and fixed cost leverage from increased volume.
Operating Expenses
The Company’s operating expenses of $87.8 million for fiscal 2013 increased $4.8 million compared to fiscal 2012
operating expenses of $83.0 million. The increase in operating expenses is primarily related to an increase of $5.8
million in personnel-related expenses, driven by higher incentive compensation and headcount to support growth,
increases in selling expenses of $3.0 million associated with growth, increases in research and development
expenses of $1.9 million, and increases in accounts receivable reserves of $1.2 million. These increases were
partially offset by the $7.2 million decrease in environmental remediation expense. Operating expenses were 12.7
percent of sales for fiscal 2013 compared to 15.1 percent of sales for fiscal 2012 due to leverage of expenses on
higher sales.
Operating margin was 15.5 percent for fiscal 2013 as compared to 11.9 percent for fiscal 2012.
Income Taxes
The Company recorded income tax expense of $36.7 million and $21.8 million for fiscal 2013 and fiscal 2012,
respectively. The increase in income tax expense was primarily due to increases in pretax income. The effective
income tax rate increased to 34.2 percent in fiscal 2013 compared to 33.5 percent in fiscal 2012. The increase in the
annual effective income tax rate from August 2012 to August 2013 primarily related to incremental increases in
foreign taxes less certain tax credits reinstated in fiscal 2013. The Company recorded no material discrete items in
fiscal 2013.
22
Net Earnings
Net earnings for fiscal 2013 were $70.6 million or $5.47 per diluted share compared to $43.3 million, or $3.38 per
diluted share for the prior fiscal year. The Company’s operating income increased to $107.1 million in fiscal 2013
compared to $65.5 million during the prior fiscal year primarily due to an increase in revenues partially offset by
higher operating expenses.
Fiscal 2012 Compared to Fiscal 2011
The following table provides highlights for fiscal 2012 compared with fiscal 2011:
$ in thousands
Consolidated
Operating revenues
Cost of operating revenues
Gross profit
Gross margin
Operating expenses (1)
Operating income
Operating margin
Other (expense) income, net
Income tax expense
Effective income tax rate
Net earnings
Irrigation Equipment Segment (See Note Q)
Operating revenues
Operating income (2)
Operating margin (2)
Infrastructure Products Segment (See Note Q)
Operating revenues
Operating (loss) income (2)
Operating margin (2)
For the Years Ended
August 31,
2012
2011
Percent
Increase
(Decrease)
$
$
$
$
$
$
$
$
$
$
$
$
551,255
402,737
148,518
26.9%
83,008
65,510
11.9%
(402)
21,831
33.5%
43,277
475,299
80,259
16.9%
75,956
(11)
(0.0%)
$
$
$
$
$
$
$
$
$
$
$
$
478,890
349,105
129,785
27.1%
73,199
56,586
11.8%
(72)
19,712
34.9%
36,802
369,930
59,703
16.1%
108,960
11,901
10.9%
15.1%
15.4%
14.4%
13.4%
15.8%
458.3%
10.7%
17.6%
28.5%
34.4%
(30.3%)
(100.1%)
(1) Includes $14.7 million and $15.0 million of unallocated general and administrative expenses for fiscal 2012
and fiscal 2011, respectively.
(2) Excludes unallocated corporate general and administrative expenses.
Revenues
Operating revenues for fiscal 2012 increased by $72.4 million to $551.3 million compared with $478.9 million in fiscal
2011. The increase is attributable to a $105.4 million increase in irrigation equipment revenues offset in part by a $33.0
million decrease in infrastructure segment revenues.
U.S. irrigation equipment revenues of $305.4 million increased $77.8 million or 34 percent compared to fiscal 2011.
The increase in U.S. irrigation equipment revenues is primarily due to a 28 percent increase in the number of irrigation
systems sold compared to the prior fiscal year. Favorable economic conditions in U.S. agriculture markets continued to
drive strong demand for irrigation equipment. Despite the severity of the 2012 drought, shortfalls in crop production
did not have a detrimental impact on sector-wide net farm income as shortages raised the prices farmers received for
crops sold and crop insurance partially offset the impact of lower yields.
International irrigation revenues of $169.9 million increased $27.6 million or 19 percent from fiscal 2011 revenues of
$142.3 million driven by volume increases in the number of irrigation systems sold due to favorable economic
conditions in most international regions. Operating revenues increased in nearly all international markets, most
significantly in the Middle East, Latin America, China, Canada and Africa.
23
Infrastructure products segment revenues of $76.0 million decreased by $33.0 million or 30 percent compared to the
prior fiscal year. The decrease in infrastructure revenues was driven primarily by fewer Road Zipper SystemTM
projects.
Gross Margin
Gross profit was $148.5 million for fiscal 2012, an increase of $18.7 million compared to fiscal 2011. Gross profit
increased primarily due to a $20.0 million increase in volume partially offset by $1.3 million decrease in gross
margin. Gross margin was 26.9 percent for fiscal 2012 compared to 27.1 percent for the prior fiscal year.
Infrastructure segment gross margins decreased by 7.5 percentage points due to lower revenues of higher-margin
Road Zipper SystemTM projects offset by higher pricing within road safety products and contract manufacturing.
Irrigation segment gross margins increased by 1.2 percentage points driven by fixed cost leverage from increased
volume.
Operating Expenses
The Company’s operating expenses of $83.0 million for fiscal 2012 increased $9.8 million compared to fiscal 2011
operating expenses of $73.2 million. Of the $9.8 million increase in operating expenses, $5.9 million is attributable
to the increase in the Company’s environmental remediation accrual over the same prior year period related to an
updated remediation assessment completed in fiscal 2012. The remaining increase in operating expenses was
primarily due to personnel related expenses of $3.4 million driven by higher headcount to support growth and
international markets, the inclusion of incremental expenses of an acquired business of $1.9 million, and
investments in sales and marketing of $0.6 million, offset in part by decreases in research and development expenses
of $1.1 million and a reduction in consultant expenses associated with the implementation of a new enterprise
resource planning (ERP) system implemented in the prior year of $0.9 million.
Operating margin was 11.9 percent for fiscal 2012 as compared to 11.8 percent for fiscal 2011. Operating expenses
were 15.1 percent of sales for fiscal 2012 compared to 15.3 percent of sales for fiscal 2011. Excluding
environmental accruals, operating margin was 13.2 percent for fiscal 2012 as compared to 12.1 percent for fiscal
2011 and operating expenses were 13.8 percent of sales for fiscal 2012 compared to 15.0 percent of sales for fiscal
2011, an improvement attributable primarily to leverage from increased sales generated from substantially similar
fixed expenses.
Income Taxes
Income tax expense of $21.8 million for fiscal 2012 increased $2.1 million compared to fiscal 2011 income tax
expense of $19.7 million. The increase in income tax expense was primarily due to increases in pretax income. The
effective income tax rate decreased to 33.5 percent in fiscal 2012 compared to 34.9 percent in fiscal 2011. The
effective income tax rate decreased 1.4 percentage points primarily due to a net reduction of uncertain tax positions
compared to the previous year and a benefit resulting from finalizing the 2011 tax return calculations that were less
than estimated in the 2011 income tax provision.
Net Earnings
Net earnings for fiscal 2012 were $43.3 million or $3.38 per diluted share compared to $36.8 million, or $2.90 per
diluted share for the prior fiscal year. The Company’s operating income increased to $65.5 million in fiscal 2012
compared to $56.6 million during the prior fiscal year primarily due to an increase in revenues partially offset by
higher operating expenses.
Liquidity and Capital Resources
The Company's cash and cash equivalents totaled $151.9 million at August 31, 2013 compared with $143.4 million
at August 31, 2012. The Company requires cash for financing its receivables and inventories, paying operating
expenses and capital expenditures, and for dividends and potential share repurchases. 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 Company believes its current cash
resources, projected operating cash flow, and remaining capacity under its continuing 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. Although the Company made no repurchases of its common stock
during the year ended August 31, 2013, the Company does have existing authorization to purchase up to 881,139
shares of its common stock under the Company’s share repurchase plan.
24
The Company’s total cash and cash equivalents held by foreign subsidiaries, in which earnings are considered
indefinitely reinvested, was approximately $26.2 million and $18.1 million as of August 31, 2013 and 2012,
respectively. The Company considers these funds to be permanently reinvested, and would need to accrue and pay
taxes if these funds were repatriated. The Company does not intend to repatriate the funds, and does not expect
these funds to have a significant impact on the Company’s overall liquidity.
Net working capital was $266.7 million at August 31, 2013, as compared with $218.4 million at August 31, 2012.
The increase in net working capital mainly resulted from increased cash from earnings over the past year, increased
inventory to support the increases in sales, especially in the irrigation segment, and increased receivables due to
higher sales. Cash flows provided by operations totaled $57.5 million during the year ended August 31, 2013
compared to $52.4 million provided by operations during the same prior year period. Cash provided by operations
increased by $5.1 million compared to the prior year period primarily as a result of increased earnings and positive
cash flow changes in other current liabilities offset in part by decreases due to negative cash flow changes in
receivables, current taxes payable and inventories.
Cash flows used in investing activities totaled $41.1 million during the year ended August 31, 2013 compared to
$6.8 million during the same prior year period. The increase in the net cash used in investing activities was
primarily due to the $29.0 million acquisition of Claude Laval Corporation and its LAKOS® brand of filtration
products in 2013. Capital spending of $11.1 million in fiscal 2013 increased compared to the prior year capital
spending of $9.9 million, primarily due to productivity improvements. In fiscal 2014, the Company expects capital
expenditures of approximately $20.0 million to $25.0 million, largely focused on manufacturing capacity expansion
and productivity improvements.
Cash flows used in financing activities totaled $8.0 million during the year ended August 31, 2013 compared to $8.8
million during the same prior year period. The $0.8 million decrease in cash used in financing activities was
primarily due to an increase in proceeds from the exercise of stock options offset in part by additional dividends
paid. The Company’s total interest-bearing debt decreased from $4.3 million at August 31, 2012 to zero at August
31, 2013 due to four quarterly principal payments that fully satisfied the debt.
Euro Line of Credit
The Company’s wholly-owned European subsidiary, Lindsay Europe SAS, has an unsecured revolving line of credit
with Societe Generale, a European commercial bank, under which it could borrow for working capital purposes up to
2.3 million Euros, which equates to approximately $3.0 million U.S. dollars as of August 31, 2013 (the “Euro Line of
Credit”). On February 8, 2013, the Company extended the Euro Line of Credit with Societe Generale through January
31, 2014. There were no borrowings outstanding on this credit agreement at August 31, 2013 and 2012. 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 110 basis points (1.32 percent at August
31, 2013). Unpaid principal and interest is due by January 31, 2014.
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 Barrier Systems, Inc., a wholly
owned subsidiary of the Company. Borrowings under the BSI Term Note bear interest at a rate equal to LIBOR plus
50 basis points (0.68 percent at August 31, 2013). The Company effectively fixed the economic effect of the variable
interest rate at 6.05 percent through an interest rate swap as described in Note L, Financial Derivatives, to the
consolidated financial statements. The BSI Term Note was repaid in full on its scheduled maturity date of June 10,
2013.
25
Revolving Credit Agreement
The Company has an unsecured $30.0 million Revolving Credit Note and Credit Agreement with Wells Fargo Bank,
N.A., which was amended on February 13, 2013 in order to extend the termination date from January 23, 2014 to
February 13, 2016 (the “Revolving Credit Agreement”). The borrowings from the Revolving Credit Agreement
may primarily be used for working capital purposes and funding acquisitions. At August 31, 2013 and 2012, there
was no outstanding balance on the Revolving Credit Agreement. Borrowings under the Revolving Credit
Agreement bear interest at a rate equal to LIBOR plus 90 basis points (1.08 percent at August 31, 2013), subject to
adjustment as set forth in the 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 percent on the unused portion
of the Revolving Credit Agreement. Any unpaid principal and interest is due by February 13, 2016.
The Revolving Credit Agreement contains certain covenants relating to the Company’s financial condition. These
include maintaining a funded debt to EBITDA ratio, a fixed charge coverage ratio, a current ratio and a tangible net
worth requirement. Upon the occurrence of any event of default of these covenants, including a change in control of
the Company, all amounts due thereunder may be declared to be immediately due and payable. The BSI Term Note
contained substantially similar covenants. At August 31, 2013 and 2012, the Company was in compliance with all
loan covenants.
Inflation
The Company is subject to the effects of changing prices. During fiscal 2013, 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 Company’s 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 Company’s inventory and raw
materials risk management system. However, competitive market pressures may affect the Company’s ability to
pass price adjustments along to its customers.
Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements
In the normal course of business, the Company enters into contracts and commitments which obligate the Company to
make future payments. The Company uses off-balance sheet arrangements, such as leases accounted for as operating
leases, standby letters of credit and performance bonds, where sound business principles warrant their use. The table
below sets forth the Company’s significant future obligations by time period.
$ in thousands
Contractual Obligations (1)
Operating lease obligations
Pension benefit obligations
Total
Less than
1 Year
Total
2-3
Years
4-5
Years
More
than 5
Years
$ 8,526 $ 2,590 $ 3,164 $ 1,802 $ 970
4,206
$ 15,407 $ 3,147 $ 4,237 $ 2,847 $ 5,176
1,045
6,881
1,073
557
(1) Total liabilities for unrecognized tax benefits as of August 31, 2013 were $1.4 million and are classified on the Company's consolidated
balance sheets within other noncurrent liabilities and are excluded from the table above.
The Company does not have any additional off-balance sheet arrangements that have or are reasonably likely to have a
material current or future effect on the Company’s financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital resources.
26
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 attempts to manage market
and credit risks associated with its derivative instruments by establishing and monitoring limits as to the types and
degree of risk that may be undertaken, and by entering into transactions with high-quality counterparties. As of
August 31, 2013, the Company’s derivative counterparty had investment grade credit ratings.
The Company has manufacturing operations in the United States, Brazil, France, 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 Company’s 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 Company’s 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 Company’s results of operations. Based on the consolidated statement of operations for the year ended
August 31, 2013, the Company estimates the potential decrease in operating income from a 10 percent adverse
change in the underlying exchange rates, in U.S. dollar terms, would be less than $1.0 million.
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, intercompany transactions and future settlement of
foreign denominated assets and liabilities. The Company had $4.0 million of U.S. dollar equivalent cash flow
forward exchange contracts and option contracts outstanding as of August 31, 2013.
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 a
portion of its Euro net investment exposure in its foreign operations. At August 31, 2013, the Company had
outstanding Euro foreign currency forward contracts to sell 29.2 million Euro at fixed prices expected to settle
during the first quarter of fiscal 2014. Based on the net investments contracts outstanding at August 31, 2013, the
Company estimates the potential decrease in fair value from a 10 percent adverse change in the underlying exchange
rates would be approximately $2.9 million. This decrease in fair value would be reflected as a reduction to other
comprehensive income offsetting the translation exposure or adjustment of the international subsidiaries.
27
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, 2013 and 2012, and the related consolidated statements of operations, comprehensive
income, shareholders’ equity, and cash flows for each of the years in the three-year period ended August 31, 2013.
In connection with our audits of the consolidated financial statements, we also have 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 Company’s 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, 2013 and 2012, and the results of their
operations and their cash flows for each of the years in the three-year period ended August 31, 2013, 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, presents fairly, in all
material respects, the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company’s internal control over financial reporting as of August 31, 2013, based on criteria established
in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated October 18, 2013 expressed an unqualified opinion on the effectiveness of the
Company’s internal control over financial reporting.
/s/ KPMG LLP
Omaha, Nebraska
October 18, 2013
28
Lindsay Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
2013
Years ended August 31,
2012
2011
$
$
690,848
496,014
194,834
$
551,255
402,737
148,518
478,890
349,105
129,785
32,937
43,441
11,395
-
87,773
28,104
38,198
9,481
7,225
83,008
(in thousands, except per share amounts)
Operating revenues
Cost of operating revenues
Gross profit
Operating expenses:
Selling expense
General and administrative expense
Engineering and research expense
Environmental remediation expense
Total operating expenses
Operating income
107,061
65,510
Interest expense
Interest income
Other income (expense), net
(304)
496
54
(492)
504
(414)
Earnings before income taxes
107,307
65,108
Income tax expense
Net earnings
Earnings per share:
Basic
Diluted
36,737
21,831
$
70,570
$
43,277
$
36,802
$
$
5.50
5.47
$
$
3.41 $
3.38 $
Shares used in computing earnings per share:
Basic
Diluted
12,830
12,901
12,704
12,810
Cash dividends declared per share
$
0.475
$
0.385
$
0.345
See accompanying notes to consolidated financial statements.
29
27,842
33,659
10,403
1,295
73,199
56,586
(762)
315
375
56,514
19,712
2.93
2.90
12,560
12,692
Lindsay Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
($ in thousands)
Net earnings
Other comprehensive income (loss):
Defined benefit pension plan adjustment, net of tax
Unrealized gain on cash flow hedges, net of tax
Foreign currency translation adjustment, net of
hedging activities and tax
Total other comprehensive (loss) income, net of tax
(benefit) expense of ($330), $394 and $440
2013
Years ended August 31,
2012
2011
$
70,570 $
43,277 $
36,802
260
53
(408)
200
69
319
(1,752)
(7,131)
4,719
(1,439)
(7,339)
5,107
41,909
Total comprehensive income
$
69,131 $
35,938 $
See accompanying notes to consolidated financial statements.
30
Lindsay Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
($ and shares in thousands, except par values)
ASSETS
Current assets:
Cash and cash equivalents
Receivables, net of allowance of $2,853 and $1,717, respectively
Inventories, net
Deferred income taxes
Other current assets
Total current assets
Property, plant and equipment, net
Intangible assets, net
Goodwill
Other noncurrent assets
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
Current portion of long-term debt
Other current liabilities
Total current liabilities
Pension benefits liabilities
Deferred income taxes
Other noncurrent liabilities
Total liabilities
$
$
$
Shareholders' equity:
Preferred stock of $1 par value - authorized 2,000 shares;
no shares issued and outstanding
Common stock at $1 par value - authorized 25,000 shares;
18,571 and 18,421 shares issued at August 31, 2013 and 2012, respectively
Capital in excess of stated value
Retained earnings
Less treasury stock (at cost, 5,698 shares)
Accumulated other comprehensive loss, net
Total shareholders' equity
Total liabilities and shareholders' equity
$
See accompanying notes to consolidated financial statements.
August 31,
2013
August 31,
2012
151,927 $
120,291
68,607
12,705
15,261
368,791
65,064
36,007
37,414
5,020
512,296 $
42,276 $
-
59,816
102,092
6,324
15,415
7,827
131,658
143,444
82,565
52,873
9,505
10,478
298,865
56,180
25,070
29,961
5,455
415,531
31,372
4,285
44,781
80,438
6,821
9,984
7,450
104,693
-
-
18,571
49,764
405,580
(90,961)
(2,316)
380,638
512,296 $
18,421
43,140
341,115
(90,961)
(877)
310,838
415,531
31
Lindsay Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands, except per share amounts)
Shares of
Common
stock
Shares of
Treasury
stock
Common
stock
Capital in
excess of
stated
value
Retained
earnings
Treasury
stock
Accumulated
other
comprehensive
(loss) income,
net
Total
Shareholders’
equity
18,185
5,698 $ 18,185 $ 30,756 $ 270,272 $ (90,961)
$
1,355 $
229,607
36,802
(4,342)
5,107
36,802
5,107
41,909
(4,342)
2,736
2,487
3,268
189
189
2,547
2,487
3,268
Balance at August 31, 2010
Comprehensive income:
Net earnings
Other comprehensive income
Total comprehensive income
Cash dividends ($0.345) per share
Issuance of common shares under
share compensation plans
Excess tax benefits from share-
based compensation
Share-based compensation expense
Balance at August 31, 2011
18,374
5,698 $ 18,374 $ 39,058 $ 302,732 $ (90,961)
$
6,462 $
275,665
Comprehensive income:
Net earnings
Other comprehensive loss
Total comprehensive income
Cash dividends ($0.385) per share
Issuance of common shares under
share compensation plans
Excess tax benefits from share-
based compensation
Share-based compensation expense
43,277
(4,894)
(7,339)
43,277
(7,339)
35,938
(4,894)
(10)
374
3,765
47
47
(57)
374
3,765
Balance at August 31, 2012
18,421
5,698 $ 18,421 $ 43,140 $ 341,115 $ (90,961)
$
(877) $
310,838
Comprehensive income:
Net earnings
Other comprehensive loss
Total comprehensive income
Cash dividends ($0.475) per share
Issuance of common shares under
share compensation plans
Excess tax benefits from share-
based compensation
Share-based compensation expense
70,570
(6,105)
(1,439)
70,570
(1,439)
69,131
(6,105)
(405)
2,800
4,379
150
150
(555)
2,800
4,379
Balance at August 31, 2013
18,571
5,698 $ 18,571 $ 49,764 $ 405,580 $ (90,961)
$
(2,316) $
380,638
See accompanying notes to consolidated financial statements.
32
Lindsay Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
Provision for uncollectible accounts receivable
Deferred income taxes
Share-based compensation expense
Other, net
Changes in assets and liabilities:
Receivables
Inventories
Other current assets
Accounts payable
Other current liabilities
Current taxes payable
Other noncurrent assets and liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisitions of business, net of cash acquired
Proceeds from settlement of net investment hedges
Payments for settlement of net investment hedges
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options
Common stock withheld for payroll tax withholdings
Principal payments on long-term debt
Excess tax benefits from share-based compensation
Dividends paid
Net cash used in financing activities
Years Ended August 31,
2012
2013
2011
$
70,570 $
43,277 $
36,802
12,600
1,543
(3,237)
4,573
(1,014)
(36,557)
(10,020)
(4,054)
9,188
14,578
(892)
227
57,505
(11,136)
22
(29,007)
1,944
(2,904)
(41,081)
2,036
(2,441)
(4,285)
2,800
(6,105)
(7,995)
12,468
379
(3,868)
3,939
959
(7,570)
(5,609)
(641)
723
(1,602)
5,408
4,576
52,439
(9,890)
116
-
3,378
(453)
(6,849)
567
(577)
(4,286)
387
(4,894)
(8,803)
11,734
388
(2,828)
3,474
208
(12,626)
(1,826)
(1,430)
4,780
8,223
(2,327)
(1,517)
43,055
(8,405)
80
(6,180)
142
(1,261)
(15,624)
3,579
(843)
(4,286)
2,487
(4,342)
(3,405)
Effect of exchange rate changes on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
54
8,483
143,444
151,927 $
(1,510)
35,277
108,167
143,444 $
723
24,749
83,418
108,167
$
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid
Interest paid
See accompanying notes to consolidated financial statements.
$
$
38,328 $
369 $
19,667 $
561 $
22,057
860
33
Lindsay Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Lindsay Corporation, along with its subsidiaries (collectively called "Lindsay" or the "Company"), is a global leader
in providing a variety of proprietary water management and road infrastructure products and services. The Company
has been involved in the manufacture and distribution of agricultural equipment since 1955 and has grown from a
regional company to an international agribusiness and highway infrastructure firm with worldwide sales and
distribution. Lindsay, a Delaware corporation, maintains its corporate offices in Omaha, Nebraska. The Company
has operations which are categorized into two major reporting segments.
Irrigation Segment – The Company’s irrigation segment includes the manufacture and marketing of center pivot,
lateral move, and hose reel irrigation systems which are used principally in the agricultural industry to increase or
stabilize crop production while conserving water, energy and labor. The irrigation segment also manufactures and
markets repair and replacement parts for its irrigation systems and controls, and designs and manufactures water
pumping stations and controls for the agriculture, golf, landscape and municipal markets. The Company continues to
strengthen irrigation product offerings through innovative technology such as GPS positioning and guidance,
variable rate irrigation, wireless irrigation management, and smartphone applications. On August 16, 2013, the
Company acquired Claude Laval Corporation, which manufactures and distributes LAKOS® separators and filtration
solutions for groundwater, agriculture, industrial and heat transfer markets, worldwide. The Company’s principal
irrigation manufacturing facilities are located in Lindsay, Nebraska, Hartland, Wisconsin, and Fresno, California.
Internationally, the Company has production operations in Brazil, France, China, and South Africa as well as
distribution operations in Australia and New Zealand. The Company also exports equipment from the U.S. to other
international markets.
Infrastructure Segment – The Company’s infrastructure segment includes the manufacture and marketing of
moveable barriers, specialty barriers, crash cushions and end terminals, road marking and road safety equipment, large
diameter steel tubing, railroad signals and structures, and outsourced manufacturing services. The principal
infrastructure manufacturing facilities are located in Rio Vista, California, Milan, Italy, and Omaha, Nebraska.
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. All 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 on the date of grant. 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.
The value of the portion of the award that is ultimately expected to vest is recognized as expense in the Company’s
Consolidated Statement of Operations over the periods during which the employee or director is required to perform
a service in exchange for the award.
34
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 Company’s stock price as well as assumptions
regarding a number of highly complex and subjective variables. These variables include, but are not limited to the
Company’s 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 Long-Term Incentive 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.
(4) Revenue Recognition
The Company’s basic criteria necessary for revenue recognition are: 1) evidence of a sales arrangement exists, 2)
delivery of goods has occurred, 3) the seller's price to the buyer is fixed or determinable, and 4) collectability is
reasonably assured. The Company recognizes revenue when these criteria have been met and when title and risk of
loss transfers to the customer. The Company generally has no post-delivery obligations to its independent dealers
other than standard warranties. Revenues and gross profits on intercompany sales are eliminated in consolidation.
Revenues from the sale of the Company’s products are recognized based on the delivery terms in the sales contract.
If an arrangement involves multiple deliverables, the delivered items are considered separate units of accounting if
the items have value on a stand-alone basis and there is objective and reliable evidence of their fair values. Revenues
from the arrangement are allocated to the separate units of accounting based on their objectively determined fair
value.
The Company offers a subscription-based service for wireless management and recognizes subscription revenue on
a straight-line basis over the contract term. The Company leases certain infrastructure property held for lease to
customers such as moveable concrete barriers and Road Zipper SystemsTM. Revenues for the lease of infrastructure
property held for lease are recognized on a straight-line basis over the lease term. If an infrastructure project is
completed ahead of schedule and prior to the lease term end date, the Company accelerates the lease term and the
timing of recognized revenue once the Company is no longer required to perform under the lease contract.
The costs related to revenues are recognized in the same period in which the specific revenues are recorded.
Shipping and handling fees billed to customers are reported in revenue. Shipping and handling costs incurred by the
Company are included in cost of sales. 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 product warranties, product rebates, cash
discounts and fair value of separate units of accounting on multiple deliverables.
(5) Receivables and Allowances
Trade receivables are reported on the balance sheet net of any doubtful accounts. Losses are recognized when it is
probable that an asset has been impaired and the amount of the loss can be reasonably estimated. In estimating
probable losses, the Company reviews specific accounts that are significant and past due, in bankruptcy or otherwise
identified at risk for potential credit loss. Collectability of these specific accounts are assessed based on facts and
circumstances of that customer, and an allowance for credit losses is established based on the probability of default.
The allowance for credit losses attributable to the remaining accounts is established using probabilities of default
and an estimate of associated losses based upon the aging of receivable balances, collection experience, economic
conditions and credit risk quality. The evaluation of the adequacy of the allowance for credit losses is based on facts
and circumstances available to the Company at the date of the consolidated financial statements and considers any
significant changes in circumstances occurring through the date that the financial statements are issued.
(6) Warranty Costs
The Company's provision for product warranty reflects management's 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.
35
(7) Cash and Cash Equivalents
Cash equivalents consist of highly-liquid 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
Company’s Lindsay, Nebraska inventory and two warehouses in Idaho and Texas. Cost is determined by the first-in,
first-out (FIFO) method for inventory at operating locations in Nebraska, California, Wisconsin, China and Australia.
Cost is determined by the weighted average cost method for inventory at the Company’s other operating locations in
Washington, Brazil, France, 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.
(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;
equipment -- 3 to 7 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 Company's long-lived
asset groups 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 group, an impairment loss is recognized based upon the difference between the fair value of the asset and its
carrying value. 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) Valuation of Goodwill and Identifiable 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 August 31 and whenever triggering events
or changes in circumstances indicate its carrying value may not be recoverable.
A significant amount of judgment is involved in determining if an indicator of impairment of goodwill has occurred.
Such indicators may include deterioration in general economic conditions, adverse changes in the markets in which
an entity operates, increases in input costs that have negative effects on earnings and cash flows, or a trend of
negative or declining cash flows over multiple periods, among others. The fair value that could be realized in an
actual transaction may differ from that used to evaluate the impairment of goodwill.
In testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine
whether the existence of events or circumstances leads to a determination that it is more likely than not (more than
50%) that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to
perform a qualitative assessment and determine that an impairment is more likely than not, the Company is then
required to perform a quantitative impairment test, otherwise no further analysis is required. The Company also may
elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test
The Company performs the impairment analysis at the reporting unit level using a two-step impairment test. Fair
value is typically estimated using a discounted cash flow analysis, which requires the Company to estimate the
future cash flows anticipated to be generated by the particular assets being tested for impairment as well as to select
a discount rate to measure the present value of the anticipated cash flows. When determining future cash flow
estimates, the Company considers historical results adjusted to reflect current and anticipated operating conditions.
Estimating future cash flows requires significant judgment and assumptions by management in such areas as future
economic conditions, industry-specific conditions, product pricing, and necessary capital expenditures. To the extent
that the reporting unit is unable to achieve these assumptions, impairment losses may emerge. The Company
updated its impairment evaluation of goodwill and intangible assets with indefinite useful lives at August 31, 2013.
36
(11) Income Taxes
Income taxes are accounted for utilizing the asset and liability method. 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.
(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.
Employee stock options, nonvested shares and similar equity instruments granted by the Company are treated as
potential common share equivalents outstanding in computing diluted net earnings per share. The Company’s
diluted common shares outstanding reported in each period includes 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.
(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.
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. 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.
The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative
that is used in the hedging transaction is highly effective. 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.
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. The Company manages
market and credit risks associated with its derivative instruments by establishing and monitoring limits as to the types
and degree of risk that may be undertaken, and by entering into transactions with high-quality counterparties. As of
August 31, 2013, the Company’s derivative counterparty had investment grade credit ratings.
37
(15) Fair Value Measurements
The Company’s disclosure of the fair value of assets and liabilities is based on a three-level hierarchy for fair value
measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement
date. Inputs refers broadly to the assumptions that market participants would use in pricing the asset or liability,
including assumptions about risk. The categorization within the valuation hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. Financial assets and liabilities carried at fair value will be
classified and disclosed in one of the following three categories:
- Level 1 – inputs to the valuation techniques are quoted prices in active markets for identical assets or
liabilities
- Level 2 – inputs to the valuation techniques are other than quoted prices but are observable for the
assets or liabilities, either directly or indirectly
- Level 3 – inputs to the valuation techniques are unobservable for the assets or liabilities
(16) 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 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.
(17) Contingencies
The Company’s 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 Company’s estimates
are based on currently available facts and its estimates of the ultimate outcome or resolution. Actual results may differ
from the Company’s estimates resulting in an impact, positive or negative, on earnings.
(18) Environmental Remediation Liabilities
Environmental remediation liabilities include costs directly associated with site investigation and clean up, such as
materials, external contractor costs and incremental internal costs directly related to the remedy. The Company
accrues the anticipated cost of environmental remediation when the obligation is probable and can be reasonably
estimated. Estimates used to record environmental remediation liabilities are based on the Company’s best estimate
of probable future costs based on site-specific facts and circumstances. Estimates of the cost for the likely remedy
are developed using internal resources or by third-party environmental engineers or other service providers. The
Company records the undiscounted environmental remediation liabilities that represent the points in the range of
estimates that are most probable or the minimum amount when no amount within the range is a better estimate than
any other amount.
(19) Translation of Foreign Currency
The Company’s 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.
38
B. NEW ACCOUNTING PRONOUNCEMENTS
New Accounting Standards Issued but not yet adopted
In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
(“ASU”) No. 2011-11, Amendments to Disclosures about Offsetting Assets and Liabilities. The objective of ASU
No. 2011-11 is to provide enhanced disclosures that will enable users of an entity’s financial statements to evaluate
the effect or potential effect of netting arrangements on its financial position. In January 2013, the FASB issued
ASU No. 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies what
instruments and transactions are subject to the offsetting disclosure requirements established by ASU No. 2011-11.
Derivative instruments accounted for in accordance with Accounting Standards Codification (“ASC”) 815,
repurchase agreements, reverse repurchase agreements, securities borrowing, and securities lending transactions are
subject to ASU No. 2011-11 disclosure requirements. The effective date for ASU No. 2011-11 and ASU No. 2013-
01 will be the first quarter of fiscal year 2014. The Company does not expect the adoption of these standards to
impact its consolidated financial statements.
In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated
Other Comprehensive Income. The objective of ASU No. 2013-02 is to improve the reporting of reclassifications
out of accumulated other comprehensive income (“AOCI”). Entities are required to disclose changes in AOCI
balances by component and significant items reclassified out of AOCI. The effective date for ASU No. 2013-02
will be the first quarter of fiscal year 2014. The Company does not expect the adoption of this standard to impact its
consolidated financial statements.
In March 2013, the FASB issued ASU No. 2013-05, Parent’s Accounting for the Cumulative Translation
Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an
Investment in a Foreign Entity. The objective of ASU No. 2013-05 is to clarify the applicable guidance for the
release of the cumulative translation adjustment under U.S. GAAP. The effective date for ASU No. 2013-05 will be
the first quarter of fiscal year 2015. The Company does not expect the adoption of this standard to impact its
consolidated financial statements.
39
C. ACQUISITIONS
The Company pursues accretive, synergistic acquisitions that further differentiate the Company’s market positions
and add new growth opportunities. The Company accounts for business combinations in accordance with ASC 805
– Business Combinations, which requires the recognition of the identifiable assets acquired, liabilities assumed,
goodwill, and any noncontrolling interest in the acquiree. In addition, the Company expenses all acquisition-related
costs in the period in which the costs are incurred and the services received.
Claude Laval Corporation
On August 16, 2013, the Company acquired 100 percent of the outstanding common shares of Claude Laval
Corporation (“CLC”), a California corporation that manufactures and distributes LAKOS® separators and filtration
solutions for groundwater, agriculture, industrial and heat transfer markets, worldwide. Total consideration paid was
$29.0 million which was financed with cash on hand. The allocation of purchase price for CLC is considered
preliminary because the closing balance sheet under the terms of the purchase agreement and the valuation of the
identifiable assets acquired and liabilities assumed will not be finalized until the end of the first quarter of fiscal
2014. However, the Company does not anticipate any material changes from the amounts presented in the table
below showing identifiable assets acquired and liabilities assumed.
The following table summarizes the consideration paid for CLC and the preliminary amounts of estimated fair value
of the assets acquired and liabilities assumed at the acquisition date.
$ in thousands
Identifiable assets acquired and liabilities assumed:
Current assets
Property and equipment
Intangible assets
Other long-term assets
Current liabilities
Long-term debt
Other long-term liabilities
Total identifiable net assets acquired
Goodwill
Total
Amount
8,686
7,604
13,700
481
(1,784)
(1,400)
(5,537)
21,750
7,257
29,007
$
$
The acquired intangible assets include amortizable intangible assets of $7.2 million and indefinite-lived intangible
assets of $6.5 million related to tradenames. The amortizable intangible assets have a weighted-average useful life of
approximately 8 years. The following table summarizes the identifiable intangible assets at estimated fair value.
$ in thousands
Intangible assets:
Tradenames
Patents
Customer relationships
Non-compete agreements
Other
Total intangible assets
Weighted Average Useful
Life in Years
Fair Value of
Identifiable Asset
N/A
10.0
5.0
5.0
1.3
$
$
6,500
4,600
1,700
500
400
13,700
Goodwill related to the acquisition of CLC primarily relates to intangible assets that do not qualify for separate
recognition, including the experience and knowledge of CLC management, its assembled workforce, and its
intellectual capital and specialization within the filtration solutions industry. Goodwill recorded in connection with
this acquisition is non-deductible for income tax purposes. Pro forma information related to this acquisition was not
included because the impact on the Company’s consolidated financial statements was not considered to be material.
40
D. NET EARNINGS PER SHARE
The following table shows the computation of basic and diluted net earnings per share for the years ended August
31, 2013, 2012 and 2011:
($ and shares in thousands, except per share amounts)
Numerator:
Net earnings
Denominator:
Weighted average shares outstanding
Diluted effect of stock equivalents
Weighted average shares outstanding assuming dilution
For the years ended August 31,
2012
2013
2011
$
70,570
$
43,277 $
36,802
12,830
71
12,901
12,704
106
12,810
12,560
132
12,692
Basic net earnings per share
Diluted net earnings per share
$
$
5.50 $
5.47 $
3.41 $
3.38 $
2.93
2.90
Certain stock options and restricted stock units were excluded from the computation of diluted net earnings per share
because their effect would have been anti-dilutive. Performance stock units are excluded from the calculation of
dilutive potential common shares until the threshold performance conditions have been satisfied. Items excluded
from the calculation were not significant for the years ended August 31, 2013, 2012 and 2011.
E. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Accumulated other comprehensive loss is included in the accompanying Consolidated Balance Sheets in the
shareholders’ equity section, and consists of the following components:
$ in thousands
Accumulated other comprehensive loss:
Defined benefit pension plan, net of tax of $1,396 and $1,554
Cash flow hedges, net of tax of $0 and $33
Foreign currency translation, net of hedging activities, net of tax of $1,588 and $2,093
Total accumulated other comprehensive loss
August 31,
2013
2012
$
$
(2,287)
-
(29)
(2,316)
$
$
(2,547)
(53)
1,723
(877)
The following is a rollfoward of the balances in accumulated other comprehensive income (loss), net of tax.
$ in thousands
Balance at August 31, 2011
Current-period change
Balance at August 31, 2012
Current-period change
Defined benefit
pension plan
adjustment
Unrealized
gain (loss) on
cash flow hedges
Foreign currency Accumulated other
translation
adjustment
comprehensive
income (loss)
$
$
(2,139)
(408)
(2,547)
260
$
(253)
200
(53)
53
$
8,854
(7,131)
1,723
(1,752)
6,462
(7,339)
(877)
(1,439)
(2,316)
Balance at August 31, 2013
$
(2,287)
$
-
$
(29)
$
41
F. INCOME TAXES
For financial reporting purposes earnings before income taxes include the following components:
$ in thousands
United States
Foreign
For the years ended August 31,
2012
2013
2011
$
$
99,781 $
7,526
107,307 $
57,884 $
7,224
65,108 $
53,879
2,635
56,514
Significant components of the income tax provision are as follows:
$ in thousands
Current:
Federal
State
Foreign
Total current
Deferred:
Federal
State
Foreign
Total deferred
Total income tax provision
For the years ended August 31,
2012
2011
2013
$
$
33,498 $
2,303
4,173
39,974
(1,554)
(178)
(1,505)
(3,237)
36,737 $
21,694 $
1,026
2,979
25,699
(3,829)
614
(653)
(3,868)
21,831 $
18,705
1,309
2,526
22,540
(1,484)
(29)
(1,315)
(2,828)
19,712
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:
$ in thousands
U.S. statutory rate
State and local taxes, net of federal tax benefit
Foreign tax rate differences
Domestic production activities deduction
Research and development and fuel tax credits
Other
Effective rate
2013
For the years ended August 31,
2012
2011
Amount
%
Amount
%
Amount
%
$
$
37,558
1,365
(103)
(2,638)
(289)
844
36,737
35.0 $
1.3
(0.1)
(2.5)
(0.3)
0.8
34.2 $
22,788
1,337
(338)
(1,900)
(105)
49
21,831
35.0 $
2.0
(0.5)
(2.9)
(0.2)
0.1
33.5 $
19,780
889
(257)
(1,301)
(239)
840
19,712
35.0
1.6
(0.5)
(2.3)
(0.4)
1.5
34.9
42
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
Company's deferred tax assets and liabilities are as follows:
$ in thousands
Deferred tax assets:
Deferred rental revenue
Employee benefits liability
Net operating loss carry forwards
Defined benefit pension plan
Share-based compensation
State tax credits
Inventory
Warranty
Vacation
Accrued expenses and allowances
Total deferred tax assets
Deferred tax liabilities:
Intangible assets
Property, plant and equipment
Inventory
Other
Total deferred tax liabilities
$
$
August 31,
2013
2012
$
$
835
1,191
21
1,396
2,299
98
909
2,449
182
8,043
17,423
(11,160)
(8,493)
(89)
(229)
(19,971)
382
1,282
284
1,554
2,284
48
633
1,686
224
6,610
14,987
(6,195)
(8,210)
(115)
(296)
(14,816)
Net deferred tax (liabilities) assets
$
(2,548)
$
171
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, 2013 and 2012 has not been established.
The Company does not intend to repatriate earnings of its foreign subsidiaries and accordingly, has not provided a U.S.
deferred income tax liability on these undistributed earnings that are indefinitely reinvested. The Company would
recognize a deferred income tax liability if the Company were to determine that such earnings are no longer indefinitely
reinvested. At August 31, 2013, undistributed earnings of the Company’s foreign subsidiaries amounted to
approximately $16.7 million. Determination of the estimated amount of unrecognized deferred tax liability on these
undistributed earnings is not practicable.
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
Company’s tax returns that do not meet these recognition and measurement standards.
43
A reconciliation of changes in pre-tax unrecognized tax benefits is as follows:
$ in thousands
Unrecognized Tax Benefits at September 1
Increases for positions taken in current year
Increases for positions taken in prior years
Decreases for positions taken in prior years
Settlements with taxing authorities
Reduction resulting from lapse of applicable statute of limitations
Other increases (decreases)
Unrecognized Tax Benefits at August 31
August 31,
2013
2012
$
$
1,309
68
346
-
(6)
(352)
10
1,375
$
$
1,565
2
61
(44)
(42)
(173)
(60)
1,309
The net amount of unrecognized tax benefits at August 31, 2013 and 2012 that, if recognized, would impact the
Company’s effective tax rate was $1.4 million and $1.3 million, respectively. Recognition of these tax benefits
would have a favorable impact on the Company’s 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
$0.5 million and $0.5 million for the years ended August 31, 2013 and 2012, respectively.
The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions.
The Company is no longer subject to examination by tax authorities in most jurisdictions for years prior to 2010.
While it is expected that the amount of unrecognized tax benefits will change in the next twelve months as a result
of the expiration of statutes of limitations, the Company does not expect this change to have a significant impact on
its results of operations or financial position.
G. INVENTORIES
($ in thousands)
Raw materials and supplies
Work in process
Finished goods and purchased parts
Total inventory value before LIFO adjustment
Less adjustment to LIFO value
Inventories, net
August 31,
2013
2012
$
$
19,369
5,665
50,038
75,072
(6,465)
68,607
$
$
9,818
4,427
45,540
59,785
(6,912)
52,873
44
H. PROPERTY, PLANT AND EQUIPMENT
$ in thousands
Operating property, plant and equipment:
Land
Buildings
Equipment
Other
Total operating property, plant and equipment
Accumulated depreciation
Total operating property, plant and equipment, net
Property held for lease:
Machines
Barriers
Total property held for lease
Accumulated depreciation
Total property held for lease, net
Property, plant and equipment, net
August, 31
2013
2012
3,342
34,066
85,689
9,037
132,134
(76,508)
55,626
3,965
17,323
21,288
(11,850)
9,438
65,064
$
$
$
$
$
2,541
28,652
75,097
9,003
115,293
(70,596)
44,697
3,945
17,457
21,402
(9,919)
11,483
56,180
$
$
$
$
$
Depreciation expense was $9.8 million, $9.6 million and $9.0 million for the years ended August 31, 2013, 2012, and
2011, respectively.
I. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The carrying amount of goodwill by reportable segment for the year ended August 31, 2013 and 2012 is as follows:
$ in thousands
Balance as of August 31, 2011
Foreign currency translation
Balance as of August 31, 2012
Acquisition of CLC
Foreign currency translation
Balance as of August 31, 2013
Irrigation
Infrastructure
Total
$
$
13,682
(206)
13,476
7,257
(66)
20,667
$
$
17,261
(776)
16,485
-
262
16,747
$
$
30,943
(982)
29,961
7,257
196
37,414
45
Other Intangible Assets
The components of the Company’s identifiable intangible assets at August 31, 2013 and 2012 are included in the
table below.
August 31,
Weighted
Average
Years
2013
Gross
Carrying
Amount
Weighted
Accumulated Average Carrying
Amount
Amortization Years
2012
Gross
Accumulated
Amortization
12.8
7.4
5.6
1.7
N/A
$
$
30,266
8,034
1,331
517
(12,364)
(4,238)
(611)
(54)
12.7
8.4
5.5
10.0
$
25,637 $
6,313
846
202
(10,458)
(3,477)
(478)
(90)
13,126
53,274
$
-
(17,267)
$
N/A
6,575
39,573
$
-
(14,503)
$
$ in thousands
Amortizable intangible assets:
Patents
Customer relationships
Non-compete agreements
Other
Unamortizable intangible assets:
Tradenames
Total
Amortization expense for amortizable intangible assets was $2.8 million, $2.9 million and $2.8 million for 2013,
2012, and 2011, respectively. Amortizable intangible assets are being amortized using the straight-line method over
an average term of approximately 10.0 years.
Future estimated amortization of intangible assets for the next five years is as follows:
Fiscal Years
2014
2015
2016
2017
2018
Thereafter
$
$
$ in thousands
3,939
3,438
3,020
2,881
2,694
20,035
36,007
The Company updated its impairment evaluation of goodwill and intangible assets with indefinite useful lives at
August 31, 2013. The estimated fair value of all of the Company’s reporting units each exceeded the respective
carrying values by more than 10 percent. Accordingly, no impairment losses were indicated as a result of the annual
impairment testing for fiscal years 2013, 2012 and 2011. The Company does not include a roll forward of
impairment losses because the Company has not had an impairment loss.
J. OTHER CURRENT LIABILITIES
$ in thousands
Other current liabilities:
Compensation and benefits
Dealer related liabilities
Warranty
Other
Total other current liabilities
August 31,
2013
2012
$
$
18,471
7,134
6,695
27,516
59,816
$
$
14,438
3,622
4,848
21,873
44,781
46
K. CREDIT ARRANGEMENTS
Euro Line of Credit
The Company’s wholly-owned European subsidiary, Lindsay Europe SAS, has an unsecured revolving line of credit
with Societe Generale, a European commercial bank, under which it could borrow for working capital purposes up to
2.3 million Euros, which equates to approximately $3.0 million U.S. dollars as of August 31, 2013 (the “Euro Line of
Credit”). There were no borrowings outstanding on this credit agreement at August 31, 2013 or 2012. 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 110 basis points, (1.32 percent at August 31, 2013).
Unpaid principal and interest is due by January 31, 2014. The Company intends to renew the Euro Line of Credit upon
expiration of its term.
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 Barrier Systems, Inc., a wholly
owned subsidiary of the Company. Borrowings under the BSI Term Note bear interest at a rate equal to LIBOR plus
50 basis points (0.68 percent at August 31, 2013). The Company effectively fixed the economic effect of the variable
interest rate at 6.05 percent through an interest rate swap as described in Note L, Financial Derivatives. Principal is
repaid quarterly in equal payments of $1.1 million over a seven year period that began in September of 2006. The BSI
Term Note was repaid in full on its scheduled maturity date of June 10, 2013.
Revolving Credit Agreement
The Company has an unsecured $30.0 million Revolving Credit Note and Credit Agreement with Wells Fargo Bank,
N.A., which was amended on February 13, 2013 in order to extend the termination date from January 23, 2014 to
February 13, 2016 (the “Revolving Credit Agreement”). The borrowings from the Revolving Credit Agreement
may primarily be used for working capital purposes and funding acquisitions. At August 31, 2013 and 2012, there
was no outstanding balance on the Revolving Credit Agreement. Borrowings under the Revolving Credit
Agreement bear interest at a rate equal to LIBOR plus 90 basis points (1.08 percent at August 31, 2013), subject to
adjustment as set forth in the 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 percent on the unused portion
of the Revolving Credit Agreement. Unpaid principal and interest is due by February 13, 2016.
The Revolving Credit Agreement contains certain covenants relating to the Company’s financial condition. These
include maintaining a funded debt to EBITDA ratio, a fixed charge coverage ratio, a current ratio and a tangible net
worth requirement at specified levels. Upon the occurrence of any event of default of these covenants, including a
change in control of the Company, all amounts due thereunder may be declared to be immediately due and
payable. The BSI Term Note contained substantially similar covenants. At August 31, 2013 and 2012, the
Company was in compliance with all loan covenants.
Long-term debt consists of the following:
$ in thousands
BSI Term Note
Less current portion
Total long-term debt
August 31,
2013
2012
$
$
-
-
-
$
$
4,285
(4,285)
-
Interest expense was $0.3 million, $0.5 million and $0.8 million for the years ended August 31, 2013, 2012 and
2011, respectively.
47
L. FINANCIAL DERIVATIVES
Financial derivatives consist of the following:
Fair Values of Derivative Instruments
Asset (Liability)
Balance Sheet Location
August 31,
2013
August 31,
2012
$ in thousands
Derivatives designated as hedging instruments:
Foreign currency forward contracts
Foreign currency forward contracts
Interest rate swap
Interest rate swap
Total derivatives designated as hedging instruments
Other current assets
Other current liabilities
Other current liabilities
Other noncurrent liabilities
$
Derivatives not designated as hedging instruments:
Foreign currency forward contracts
Foreign currency forward contracts
Total derivatives not designated as hedging
Other current assets
Other current liabilities
151 $
(258)
-
-
(107) $
78
(33)
45 $
-
(436)
(90)
-
(526)
12
(37)
(25)
$
$
In addition, accumulated other comprehensive income included gains, net of related income tax effects of $2.0 million
and $2.4 million at August 31, 2013 and 2012, 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 was designed to effectively convert or hedge the variable interest rate on the entire
amount of this borrowing to achieve a net fixed rate of 6.05 percent per annum. Under the terms of the interest rate
swap, the Company received variable interest rate payments and made fixed interest rate payments on an amount
equal to the outstanding balance of the BSI Term Note (see Note K, 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.
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.
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 a
portion of 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.
$ in thousands
Foreign currency forward contracts(1)
Amount of Gain/(Loss) Recognized in OCI on
For the years ended August 31,
2012
2013
2011
$
(357) $
1,677 $
(800)
(1) Net of tax (benefit) expense of ($0.3 million), $1.0 million and ($0.5 million) for the years ended August 31,
2013, 2012 and 2011, respectively.
48
During fiscal 2013, 2012 and 2011, the Company settled Euro foreign currency forward contracts resulting in after-
tax net (losses) gains of ($0.6 million), $1.8 million and ($0.7 million), respectively, which were 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,
2013, 2012 and 2011. Accumulated currency translation adjustment in AOCI at August 31, 2013, 2012 and 2011
reflected realized and unrealized after-tax gains of $2.0 million, $2.4 million and $0.7 million, respectively.
At August 31, 2013 and 2012, the Company had outstanding Euro foreign currency forward contracts to sell 29.2
million Euro and 26.5 million Euro, respectively, at fixed prices to settle during the next fiscal quarter. At August
31, 2013, the Company also had an outstanding foreign currency forward contract to sell 43.0 million South African
Rand at fixed prices to settle during the next fiscal quarter. The Company’s foreign currency forward contracts
qualify as hedges of a net investment in foreign operations.
M. FAIR VALUE MEASUREMENTS
The following table presents the Company’s 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, 2013 and 2012,
respectively:
$ in thousands
Cash and cash equivalents
Derivative assets
Derivative liabilities
$ in thousands
Cash and cash equivalents
Derivative assets
Derivative liabilities
Level 1
Level 2
Level 3
Total
August 31, 2013
$
$
$
$
$
$
151,927
-
-
Level 1
143,444
-
-
$
$
$
$
$
$
-
229
(291)
$
$
$
August 31, 2012
Level 2
Level 3
-
12
(563)
$
$
$
-
-
-
-
-
-
$
$
$
$
$
$
151,927
229
(291)
Total
143,444
12
(563)
The carrying amount of long-term debt (including current portion), which represented fair value, was zero and $4.3
million as of August 31, 2013 and 2012, respectively. 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. There were no required fair value adjustments
for goodwill, intangible assets and other long-lived assets for the years ended August 31, 2013 and 2012. No
impairment losses were indicated as a result of the annual impairment testing for fiscal years 2013, 2012, and 2011.
N. COMMITMENTS AND CONTINGENCIES
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. The Company has
established accruals for certain proceedings based on an assessment of probability of loss. The Company believes
that any potential loss in excess of the amounts accrued would not have a material effect on the business or its
consolidated financial statements. Such proceedings are exclusive of environmental remediation matters which are
discussed separately below.
Environmental Remediation
In 1992, the Company entered into a consent decree with the U.S. Environmental Protection Agency (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 EPA’s 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 soil and groundwater. To date, the remediation process has consisted primarily of
drilling wells into the aquifer and pumping water to the surface to allow these contaminants to be removed by aeration.
49
In fiscal 2012, the Company undertook an investigation to assess further potential site remediation and containment
actions. In connection with the receipt of preliminary results of this investigation and other evaluations, the Company
estimated that it would incur $7.2 million in remediation and operating costs and accrued that undiscounted amount as
an operating expense in fiscal 2012. The EPA has not approved the Company’s remediation plan.
In fiscal 2013, the Company and the EPA conducted a periodic five-year review of the status of the remediation of the
contamination of the site. The Company intends to complete additional investigation of the soil and groundwater on
the site during the first half of fiscal 2014. The Company will then assess whether it will need to revise its remediation
plan in order to come to an agreement with the EPA on how to proceed. During fiscal 2013, the Company did not
accrue any additional incremental costs related to environmental remediation liabilities. The Company anticipates there
could be revisions to the current remediation plan as a result of these activities and as additional information is
obtained. Any revisions could be material to the operating results of any fiscal quarter or fiscal year. The Company
does not expect such additional expenses would have a material adverse effect on its liquidity or financial condition.
The Company accrues the anticipated cost of investigation and remediation when the obligation is probable and can be
reasonably estimated. Although the Company has accrued all reasonably estimable costs associated with remediation
of the site, it is expected that additional testing and environmental monitoring and remediation could be required in the
future as part of the Company’s ongoing discussions with the EPA regarding the development and implementation of
the remedial action plans. In addition, the current investigation has not yet been completed and does not include all
potentially affected areas on the site. Due to the current stage of discussions with the EPA and the uncertainty of the
remediation actions that may be required with respect to these affected areas, the Company believes that meaningful
estimates of costs or range of costs cannot currently be made and accordingly have not been accrued.
The following table summarizes the undiscounted environmental remediation liability classifications included in the
balance sheet as of August 31, 2013 and 2012:
Environmental Remediation Liabilities
$ in thousands
Balance Sheet Location
Other current liabilities
Other noncurrent liabilities
Total environmental remediation liabilities
August 31,
2013
August 31,
2012
$
$
1,740
5,200
6,940
$
$
2,414
5,200
7,614
Leases
The Company leases land, buildings, machinery, equipment, and computer equipment under various noncancelable
operating lease agreements. At August 31, 2013, future minimum lease payments under noncancelable operating
leases were as follows:
Fiscal Years
2014
2015
2016
2017
2018
Thereafter
$ in thousands
$
$
2,590
1,904
1,260
1,011
791
970
8,526
Lease expense was $3.9 million, $3.6 million and $3.4 million for the years ended August 31, 2013, 2012, and 2011,
respectively.
50
O. RETIREMENT PLANS
The Company has defined contribution profit-sharing plans 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 Company's total
contributions charged to expense under this plan were $1.0 million, $0.9 million and $0.7 million for the years ended
August 31, 2013, 2012 and 2011, respectively.
A supplementary non-qualified, non-funded retirement plan for six former executives is also maintained. Plan benefits
are based on the executive's 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 former executives named in this supplemental retirement
plan to provide funding for this liability.
As of August 31, 2013 and 2012, 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:
$ in thousands
Change in benefit obligation:
Benefit obligation at beginning of year
Interest cost
Actuarial loss
Benefits paid
Benefit obligation at end of year
Amounts recognized in the statement of financial position consist of:
$ in thousands
Other current liabilities
Pension benefit liabilities
Net amount recognized
August 31,
2013
2012
7,378 $
266
(206)
(557)
6,881 $
6,787
325
823
(557)
7,378
August 31,
2013
2012
557 $
6,324
6,881 $
557
6,821
7,378
$
$
$
$
The before-tax amounts recognized in accumulated other comprehensive loss as of August 31 consists of:
August 31,
$ in thousands
Net actuarial loss
2013
2012
$
(3,683) $
(4,101)
For the years ended August 31, 2013 and 2012, the Company assumed a discount rate of 4.75 percent and 3.75
percent, respectively, for the determination of the liability. 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.
51
For the years ended August 31, 2013, 2012 and 2011, the Company assumed a discount rate of 3.75 percent, 5.00
percent and 5.00 percent, respectively, for the determination of the net periodic benefit cost. The components of the
net periodic benefit cost for the supplemental retirement plan for the years ended August 31 are as follows:
$ in thousands
Interest cost
Net amortization and deferral
Total
For the years ended August 31,
2012
2013
2011
$
$
266 $
212
478 $
325 $
166
491 $
334
164
498
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 2013 will be $0.2 million.
The Company’s future annual contributions to the supplemental retirement plan will be equal to expected net benefit
payments since the plan is unfunded. The following net benefit payments are expected to be paid:
Fiscal Years
2014
2015
2016
2017
2018
Thereafter
$ in thousands
557
540
533
526
519
4,206
6,881
$
$
P. 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 Company’s product warranties:
$ in thousands
Warranties:
Product warranty accrual balance, beginning of period
Liabilities accrued for warranties during the period
Warranty claims paid during the period
Product warranty accrual balance, end of period
For the years ended August 31,
2013
2012
$
$
4,848 $
6,938
(5,091)
6,695 $
3,651
4,922
(3,725)
4,848
Warranty costs were $6.9 million, $4.9 million, and $4.9 million for the fiscal years ended August 31, 2013, 2012 and
2011, respectively.
52
Q. INDUSTRY SEGMENT INFORMATION
The Company manages its business activities in two reportable segments:
Irrigation
This reporting segment includes the manufacture and marketing of center pivot, lateral move, and hose reel irrigation
systems as well as various water pumping stations, controls, and filtration solutions. The irrigation reporting segment
consists of thirteen 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 reporting 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 reporting segment consists of two 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.
The Company has no single major customer representing 10 percent or more of its total revenues during fiscal 2013,
2012, or 2011.
Summarized financial information concerning the Company’s reportable segments is shown in the following tables:
$ in thousands
Operating revenues:
Irrigation
Infrastructure
Total operating revenues
Operating income:
Irrigation
Infrastructure
Segment operating income
Unallocated general and administrative expenses
Interest and other income (expense), net
Earnings before income taxes
Total Capital Expenditures:
Irrigation
Infrastructure
Total Depreciation and Amortization:
Irrigation
Infrastructure
2013
2012
2011
625,996 $
64,852
690,848 $
475,299 $
75,956
551,255 $
369,930
108,960
478,890
125,395 $
(811)
124,584 $
(17,523)
246
107,307 $
80,259 $
(11)
80,248 $
(14,738)
(402)
65,108 $
59,703
11,901
71,604
(15,018)
(72)
56,514
10,687 $
449
11,136 $
7,147 $
5,453
12,600 $
7,942 $
1,948
9,890 $
6,959 $
5,509
12,468 $
5,490
2,915
8,405
6,009
5,725
11,734
$
$
$
$
$
$
$
$
$
53
Total Assets:
Irrigation
Infrastructure
$
$
391,527 $
120,769
512,296 $
303,741 $
111,790
415,531 $
267,275
113,869
381,144
Summarized financial information concerning the Company’s geographical areas is shown in the following tables.
$ in thousands
2013
For the years ended August 31,
2012
2011
Revenues
% of Total
Revenues
Revenues
% of Total
Revenues
Revenues
United States
International
Total Revenues
$
$
428,929
261,919
690,848
62 $
38
100 $
354,649
196,606
551,255
64 $
36
100 $
307,694
171,196
478,890
% of Total
Revenues
64
36
100
$ in thousands
2013
For the years ended August 31,
2012
2011
Long-Lived
Tangible
Assets
% of Total
Long-Lived
Tangible
Assets
Long-Lived
Tangible
Assets
% of Total
Long-Lived
Tangible
Assets
Long-Lived
Tangible
Assets
% of Total
Long-Lived
Tangible
Assets
United States
International
Total Long-Lived
$
$
53,894
11,170
65,064
83 $
17
100 $
45,100
11,080
56,180
80 $
20
100 $
45,091
13,374
58,465
77
23
100
R. 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, 2013, the
Company’s share-based compensation plan was the 2010 Long-Term Incentive Plan (the “2010 Plan”). The 2010
Plan was approved by the shareholders of the Company, and became effective on January 25, 2010, and replaced the
Company’s 2006 Long Term Incentive Plan. At August 31, 2013 the Company had share based awards outstanding
under its 2001, 2006 and 2010 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, 2013, 229,767
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.
54
Share Based Compensation Information
Stock Options – Stock option awards granted under the 2010 Plan have an exercise price equal to the closing price on
the date of grant, expire no later than ten years from the date of grant and vest over a four-year period at 25 percent per
year. The fair value of stock option awards is estimated using the Black-Scholes option pricing model. The table
below shows the annual weighted-average assumptions used for valuation purposes.
Weighted-Average Assumptions
Risk-free interest rate
Dividend yield
Expected life (years)
Volatility
Weighted-average grant-date fair value of options granted
Grant Year
Fiscal 2013
Fiscal 2012
1.2%
0.6%
7
56.3%
40.09 $
1.7%
0.6%
7
55.9%
31.04
$
There were no stock option awards granted in fiscal 2011. The risk-free rate is based on the U.S. Treasury yield curve
in effect at the time of grant; the dividend yield is calculated as the ratio of dividends paid per share of common
stock to the stock price on the date of grant; the expected life is based on historical and expected exercise behavior;
and volatility is based on the historical volatility of the Company’s stock price over the expected life of the option.
The following table summarizes information about stock options outstanding as of and for the years ended August 31,
2013, 2012 and 2011:
Number of
stock options
Average
Exercise
Price
Average
Remaining
Contractual
Term (years)
Stock options outstanding at August 31, 2011
Granted
Exercised
Forfeitures
Stock options outstanding at August 31, 2012
Granted
Exercised
Forfeitures
Stock options outstanding at August 31, 2013
136,575 $
36,294 $
(23,588) $
(2,983) $
146,298 $
24,684 $
(89,390) $
(2,454) $
79,138 $
23.17
58.10
24.10
58.10
30.97
75.68
22.77
67.03
53.06
Aggregate
Intrinsic
Value ('000s)
5,331
3.1 $
$
971
3.9 $
5,031
$
4,960
6.4 $
1,817
Exercisable at August 31, 2011
Exercisable at August 31, 2012
Exercisable at August 31, 2013
136,575 $
112,987 $
31,927 $
23.17
22.97
32.70
3.1 $
2.4 $
3.0 $
5,331
4,789
1,383
There were 8,330 and 6,750 outstanding stock options that vested during the fiscal years ended August 31, 2013 and
2011, respectively. There were no outstanding stock options that vested during the fiscal year ended August 31,
2012. Additional information regarding stock option exercises is summarized in the table below.
$ in thousands
For the years ended August 31,
2012
2011
2013
Intrinsic value of stock options exercised
Cash received from stock option exercises
Tax benefit realized from stock option exercises
Aggregate grant-date fair value of stock options vested
$
$
$
$
4,960 $
2,036 $
1,817 $
31.04 $
971 $
567 $
368 $
$
N/A
7,001
3,579
2,628
8.13
55
Restricted stock units - 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 percent per year. The restricted stock units granted to non-employee directors generally vest over a nine-month
period.
The following table summarizes information about restricted stock units as of and for the years ended August 31,
2013, 2012 and 2011:
Restricted stock units outstanding at August 31, 2011
Granted
Vested
Forfeited
Restricted stock units outstanding at August 31, 2012
Granted
Vested
Forfeited
Restricted stock units outstanding at August 31, 2013
Number of
restricted
stock units
71,826
40,212
(37,381)
(7,122)
67,535
30,551
(37,534)
(3,121)
57,431
Weighted-
Average Grant-
Date Fair Value
$
47.99
58.27
47.87
51.16
54.35
77.46
51.82
65.52
68.06
$
$
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, 2013, 2012 and 2011,
outstanding restricted stock units included 4,496, 4,873 and 5,658 units, respectively, that will be settled in cash.
The vesting date fair value of restricted stock units that vested was $1.9 and $1.7 million for each of the years ended
August 31, 2013 and 2012, respectively.
Performance stock units - 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 revenue growth and a return on net assets are achieved.
The table below summarizes the status of the Company’s performance stock units as of and for the year ended
August 31, 2013, 2012 and 2011:
Performance stock units outstanding at August 31, 2011
Granted
Forfeited
Performance stock units outstanding at August 31, 2012
Granted
Vested
Forfeited
Performance stock units outstanding at August 31, 2013
Number of
performance
stock units
98,625
19,386
(38,987)
79,024
13,072
(36,634)
(2,663)
52,799
56
Weighted-
Average Grant-
Date Fair Value
$
42.21
57.09
43.30
45.32
74.31
32.81
60.65
60.41
$
$
In connection with the performance stock units, the performance goals are based upon revenue growth and a return
on net assets during 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 2013 represented
56,944 actual shares of common stock issued. No shares vested in fiscal 2012 as performance measures were not
met. The vesting date fair value of performance stock units that vested was $1.9 million for the year ended August
31, 2013.
As of August 31, 2013, there was $4.9 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 1.6
years.
The following table summarizes share-based compensation expense for the fiscal years ended August 31, 2013,
2012 and 2011:
$ in thousands
Share-based compensation expense included in cost of
operating revenues
Research and development
Sales and marketing
General and administrative
Share-based compensation expense included in
operating expenses
Total share-based compensation expense
Tax benefit
Share-based compensation expense, net of tax
For the years ended August 31,
2012
2011
2013
$
214 $
225 $
157
233
547
3,579
189
524
3,001
4,359
4,573
(1,733)
2,840 $
3,714
3,939
(1,493)
2,446 $
$
120
574
2,623
3,317
3,474
(1,317)
2,157
S. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
$ in thousands, except per share amounts
Year ended August 31, 2013
Operating revenues
Cost of operating revenues
Earnings before income taxes
Net earnings
Diluted net earnings per share
Year ended August 31, 2012
Operating revenues
Cost of operating revenues
Earnings before income taxes
Net earnings
Diluted net earnings per share
$
$
$
$
$
$
$
$
$
$
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
147,370 $
104,513 $
22,383 $
14,728 $
1.15 $
175,539 $
125,175 $
29,488 $
19,351 $
1.50 $
219,542 $
156,506 $
39,750 $
26,063 $
2.01 $
148,397
109,820
15,686
10,428
0.81
119,205 $
88,957 $
4,441 $
2,921 $
0.23 $
132,134 $
95,640 $
19,427 $
12,774 $
1.00 $
172,099 $
123,071 $
28,587 $
18,823 $
1.47 $
127,817
95,069
12,653
8,759
0.68
57
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 Company’s management, including the Company’s Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the Company’s 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 Company’s Chief
Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are
effective in enabling the Company to record, process, summarize and report information required to be included in
the Company’s periodic SEC filings within the required time period.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for
the Company. The Company’s internal control system was designed to provide reasonable assurance to the
Company’s management and board of directors regarding the preparation and fair presentation of published
financial statements.
Management has assessed the effectiveness of the Company’s internal control over financial reporting as of August
31, 2013, 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 Company’s internal control over financial reporting was effective as of August 31,
2013.
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
management’s evaluation of the Company’s 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 Corporation’s internal control over financial reporting as of August 31, 2013, based on
criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Lindsay Corporation’s 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 management’s report on internal control over
financial reporting. Our responsibility is to express an opinion on the Company’s 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.
58
A company’s 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 generally accepted accounting principles. A company’s 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 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 company’s
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, 2013, based on criteria established in Internal Control – Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of Lindsay Corporation and subsidiaries as of August 31, 2013 and 2012,
and the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows
for each of the years in the three-year period ended August 31, 2013, and our report dated October 18, 2013
expressed an unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP
Omaha, Nebraska
October 18, 2013
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal controls over financial reporting that occurred during the quarter
ended August 31, 2013, that have materially affected, or are reasonably likely to materially affect, the Company’s
internal control over financial reporting.
ITEM 9B – Other Information
None.
59
ITEM 10 – Directors, Executive Officers and Corporate Governance
PART III
The Company will file with the Securities and Exchange Commission a definitive Proxy Statement for its 2014 Annual
Meeting of Stockholders (the “Proxy Statement”) not later than 120 days after the close of its fiscal year ended August
31, 2013. 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.
The executive officers and significant employees of the Company, their ages, positions and business 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.
Richard W. Parod
Eric R. Arneson*
David B. Downing
James C. Raabe
Mark A. Roth*
Barry A. Ruffalo
Reuben P. Srinivasan*
Lori L. Zarkowski*
Age
60
39
58
53
38
43
50
38
Position
President and Chief Executive Officer
Vice President, General Counsel and Secretary
President – Irrigation Segment
Vice President and Chief Financial Officer
Vice President – Corporate Development and Treasurer
President – Infrastructure Segment
Vice President – Human Resources
Chief Accounting Officer
* 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, when he joined the Company. Prior to that time 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. David B. Downing is President – Irrigation Segment of the Company and has held such position since October
2013. Between March 2008 and October 2013, Mr. Downing served as President – International operations of the
Company. Between March 2009 and June 2011, Mr. Downing served as both Chief Financial Officer and President
– International Operations of the Company. Previously he was Senior Vice President-Finance, Chief Financial
Officer, Treasurer and Secretary of the Company and held such positions from August 2004, when he joined the
Company, to March 2008. Prior to August 2004, Mr. Downing served as the President of FPM L.L.C., a heat-
treating company based in Elk Grove Village, Illinois, 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. James C. Raabe is Vice President and Chief Financial Officer of the Company, and has held such positions since
June 2011. Prior to joining Lindsay and since April 1999, he served as Senior Vice President and Chief Financial
Officer of Select Comfort Corporation. From September 1997 to April 1999, Mr. Raabe served as the Controller for
Select Comfort Corporation. From May 1992 to September 1997, he served as Vice President – Finance of ValueRx,
Inc., a pharmacy benefit management provider. Mr. Raabe held various positions with KPMG LLP from August 1982
to May 1992.
60
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 – 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.
Mr. Barry A. Ruffalo is President – Infrastructure Segment of the Company and has held such position since
October 2013. Between March 2007 and October 2013, Mr. Ruffalo served as President – Irrigation Business of 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. Reuben P. Srinivasan is Vice President – Human Resources and joined the Company in January 2013. Mr.
Srinivasan was formerly Director (Global), Human Resources at Trimble Navigation Limited, a provider of
advanced location-based solutions based in Sunnyvale, California, from 2006 to 2013. Prior to that time and since
1997, Mr. Srinivasan held positions of increasing responsibility with Volkswagen Group of America, the last six
years of which were as Manager of Human Resources with the Audi brand.
Ms. Lori L. Zarkowski is Chief Accounting Officer of the Company, and has held such position since August 2011.
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.
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 Company’s
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 Company’s 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 Company’s website at www.lindsay.com. No waivers were provided for
the fiscal year ended August 31, 2013.
61
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, 2013 (there were no equity compensation plans not approved
by security holders as of August 31, 2013):
(a)
(b)
(c)
Plan category
Number of securities to be
issued upon exercise of
outstanding options,
warrants, and rights
Weighted-average
exercise price of
outstanding options,
warrants, and rights
Number of securities remaining available
for future issuance under equity
compensation plans (excluding securities
reflected in column (a))
Equity compensation plans
approved by security holders (1) (2)
184,872 $ 53.06
Total
184,872 $ 53.06
229,767
229,767
(1) Plans approved by stockholders include the Company’s 2001, 2006 and 2010 Long-Term Incentive Plans. While certain share
based awards remain outstanding under the Company’s 2001 and 2006 Long-Term Incentive Plans, no future equity compensation
awards may be granted under such plans.
(2) Column (a) includes (i) 52,799 shares that could be issued under performance stock units (“PSU”) outstanding at August 31,
2013, and (ii) 52,935 shares that could be issued under restricted stock units (“RSU”) outstanding at August 31, 2013. 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 percent 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.
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 Registered Public Accounting Firm” in the Proxy Statement.
62
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.
Report of Independent Registered Public Accounting Firm ....................................................................................
Consolidated Statements of Operations for the years
ended August 31, 2013, 2012, and 2011 ..........................................................................................................
Consolidated Statements of Comprehensive Income for the years
ended August 31, 2013, 2012, and 2011 ..........................................................................................................
Consolidated Balance Sheets at
August 31, 2013 and 2012 ................................................................................................................................
Consolidated Statements of Shareholders' Equity
for the years ended August 31, 2013, 2012, and 2011 ....................................................................................
Consolidated Statements of Cash Flows for the years
ended August 31, 2013, 2012, and 2011 ..........................................................................................................
Page
28
29
30
31
32
33
Notes to Consolidated Financial Statements ............................................................................................................ 34-57
Valuation and Qualifying Accounts -
Years ended August 31, 2013, 2012, and 2011 ..................................................................................................
64
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.
63
a(2) Exhibit
Lindsay Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
Years ended August 31, 2013, 2012 and 2011
Additions
(in thousands)
Year ended August 31, 2013:
Deducted in the balance sheet from the
assets to which they apply:
Allowance for doubtful accounts (a)
Allowance for inventory obsolescence (b)
Year ended August 31, 2012:
Deducted in the balance sheet from the
assets to which they apply:
Allowance for doubtful accounts (a)
Allowance for inventory obsolescence (b)
Year ended August 31, 2011:
Deducted in the balance sheet from the
assets to which they apply:
Allowance for doubtful accounts (a)
Allowance for inventory obsolescence (b)
(a) Deductions consist of uncollectible items
(b) Deductions consist of obsolete items sold
Balance at
beginning of
period
Charges to
costs and
expenses
Charged to
other
accounts
Deductions
Balance at
end of
period
$
$
$
$
$
$
1,717
1,648
$
$
1,543
2,632
$
$
-
71
$
$
407
1,262
$
$
2,853
3,089
2,340
2,167
$
$
379
1,114
$
$
-
(126)
$
$
1,002
1,507
$
$
1,717
1,648
2,244
2,045
$
$
388
426
$
$
-
(2)
$
$
292
302
$
$
2,340
2,167
a(3) Exhibits. The list of the Exhibits in the Exhibit Index is incorporated into this item by reference.
64
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 18th day of October,
2013.
LINDSAY CORPORATION
By:
Name:
Title:
/s/ JAMES C. RAABE
James C. Raabe
Vice President and Chief Financial Officer
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 18th day of October, 2013.
/s/ RICHARD W. PAROD
Richard W. Parod
/s/ JAMES C. RAABE
James C. Raabe
/s/ MICHAEL N. CHRISTODOLOU
Michael N. Christodolou
/s/ ROBERT E. BRUNNER
Robert E. Brunner
/s/ HOWARD G. BUFFETT
Howard G. Buffett
(1)
(1)
(1)
Director, President and Chief Executive Officer
(Principal Executive Officer)
Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
Chairman of the Board of Directors
Director
Director
/s/ W. THOMAS JAGODINSKI
W. Thomas Jagodinski
(1)
Director
/s/ J. DAVID MCINTOSH
J. David McIntosh
/s/ MICHAEL C. NAHL
Michael C. Nahl
/s/ MICHAEL D.WALTER
Michael D. Walter
/s/ WILLIAM F. WELSH II
William F. Welsh II
(1)
(1)
(1)
(1)
(1) By: /s/ RICHARD W. PAROD
Richard W. Parod, Attorney-In-Fact
Director
Director
Director
Director
65
Exhibit
Number
Description
a(3) EXHIBIT INDEX
3.1
3.2
4.1
10.1
10.2
10.3
10.4
10.5
Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company’s
Current Report on Form 8-K filed on December 14, 2006.
Amended and Restated By-Laws of the Company, incorporated by reference to Exhibit 3.1 to the Company’s Current
Report on Form 8-K filed on February 3, 2011.
Specimen Form of Common Stock Certificate incorporated by reference to Exhibit 4(a) to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended November 30, 2006.
Lindsay Corporation 2010 Long-Term Incentive Plan and forms of award agreements, incorporated by reference to
Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2011.†
Lindsay Manufacturing Co. 2006 Long-Term Incentive Plan and forms of award agreements, incorporated by
reference to Exhibit 10(a) to the Company’s Annual Report on Form 10-K for the fiscal year ended August 31,
2007.†
Lindsay Manufacturing Co. 2001 Amended and Restated Long-Term Incentive Plan, incorporated by reference to
Exhibit 10(i) of the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2001.†
Amendment to Lindsay Manufacturing Co. 2001 Amended and Restated Long-Term Incentive Plan, incorporated by
reference to Exhibit 10(k) to the Company’s Annual Report on Form 10-K for the fiscal year ended August 31,
2005.†
Lindsay Corporation Management Incentive Umbrella Plan, incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2009.†
10.6**
Lindsay Corporation Management Incentive Plan (MIP), 2013 Plan Year, incorporated by reference to Exhibit
10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2012.†
10.7
10.8
10.9
10.10
10.11
10.12
10.13
Form of Indemnification Agreement between the Company and its Officers and Directors, incorporated by reference
to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2008.†
Employment Agreement between the Company and Richard W. Parod effective March 8, 2000, incorporated by
reference to Exhibit 10(a) to the Company's Report on Form 10-Q for the fiscal quarter ended May 31, 2000.†
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 Company’s Report on Form 10-Q for the
fiscal quarter ended May 31, 2003.†
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 Company’s Current Report on Form 8-K filed on
December 27, 2004.†
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 Company’s Current Report on Form 8-K filed on March
22, 2007.†
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 Company’s Current Report on Form 8-K filed on January
30, 2009.†
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 Company’s Current Report on Form 8-K filed on January
30, 2009.†
66
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
21*
23*
24*
31.1*
31.2*
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 Company’s Quarterly Report on Form 10-Q for the fiscal quarter
ended February 28, 2010.†
Seventh Amendment to Employment Agreement, dated January 31, 2011, between the Company and Richard W.
Parod, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on February
3, 2011.†
Eighth Amendment to Employment Agreement, dated November 29, 2012, between the Company and Richard W.
Parod, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on
December 4, 2012. †
Employment Agreement, dated May 5, 2011, between the Company and James Raabe, incorporated by reference
to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on May 10, 2011.†
Employment Agreement dated February 19, 2009, by and between the Company and David B. Downing,
incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on February 25,
2009.†
Employment Agreement, dated February 19, 2009, by and between the Company and Barry A. Ruffalo,
incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on February 25,
2009.†
Employment Agreement, dated August 13, 2010, by and between the Company and Steve Cotariu, incorporated
by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K for the fiscal year ended August 31,
2010.†
Revolving Credit Note, dated January 24, 2008, by and between the Company and Wells Fargo Bank, National
Association, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
January 30, 2008.
Revolving Credit Agreement, dated January 24, 2008, by and between the Company and Wells Fargo Bank,
National Association, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
filed on January 30, 2008.
First Amendment to Revolving Credit Agreement, dated January 23, 2010, by and between the Company and
Wells Fargo Bank, National Association, incorporated by reference to Exhibit 10.1 of the Company’s Current
Report on Form 8-K filed on January 26, 2010.
Second Amendment to Credit Agreement, dated January 23, 2011, by and between the Company and Wells Fargo
Bank, National Association, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form
8-K filed on January 26, 2011.
Third Amendment to Credit Agreement, dated February 13, 2013, by and between the Company and Wells Fargo
Bank, National Association, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form
8-K filed on February 19, 2013.
Lindsay Corporation Policy on Payment of Directors Fees and Expenses, incorporated by reference to Exhibit 10.2
to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2012.
Subsidiaries of the Company
Consent of KPMG LLP
The Power of Attorney authorizing Richard W. Parod to sign the Annual Report on Form 10-K for fiscal 2013 on
behalf of non-management directors.
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 18 U.S.C.
Section 1350.
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section
1350.
67
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.
101.INS*** XBRL Instance Document
101.SCH*** XBRL Taxonomy Extension Schema Document
101.CAL*** XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*** XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*** XBRL Taxonomy Extension Label Linkbase Document
101.PRE*** XBRL Taxonomy Extension Presentation Linkbase Document
† Management contract or compensatory plan or arrangement required to be filed as an exhibit hereto pursuant to Item 15(b) of
Form 10-K.
* 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 Company’s application requesting
confidential treatment under Rule 24b-2 of the Securities and Exchange Act of 1934.
*** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a
registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for
purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these Sections.
68
D I R EC TO R S A N D E L EC T E D O FF I C E R S
L I N D S AY CO R P O R AT I O N
DIRECTORS
OFFICERS
Michael N. Christodolou
Director since 1999
Chairman of the Board since 2003
Founder and Manager, Inwood Capital
Management, LLC
Robert E. Brunner
Director since 2013
Retired Executive Vice President,
Illinois Tool Works, Inc.
Director: Laggett & Platt, Inc. and NN, Inc.
Howard G. Buffett
Director since 1995
President, Buffett Farms &
Howard G. Buffett Foundation
Director: Berkshire Hathaway, Inc. and the
Coca-Cola Company
W. Thomas Jagodinski
Director since 2008
Retired President, Chief Executive Officer
of Delta and Pine Land Company
Director: Phosphate Holdings, Inc. and
Quinpario Acquisition Corp.
J. David McIntosh
Director since 2002
Retired Executive Vice President,
The Toro Company
Michael C. Nahl
Director since 2003
Retired Executive Vice President
and Chief Financial Officer,
Albany International Corp.
Director: Trans World Entertainment Corporation
Michael D. Walter
Director since 2009
President of Mike Walter & Associates
Director: Agro Tech Foods and
Richardson International
William F. Welsh II
Director since 2001
Retired Chairman of Election
Systems & Software
Director: Ballantyne Strong, Inc.
Richard W. Parod
Director since 2000
President and Chief Executive Officer
Joined Lindsay in 2000
Eric R. Arneson
Vice President – General Counsel and Secretary
Joined Lindsay in 2008
David B. Downing
President – Agricultural Irrigation Division
Joined Lindsay in 2004
C. Mike Harris
President – Technology Business
Joined Lindsay in 2013
James C. Raabe
Chief Financial Officer
Joined Lindsay in 2011
Mark A. Roth
Vice President –
Corporate Development and Treasurer
Joined Lindsay in 2004
Barry A. Ruffalo
President – Infrastructure Division
Joined Lindsay in 2007
Reuben P. Srinivasan
Vice President – Human Resources
Joined Lindsay in 2013
Lori L. Zarkowski
Corporate Controller and Chief Accounting Officer
Joined Lindsay in 2007
Annual Meeting
All shareholders are invited to attend our annual meeting, which will be
held on January 27, 2014, at 8:30 a.m. at our corporate office located at
2222 North 111th Street, Omaha, Nebraska. We look forward to meeting
shareholders and answering questions at the meeting. Any shareholder who
will be unable to attend is encouraged to send questions and comments in
writing to Eric Arneson, Secretary, at Lindsay’s corporate office.
Quarterly Calendar
The Company operates on a fiscal year ending August 31. Fiscal
2014 quarter-end dates are November 30, 2013, February 28, 2014,
May 31, 2014 and August 31, 2014. Quarterly earnings are announced
approximately four weeks after the end of each quarter and audited
results are announced approximately seven weeks after year end.
Quarterly earnings releases are posted to Lindsay’s Web site at
www.lindsay.com.
Transfer Agent and Registrar
Wells Fargo Shareowner Services
Post Office Box 64874
St. Paul, Minnesota 55164-0874
Phone: (800) 468-9716
FAX: (866) 729-7680
Research Coverage Provided By
BB&T Capital
Janney Montgomery Scott LLC
Monness, Crespi, Hardt & Co., Inc.
Piper Jaffray
Stifel Nicolaus
Wedbush Securities, Inc.
William Blair & Co., LLC
Stock Market Information
Lindsay’s common stock is traded on the New York Stock Exchange, Inc.
(NYSE) under the ticker symbol LNN.
Certifications
The Company has filed certifications under Section 302 and Section 906
of the Sarbanes-Oxley Act of 2002 as exhibits to its Form 10-K for
fiscal year 2013. These exhibits are signed by the Principal Executive
Officer and the Principal Financial Officer, respectively. Additionally, on
February 27, 2013, the Company’s Chief Executive Officer provided his
annual certification regarding the Company’s compliance with the New
York Stock Exchange corporate governance listing standards.
Independent Auditors
KPMG LLP
Omaha, Nebraska
For Further Information
Shareholders and prospective investors are welcome to call or
write Lindsay Corporation with questions or requests for additional
information. Please direct inquiries to:
James C. Raabe
Chief Financial Officer
2222 North 111th Street
Omaha, Nebraska 68164
(402) 827-6579
Web Site
www.lindsay.com
Concerning Forward-Looking Statements
This Annual Report and Form 10-K, including the President’s letter, Management’s Discussion and Analysis, and other sections, contains forward-looking statements
that are subject to risks and uncertainties and which reflect management’s current beliefs and estimates of future economic circumstances, industry conditions,
company performance and financial results. You can find a discussion of many of these risks and uncertainties in the annual, quarterly, and current reports we file
with the Securities and Exchange Commission. Forward-looking statements include the information concerning possible or assumed future results of operations
of the Company and those statements preceded by, followed by, or including the words “anticipate,” “estimate,” “believe,” “intend,” “expectation,” “outlook,”
“could,” “may,” “should,” “will,” “future,” “position,” or similar expressions. For these statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You should understand that the following important factors, in
addition to those discussed elsewhere in the document, could affect the future results of the Company and could cause those results to differ materially from
those expressed in our forward-looking statements: availability of and price of raw materials, product pricing, competitive environment and related domestic and
international market conditions, operating efficiencies and actions of domestic and foreign governments. Any changes in such factors could result in significantly
different results. The Company undertakes no obligation to update any forward-looking information contained in this Annual Report.
Lean, Clean and Green. Lindsay
Corporation is committed to developing
environmental awareness and
implementing sustainable practices to
reduce the use of and protect energy,
water, and all other resources.
L I N D S AY U S A
Lindsay Corporation
Corporate Headquarters
2222 North 111th Street
Omaha, Nebraska 68164 U.S.A.
Ph: 1-402-829-6800
Toll-free: 1-866-404-5049
www.lindsay.com
Watertronics LLC.
525 East Industrial Drive
Hartland, Wisconsin 53029 U.S.A.
Ph: 1-262-367-5000
Toll-free: 1-800-356-6686
www.watertronics.com
Lindsay Transportation Solutions, Inc.
180 River Road
Rio Vista, California 94571 U.S.A.
Ph: 1-707-374-6800
Toll-free: 1-888-800-3691
www.lindsaytransportationsolutions.com
Claude Laval Corporation
1365 N. Clovis Ave.
Fresno, California 93727 U.S.A.
Ph: 1-559-255-1601
www.lakos.com
L I N D S AY I N T E R N AT I O N A L
Lindsay Europe SAS
72300 La Chapelle
D’Aligne, France
Ph: 33-2-4348-0202
www.lindsayeurope.com
Lindsay Africa Pty. Ltd.
25 Karee Street
Kraaifontein Industria
Kraaifontein
Western Cape
Postal code 7570
South Africa
Ph: +27 (21) 986 8900
www.lindsayafrica.com
Lindsay América Do Sul, Ltda.
Rodovia Adhemar Pereira de Barros
SP 340 – KM 153.5
CEP 13804-830 Mogi-Mirim
Sao Paulo
Brazil
Ph: 55-19-3814-1100
www.lindsaybrazil.com
Snoline S.P.A.
Via F. Baracca 19/23
20056 Trezzo sull’Adda
Milan, Italy
Ph: 39 02 909961
www.snoline.com
Lindsay (Tianjin) Industry Co., Ltd.
2nd Floor, Office Building
10 Huanghai 2nd St.
Tianjin Economic-Technological
Development Area (TEDA)
Tianjin 300457
China
Ph: +86 22 2532 1262
www.lindsaychina.com
Lindsay International B.V.
Weena 278
Tower B, 7th Floor
3012 NJ Rotterdam
The Netherlands
Ph: +31 (10) 870-1340
Lindsay International (ANZ) Pty Ltd.
19 Spencer Street
Toowoomba
Queensland 4350
Australia
Ph: +61 (7) 4613 5000
I
L
I
N
D
S
A
Y
C
O
R
P
O
R
A
T
O
N
2
0
1
3
A
N
N
U
A
L
R
E
P
O
R
T
Separators and Filtration Solutions
Separators and Filtration Solutions
Separators and Filtration Solutions
Separators and Filtration Solutions
Separators and Filtration Solutions