20 14 ANNUA L REPORT
L
I
N
D
S
A
Y
C
O
R
P
O
R
A
T
I
O
N
2
0
1
4
A
N
N
U
A
L
R
E
P
O
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T
VALUE THROUGH MARKET LEADERSHIP AND INNOVATION
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)
2014
2013
% Change
Income Statement Data
(for the fiscal years ended August 31)
Operating revenues
Gross profit
Operating expenses
Operating income
Net earnings
$ 617,933
$ 690,848
$ 170,995
$ 194,834
$ 92,637
$ 87,773
$ 78,358
$ 107,061
$ 51,512
$ 70,570
05 06 07 08 09 10 11 12 13 14
Average diluted shares outstanding
12,882
12,901
Diluted net earnings per share
$
4.00
$
5.47
We experienced declines in both the
U.S. and international irrigation equipment
revenues, driven largely by declining
crop prices.
Operating Margin (percentage)
Cash and cash equivalents
$ 171,842
$ 151,927
Balance Sheet Data
(at August 31)
-11%
-12%
6%
-27%
-27%
-27%
0%
13%
1%
11%
3%
14%
0%
1%
-3%
60%
-55%
570%
59%
NA
94%
Current assets
Fixed assets, net
Total assets
Current liabilities
$ 374,058
$ 368,791
$ 72,457
$ 65,064
$ 526,551
$ 512,296
$ 116,367
$ 102,092
Current and long-term debt
$
–
$
–
Shareholder’s equity
$ 382,647
$ 380,638
Shares outstanding at year end
12,440
12,873
Cash Flow Data
(for the fiscal years ended August 31)
Cash flows provided by
operating activities
$ 91,798
$ 57,505
Cash flows used in investing activities $ 18,476
$ 41,081
Cash flows used in financing activities $ 53,595
$
7,995
Capital expenditures
Share repurchases
$ 17,715
$ 11,136
$ 41,059
$
$
–
0.475
Cash dividends declared per share
$
0.920
Performance Ratios
Annual revenue growth
Operating margin
Return on net assets
-10.6%
12.7%
12.6%
25.3%
15.5%
19.0%
NA
NA
NA
2 014 A N N UA L R E P O R T
05 06 07 08 09 10 11 12 13 14
Our operating margins in fiscal 2014
declined slightly, primarily impacted
by the effects of a cyclical downturn in
U.S. irrigation.
Return on Net Assets (RONA)
(percentage)
05 06 07 08 09 10 11 12 13 14
Fiscal 2014 return on net assets decreased
primarily due to lower operating revenues
and associated profits.
With fixed quantities of land and water, the only way to
feed an increasing population is to achieve higher
crop yields through the innovative and
efficient use of resources.
3 Pasco, Washington
Zimmatic and FieldNET user
1
FINANCIAL OVERVIEW
TO OUR SH A R EHOLDERS
In the history of Lindsay Corporation,
the Company has performed well
through both the peaks and valleys
that characterize the agriculture
industry. After several years of record
performance, we anticipated that
some slowdown would occur in our
fiscal year 2014. Despite the expected
decrease in revenue, Lindsay was able
to maintain strong margins, achieve
significant improvement in our
infrastructure segment, and solidify
our position as the market technology
leader in the irrigation industry.
We continued to deliver solutions
that offer exceptional value in the
marketplace as we create value for
shareholders.
FINANCIAL PERFORMANCE
For the fiscal year ended August 31,
2014, Company revenues were
$617. 9 million, an 11 percent
decrease from the record $690.8
million of fiscal 2013.
Irrigation equipment revenues
decreased 14 percent from the
prior year to $539.9 million. U.S.
irrigation revenues of $331.5
million represented a 14 percent
decline, driven largely by declining
crop prices and the lessening of
drought conditions in the corn belt.
International irrigation revenues
declined 13 percent to $208.4
million primarily due to Iraq contract
revenues that were included in fiscal
year 2013.
Infrastructure segment revenues
increased 20 percent to $78.0 million
from $64.9 million in fiscal 2013 due
to significantly increased sales of road
safety products and rail products.
With the higher sales volume,
infrastructure operating income
was $3.5 million compared to a
$0.8 million loss the prior year.
For fiscal 2014, Company operating
income was $78.4 million, a 27
percent decrease from 2013. Net
earnings were $51.5 million, or $4.00
per diluted share, compared with
$70.6 million, or $5.47 per diluted
share, in the prior year. Operating
expenses were $92.6 million, or 15.0
percent of sales, compared to $87.8
million, or 12.7 percent of sales, for
fiscal 2013. Gross margin for fiscal
2014 declined slightly to 27.7 percent
compared to 28.2 percent in 2013.
Operating margin decreased to 12.7
percent from 15.5 percent.
While we experienced the effects of a
cyclical downturn in the agricultural
segment in 2014, we were able to
strengthen our balance sheet with
solid net earnings and improvements
in our working capital position. At
August 31, 2014, cash and cash
equivalents were $172 million, $20
million higher than the prior year.
Our cash position grew even as we
invested nearly $18 million in capital
expenditures primarily for capacity
expansion, and by doubling our
quarterly dividend and repurchasing
$41 million of our outstanding
common stock. The Company has no
long-term debt.
In 2014, Lindsay solidified
its position as market
technology leader in the
irrigation industry and
further defined its cash
allocation plan to improve
return to shareholders.
2
Richard W. Parod,
President and Chief
Executive Officer
3
IRRIGATION SEGMENT REVIEW
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
scheduling and 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. Our products and systems
help growers around the world
conserve precious water, increase crop
production, and reduce costs such as
fuel and labor.
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.
IRRIGATION SEGMENT
PERFORMANCE
The irrigation segment provided
87 percent of Lindsay’s revenue in
fiscal 2014 compared to 91 percent
the prior year. Irrigation equipment
sales in the U.S. accounted for
approximately 61 percent of segment
revenue, with international sales
comprising approximately 39 percent.
Operating margin for the irrigation
segment was 17 percent in fiscal 2014
compared to 20 percent the prior
year, primarily due to cost deleverage
on lower sales.
IRRIGATION
MARKET CONDITIONS
In fiscal 2014, lower agricultural
commodity prices continued to exert
downward pressure on irrigation
equipment demand in the U.S.
In addition, in August the USDA
forecasted 2014 net farm income
to be 14 percent below 2013 levels,
although still remaining above the
10-year average. Finally, enhanced
Section 179 depreciation tax benefits
expired on December 31, 2013.
These factors contributed to farmer
sentiment being less inclined to make
capital purchases.
LAKOS Filtration Products was
acquired in August 2013.
However, the decrease in irrigation
equipment sales was mitigated
somewhat by revenue contributions
from LAKOS filtration products,
a business acquired at the end of
fiscal 2013, along with higher than
normal replacement sales due to
severe spring and summer storms
across the Midwest. With the superb
responsiveness of our Nebraska
factory and entire irrigation team,
we were able to quickly meet the
urgent needs of our dealers and
their customers and provide the
replacement equipment needed in
the peak of the growing season.
International markets remain
important in Lindsay’s growth
strategy. In fiscal 2014, international
sales accounted for 39 percent of
Lindsay experienced
solid performance in key
markets throughout the
U.S. and around the world.
4
NFTRAX
The NFTrax airless
wheel assembly is one
of Lindsay’s newest
award-winning products.
5
IRRIGATION SEGMENT REVIEW (CONT.)
irrigation revenue compared to
38 percent the prior year. Solid
performance in key markets such as
South America, Europe, Australia,
New Zealand, and Sudan tempered
market uncertainty in politically
sensitive areas such as Russia,
Ukraine and Iraq. Our international
footprint is solid although we
experience regional volatility due to
timing of large project opportunities,
the competitive environment,
government influences on subsidy
programs and the effect of commodity
pricing in certain areas.
NEW IRRIGATION PRODUCTS
In fiscal 2014, Lindsay continued
to develop and introduce products
that provide exceptional value and
unique benefits to growers while
enhancing our competitive position
as a market leader.
We further expanded the capability
of our industry-leading FieldNET®
wireless irrigation management
system, adding a next-generation
3G remote telemetry unit (RTU) as
well as drip-controller technology
that enables FieldNET connectivity
to operate drip- and micro-irrigation
systems along with the larger center
pivot and lateral move systems. The
award-winning FieldNET technology
provides growers the industry’s most
comprehensive options to remotely
control their entire irrigation systems
throughout the crop life cycle.
We also introduced the revolutionary
NFTrax airless wheel assembly that
eliminates the potential for flat
tires on center pivots. The patent-
pending product reduces downtime
and labor required to perform repairs
in the field. This is another example
of our development process that
addresses key customer concerns
6
with innovative solutions, and it has
received very positive response in
the marketplace.
THE COMPETITIVE ADVANTAGE
OF INTEGRATED SOLUTIONS
Lindsay offers an unmatched breadth
of products and value-added services.
Beyond just selling center pivot
irrigation equipment, we provide
comprehensive solutions including
pump stations and filtration, field
layout and total system design,
weather and field monitoring services,
and the design and installation of
in-field broadband communication
Since its market introduction
in early 2014, Growsmart® by
Lindsay’s MULTI-CONTROL for
drip and micro-irrigation has
received significant industry
recognition:
• Top Ten New Product -
World Ag Expo 2014
• One of the Year’s Most
Innovative Designs in
Engineering Products - The
American Society of Agricultural
and Biological Engineers AE50
• 2014 Best New Product,
Agriculture - Irrigation
Association’s Irrigation Show &
Education Conference
infrastructure. The synergistic
acquisitions the Company has made
in recent years further expand our
product and service offerings.
Integrated solutions differentiate us
from competitors in the marketplace.
We lead the industry in customer-
valued technological innovations,
quality products and reliable service.
We have observed, for example, that
growers who use FieldNET to more
effectively manage their crop growing
processes become dedicated, loyal
customers, depending on Lindsay
products to help them increase
irrigation efficiency, improve crop
productivity, and reduce costs such
as fuel and labor. Dealers in our
network have expressed encouraging
assessments of market share growth
during the past few years, as well as
recognized the benefits of a strong,
differentiated competitive offering of
products and services.
IRRIGATION MARKET OUTLOOK
In the near term, we expect that
irrigation sales will continue to be
impacted by lower crop prices and
projected reductions in farm income
as well as political instability in
various regions of the world. The
extent and the duration of the
current cyclical downturn are difficult
to predict.
However, our team is confident
that the Company’s investment in
competitively advantaged products
and services will continue to position
us well now and as agricultural
market conditions improve.
In addition, our initiatives to
manage costs have been effective.
Lean manufacturing practices in
the Nebraska irrigation facility have
proven very valuable. Along with
productivity enhancements, we
THE LINDSAY ADVANTAGE
Lindsay’s rugged equipment,
integrated technologies, and
plug-and-play add-ons form the
best line of irrigation solutions
from a single, reliable source.
®
u
o
e Y
s L i k
k
h i n
t T
a
h
y t
g
o l o
n
h
c
e
T
PIVOTS
& LATERALS
CUSTOM PUMPING
SOLUTIONS
PLUG-AND-PLAY
ADD-ONS
WIRELESS IRRIGATION
MANAGEMENT
FILTRATION
have demonstrated the ability to
ramp production levels up and down
in response to extensive market
demand changes and to minimize
the deleverage effect when
volume decreases.
The production of liquid biofuels
plays a part in our sales mix as
irrigated corn, sugar cane and soybean
crops are used to produce ethanol
and biodiesel. The U.S. Energy
Information Administration projects
ethanol production to remain
essentially unchanged from 2014 to
2015 while biodiesel production is
forecast to increase by 3.6 percent.
Despite potential disruptions in
Russia and Ukraine and continued
political instability in the Middle
East, we continue to generate
revenue in those regions and see
opportunities for future growth. We
see potential for continuing growth
in other international irrigation
markets, as well. To further solidify
our global supply capability we
began construction on a new plant
in Turkey, which is expected to be
operational in February 2015. In
addition, we acquired our previously-
leased facility in Brazil, with the
intent to continue expansion of
our international footprint and
global, vertical integration of
manufacturing processes.
For the long term, the macro drivers
of demand for our products will
remain positive. Global population
growth and the need for food, the
conservation and efficient use of
water, protection of the environment
and the adoption of biofuels will
all continue to be issues of global
importance.
In particular, population growth is
the fundamental driver for the global
agricultural market. The United
Nations projects that the world’s
population will grow from 7.2 billion
in 2014 to approximately 9.6 billion
by 2050. To adequately feed that
increased population, the U.N. Food
and Agriculture Organization (FAO)
projects that food production will
have to increase by 60 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 20 percent of
cultivated land 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
that consumes twice as much water
as an efficient mechanical system.
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.
Lindsay’s irrigation business is engaged
in meeting a basic human need. By
continuing to expand our capabilities,
our efficiency, our global footprint
and our capacity in the international
markets, we will remain at the
forefront of this essential industry.
7
INFRASTRUCTURE SEGMENT REVIEW
by higher sales volume. Operating
margins increased to a 4.5 percent
profit in fiscal 2014 from a 1.3 percent
loss in fiscal 2013 due to higher
sales and a mix shift to higher
margin products.
AGGRESSIVE
FOCUS ON RESULTS
The Company made significant
progress in infrastructure profitability
in fiscal 2014 through both revenue
increases and expense management.
The infrastructure sales team was
expanded and executed a more
aggressive, structured sales process
leading to expanded market share in
road safety and railroad products. For
road safety products, each state has
its own qualification requirements for
vendors and products. We were able
to expand our geographic footprint
and make inroads in getting key
products qualified in many more
states during the year.
The innovative TAU Tube crash cushion was
designed for use in tunnels.
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 (QMB®),
commonly known as The Road
Zipper System™, is one of the few
ways to effectively and safely manage
congestion at a lesser investment
than that required to build new roads.
The QMB system provides a way to
divert traffic around construction
areas or work zones, increasing safety
for work crews and motorists alike.
On a permanent basis, the QMB
is 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
SEGMENT PERFORMANCE
The infrastructure segment provided
13 percent of Lindsay’s revenue in
fiscal 2014 compared to 9 percent in
fiscal 2013. Operating income was
$3.5 million compared to a loss of
$0.8 million the prior year, driven
Infrastructure segment
revenues increased
20% due to significantly
increased sales of road
safety and rail products.
8
Before The Road Zipper System
was installed on the Pesio
bridge in Italy, traffic queues
were six miles (10 km) long.
During reconstruction, The
Road Zipper System eliminated
traffic queues, provided positive
protection for motorists and
didn’t require any closures.
9
INFRASTRUCTURE SEGMENT REVIEW (CONT.)
Today, more than half of
the world’s infrastructure
investment is being made
in emerging nations with
a rapidly growing number
of vehicles and under-
developed infrastructure.
10
INFRASTRUCTURE
PRODUCT DEVELOPMENT
In fiscal 2014 we launched an
innovative crash cushion called the
TAU Tube. It addresses a pressing
market need for a crash cushion
to be used in tunnels, where many
competitive crash cushions release
toxic fumes during fires, presenting
significant risk to motorists and first
responders. The construction of
the TAU Tube substantially limits
toxic fume off-gassing and meets
stringent European requirements for
this application.
INFRASTRUCTURE
MARKET OUTLOOK
In the near term, we expect to build
on the success of fiscal 2014 with
further improvement including
$12.7 million of revenue from
installation of The Road Zipper
System on the Golden Gate Bridge,
culminating from an order received
during fiscal 2014.
A federal highway bill signed in
August of 2014 only provided $10.8
billion in temporary funding for a
10-month period, creating future
funding uncertainty for road safety
product revenues. In spite of this
uncertainty, we believe we can
continue to capitalize on recent
progress with plans for market share
increases in key product categories,
margin improvements through
manufacturing efficiencies, and
expense management.
For the long term, population
growth and essential transportation
needs will continue to fuel
expansion in demand for our
infrastructure products.
GOLDEN GATE BRIDGE, CA
Lindsay is building on the success of fiscal 2014,
which included a $12.7 million Road Zipper
System order from the Golden Gate Bridge
Highway & Transportation District.
Today, more than half of the world’s
infrastructure investment is being
made in emerging nations that
have a rapidly growing number
of vehicles and under-developed
roadway infrastructure. On a global
basis, there is continuing emphasis
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.
cushions, and clear markings.
In more developed nations, there will
be ongoing needs for infrastructure
In more developed nations, there will
expansion and renovation. In
be ongoing needs for infrastructure
addition, traffic congestion is much
expansion and renovation. In
more than a mere inconvenience.
addition, traffic congestion is much
The direct and indirect costs
more than a mere inconvenience.
of roadway congestion drain
The direct and indirect costs
approximately $121 billion from
of roadway congestion drain
the U.S. economy annually, in the
approximately $121 billion from
form of 5.5 billion hours lost in
the U.S. economy annually, in the
traffic and 2.9 billion gallons of fuel
form of 5.5 billion hours lost in
wasted (Source: Texas Transportation
traffic and 2.9 billion gallons of fuel
Institute – 2012 Urban Mobility
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.
As the world’s population grows
and mobility increases, Lindsay’s
infrastructure solutions will
demonstrate increasing value in terms
of financial savings, environmental
benefits and quality of life.
A
C
B
D
A Lindsay Railroad Products offers
an extensive product line of
reliable structures and signals
from one source.
B Truck and trailer mounted
attenuators provide outstanding
performance.
C The Road Zipper System improves
traffic flow, and safeguards work
crews and motorists.
D Road Safety Products consistently
develops solutions for road hazards.
11
2015 AND BEYOND
Lindsay remains confident
in its enduring ability to
generate lasting value
by developing solutions
that enhance the quality
of life for people around
the world.
12
optimistic in our ability to execute on
potential opportunities to expand our
product offerings and strengthen our
integrated irrigation solutions.
Invest excess cash in opportunistic
share repurchases, taking into
account cyclical and seasonal
fluctuations. The Company
expects to opportunistically invest
approximately $100 million to $150
million in share repurchases. In
fiscal 2014, the Company spent
$41.1 million on share repurchases.
LONG-TERM CONFIDENCE
As we continue to operate against
a market headwind, we remain
confident in the enduring ability of
our Company to generate lasting
value by developing solutions
that provide distinct competitive
advantages, enable more efficient use
of resources, increase agricultural
production, improve road safety,
promote environmental responsibility,
and enhance the quality of life for
people around the world.
In conclusion, I extend my thanks
and appreciation to our employees,
channel partners, suppliers,
customers, shareholders and Board
of Directors. Your confidence and
support are invaluable to all of us at
Lindsay Corporation.
Sincerely,
Richard W. Parod
President and Chief Executive Officer
A YEAR OF DECISIVE ACTION
AND FORWARD THINKING
Backed by a strong balance sheet,
we made strategic investments for
future growth and also returned value
to shareholders, executing against a
carefully articulated capital allocation
plan that was introduced in January
2014. The Company’s prioritization
for cash use:
Investment in organic growth,
including capital expenditures,
primarily for increasing capacity,
manufacturing productivity
and product development. The
capital allocation plan called for
capital expenditures of $20 million
to $25 million annually for the
next three years. In addition to
investments made in 2014, we plan
to continue to increase capacity,
improve productivity and add
vertical integration. Our irrigation
and infrastructure businesses both
introduced important new products
in 2014 and continue to work on
product ideas that will advance our
competitive position.
Annual increases in dividends
to shareholders. In January 2014,
the Board of Directors doubled the
quarterly dividend from $0.13 per
share to $0.26 per share. This marked
our twelfth consecutive year of
dividend increases. We increased our
quarterly dividend again near the end
of the year to $0.27 per share.
Synergistic water-related acquisitions
that offer attractive returns to
shareholders. We expect to spend
$100 million to $150 million over
the next few years, funded through
cash and debt. While there were not
acquisitions completed in 2014, we are
LONG-TERM GOALS
AND PERFORMANCE
GOAL
Lindsay’s goals of providing
solid financial performance
have not changed.
Generate revenue growth of
10 to 15 percent annually
Realize operating margins of
9 to 14 percent
Produce a return on net assets of
9 to 15 percent
FY14
FY13
5-Year Average
-11%
25%
13%
15%
13%
19%
14%
13%
14%
These figures exclude acquired companies in the year of acquisition.
13
Population growth is the fundamental driver
for the global agricultural market. Lindsay has the
ability to manage for short-term performance
with a long-term perspective.
14
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
(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, 2014
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, 2014 was $1,064,498,096.
As of October 10, 2014, 12,200,857 shares of the registrant’s Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement pertaining to the Registrant’s 2015 annual stockholders' meeting are incorporated herein by
reference into Part III.
1
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
15-27
28
29-58
59
59-60
60
61-62
63
63
63
63
64-65
66
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. In addition, the irrigation segment 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. 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. 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 and sales operations in the Netherlands, 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, and railroad signals and structures. The infrastructure segment also provides outsourced
manufacturing and production 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, under its LAKOS® brand.
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 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 in the U.S. 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 125 to 130 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 remote monitoring and automation technology for pivot and drip irrigation systems that
is sold on a subscription basis under the FieldNET® product name. FieldNET® technology allows growers to remotely
monitor and operate irrigation equipment, saving time and reducing water and energy consumption. The technology
uses cellular or radio frequency communication systems to remotely acquire data relating to various conditions in an
irrigated field, including operational status of the irrigation system, position of the irrigation system, water flow rates,
weather and soil conditions and similar data. The system can remotely control the irrigation system, including
changing position, varying water flow rates, and controlling pump station and diesel generator operation. Data
management and control is achieved using applications running on either a personal computer-based internet browser
or various mobile devices connected to the internet.
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 and cost
savings 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.
4
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. Demand for
center pivots and lateral move irrigation equipment also 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 preferred or critical; and/or fertigation or
chemigation will be utilized.
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 – The Company sells center pivot and lateral move irrigation systems throughout the world.
International sales accounted for approximately 39 percent and 38 percent of the Company’s total irrigation segment
revenues in fiscal 2014 and 2013, respectively. The Company has production and sales operations in Brazil, France,
China, and South Africa as well as distribution and sales operations in the Netherlands, Australia and New Zealand
serving the key South American, European, Chinese, African, Russian/Ukrainian, Australian, and New Zealand
markets. The Company also exports irrigation equipment from the U.S. to international markets. The Company’s
manufacturing operation in Turkey is planned to be operational early in calendar 2015 and is expected to
accommodate long-term growth plans for several international markets.
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 $7.8 million, $8.1 million,
and $6.0 million for fiscal years 2014, 2013, and 2012, 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.
5
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, and promotes safety by maintaining the physical separation of opposing
lanes of traffic. 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.
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 by departments of transportation and government regulators
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.
6
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.
The global market for the Company’s infrastructure products continues to be driven by population growth and the need
for improved road safety. International sales accounted for approximately 41 percent and 33 percent of the Company’s
total infrastructure segment revenues in fiscal 2014 and 2013, respectively. 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 expects to continue expanding in international 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, $3.3 million and $3.5 million for fiscal years 2014, 2013
and 2012, 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.
7
The following table describes the Company’s total revenues for the past three fiscal years. United States export
revenue is included in International based on the region of destination.
$ in millions
United States
International
Total Revenues
2014
For the years ended August 31,
2013
2012
% of Total
Revenues Revenues
% of Total
Revenues Revenues
% of Total
Revenues Revenues
$ 377.7
$ 240.3
$ 617.9
61 $ 428.9
39 $ 261.9
100 $ 690.8
62 $ 354.6
38 $ 196.7
100 $ 551.3
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.
ORDER BACKLOG
As of August 31, 2014, the Company had an order backlog of $79.6 million compared with $66.5 million at August 31,
2013. The increase in backlog at August 31, 2014 included a $12.7 million Road Zipper System™ order from the
Golden Gate Bridge Highway & Transportation District. The Company’s backlog can fluctuate from period to period
due to the seasonality, cyclicality, timing and execution of contracts. Backlog typically represents long-term projects as
well as short lead-time orders and therefore, is generally not a good indication of the next quarter’s revenues.
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 from
assorted domestic and foreign suppliers to adequate supplies of raw materials and components.
CAPITAL EXPENDITURES
Capital expenditures for fiscal 2014, 2013, and 2012 were $17.7 million, $11.1 million and $9.9 million, respectively.
Capital expenditures for fiscal 2015 are estimated to be approximately $20.0 million to $25.0 million largely focused
on manufacturing capacity expansion and productivity improvements. The Company’s capital expenditure plan
includes investments in a manufacturing operation in Turkey, which is planned to be operational early in calendar 2015
and is expected to accommodate long-term growth plans for several international markets. 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.
8
EMPLOYEES
The number of persons employed by the Company and its wholly-owned subsidiaries at fiscal year ends 2014, 2013,
and 2012 were 1,202, 1,262 and 1,082, 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.
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 the
Netherlands, Australia and New Zealand. Where the Company exports products from the United States to international
markets, the Company generally ships against prepayment, an irrevocable letter of credit confirmed by a U.S. bank or
another secured means of payment. 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 other currencies. Approximately 23
percent and 19 percent of total consolidated Company sales were conducted in currencies other than the U.S. dollar
in fiscal 2014 and 2013, respectively. 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 U.S. dollars.
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 cyclical and 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, 2014, approximately 39 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. In addition, the
collectability of receivables can be difficult to estimate, particularly in areas of political instability or with
governments with which the Company has limited experience or where there is a lack of transparency as to the
current credit condition. 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’s capital expenditure plan includes
investments in a manufacturing operation in Turkey, which is planned to be operational early in calendar 2015 and is
expected to accommodate long-term growth plans for several international markets. 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
Irrigation
Corlu, Turkey
Lease
2024
274,147
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
Principal U.S. manufacturing plant consists of eight separate
buildings located on 122 acres
Manufacturing plant to be operational early in calendar 2015 and
is expected to accommodate several international markets
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
Mogi Mirim, Sao Paulo,
Brazil
Own
N/A
67,000
Manufacturing plant for irrigation products for the Brazilian
market, consists of two buildings
Irrigation
Infrastructure
Tianjin, China and
Beijing, China
Milan, Italy
Lease
Own
2015
N/A
Manufacturing plant and office facilities for irrigation products
for the Chinese market
58,400
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
2016 -
2022
28,900 Retail irrigation operations in four leased buildings
Irrigation
Kraaifontein, South Africa Lease
2016
23,900
Manufacturing and warehouse facility for the sub-Saharan Africa
markets
Pasco, Washington;
Hermiston, Oregon;
Portland, Oregon
Amarillo, Texas
Tifton, Georgia
Milford, Nebraska; Sioux
Falls South Dakota
Paul, Idaho
Toowoomba, Queensland,
Australia; Feilding, New
Zealand
Irrigation
Irrigation
Irrigation
Irrigation
Irrigation
Irrigation
Lease
Lease
Lease
Lease
Lease
2016 -
2018
2017
2016
2015
2017
22,500 Office and warehouse locations related to IRZ Consulting, LLC
22,000 Warehouse facility for irrigation products
15,500 Warehouse facility for irrigation products
Manufacturing, engineering, and office locations related to
Digitec, Inc.
17,400
11,400 Warehouse facility for irrigation products
Lease
2017
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.
Holders
Lindsay Common Stock trades on the New York Stock Exchange, Inc. (NYSE) under the ticker symbol LNN. As of
October 10, 2014, there were approximately 165 stockholders of record.
Price Range of Common Stock
The following table sets forth for the periods indicated the range of the high and low stock prices and dividends paid
per share:
Fiscal 2014 Stock Price
Fiscal 2013 Stock Price
High
Low
Dividends
High
Low
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year
$
$
$
$
$
90.00 $
92.93 $
91.60 $
89.82 $
92.93 $
71.13 $
75.76 $
77.50 $
76.02 $
71.13 $
0.130 $
0.260 $
0.260 $
0.270 $
0.920 $
80.48 $
94.90 $
94.50 $
82.23 $
94.90 $
64.52 $
73.86 $
73.43 $
72.54 $
64.52 $
Dividends
0.115
0.115
0.115
0.130
0.475
Purchases of Equity Securities by the Issuer and Affiliated Purchases
The table below sets forth information with respect to purchases of the Company’s common stock made by or on
behalf of the Company during the three months ended August 31, 2014:
ISSUER PURCHASES OF EQUITY SECURITIES
Period
June 1, 2014 to June 30, 2014
July 1, 2014 to July 31, 2014
August 1, 2014 to August 31, 2014
Total
Total Number
of Shares
Purchased
Average
Price Paid
Per Share
-
83.69
78.55
80.29
- $
98,224 $
192,051 $
290,275 $
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Approximate Dollar
Value of Shares
That May Yet Be
Purchased Under
the Plans or
Programs (1)
($ in thousands)
- $
98,224 $
192,051 $
290,275 $
132,247
124,027
108,940
108,940
(1) On January 3, 2014, the Company announced that its Board of Directors terminated its existing share repurchase
authorization to purchase up to a maximum of 881,139 shares of its common stock, effective as of January 2, 2014,
and replaced it with an increased authorization to repurchase up to $150.0 million of common stock through January
2, 2016. Under the new program, shares may be repurchased in privately negotiated and/or open market
transactions. On July 25, 2014, the Company adopted a written trading plan in connection with its share repurchase
program for repurchasing its common stock in accordance with the guidelines specified under Rule 10b5-1 of the
Securities Exchange Act of 1934, as amended.
13
Dividends
The Company paid a total of $11.7 million and $6.1 million in dividends during fiscal 2014 and fiscal 2013,
respectively. 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.
Company Stock Performance
The following graph 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 Small Cap 600
Construction, Farm Machinery and Heavy Truck index for the five-year period ended August 31, 2014. 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, 2009 and the graph shows its relative performance through
August 31, 2014.
(cid:3)
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
$250
$200
$150
$100
$50
$0
8/09
8/10
8/11
8/12
8/13
8/14
Lindsay Corporation
S&P Smallcap 600
S&P SmallCap 600 Construction, Farm Machinery and Heavy Truck Index
*$100 invested on 8/31/09 in stock or index, including reinvestment of dividends.
Fiscal year ending August 31.
Copyright© 2014 S&P, a division of The McGraw -Hill Companies Inc. All rights reserved.
Lindsay Corporation
S&P Smallcap 600
S&P SmallCap 600 Construction, Farm Machinery and Heavy Truck Index
100.00
100.00
100.00
89.63
107.81
91.91
152.04
134.16
114.09
160.73
156.83
105.22
188.06
198.69
156.71
194.55
235.84
194.25
8/09
8/10
8/11
8/12
8/13
8/14
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 (4)
Diluted weighted average shares
2010
2013
12.7%
27.7%
28.2%
27.1%
26.9%
2011(3)
2014(1)
For the Years Ended August 31,
2012(2)
$ 617.9 $ 690.8 $ 551.3 $ 478.9 $ 358.4
$ 171.0 $ 194.8 $ 148.5 $ 129.8 $ 98.9
27.6%
$ 92.6 $ 87.8 $ 83.0 $ 73.2 $ 61.1
$ 78.4 $ 107.1 $ 65.5 $ 56.6 $ 37.8
10.6%
$ 51.5 $ 70.6 $ 43.3 $ 36.8 $ 24.9
6.9%
$ 4.00 $ 5.47 $ 3.38 $ 2.90 $ 1.98
$ 0.920 $ 0.475 $ 0.385 $ 0.345 $ 0.325
$ 72.5 $ 65.1 $ 56.2 $ 58.5 $ 57.6
$ 526.6 $ 512.3 $ 415.5 $ 381.1 $ 325.5
$ - $ - $ - $ 4.3 $ 8.6
8.1%
12,585
11.3%
12,692
11.4%
12,810
17.0%
12,901
10.1%
12,882
11.9%
11.8%
10.2%
15.5%
7.9%
7.7%
8.3%
(1) Fiscal 2014 includes operating results of Claude Laval Corporation acquired in fourth quarter of fiscal 2013.
(2) Fiscal 2012 includes the operating results of IRZ Consulting, LLC acquired in the fourth quarter of fiscal 2011.
(3) Fiscal 2011 includes the operating results of Digitec, Inc. acquired in fourth quarter of fiscal 2010 and WMC Technology Limited
acquired in first quarter of fiscal 2011.
(4) 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, including Management’s Discussion
and Analysis of Financial Condition and Results of Operations, 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 customers, the farmers. 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 the
Netherlands, 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 irrigation/water management. Lindsay is committed to achieving
earnings growth by global market expansion, improvements in margins, and strategic acquisitions. Since 2001, the
Company has utilized acquisitions and greenfield efforts to expand its product lines and add to its operations in
Europe, South America, South Africa, the Netherlands, 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 sales 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,
revenues from the arrangement are allocated to the separate units of accounting based on their relative selling price.
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.
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.
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 three warehouses in Idaho, Georgia 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.
17
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 land 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 second half of calendar 2014. Based on this investigation, the Company will then assess revisions to
its remediation plan and expects to meet with the EPA in the first half of fiscal 2015 to determine how to proceed. 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.
Trade 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.
In assessing the likelihood of collection of receivable, the Company considers, for example, the Company’s history
of collections, the current status of discussions and repayment plans, collateral received, and other evidence and
information regarding collection or default risk that is available in the market place. 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 condition and credit risk
quality.
18
As the Company’s international business has grown, the exposure to potential losses in international markets has
also increased. These exposures can be difficult to estimate, particularly in areas of political instability or with
governments with which the Company has limited experience or where there is a lack of transparency as to the
current credit condition of governmental units. As of August 31, 2014 the Company had $8.0 million in delinquent
accounts receivable with Chinese governmental entities, and $2.5 million of accounts receivable and $1.9 million in
performance bonds related to its contract in Iraq. The Company’s allowance for all doubtful accounts related to both
current and long-term receivables increased to $4.8 million at August 31, 2014 from $2.9 million at August 31,
2013. Receivables that are not reasonably expected to be realized in cash within the next twelve months are
classified as long-term receivables within noncurrent assets. The Company’s 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.
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 affect the Company’s
consolidated results of operations and financial condition. 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. 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.
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 percent) that the estimated fair value of a reporting unit is less than its carrying amount. A significant amount of
judgment is involved in determining if an indicator of impairment has occurred. Such indicators 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. 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. In fiscal 2014, in conjunction with the Company’s
annual review for impairment, the Company performed a qualitative analysis of goodwill for each of the Company’s
reporting units, which are the same as its operating segments, and did not identify any potential impairment.
In assessing other intangible assets not subject to amortization for impairment, the Company has the option to
perform a qualitative assessment to determine whether the existence of events or circumstances leads to a
determination that it is more likely than not that the fair value of such an intangible asset is less than its carrying
amount. If the Company determines that it is not more likely than not that the fair value of such an intangible asset is
less than its carrying amount, then the Company is not required to perform any additional tests for assessing
intangible assets for impairment. However, if the Company concludes otherwise or elects not to perform the
qualitative assessment, the Company is then required to perform a quantitative impairment test that involves a
comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the
intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. In fiscal
2014, the Company performed a qualitative analysis of other intangible assets not subject to amortization and
concluded there were no indicators of impairment.
19
Executive Overview and Outlook
Net earnings for fiscal 2014 were $51.5 million or $4.00 per diluted share compared with $70.6 million or $5.47 per
diluted share in the prior year. The decrease in earnings was primarily attributable to lower revenues, which
declined 11 percent to $617.9 million from $690.8 million. The primary driver of lower revenue was the irrigation
segment, where sales decreased 14 percent to $539.9 million. Infrastructure revenues increased 20 percent to $78.0
million, partially offsetting the decline in irrigation revenue. Gross margins declined by 0.5 percentage points and
operating expenses increased by $4.9 million. Operating margin for fiscal 2014 declined to 12.7 percent as
compared to 15.5 percent for fiscal 2013 primarily due to deleverage of fixed costs on lower sales and from higher
operating expenses due to the acquisition of the LAKOS® separators and filtration solution business in August 2013.
The Company’s irrigation revenues are highly dependent upon the need for irrigated agricultural crop production,
which, in turn, depends upon many factors, including the following primary drivers:
(cid:120) Agricultural commodity prices - As of August 2014, corn and soybean prices have decreased approximately
25 percent compared to the same time last year.
(cid:120) Net farm income - As of August 2014, the U.S. Department of Agriculture (USDA) estimated U.S. 2014 net
farm income to be $113.2 billion, down 14 percent from USDA’s estimate of U.S. 2013 net farm income of
$131.3 billion. The U.S. 2014 net farm income forecast would be the lowest since 2010, but would remain
above the 10-year average.
(cid:120) Weather conditions – Optimal growing conditions for 2014 have led to projections of record harvests and
contributed to lower crop prices. During the third and fourth quarters of fiscal 2014, storms across the
Midwest created additional demand for replacement units. Drought conditions drove higher equipment
purchases in prior years.
(cid:120) Governmental policies - A number of government laws and regulations can impact the Company’s business,
including:
(cid:120) The Agricultural Act of 2014 provides certainty to growers by adopting a five-year farm bill. This
law continues many of its existing programs, including funding for the Environmental Quality
Incentives Program (EQIP), which provides financial assistance to farmers to implement
conservation practices and is frequently used to assist in the purchase of center pivot irrigation
systems.
(cid:120) Certain tax incentives (such as the Section 179 income tax deduction and bonus depreciation) that
encourage equipment purchases were significantly reduced in 2014.
(cid:120) The U.S. government has imposed trade sanctions that could impact irrigation equipment sales to
Russia and the Ukraine.
(cid:120) The ethanol mandate that increases corn demand was reduced.
(cid:120) Recent legislative discussions involve possible elimination of the Export-Import Bank of the United
States (EXIM). The Company has put measures in place in an effort to mitigate the potential impact
of the loss of credit insurance provided by EXIM.
At this point, the U.S. irrigation market has slowed significantly in recent quarters as compared to the same periods
last year. U.S. irrigation revenues have contracted due to the significant reduction in commodity prices, the
reduction in the Central Plains drought conditions, and the reduction in accelerated tax benefits, partially offset by
demand caused by incremental sales from storm damage. International markets remain active, but with some
projects delayed due to lower commodity prices or by regional conflict. The current political environment in Russia,
the Ukraine and Iraq may have a negative effect on international irrigation equipment revenues. As a result of the
above factors, the Company anticipates lower irrigation segment revenues in fiscal 2015.
The infrastructure business has improved its profit profile and generated growth in an environment of constrained
government spending. In August 2014, the U.S. government enacted a $10.8 billion temporary highway-funding bill to
fund highway and bridge projects, the latest in a series of short term funding bills over the last several years. Until and
unless a long-term U.S. Highway Bill is passed, uncertainties and limitations on infrastructure growth will continue.
In spite of government spending uncertainty, opportunities exist for market share gains in each of the infrastructure
20
product lines. Demand for the Company’s transportation safety products continues to be driven by population growth
and the need for improved road safety.
As of August 31, 2014, the Company has an order backlog of $79.6 million compared with $66.5 million at August 31,
2013. The increase in backlog at August 31, 2014 included a $12.7 million Road Zipper System™ order from the
Golden Gate Bridge Highway & Transportation District. The Company’s backlog can fluctuate from period to period
due to the seasonality, cyclicality, timing and execution of contracts. Backlog typically represents long-term projects as
well as short lead-time orders and therefore, is generally not a good indication of the next quarter’s revenues.
The global drivers for the Company’s markets of population growth, expanded food production and efficient water
use and infrastructure expansion support the Company’s long-term growth goals. 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.
Results of Operations
The following “Fiscal 2014 Compared to Fiscal 2013” and the “Fiscal 2013 Compared to Fiscal 2012” 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 2014 Compared to Fiscal 2013
The following table provides highlights for fiscal 2014 compared with fiscal 2013:
$ in thousands
Consolidated
Operating revenues
Cost of operating revenues
Gross profit
Gross margin
Operating expenses (1)
Operating income
Operating margin
Other 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 income (loss) (2)
Operating margin (2)
For the Years Ended
August 31,
2014
2013
Percent
Increase
(Decrease)
$
$
$
$
$
$
$
$
$
$
$
$
617,933
446,938
170,995
27.7%
92,637
78,358
12.7%
297
27,143
34.5%
51,512
539,943
91,697
17.0%
77,990
3,511
4.5%
$
$
$
$
$
$
$
$
$
$
$
$
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%)
(11%)
(10%)
(12%)
6%
(27%)
21%
(26%)
(27%)
(14%)
(27%)
20%
533%
(1) Includes $16.9 million and $17.5 million of unallocated general and administrative expenses for fiscal 2014
and fiscal 2013, respectively.
(2) Excludes unallocated corporate general and administrative expenses.
21
Revenues
Operating revenues in fiscal 2014 decreased by 11 percent to $617.9 million compared with $690.8 million in fiscal
2013. The decrease is attributable to an $86.1 million decrease in irrigation revenues offset in part by a $13.1
million increase in infrastructure revenues. The irrigation segment provided 87 percent of Company revenue in
fiscal 2014 as compared to 91 percent of the same prior year period.
U.S. irrigation revenues in fiscal 2014 of $331.5 million decreased $54.2 million or 14 percent from $385.7 million
in fiscal 2013. The decrease in U.S. irrigation revenues is primarily due to a decline in the number of irrigation systems
sold as compared to the prior year. Lower agricultural commodity prices contributed to lower demand for U.S.
irrigation equipment. An incremental increase in sales resulting from storms in the U.S. irrigation market contributed
an estimated $27.0 million of revenues partially offsetting the market decline. The revenues of $20.8 million
generated from the LAKOS® separators and filtration solution business that was acquired in August 2013 partially
offset the decrease in sales of irrigation systems as well.
International irrigation revenues in fiscal 2014 of $208.4 million decreased $31.9 million or 13 percent from $240.3
million in fiscal 2013. The decrease in international irrigation revenues is primarily due to a decline in the number of
irrigation systems sold as compared to the prior year. Operating revenues decreased most significantly in the Middle
East due to the near completion of the Iraq contract in fiscal 2013. Revenues from the Iraq contract during fiscal 2014
were $2.4 million compared to $33.4 million during fiscal 2013. In other international markets, revenue declined in
Russia/Ukraine, Canada and China partially offset by increases in Australia and water filtration system export sales of
$7.2 million from the LAKOS® business.
Infrastructure products segment revenues in fiscal 2014 of $78.0 million increased by $13.1 million or 20 percent from
$64.9 million in fiscal 2013. The increase in sales is primarily due to increases in road safety products and railroad
signals and structures.
Gross Margin
Gross profit was $171.0 million for fiscal 2014, a decrease of $23.8 million compared to fiscal 2013. The decrease
in gross profit was primarily due to the decline in sales and a decrease in gross margin to 27.7 percent for fiscal 2014
from 28.2 percent for fiscal 2013. Gross margins in irrigation declined by less than one percentage point due
primarily to fixed cost deleverage on lower sales volume. Infrastructure gross margins improved by approximately
two percentage points primarily due to a combination of mix shift to higher margin products and fixed cost leverage
on higher sales volume.
Operating Expenses
The Company’s operating expenses of $92.6 million for fiscal 2014 increased $4.9 million compared to fiscal 2013
operating expenses of $87.8 million. Excluding the acquired LAKOS® business, operating expenses decreased $3.6
million primarily due to a reduction of $1.7 million in personnel related expenses including incentive compensation,
$1.0 million decrease in research and development expenses and $0.9 million in lower advertising expenses.
Operating expenses were 15.0 percent of sales for fiscal 2014 compared to 12.7 percent of sales for fiscal 2013
Operating margin was 12.7 percent for fiscal 2014 as compared to 15.5 percent for fiscal 2013.
Income Taxes
The Company recorded income tax expense of $27.1 million and $36.7 million for fiscal 2014 and fiscal 2013,
respectively. The effective income tax rate increased to 34.5 percent in fiscal 2014 compared to 34.2 percent in
fiscal 2013. The increase in the annual effective income tax rate primarily relates to the earnings mix among
jurisdictions.
Net Earnings
Net earnings for fiscal 2014 were $51.5 million or $4.00 per diluted share compared to $70.6 million, or $5.47 per
diluted share for the prior fiscal year. The Company’s operating income decreased to $78.4 million in fiscal 2014
compared to $107.1 million during the prior fiscal year primarily due to a decrease in revenues.
22
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 (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 (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%
23%
31%
6%
63%
161%
68%
63%
32%
56%
(15%)
(7273%)
(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.
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 an 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.
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 an 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.
23
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
approximately 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 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 primarily relates to earnings mix among
jurisdictions less certain tax credits reinstated in fiscal 2013.
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.
Liquidity and Capital Resources
The Company's cash and cash equivalents totaled $171.8 million at August 31, 2014 compared with $151.9 million
at August 31, 2013. The Company requires cash for financing its receivables and inventories, paying operating
expenses and capital expenditures, and for dividends and 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 two 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 and dividends. The Company’s Capital Allocation
Plan outlined below could require the Company to incur debt depending on the size and timing of share repurchases
and potential acquisitions.
The Company’s total cash and cash equivalents held by foreign subsidiaries, in which earnings are considered
indefinitely reinvested, was approximately $33.1 million and $26.2 million as of August 31, 2014 and 2013,
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.
24
Net working capital was $258.2 million at August 31, 2014, as compared with $266.7 million at August 31, 2013.
Cash flows provided by operations totaled $91.8 million during the year ended August 31, 2014 compared to $57.5
million provided by operations during the same prior year period. Cash provided by operations increased by $34.3
million compared to the prior year period primarily as a result of positive cash flow changes in receivables and
inventories.
As the Company’s international business has grown, the exposure to potential losses in international markets has
also increased. These exposures can be difficult to estimate, particularly in areas of political instability or with
governments with which the Company has limited experience or where there is a lack of transparency as to the
current credit condition of governmental units. As of August 31, 2014 the Company had $8.0 million in delinquent
accounts receivable with Chinese governmental entities, and $2.5 million of accounts receivable and $1.9 million in
performance bonds related to its contract in Iraq. The Company’s allowance for all doubtful accounts increased to
$4.8 million at August 31, 2014 from $2.9 million at August 31, 2013. The amount and timing of collection of
outstanding amounts could impact working capital needs.
Cash flows used in investing activities totaled $18.5 million during the year ended August 31, 2014 compared to
$41.1 million during the same prior year period. Net cash used in investing activities was lower in fiscal 2014
primarily due to the $29.0 million acquisition of Claude Laval Corporation and its LAKOS® brand of filtration
products that occurred in the prior year. Capital spending of $17.7 million in fiscal 2014 increased compared to the
prior year capital spending of $11.1 million, primarily due to increased capital expenditures for productivity
improvements and manufacturing capacity expansion.
Cash flows used in financing activities totaled $53.6 million during the year ended August 31, 2014 compared to
$8.0 million during the same prior year period. The $45.6 million increase in cash used in financing activities was
primarily due to an increase in share repurchases of $41.1 million and an increase in the amount of dividends paid of
$4.9 million. The Company had no outstanding long-term debt as of August 31, 2014 and 2013.
Capital Allocation Plan
The Company’s capital allocation plan is to continue investing in revenue and earnings growth, combined with a
defined process for enhancing returns to stockholders. Under the Company’s announced capital allocation plan in
January 2014, the priorities for uses of cash include:
Investment in organic growth including capital expenditures and expansion of international markets,
(cid:120)
(cid:120) Dividends to stockholders, along with expectations to increase dividends on an annual basis,
(cid:120) Synergistic water related acquisitions that provide attractive returns to stockholders, and
(cid:120) Opportunistic share repurchases taking into account cyclical and seasonal fluctuations.
Capital Expenditures and Expansion of International Markets
In fiscal 2015, the Company expects capital expenditures of approximately $20.0 million to $25.0 million, largely
focused on manufacturing capacity expansion and productivity improvements. The Company’s capital expenditure
plan includes investments in a manufacturing operation in Turkey, which is planned to be operational early in calendar
2015 and is expected to accommodate long-term growth plans for several international markets. The Company’s
management does maintain flexibility to modify the amount and timing of some of the planned expenditures in
response to economic conditions.
Dividends
In fiscal 2014, the Company paid cash dividends of $0.92 per common share or $11.7 million to stockholders as
compared to $0.475 per common share or $6.1 million in fiscal 2013.
25
Share Repurchases
On January 3, 2014, the Company announced that its Board of Directors replaced its existing share repurchase
authorization with an increased authorization to repurchase up to $150.0 million of common stock with the
authorization effective through January 2, 2016. On July 25, 2014, the Company adopted a written trading plan in
connection with its share repurchase program for repurchasing its common stock in accordance with the guidelines
specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. During the twelve months ended
August 31, 2014, the Company repurchased 497,899 shares of common stock for an aggregate purchase price of $41.1
million. During the twelve months ended August 31, 2013, the Company did not repurchase shares of common stock.
The remaining amount available under the repurchase program was $108.9 million as of August 31, 2014.
Credit Facility Agreement
The Company’s wholly-owned subsidiary, Lindsay International Holdings B.V., has an unsecured $5.0 million Credit
Facility Agreement with Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank”), which was entered into
on August 22, 2014 (the “Credit Facility Agreement”). The borrowings from the Credit Facility Agreement may
primarily be used for working capital purposes and funding acquisitions. There were no borrowings outstanding on the
Credit Facility Agreement at August 31, 2014. Borrowings under the Credit Facility Agreement bear interest at a rate
equal to LIBOR plus 115 basis points (1.31 percent at August 31, 2014). The Company also pays an annual
commitment fee of 0.25 percent on the unused portion of the Credit Facility Agreement. Unpaid principal and interest
is due by August 21, 2015.
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 January 22, 2014 to revise letter of credit expiry dates and cash collateralization
procedures (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, 2014 and 2013, the
Company had no outstanding borrowings on the Revolving Credit Agreement. The amount of borrowings available
at any time under the Revolving Credit Agreement is reduced by the amount of standby letters of credit then
outstanding. At August 31, 2014, the Company had the ability to borrow $24.5 million under this facility, after
consideration of standby letters of credit of $5.5 million. Borrowings under the Revolving Credit Agreement bear
interest at a rate equal to LIBOR plus 90 basis points (1.06 percent at August 31, 2014), 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.
Each of the Credit Facility Agreement and the Revolving Credit Agreement contains certain covenants relating to
the Company’s financial condition. 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.
At August 31, 2014 and 2013, the Company was in compliance with all loan covenants.
Inflation
The Company is subject to the effects of changing prices. During fiscal 2014, 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.
26
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
$ 17,027 $ 3,156 $ 4,463 $ 3,283 $ 6,125
4,486
$ 24,184 $ 3,713 $ 5,535 $ 4,325 $ 10,611
1,042
1,072
7,157
557
(1) Total liabilities for unrecognized tax benefits as of August 31, 2014 were $3.6 million and are excluded from the table above. Unrecognized tax
benefits are classified on the Company's consolidated balance sheets within other current liabilities ($2.6 million) and within other noncurrent
liabilities ($1.0 million).
In fiscal 2013, the Company entered into a $39 million contract with the government of Iraq for the delivery and
installation of irrigation equipment, of which $35.8 million has been fulfilled. The June 2014 escalation of political
instability within Iraq has resulted in increased difficulties for the Company to complete installation as required, and
may make it impossible to do so. The Company has suspended installation services indefinitely until the political
environment improves in Iraq. The Company has a $1.9 million performance bond securing its obligations under the
contract. No amounts have been accrued for potential losses in the consolidated financial statements as of August
31, 2014 as the Company continues to evaluate its exposure to claims for uncompleted services.
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.
27
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 counterparties that have investment
grade credit ratings. As of August 31, 2014, 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, 2014, 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 $4.9 million of U.S. dollar equivalent cash flow
forward exchange contracts and option contracts outstanding as of August 31, 2014.
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, 2014, the Company had
outstanding Euro foreign currency forward contracts to sell 28.9 million Euro at fixed prices expected to settle
during the first quarter of fiscal 2015. At August 31, 2014, 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 first quarter of fiscal
2015. Based on the net investments contracts outstanding at August 31, 2014, 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.
28
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, 2014 and 2013, 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, 2014.
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, 2014 and 2013, and the results of their
operations and their cash flows for each of the years in the three-year period ended August 31, 2014, 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, 2014, based on criteria established
in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), and our report dated October 15, 2014 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
/s/ KPMG LLP
Omaha, Nebraska
October 15, 2014
29
Lindsay Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(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
Total operating expenses
2014
Years ended August 31,
2013
2012
$
$
617,933
446,938
170,995
$
690,848
496,014
194,834
551,255
402,737
148,518
38,284
43,228
11,125
92,637
32,937
43,441
11,395
87,773
Operating income
78,358
107,061
Interest expense
Interest income
Other income (expense), net
(187)
729
(245)
(304)
496
54
Earnings before income taxes
78,655
107,307
Income tax expense
Net earnings
Earnings per share:
Basic
Diluted
27,143
36,737
$
51,512
$
70,570
$
43,277
$
$
4.01
4.00
$
$
5.50 $
5.47 $
Shares used in computing earnings per share:
Basic
Diluted
12,832
12,882
12,830
12,901
Cash dividends declared per share
$
0.920
$
0.475
$
0.385
See accompanying notes to consolidated financial statements.
30
28,104
45,423
9,481
83,008
65,510
(492)
504
(414)
65,108
21,831
3.41
3.38
12,704
12,810
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 ($27), ($330) and $394
2014
Years ended August 31,
2013
2012
$
51,512 $
70,570 $
43,277
(210)
-
325
115
260
53
(408)
200
(1,752)
(7,131)
(1,439)
(7,339)
35,938
Total comprehensive income
$
51,627 $
69,131 $
See accompanying notes to consolidated financial statements.
31
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 $2,857 and $2,853, respectively
Inventories, net
Deferred income taxes
Other current assets
Total current assets
Property, plant and equipment, net
Intangible assets, net
Goodwill
Other noncurrent assets, net of allowance of $2,000 and $0, respectively
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
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;
18,636 and 18,571 shares issued at August 31, 2014 and 2013, respectively
Capital in excess of stated value
Retained earnings
Less treasury stock - at cost, 6,196 and 5,698 shares
at August 31, 2014 and 2013, respectively
Accumulated other comprehensive loss, net
Total shareholders' equity
Total liabilities and shareholders' equity
$
See accompanying notes to consolidated financial statements.
August 31,
2014
August 31,
2013
$
$
$
171,842
94,135
71,696
17,714
18,671
374,058
72,457
31,980
37,021
11,035
526,551
42,424
73,943
116,367
6,600
12,992
7,945
143,904
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
-
-
18,636
52,866
445,366
(132,020)
(2,201)
382,647
526,551
$
18,571
49,764
405,580
(90,961)
(2,316)
380,638
512,296
32
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
Balance at August 31, 2011
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
Balance at August 31, 2012
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
Balance at August 31, 2013
Comprehensive income:
Net earnings
Other comprehensive income
Total comprehensive income
Cash dividends ($0.920) per share
Repurchase of common stock
Issuance of common shares under
share compensation plans
Excess tax benefits from share-
based compensation
Share-based compensation expense
18,374
5,698
$ 18,374 $ 39,058 $ 302,732 $ (90,961) $
6,462
$
275,665
43,277
(4,894)
(7,339)
43,277
(7,339)
35,938
(4,894)
(10)
374
3,765
47
47
(57)
374
3,765
18,421
5,698
$ 18,421 $ 43,140 $ 341,115 $ (90,961) $
(877)
$
310,838
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
18,571
5,698
$ 18,571 $ 49,764 $ 405,580 $ (90,961) $
(2,316)
$
380,638
51,512
(11,726)
115
498
(41,059)
65
65
(1,639)
722
4,019
51,512
115
51,627
(11,726)
(41,059)
(1,574)
722
4,019
Balance at August 31, 2014
18,636
6,196
$ 18,636 $ 52,866 $ 445,366 $
(132,020) $
(2,201)
$
382,647
See accompanying notes to consolidated financial statements.
33
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:
Years Ended August 31,
2014
2013
2012
$
51,512 $
70,570 $
43,277
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
Repurchase of common shares
Dividends paid
Net cash used in financing activities
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
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid
Interest paid
See accompanying notes to consolidated financial statements.
34
14,793
2,225
(8,195)
4,207
(465)
24,751
(2,724)
(3,092)
(623)
8,954
5,706
(5,251)
91,798
12,600
1,543
(3,237)
4,573
(1,014)
(36,557)
(10,020)
(4,054)
9,188
14,578
(892)
227
57,505
12,468
379
(3,868)
3,939
959
(7,570)
(5,609)
(641)
723
(1,602)
5,408
4,576
52,439
(17,715)
(11,136)
(9,890)
34
-
1,245
(2,040)
(18,476)
455
(2,027)
-
762
(41,059)
(11,726)
(53,595)
188
19,915
151,927
22
(29,007)
1,944
(2,904)
(41,081)
2,036
(2,441)
(4,285)
2,800
-
(6,105)
(7,995)
54
8,483
143,444
$
171,842 $
151,927 $
116
-
3,378
(453)
(6,849)
567
(577)
(4,286)
387
-
(4,894)
(8,803)
(1,510)
35,277
108,167
143,444
$
$
26,261 $
38,328 $
19,667
234 $
369 $
561
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. In addition, the irrigation segment 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. 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. 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 and sales operations in the Netherlands, 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, and railroad signals and structures. The infrastructure also provides outsourced manufacturing
and production 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) 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.
35
(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 sales 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, revenues from the arrangement are allocated to the separate units
of accounting based on their relative selling price.
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.
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) 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.
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.
(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.
(7) Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with original maturities of three months or less.
36
(8) 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.
In assessing the likelihood of collection of receivable, the Company considers (for example) the Company’s history
of collections, the current status of discussions and repayment plans, collateral received, and other evidence and
information regarding collection or default risk that is available in the market place. 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 condition and credit risk
quality.
As the Company’s international business has grown, the exposure to potential losses in international markets has
also increased. These exposures can be difficult to estimate, particularly in areas of political instability or with
governments with which the Company has limited experience or where there is a lack of transparency as to the
current credit condition of governmental units. As of August 31, 2014 the Company had $8.0 million in delinquent
accounts receivable with Chinese governmental entities, and $2.5 million of accounts receivable and $1.9 million in
performance bonds related to its contract in Iraq. The Company’s allowance for all doubtful accounts related to both
current and long-term receivables increased to $4.8 million at August 31, 2014 from $2.9 million at August 31,
2013. Receivables that are not reasonably expected to be realized in cash within the next twelve months are
classified as long-term receivables within noncurrent assets. The Company’s 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.
(9) 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 three warehouses in Idaho, Georgia 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.
(10) 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. No impairments were recorded during the fiscal years ended August 31, 2014, 2013, and 2012. 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.
37
(11) 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. 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.
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 percent) that the estimated fair value of a reporting unit is less than its carrying amount. A significant amount of
judgment is involved in determining if an indicator of impairment has occurred. Such indicators 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. 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. In fiscal 2014, in conjunction with the Company’s
annual review for impairment, the Company performed a qualitative analysis of goodwill for each of the Company’s
reporting units, which are the same as its operating segments, and did not identify any potential impairment.
In assessing other intangible assets not subject to amortization for impairment, the Company has the option to
perform a qualitative assessment to determine whether the existence of events or circumstances leads to a
determination that it is more likely than not that the fair value of such an intangible asset is less than its carrying
amount. If the Company determines that it is not more likely than not that the fair value of such an intangible asset is
less than its carrying amount, then the Company is not required to perform any additional tests for assessing
intangible assets for impairment. However, if the Company concludes otherwise or elects not to perform the
qualitative assessment, the Company is then required to perform a quantitative impairment test that involves a
comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the
intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. In fiscal
2014, the Company performed a qualitative analysis of other intangible assets not subject to amortization and
concluded there were no indicators of impairment.
(12) 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.
38
(13) 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.
(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 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, 2014, the Company’s derivative counterparty had investment grade credit ratings.
(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:
(cid:120) Level 1 – inputs to valuation techniques are quoted prices in active markets for identical assets or liabilities
(cid:120) Level 2 – inputs to the valuation techniques are other than quoted prices but are observable for the assets or
liabilities, either directly or indirectly
(cid:120) Level 3 – inputs to the valuation techniques are unobservable for the assets or liabilities
39
(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.
B. NEW ACCOUNTING PRONOUNCEMENTS
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The standard provides a
single model for revenue arising from contracts with customers and supersedes current revenue recognition
guidance. The ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the
transfer of goods or services. The ASU will replace existing revenue recognition guidance in U.S. GAAP when it
becomes effective. The effective date for ASU No. 2014-09 will be the first quarter of fiscal year 2018. Early
adoption is not permitted. The guidance permits companies to either apply the requirements retrospectively to all
prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. The
Company is currently evaluating the impact the adoption will have on its consolidated financial statements and
related disclosures. The Company has not yet selected a transition method, nor has it determined the effect of the
standard on its ongoing financial reporting.
40
C. ACQUISITIONS
In connection with business acquisitions, the Company records the estimated fair value of the identifiable assets
acquired, liabilities assumed, goodwill, and any noncontrolling interest in the acquire, all determined as of the date
of acquisition. 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 was finalized in
the first quarter of fiscal 2014. The allocation of purchase price for CLC below changed from the allocation of
purchase price disclosed in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended
August 31, 2013 because the closing balance sheet under the terms of the purchase agreement and the valuation of
the identifiable assets acquired and liabilities assumed was finalized in November 2013. The Company determined
the changes to be immaterial.
The following table summarizes the consideration paid for CLC and the amounts of 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
8,656
7,867
13,600
738
(1,808)
(1,400)
(5,500)
22,153
6,854
29,007
$
$
The acquired intangible assets include amortizable intangible assets of $7.1 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 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
1,600
500
400
13,600
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.
41
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, 2014, 2013 and 2012:
($ and shares in thousands, except per share amounts)
Numerator:
Net earnings
For the years ended August 31,
2013
2014
2012
$
51,512
$
70,570 $
43,277
Denominator:
Weighted average shares outstanding
Diluted effect of stock equivalents
Weighted average shares outstanding assuming dilution
12,832
50
12,882
12,830
71
12,901
Basic net earnings per share
Diluted net earnings per share
$
$
4.01 $
4.00 $
5.50 $
5.47 $
12,704
106
12,810
3.41
3.38
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. The following
table shows the securities excluded from the computation of earnings per share because their effect would have been
anti-dilutive:
Units and options in thousands
Restricted stock units
Stock options
For the years ended August 31,
2013
2014
2012
3
44
3
29
3
29
E. ACCUMULATED OTHER COMPREHENSIVE 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 $1,524 and $1,396
Foreign currency translation, net of hedging activities, net of tax of $1,688 and $1,588
Total accumulated other comprehensive loss
August 31,
2014
2013
$
$
(2,497)
296
(2,201)
$
$
(2,287)
(29)
(2,316)
The following is a rollfoward of the balances in accumulated other comprehensive income (loss), net of tax.
$ in thousands
Balance at August 31, 2012
Current-period change
Balance at August 31, 2013
Current-period change
Balance at August 31, 2014
$
$
Defined benefit
pension plan
adjustment
Unrealized
gain (loss) on
cash flow hedges
Foreign currency Accumulated other
translation
adjustment
comprehensive
loss
(2,547)
260
(2,287)
(210)
(2,497)
$
(53)
53
-
-
-
$
1,723
(1,752)
(29)
325
296
$
(877)
(1,439)
(2,316)
115
(2,201)
42
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,
2013
2014
2012
$
$
70,066 $
8,589
78,655 $
99,781 $
7,526
107,307 $
57,884
7,224
65,108
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,
2013
2014
2012
$
$
29,015 $
2,176
4,147
35,338
(6,936)
(346)
(913)
(8,195)
27,143 $
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
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
2014
For the years ended August 31,
2013
2012
Amount
%
Amount
%
Amount
%
$
$
27,529
1,067
(116)
(2,170)
(89)
922
27,143
35.0 $
1.4
(0.1)
(2.8)
(0.1)
1.1
34.5 $
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
43
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,
2014
2013
$
$
2,812
1,256
433
1,524
2,106
87
1,396
3,354
191
10,955
24,114
(10,247)
(6,919)
(121)
(980)
(18,267)
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)
Net deferred tax assets (liabilities)
$
5,847
$
(2,548)
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, 2014 and 2013 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, 2014, undistributed earnings of the Company’s foreign subsidiaries amounted to
approximately $21.7 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.
44
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
Settlements with taxing authorities
Reduction resulting from lapse of applicable statute of limitations
Other increases (decreases)
Unrecognized Tax Benefits at August 31
August 31,
2014
2013
$
$
902
50
2,721
-
(62)
-
3,611
$
$
871
57
239
(6)
(269)
10
902
The net amount of unrecognized tax benefits at August 31, 2014 and 2013 that, if recognized, would impact the
Company’s effective tax rate was $1.0 million and $0.9 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 $0.9 million and $0.5 million for the years ended
August 31, 2014 and 2013, respectively.
The Company files income tax returns in the United States and in state, local, and foreign jurisdictions. The
Company is no longer subject to examination by tax authorities in most jurisdictions for years prior to 2011. The
U.S. Internal Revenue Service (IRS) began an income tax audit for the year 2011 in 2014. At August 31, 2014, the
Company does not believe the outcome of the IRS examination is likely to be material to our consolidated financial
statements.
While it is expected that the amount of unrecognized tax benefits will change in the next twelve months as a result
of the expiration of statutes of limitations, the Company does not expect this change to have a significant impact on
its results of operations or financial position.
G. INVENTORIES
($ 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,
2014
2013
$
$
19,953
9,990
48,300
78,243
(6,547)
71,696
$
$
19,369
5,665
50,038
75,072
(6,465)
68,607
45
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
2014
2013
3,315
38,573
91,254
14,946
148,088
(83,674)
64,414
4,395
17,213
21,608
(13,565)
8,043
72,457
$
$
$
$
$
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
$
$
$
$
$
Depreciation expense was $10.8 million, $9.8 million and $9.6 million for the years ended August 31, 2014, 2013, and
2012, respectively.
I. GOODWILL AND OTHER INTANGIBLE ASSETS
The carrying amount of goodwill by reportable segment for the year ended August 31, 2014 and 2013 is as follows:
$ in thousands
Balance as of August 31, 2012
Acquisition of CLC
Foreign currency translation
Balance as of August 31, 2013
Finalization of CLC acquisition
Foreign currency translation
Balance as of August 31, 2014
Irrigation
Infrastructure
Total
$
$
13,476
7,257
(66)
20,667
(403)
29
20,293
$
$
16,485
-
262
16,747
-
(19)
16,728
$
$
29,961
7,257
196
37,414
(403)
10
37,021
The components of the Company’s identifiable intangible assets at August 31, 2014 and 2013 are included in the
table below.
August 31,
2014
Gross
Weighted
2013
Gross
Carrying Accumulated Average
Amortization
Amount
Years
Carrying
Amount
Accumulated
Amortization
Weighted
Average
Years
13.0
7.4
5.6
1.6
N/A
10.0
$
$
30,282
7,932
1,336
517
(14,687)
(5,304)
(852)
(366)
13,122
-
$
53,189
$
(21,209)
12.8
7.4
5.6
1.7
N/A
10.0
$
$
30,266
8,034
1,331
517
(12,364)
(4,238)
(611)
(54)
13,126
-
$
53,274
$
(17,267)
$ in thousands
Amortizable intangible assets:
Patents
Customer relationships
Non-compete agreements
Other
Unamortizable intangible assets:
Tradenames
Total
46
Amortization expense for amortizable intangible assets was $4.0 million, $2.8 million and $2.9 million for 2014,
2013, and 2012, respectively.
Future estimated amortization of intangible assets for the next five years is as follows:
Fiscal Years
2015
2016
2017
2018
2019
Thereafter
$
$
$ in thousands
3,414
3,003
2,865
2,674
2,036
4,866
18,858
The Company updated its impairment evaluation of goodwill and intangible assets with indefinite useful lives at
August 31, 2014. No impairment losses were indicated as a result of the annual impairment testing for fiscal years
2014, 2013 and 2012. 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
Warranty
Deferred revenues
Income tax liabilities
Customer deposits
Dealer related liabilities
Other
Total other current liabilities
August 31,
2014
2013
$
$
16,622
9,331
8,979
8,922
7,366
7,103
15,620
73,943
$
$
18,471
6,695
4,790
3,550
4,580
7,134
14,596
59,816
K. CREDIT ARRANGEMENTS
The Company has no outstanding long-term debt as of August 31, 2014 and 2013. The Company’s credit
arrangements consisted of the following:
Credit Facility Agreement
The Company’s wholly-owned subsidiary, Lindsay International Holdings B.V., has an unsecured $5.0 million Credit
Facility Agreement with Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank”), which was entered into
on August 22, 2014 (the “Credit Facility Agreement”). The borrowings from the Credit Facility Agreement may
primarily be used for working capital purposes and funding acquisitions. There were no borrowings outstanding on the
Credit Facility Agreement at August 31, 2014. Borrowings under the Credit Facility Agreement bear interest at a rate
equal to LIBOR plus 115 basis points (1.31 percent at August 31, 2014). The Company also pays an annual
commitment fee of 0.25 percent on the unused portion of the Credit Facility Agreement. Unpaid principal and interest
is due by August 21, 2015.
47
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 January 22, 2014 to revise letter of credit expiry dates and cash collateralization
procedures (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, 2014 and 2013, the
Company had no outstanding borrowings on the Revolving Credit Agreement. The amount of borrowings available
at any time under the Revolving Credit Agreement is reduced by the amount of standby letters of credit then
outstanding. At August 31, 2014, the Company had the ability to borrow $24.5 million under this facility, after
consideration of standby letters of credit of $5.5 million. Borrowings under the Revolving Credit Agreement bear
interest at a rate equal to LIBOR plus 90 basis points (1.06 percent at August 31, 2014), 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 credit agreements contain certain covenants relating to the Company’s financial condition. 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. At August 31, 2014 and 2013, the Company was in
compliance with all loan covenants.
L. FINANCIAL DERIVATIVES
Fair Values of Derivative Instruments
Asset (Liability)
$ in thousands
Derivatives designated as hedging instruments:
Foreign currency forward contracts
Foreign currency forward contracts
Total derivatives designated as hedging instruments
Balance Sheet Location
Other current assets
Other current 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
August 31,
August 31,
2014
2013
$
$
$
900 $
(240)
660 $
-
(160)
(160) $
151
(258)
(107)
78
(33)
45
In addition, accumulated other comprehensive income (“AOCI”) included realized and unrealized after-tax gains of
$2.0 million and $2.0 million at August 31, 2014 and 2013, respectively, related to derivative contracts designated as
hedging instruments.
Net Investment Hedging Relationships
$ in thousands
Foreign currency forward contracts, net of tax expense
(benefit) of $16, ($286), and $1,023
Amount of Gain/(Loss) Recognized
in OCI on Derivatives
For the years ended August 31,
2013
2012
2014
$
(53)
$
(357)
$
1,677
48
During fiscal 2014, 2013 and 2012, the Company settled Euro foreign currency forward contracts resulting in after-
tax net (losses) gains of ($0.5 million), ($0.6 million) and $1.8 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,
2014, 2013 and 2012. Accumulated currency translation adjustment in AOCI at August 31, 2014, 2013 and 2012
reflected realized and unrealized after-tax gains of $2.0 million, $2.0 million and $2.4 million, respectively.
At August 31, 2014 and 2013, the Company had outstanding Euro foreign currency forward contracts to sell 28.9
million Euro and 29.2 million Euro, respectively, at fixed prices to settle during the next fiscal quarter. At August
31, 2014 and 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.
Derivatives Not Designated as Hedging Instruments
In order to reduce exposures related to changes in foreign currency exchange rates, the Company, at times, may
enter into forward exchange or option contracts for transactions denominated in a currency other than the functional
currency for certain of the Company’s operations. This activity primarily relates to economically hedging against
foreign currency risk in purchasing inventory, sales of finished goods, and future settlement of foreign denominated
assets and liabilities. The Company may choose whether or not to designate these contracts as hedges. For those
contracts not designated, changes in fair value are recognized currently in the income statement. At August 31,
2014 and 2013, the Company had $4.9 million and $4.0 million, respectively, of U.S. dollar equivalent of foreign
currency forward contracts outstanding.
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, 2014 and 2013,
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, 2014
$
$
$
$
$
$
171,842
-
-
Level 1
151,927
-
-
$
$
$
$
$
$
-
900
(400)
$
$
$
August 31, 2013
Level 2
Level 3
-
229
(291)
$
$
$
-
-
-
-
-
-
$
$
$
$
$
$
171,842
900
(400)
Total
151,927
229
(291)
The Company has no outstanding long-term debt as of August 31, 2014 and 2013. There were no required fair value
adjustments for goodwill, intangible assets and other long-lived assets for the years ended August 31, 2014 and
2013. No impairment losses were indicated as a result of the annual impairment testing for fiscal years 2014, 2013,
and 2012.
49
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 compounds 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.
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 of source area contamination and operating costs and accrued
that undiscounted amount. The expense was included within general and administrative expense in the consolidated
statements of operations. The EPA has not approved the Company’s remediation plan.
In addition to the source area noted above, the Company has determined that volatile organic compounds also exist
under one of the manufacturing buildings on the site. Due to the location, the Company has not yet determined the
extent of these compounds or whether they are contributing, if at all, to groundwater contamination. Based on the
current stage of discussions with the EPA and the uncertainty of the remediation actions that may be required with
respect to this affected area, if any, the Company believes that meaningful estimates of costs or range of costs cannot
currently be made and accordingly have not been accrued.
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 second half of calendar 2014. Based on this investigation, the Company will then assess revisions to
its remediation plan and expects to meet with the EPA in the first half of fiscal 2015 to determine how to proceed.
During fiscal 2014, the Company did not accrue any additional incremental costs related to environmental remediation
liabilities.
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 the site, it
anticipates there could be revisions to the current remediation plan as well as additional testing and environmental
monitoring as part of the Company’s ongoing discussions with the EPA regarding the development and implementation
of the remedial action plans. 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 following table summarizes the undiscounted environmental remediation liability classifications included in the
balance sheet as of August 31, 2014 and 2013:
Environmental Remediation Liabilities
$ in thousands
Balance Sheet Location
Other current liabilities
Other noncurrent liabilities
Total environmental remediation liabilities
August 31,
2014
August 31,
2013
$
$
1,370
5,025
6,395
$
$
1,740
5,200
6,940
50
Leases
The Company leases land, buildings, machinery, equipment, and computer equipment under various noncancelable
operating lease agreements. At August 31, 2014, future minimum lease payments under noncancelable operating
leases were as follows:
Fiscal Years
2014
2015
2016
2017
2018
Thereafter
$ in thousands
3,156
2,376
2,087
1,815
1,468
6,125
17,027
$
$
Lease expense was $4.0 million, $3.9 million and $3.6 million for the years ended August 31, 2014, 2013, and 2012,
respectively.
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 $1.2 million, $1.0 million and $0.9 million for the years ended
August 31, 2014, 2013 and 2012, 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, 2014 and 2013, 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
August 31,
2014
2013
$
$
6,881 $
314
519
(557)
7,157 $
7,378
266
(206)
(557)
6,881
51
Amounts recognized in the statement of financial position consist of:
$ in thousands
Other current liabilities
Pension benefit liabilities
Net amount recognized
August 31,
2014
2013
557 $
6,600
7,157 $
557
6,324
6,881
$
$
The before-tax amounts recognized in accumulated other comprehensive loss consists of:
$ in thousands
Net actuarial loss
August 31,
2014
2013
$
(4,021) $
(3,683)
For the years ended August 31, 2014 and 2013, the Company assumed a discount rate of 4.00 percent and 4.75
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.
For the years ended August 31, 2014, 2013 and 2012, the Company assumed a discount rate of 4.75 percent, 3.75
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 are as follows:
$ in thousands
Interest cost
Net amortization and deferral
Total
For the years ended August 31,
2013
2014
2012
$
$
314 $
181
495 $
266 $
212
478 $
325
166
491
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 2015 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
2015
2016
2017
2018
2019
Thereafter
$ in thousands
557
540
532
525
517
4,486
7,157
$
$
52
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,
2014
2013
$
$
6,695 $
6,428
(3,792)
9,331 $
4,848
6,938
(5,091)
6,695
Warranty costs were $6.4 million, $6.9 million, and $4.9 million for the fiscal years ended August 31, 2014, 2013 and
2012, respectively.
Q. INDUSTRY SEGMENT INFORMATION
The Company manages its business activities in two reportable segments: Irrigation and Infrastructure. The
accounting policies of the two reportable segments are the same as those described in Note A, Description of Business
and Significant Accounting Policies. 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.
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 four 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, crash cushions
and end terminals, and road marking and road safety equipment; the manufacturing and selling of large diameter steel
tubing and railroad signals and structures; and providing outsourced manufacturing and production services. The
infrastructure reporting segment consists of one operating segment.
The Company has no single major customer representing 10 percent or more of its total revenues during fiscal 2014,
2013, or 2012.
53
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
Total Assets:
Irrigation
Infrastructure
2014
2013
2012
539,943 $
77,990
617,933 $
625,996 $
64,852
690,848 $
475,299
75,956
551,255
91,697 $
3,511
95,208 $
(16,850)
297
78,655 $
125,395 $
(811)
124,584 $
(17,523)
246
107,307 $
15,534 $
2,181
17,715 $
9,494 $
5,299
14,793 $
10,687 $
449
11,136 $
7,147 $
5,453
12,600 $
80,259
(11)
80,248
(14,738)
(402)
65,108
7,942
1,948
9,890
6,959
5,509
12,468
407,447 $
119,104
526,551 $
391,527 $
120,769
512,296 $
303,741
111,790
415,531
$
$
$
$
$
$
$
$
$
$
$
Summarized financial information concerning the Company’s geographical areas is shown in the following tables.
$ in thousands
2014
For the years ended August 31,
2013
2012
Revenues
% of Total
Revenues
% of Total
Revenues
United States
International
Total Revenues
$
$
377,652
240,281
617,933
61 $
39
100 $
428,929
261,919
690,848
62 $
38
100 $
% of Total
64
36
100
354,649
196,606
551,255
$ in thousands
2014
For the years ended August 31,
2013
2012
Long-Lived
Tangible
Assets
Long-Lived
Tangible
Assets
% of Total
Long-Lived
Tangible
Assets
% of Total
United States
International
Total Long-Lived Assets $
$
55,378
17,079
72,457
76 $
24
100 $
53,894
11,170
65,064
83 $
17
100 $
45,100
11,080
56,180
% of Total
80
20
100
54
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, 2014, 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, 2014 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, 2014, 153,929
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.
Share Based Compensation Information
The following table summarizes share-based compensation expense for the fiscal years ended August 31, 2014,
2013 and 2012:
$ 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,
2013
2012
2014
$
205 $
214 $
225
135
570
3,297
233
547
3,579
4,002
4,207
(1,594)
2,613 $
4,359
4,573
(1,733)
2,840 $
$
189
524
3,001
3,714
3,939
(1,493)
2,446
As of August 31, 2014, there was $5.1 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 1.7
years.
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.
Grant Year
Weighted-Average Assumptions
Risk-free interest rate
Dividend yield
Expected life (years)
Volatility
Weighted-average grant-date fair value of options granted
$
55
Fiscal 2014
1.9%
0.7%
7
55.2%
40.40 $
Fiscal 2013
1.2%
0.6%
7
56.3%
40.09
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,
2014, 2013 and 2012:
Number of
stock options
Average
Exercise
Price
Average
Remaining
Contractual
Term (years)
Stock options outstanding at August 31, 2012
Granted
Exercised
Forfeitures
Stock options outstanding at August 31, 2013
Granted
Exercised
Forfeitures
Stock options outstanding at August 31, 2014
Exercisable at August 31, 2012
Exercisable at August 31, 2013
Exercisable at August 31, 2014
146,298 $
24,684 $
(89,390) $
(2,454) $
79,138 $
25,394 $
(15,590) $
(2,319) $
86,623 $
112,987 $
31,927 $
30,130 $
30.97
75.68
22.77
67.03
53.06
76.39
29.21
67.55
63.80
22.97
32.70
49.55
Aggregate
Intrinsic
Value ('000s)
5,031
3.9 $
$
4,960
6.4 $
1,817
$
853
7.3 $
1,211
2.4 $
3.0 $
5.3 $
4,789
1,383
851
There were 13,793 and 8,330 outstanding stock options that vested during the fiscal years ended August 31, 2014
and 2013, 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,
2013
2012
2014
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
$
$
$
$
853 $
455 $
317 $
34.89 $
4,960 $
2,036 $
1,817 $
31.04 $
971
567
368
N/A
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.
56
The following table summarizes information about restricted stock units as of and for the years ended August 31,
2014, 2013 and 2012:
Restricted stock units outstanding at August 31, 2012
Granted
Vested
Forfeited
Restricted stock units outstanding at August 31, 2013
Granted
Vested
Forfeited
Restricted stock units outstanding at August 31, 2014
Number of
restricted
stock units
67,535
30,551
(37,534)
(3,121)
57,431
35,450
(31,204)
(2,524)
59,153
Weighted-
Average Grant-
Date Fair Value
$
54.35
77.46
51.82
65.52
68.06
76.46
67.49
70.07
73.40
$
$
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, 2014, 2013 and 2012,
outstanding restricted stock units included 5,289, 4,496 and 4,873 units, respectively, that will be settled in cash.
The vesting date fair value of restricted stock units that vested was $2.1 and $1.9 million for each of the years ended
August 31, 2014 and 2013, 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, 2014, 2013 and 2012:
Performance stock units outstanding at August 31, 2012
Granted
Vested
Forfeited
Performance stock units outstanding at August 31, 2013
Granted
Vested
Forfeited
Performance stock units outstanding at August 31, 2014
Number of
performance
stock units
79,024
13,072
(36,634)
(2,663)
52,799
13,434
(23,454)
(2,027)
40,752
Weighted-
Average Grant-
Date Fair Value
$
45.32
74.31
32.81
60.65
60.41
74.84
55.45
64.57
67.81
$
$
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. In fiscal 2014 and fiscal 2013, performance stock units that
vested represented 46,908 and 56,944, respectively, of 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 $2.6 million and $1.9 million for the year ended August 31, 2014 and 2013, respectively.
57
S. SHARE REPURCHASES
On January 3, 2014, the Company announced that its Board of Directors replaced its existing share repurchase
authorization with an increased authorization to repurchase up to $150.0 million of common stock with the
authorization effective through January 2, 2016. On July 25, 2014, the Company adopted a written trading plan in
connection with its share repurchase program for repurchasing its common stock in accordance with the guidelines
specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. During the twelve months ended
August 31, 2014, the Company repurchased 497,899 shares of common stock for an aggregate purchase price of $41.1
million. During the twelve months ended August 31, 2013, the Company did not repurchase shares of common stock.
The remaining amount available under the repurchase program was $108.9 million as of August 31, 2014.
T. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
$ in thousands, except per share amounts
Year ended August 31, 2014
Operating revenues
Cost of operating revenues
Earnings before income taxes
Net earnings
Diluted net earnings per share
Year ended August 31, 2013
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
$
$
$
$
$
$
$
$
$
$
147,671 $
107,520 $
15,817 $
10,234 $
0.79 $
152,804 $
110,132 $
20,789 $
13,450 $
1.04 $
169,936 $
121,687 $
25,500 $
16,499 $
1.28 $
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 $
147,522
107,599
16,549
11,329
0.89
148,397
109,820
15,686
10,428
0.81
58
ITEM 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
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, 2014, based on the criteria for effective internal control described in Internal Control – Integrated Framework
(1992) 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, 2014.
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, 2014, based on
criteria established in Internal Control – Integrated Framework (1992) 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.
59
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, 2014, based on criteria established in Internal Control – Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
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, 2014 and 2013,
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, 2014, and our report dated October 15, 2014
expressed an unqualified opinion on those consolidated financial statements.
/s/ KPMG LLP
Omaha, Nebraska
October 15, 2014
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal controls over financial reporting that occurred during the year
ended August 31, 2014, that have materially affected, or are reasonably likely to materially affect, the Company’s
internal control over financial reporting.
ITEM 9B – Other Information
None.
60
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 2015 Annual
Meeting of Stockholders (the “Proxy Statement”) not later than 120 days after the close of its fiscal year ended August
31, 2014. 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
C. Mike Harris*
James C. Raabe
Mark A. Roth*
Barry A. Ruffalo
Reuben P. Srinivasan*
Lori L. Zarkowski*
Age
61
40
59
48
54
39
44
51
39
Position
President and Chief Executive Officer
Vice President, General Counsel and Secretary
President – Agricultural Irrigation Division
President – Technology Business
Vice President and Chief Financial Officer
Vice President – Corporate Development and Treasurer
President – Infrastructure Division
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 – Agricultural Irrigation Division 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.
61
Mr. C. Mike Harris is President – Technology Business of the Company and has held such position since November
2013. Prior to joining Lindsay and since February 2013, he served as Vice President of Sales and Field Operation at
Johnson Controls, Inc., a global diversified technology and industrial company. From May 2010 to February 2013, Mr.
Harris served as Vice President and Managing Director of Asia Pacific at Johnson Controls, Inc. From February 2005
to April 2010, Mr. Harris served as Vice President and General Manager of Energy Services for Johnson Controls, Inc.
Prior to 2005 and since 2002, Mr. Harris served in several Vice President positions at Johnson Controls, Inc. Prior to
joining Johnson Controls, Inc., Mr. Harris held various leadership positions in the energy services, commodity
trading and utility industries.
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.
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 Division 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, 2014.
62
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, 2014 (there were no equity compensation plans not approved
by security holders as of August 31, 2014):
(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)
181,239 $ 63.80
Total
181,239 $ 63.80
153,929
153,929
(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) 40,752 shares that could be issued under performance stock units (“PSU”) outstanding at August 31,
2014, and (ii) 53,864 shares that could be issued under restricted stock units (“RSU”) outstanding at August 31, 2014. 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.
63
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, 2014, 2013, and 2012 ..........................................................................................................
Consolidated Statements of Comprehensive Income for the years
ended August 31, 2014, 2013, and 2012 ..........................................................................................................
Consolidated Balance Sheets as of
August 31, 2014 and 2013 ................................................................................................................................
Consolidated Statements of Shareholders' Equity
for the years ended August 31, 2014, 2013, and 2012 ....................................................................................
Consolidated Statements of Cash Flows for the years
ended August 31, 2014, 2013, and 2012 ..........................................................................................................
Page
29
30
31
32
33
34
Notes to Consolidated Financial Statements ............................................................................................................ 35-58
Valuation and Qualifying Accounts -
Years ended August 31, 2014, 2013, and 2012 ..................................................................................................
65
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.
64
a(2) Exhibit
(cid:3)
Lindsay Corporation and Subsidiaries
VALUATION AND QUALIFYING ACCOUNTS
Years ended August 31, 2014, 2013 and 2012
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
Additions
Balance at
beginning of
period
Charges to
costs and
expenses
Charged to
other
accounts
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
Deductions (cid:3)
(cid:3)
(cid:3)
(cid:3)
(cid:3)
Balance at
end of
period
(cid:3)
(cid:3)
(cid:3)
(cid:3)
(in thousands)
Year ended August 31, 2014:
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, 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)
(cid:3)
(cid:3)
(a) Deductions consist of uncollectible items
(b) Deductions consist of obsolete items sold
$
$
$
$
$
$
2,853
3,089
1,717
1,648
2,340
2,167
$
$
$
$
$
$
2,225
698
1,543
2,632
379
1,114
$
$
$
$
$
$
-
11
-
71
-
(126)
$
$
$
$
$
$
221
941
407
1,262
1,002
1,507
$
$
$
$
$
$
4,857
2,858
2,853
3,089
1,717
1,648
a(3) Exhibits. The list of the Exhibits in the Exhibit Index is incorporated into this item by reference.
65
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 15th day of October,
2014.
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 15th day of October, 2014.
/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/ 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)
Director
Director
Director
(1) By: /s/ RICHARD W. PAROD
Richard W. Parod, Attorney-In-Fact
66
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 May 5, 2014.
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 10.2 to the
Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2014.†
10.6**
Lindsay Corporation Management Incentive Plan (MIP), 2014 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, 2013.†
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.†
67
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
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.†
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.
Fourth Amendment to Credit Agreement, dated January 22, 2014, by and between the Company and Wells Fargo
Bank, National Association, incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on
Form 10-Q for the fiscal quarter ended February 28, 2014.
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, 2013.
68
21*
23*
24*
31.1*
31.2*
32*
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 2014 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.
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***
Interactive Data Files.
† 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.
69
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
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: Centrus Energy Corp.
Michael C. Nahl
Director since 2003
Retired Executive Vice President
and Chief Financial Officer,
Albany International Corp.
Director: Trans World Entertainment Corporation
David B. Rayburn
Director since 2014
Retired President, Chief Executive Officer,
Modine Manufacturing
Director: Twin Disc, Inc.
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.
OFFICERS
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 26, 2015, 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
2015 quarter-end dates are November 30, 2014, February 28, 2015,
May 31, 2015 and August 31, 2015. Quarterly earnings are announced
approximately four weeks after the end of each quarter and audited
results are announced approximately six weeks after year end. Quarterly
earnings releases are posted to Lindsay’s Web site at
www.lindsay.com.
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 2014. These exhibits are signed by the Principal Executive
Officer and the Principal Financial Officer, respectively. Additionally, on
February 25, 2014, 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:
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
Gabelli & Company
Janney Montgomery Scott LLC
Monness, Crespi, Hardt & Co., Inc.
Piper Jaffray
Sidoti & Company
Sterne Agee
Stifel Nicolaus
Wedbush Securities, Inc.
William Blair & Co., LLC
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
IRZ Consulting, LLC
500 North First Street
Hermiston, Oregon 97838 U.S.A.
Ph: 1-541-567-0252
www.irzconsulting.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 North Clovis Avenue
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.
6 Talana Close
Sacs Circle
Bellville South
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
Lindsay Sulama (Turkey)
Karamehmet Mahallesi
Avrupa Serbest Bölgesi AdnanArısoy
Bulvarı NO : 11 / Z13
ERGENE / TEKİRDAĞ
Adres No : 3402119204
Turkey
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
Separators and Filtration Solutions
Separators and Filtration Solutions
Separators and Filtration Solutions
Separators and Filtration Solutions
Separators and Filtration Solutions
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VALUE THROUGH MARKET LEADERSHIP AND INNOVATION
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