-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B6dCJb4AyxFuYh5WrNv1Erepja/ed4YzOCzxz0s1PIcxlgnB6ig/0BvDpcLuw2vt pBBHlM38C+T3eZXMnxtYqw== 0000950137-01-504906.txt : 20020412 0000950137-01-504906.hdr.sgml : 20020412 ACCESSION NUMBER: 0000950137-01-504906 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20010831 FILED AS OF DATE: 20011129 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINDSAY MANUFACTURING CO CENTRAL INDEX KEY: 0000836157 STANDARD INDUSTRIAL CLASSIFICATION: FARM MACHINERY & EQUIPMENT [3523] IRS NUMBER: 470554096 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13419 FILM NUMBER: 1801821 BUSINESS ADDRESS: STREET 1: 2707 NORTH 108TH STREET STE 102 CITY: OMAHA STATE: NE ZIP: 68644 BUSINESS PHONE: 4024282131 MAIL ADDRESS: STREET 1: 2707 NORTH 108TH STREET STE 102 CITY: OMAHA STATE: NE ZIP: 68644 10-K 1 c66282e10-k.txt ANNUAL REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended August 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _____ to _____ Commission File Number 0-17116 LINDSAY MANUFACTURING CO. ------------------------- (Exact name of registrant as specified in its charter) DELAWARE 47-0554096 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2707 NORTH 108TH STREET, SUITE 102, OMAHA, NEBRASKA 68164 - --------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) 402-428-2131 - ------------ Registrant's telephone number, including area code Securities registered pursuant to Section 12(b) of the Act: TITLE OF CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED - -------------- ----------------------------------------- Common Stock, $1.00 par value New York Stock Exchange, Inc.(Symbol LNN) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] 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 [ ] As of November 23, 2001, 11,636,262 shares of the registrant's Common Stock were outstanding and the aggregate market value of all Common Stock held by non-affiliates (11,240,025 shares) was $205,692,458 based upon the final sales price on the New York Stock Exchange, Inc. on such date. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement pertaining to the January 29, 2002, annual shareholders' meeting are incorporated herein by reference into Part III. Exhibit index is located on page 29-30. ITEM 1 - BUSINESS Lindsay Manufacturing Co. ("Lindsay" or the "Company") is a leading designer, manufacturer and international and domestic marketer, under its "Zimmatic" trademark, of electrically powered center pivot and lateral move irrigation systems for use to irrigate agricultural crops. The Company began manufacturing and marketing a separate line of center pivot and lateral move irrigation equipment for use on small fields (1 to 60 acres - sometimes referred to as mini-pivots) under its "Greenfield" tradename (trademark applied for in August 2000). Since March 2001, the Company has also manufactured and marketed hose reel travelers under the "Perrot" (Greenfield in the United States) tradename. Hose reel travelers are most often used on irregular shaped fields or, like mini-pivots, on small fields. The Company manufactures and markets repair and replacement parts for its Zimmatic, Greenfield and Perrot systems. Additionally, Lindsay also produces and sells large diameter thin wall steel tubing and manufactures and assembles products for other manufacturers (such as corn planters and sub-assemblies for construction equipment). Industry segment information is included in Part II, Item 8, Footnote M on page 25. Lindsay was founded in 1955 and incorporated under Nebraska law in 1969. DEKALB Energy Company, ("DEKALB", formerly DEKALB Corporation) acquired Lindsay in 1974 through its merger into Lindsay Manufacturing Co., a wholly-owned Delaware subsidiary of DEKALB. The company was a wholly-owned subsidiary of DEKALB until October 1988 at which time it became a separate public corporation. IRRIGATION PRODUCTS Lindsay's irrigation systems are primarily of the standard sized center pivot type, with a small portion of its products consisting of the lateral move type. Both are automatic continuous move systems consisting of sprinklers mounted on a water carrying pipeline which is supported approximately 11 feet off the ground by a truss system suspended between moving towers. Due to lower price and simplicity of operation, center pivots currently account for over 95 percent of Lindsay's irrigation system sales. A typical standard center pivot for the U.S. market is approximately 1,250 feet long and is designed to circle within a quarter-section of land, which comprises 160 acres, wherein it irrigates approximately 130 to 135 acres. A typical standard center pivot for the international market is somewhat shorter than that in the U.S. market. Standard center pivot or lateral move systems can also be custom designed and can irrigate from 25 to 500 acres. A mini-pivot is a small version of the standard pivot and is used for smaller fields and/or shorter crops, than that which standard pivots are used. A center pivot system represents a significant investment to a farmer. A typical standard center pivot system, fully installed, requires an investment of up to approximately $60,000 to $70,000. Approximately one-half of such expenditure is for the pivot itself and the remainder is attributable to installation of additional equipment such as wells, pumps, underground water pipe, electrical supply and a concrete pad upon which the pivot is anchored. Lindsay estimates that there are approximately 165,000 to 175,000 standard center pivot irrigation systems in operation worldwide, resulting in an active repair and replacement parts business. Mini-pivots and hose reel travelers require, on average, a lower investment than a typical standard center pivot. Other Types Of Irrigation. Center pivot and lateral move irrigation systems compete with three other types of irrigation: flood, drip and other mechanical devices such as hose reel travelers. The bulk of the worldwide irrigation is accomplished by the traditional method of flood irrigation. Flood irrigation is accomplished by either flooding an entire field, or by providing a water source (ditches or a pipe) along the side of a field, which is planed and slopes slightly away from the water source. The water is released to the crop rows through gates in the ditch or pipe, or through siphon tubes arching over the ditch wall into some of the crop rows. It runs down through the crop row until it reaches the far end of the row, at which time the water source is moved and another set of rows are flooded. Note that 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 "trickle" 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 and lateral move irrigation offers significant advantages when compared with other types of irrigation. It requires less labor and monitoring; it can be used on sandy ground which, due to poor water retention ability, must have water applied frequently; it can be used on uneven ground, thereby allowing previously unsuitable land to be brought into production; it can also be used for the application of fertilizers, insecticides, herbicides or other chemicals (termed "chemigation"); and it conserves water and chemicals through precise control of the amount and timing of its application. 2 Markets - General. Water is an essential and critical requirement for crop production, and the extent, regularity and frequency of water application can be a critical determinant 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 domestic and international markets. Demand for center pivot and lateral move systems is determined by whether the increased value of crop production attributable to center pivot or lateral move irrigation exceeds any increased costs associated with purchasing, installing and operating the equipment. Thus, the decision to purchase a center pivot or lateral move system reflects the profitability of agricultural production, which is determined primarily by the prices of agricultural commodities and the costs of other farming inputs. The current demand for center pivot systems has three sources: conversion to center pivot systems from less water efficient, more labor intensive types of irrigation; replacement of older center pivot systems, which are beyond their useful lives or technologically outmoded; and conversion of dry land farming to irrigated farming. In addition, demand for center pivots and lateral move irrigation equipment depends upon the need for the particular operational characteristics and advantages of such systems in relation to alternative types of irrigation, primarily flood. Selection of center pivot or lateral move systems, over competitive types of irrigation, is aided by the fact that agricultural production is continually forced to become more efficient in its use of the basic natural resources of land, water and energy. Increasing global population not only increases demand for agricultural output, but also places additional and competing demands on land, water and energy. As center pivot and lateral move systems are required where the soil is sandy, the terrain is not flat, there is a shortage of reliable labor, water supply is restricted and conservation is critical, and/or chemigation will be utilized, Lindsay expects demand for center pivots and lateral moves to increase relative to other irrigation methods. The following table describes Lindsay's total revenues for the past three years: FISCAL YEAR ENDED AUGUST 31, ($ IN THOUSANDS)
------------------------------------------------------------------------------- 2001 2001 2000 2000 1999 1999 % of Total % of Total % of Total Revenues Revenues Revenues Revenues Revenues Revenues -------- ---------- -------- --------- --------- --------- United States ..................... $101,940 80 $107,780 83 $ 94,103 81 Europe, Africa & Middle East ...... 14,720 12 8,888 7 8,088 7 Mexico & Latin America ............ 3,207 3 5,081 4 6,709 6 Other International ............... 6,802 5 8,036 6 7,751 6 -------- --- -------- --- -------- --- Total Revenues .................... $126,669 100 $129,785 100 $116,651 100
United States Market. In the United States, Lindsay sells its irrigation systems to approximately 200 independent dealers, who resell to their customer, the farmer. Dealers assess their customer's requirements, assemble and erect the system in the field from the parts delivered from Lindsay, and provide additional system components, primarily relating to water supply (wells, pumps, pipes) and electrical supply (on-site generation or hook-up to power lines). Lindsay dealers generally are established local agri-businesses, which also deal in related products, such as well drilling and water pump equipment, farm implements, grain handling and storage systems or farm structures. International Market. Over the years, Lindsay has sold center pivot and lateral move irrigation systems in over 90 countries. The majority of Lindsay's foreign sales are in U.S. dollars and are shipped against prepayments or U.S. bank confirmed irrevocable letters of credit or other secured means. Lindsay's export markets differ significantly with respect to need for irrigation, ability to pay, demand, customer type, government support of agriculture, marketing and sales methods, equipment requirements and difficulty of on-site erection. The Company's industry position is such that Lindsay believes that it will be approached as a potential supplier for most major international agricultural developments utilizing center pivot or lateral move irrigation systems. 3 Competition. During the 1970's there were over 30 domestic manufacturers of center pivot irrigation systems, while six manufacturers remain today. There is a high level of price competition and utilization of seasonal promotional programs. Competition also occurs in areas of product quality and durability, advanced product technology, product characteristics, retention and reputation of local dealers, post-sale service, and, at certain times of the year, the availability of systems and their delivery time. Lindsay believes it generally competes favorably with respect to these factors. DIVERSIFIED PRODUCTS Seeking to expand the throughput of its manufacturing facility and operation, the company began in 1987 to more fully utilize off-season capacity by providing outsource manufacturing services and selling large-diameter steel tubing. Lindsay's customer base includes some of the country's most demanding industrial companies, including Caterpillar Inc., Deere & Company and New Holland North America, Inc. Each benefits from Lindsay's design and engineering capabilities as well as the Company's ability to provide a wide spectrum of manufacturing services, including welding, machining, painting, punching, forming, galvanizing and hydraulic, electrical and mechanical assembly. SEASONALITY/CYCLICALITY Irrigation equipment sales are seasonal by nature. Farmers generally order systems to be delivered and installed before the growing season. Shipments to U. S. customers usually peak during Lindsay's second and third quarters for the spring planting period. ORDER BACKLOG As of August 31, 2001, Lindsay had an order backlog of $23.1 million, an increase of 17% from $19.8 million at August 31, 2000. At fiscal year end 2001, Lindsay had a $17.1 million order backlog for irrigation equipment. This was an increase of 60% from fiscal year end 2000's irrigation equipment order backlog of $10.7 million. At fiscal year end 2001, order backlog for diversified products totaled $6.0 million, compared to $9.1 million at fiscal year end 2000. Generally Lindsay manufactures a center pivot or lateral move system upon a dealer's firm order for both the U.S. and export markets. Orders from U.S. dealers are accompanied with a $1,000 (approximately 4 percent of sales price) down payment. International orders are generally shipped against prepayments or receipt of an irrevocable letter of credit confirmed by a U.S. bank or other secured means, which call for delivery within time periods negotiated with the customer. RAW MATERIALS AND COMPONENTS Raw materials used by Lindsay include coil steel, angle steel, plate steel, zinc, tires, gearboxes, fasteners and electrical components (motors, switches, cable and stators). Lindsay has, on occasion, faced shortages of certain such materials. Lindsay believes it currently has ready access to adequate supplies of raw materials and components. CAPITAL EXPENDITURES Capital expenditures for fiscal 2001, 2000 and 1999, were $2.9 million, $3.5 million and $4.0 million, respectively. Fiscal 2001 capital expenditures were used primarily for updating manufacturing plant and equipment and to further automate Lindsay's facility. Capital expenditures for fiscal year 2002 are expected to be approximately $3.0 to $4.0 million and will be used to improve the company's existing facilities, expand its manufacturing capabilities and increase productivity. The Company expects annual capital expenditures for plant expansion over the next several years to approximate the $3.0 to $4.0 million level per year. PATENTS, TRADEMARKS, LICENSES Lindsay's Zimmatic, Greenfield, GrowSmart, 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. Although the Company believes it is important to follow a patent protection policy, Lindsay's business is not dependent, to any material extent, on any single patent or group of patents. EMPLOYEES The number of persons employed by Lindsay and its wholly owned subsidiaries at fiscal year end 2001, 2000 and 1999 were 507, 531 and 480, respectively. Lindsay and its wholly owned subsidiaries currently employs approximately 550 persons. None of Lindsay's employees are represented by a union. 4 ENVIRONMENTAL AND HEALTH AND SAFETY MATTERS Like other manufacturing concerns, Lindsay is subject to numerous laws and regulations which govern environmental and occupational health and safety matters. Lindsay believes that its operations are substantially in compliance with all such applicable laws and regulations. Permits are or may be required for some of the operations at its facilities. Although management believes that all currently required permits have been obtained by Lindsay, as with all such permits, they are subject to revocation, modification and renewal. Even where regulations or standards have been adopted, they are subject to varying and conflicting interpretations and implementation. In some cases, compliance with applicable environmental regulations or standards may require additional capital and operational expenditures. However, management does not believe any material additional capital and operational expenditures for such issues are currently required. SUBSIDIARIES Lindsay has three wholly owned operating subsidiaries: Lindsay International Sales Corporation, Lindsay Transportation, Inc. and Lindsay Europe SA (Perrot). Since December, 2000, international sales personnel have been located at the Omaha corporate office as part of Lindsay International Sales Corporation, which conducts foreign sales operations for Lindsay. Lindsay Transportation, Inc. was formed in 1975. It owns approximately 115 trailers and, through lease of tractors, supplies the ground transportation in the United States and Canada for Lindsay's products and the bulk of incoming raw materials, and hauls other products on backhauls. Perrot was acquired in March 2001, and is a manufacturer of irrigation systems located in La Chapelle d'Aligne, France. Lindsay also has four non-operational subsidiaries. ITEM 2 - PROPERTIES Lindsay owns and occupies 43 acres in Lindsay, Nebraska. The Lindsay, Nebraska facility has eight separate buildings, with approximately one-half million square feet of manufacturing area under roof. Lindsay's La Chappelle d'Aligne, France facility was acquired in March 2001 to provide a European location for the manufacture of its irrigation products. The French facility consists of three separate buildings situated on approximately 3.5 acres. With the Company's current manufacturing capacity, Lindsay believes it can increase sales without a significant new investment in facilities and capital equipment. Since December 1, 2000, the Company leases approximately 7,000 square feet of office space in Omaha, Nebraska, where it maintains its executive and its domestic and international sales and marketing offices. This Omaha office space lease expires October 31, 2004 with a lease rent remaining of $294,000. ITEM 3 - LEGAL PROCEEDINGS Lindsay is a party to a number of lawsuits in the ordinary course of its business. Management does not believe that these lawsuits, either individually or in the aggregate, are likely to have a material adverse effect on Lindsay's consolidated financial condition, results of operations or cash flows. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to the vote of security holders during the fourth quarter of Fiscal 2001. 5 EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers of the Company, their ages, positions and past five years experience are set forth below. All officers are elected for one year terms at the Board of Directors meeting following the Company's annual shareholders' meeting. This meeting is scheduled for January 29, 2002.
AGE POSITION WITH THE COMPANY --- ------------------------- Richard W. Parod 48 President and Chief Executive Officer Matthew T. Cahill 39 Vice President - Manufacturing Eduardo R. Enriquez 61 Vice President - International Sales, Emerging Markets Robert A. Finkenbiner 45 Vice President - International Business Bruce C. Karsk 49 Executive Vice President, Chief Financial Officer, Treasurer and Secretary Dirk A. Lenie 47 Vice President - Marketing Charles H. Meis 55 Vice President - Engineering Robert S. Snoozy 55 Vice President - Domestic Sales
Mr. Richard W. Parod is President and Chief Executive Officer of Lindsay, 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 Lindsay. Mr. Matthew T. Cahill is Vice President - Manufacturing of Lindsay, and has held such position since October, 2000 when he joined the company. Prior to that time and since 1997, Mr. Cahill held several positions with Ingersoll-Rand; most recently as the Fabrication and Machining Operations Manager - Road Machinery Division. From 1997 through early 2000 Mr. Cahill was a Process Engineering Consultant - Corporate Technology Staff. Prior to his employment with Ingersoll-Rand and since 1996 Mr. Cahill was Operations Manager with ACG Incorporated. Mr. Cahill was the Manager Operations Support Engineering for Ingersoll-Rand Fluid Products Division in 1995 and part of 1996. Mr. Eduardo R. Enriquez is Vice President - International Sales, Emerging Markets of Lindsay and was appointed to that position in November 2001. From 1986 through November 2001, Mr. Enriquez was Vice-President - International of Lindsay. Prior to that time, and since 1981, he was Vice President - Sales of Lindsay International Sales Corporation. Mr. Enriquez began his employment with Lindsay in 1981. Mr. Robert A. Finkenbiner is Vice President - International Business of Lindsay and was appointed to that position in September 2001 when he joined the Company. Prior to that time and since 1998, Mr. Finkenbiner held several positions with The Toro Company; most recently as the Brand Manager of the Residential/Commercial Irrigation Division. Mr. Finkenbiner was employed by Rain Bird Corporation from 1991 through 1998 as Brand Manager of Golf Irrigation Controls. Mr. Bruce C. Karsk is Executive Vice President, Chief Financial Officer, Treasurer and Secretary of Lindsay, and has held such positions since January 2001. From 1984 through January 2001 Mr. Karsk was Vice President - Finance, Treasurer and Secretary. Prior to that time, and since 1981, Mr. Karsk had been the Controller. Mr. Dirk A. Lenie is Vice President - Marketing of Lindsay, and has held such position since November 2000 when he joined the Company. Prior to that time, and since 1997, Mr. Lenie was Director of Sales and Marketing of Residential/Commercial Irrigation Division of The Toro Company. Prior to Toro, Mr. Lenie was employed by Pacific Enterprises (the holding company of Southern California Gas) as Director of Seismic Safety Products in 1996/1997 and as Director of Product Development in 1995/1996. From 1981 through 1995 Mr. Lenie held several sales and marketing positions with Rain Bird Corporation. Mr. Charles H. Meis is Vice President - Engineering of Lindsay, and has held such position since 1975. Mr. Meis began his employment with Lindsay in 1971. Mr. Robert S. Snoozy is Vice President - Domestic Sales of Lindsay, and has held such position since 1997. From 1986 through 1997 Mr. Snoozy was Vice President of Sales and Marketing. Prior to that time, and since 1978, he had been Vice President of Marketing. Mr. Snoozy began his employment with Lindsay in 1973. 6 PART II ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS Lindsay Common Stock began public trading on October 12, 1988. On October 21, 1997, Lindsay's Common Stock began trading on the New York Stock Exchange, Inc. (NYSE) under the ticker symbol "LNN". Prior to trading on the NYSE, Lindsay Common Stock traded on the Nasdaq National Market. As of November 8, 2001 there were approximately 200 shareholders of record and an estimated 3,000 beneficial shareholders. The following table sets forth for the periods indicated the range of the high and low sales price and dividends paid:
FISCAL YEAR 2001 FISCAL YEAR 2000 STOCK PRICE STOCK PRICE ------------------------------------------ ---------------------------------------- HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS ------ ------ --------- ------ ------ --------- First Quarter $22.19 $18.00 $0.035 $21.13 $16.38 $0.035 Second Quarter 26.00 19.69 0.035 18.25 16.13 0.035 Third Quarter 20.00 17.00 0.035 20.81 14.00 0.035 Fourth Quarter 19.15 17.40 0.035 20.56 17.00 0.035 Year $26.00 $17.00 $0.140 $21.13 $14.00 $0.140
ITEM 6 - SELECTED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) FOR THE YEARS ENDED AUGUST 31, - ------------------------- ------------------------------ 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- Operating revenues .......... $ 126.7 $ 129.8 $ 116.7 $ 155.7 $ 158.3 $ 136.2 $ 111.8 $ 112.7 $ 102.1 $ 108.9 Gross profit ................ 27.9 31.6 30.6 42.8 40.9 32.7 25.9 25.7 23.8 23.8 Selling, general and administrative, and engineering and research expenses ......... 17.4 15.2 15.6 15.7 14.4 13.4 11.9 11.6 10.7 10.9 Restructuring charges ....... 0.9 0 0 0 0 0 0 0 0 0 Earnings before cumulative effect of accounting change (1) ................ 8.0 13.2 12.7 23.5 20.1 16.5 11.7 11.2 10.7 11.0 Net earnings ................ 8.0 13.2 12.7 23.5 20.1 16.5 11.7 11.9 10.7 11.0 Earnings before cumulative effect of accounting change per share(1) (2) ... 0.67 1.06 0.96 1.61 1.34 1.08 0.73 0.68 0.66 0.68 Net earnings per share (2) .. 0.67 1.06 0.96 1.61 1.34 1.08 0.73 0.72 0.66 0.68 Cash dividends per share .... 0.14 0.14 0.14 0.125 0.091 0.067 0 0 0 0 Property, plant and equipment, net ............ 14.9 15.9 15.4 14.1 11.3 9.7 7.2 5.6 5.6 6.0 Total assets ................ 100.3 95.8 100.4 108.9 108.0 96.8 86.1 88.4 79.9 71.4 Long-term obligation ........ $ 0 $ 0 $ 0 $ 0.1 $ 0.3 $ 0 $ 0 $ 0 $ 0 $ 0 Return on sales ............. 6.3% 10.2% 10.9% 15.1% 12.7% 12.1% 10.5% 10.6% 10.5% 10.1% Return on beginning assets .. 8.3% 13.2% 11.7% 21.7% 20.7% 19.2% 13.2% 14.9% 15.0% 18.2% Diluted weighted average shares..................... 11.900 12.503 13.285 14.556 14.980 15.226 15.993 16.418 16.358 16.310
(1) In 1994 the Company adopted the Financial Accounting Standards Board's Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes". (2) Per share amount are calculated using diluted average shares outstanding. 7 ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION OVERVIEW Fiscal year 2001's revenues and earnings were undercut by the weak agricultural economy which became visible in late December 2000. Operating revenues of $126.7 million were 2.4 percent less than the prior years operating revenues. Net earnings of $8.0 million were 39.7 percent less than the prior year's net earnings of $13.2 million. The Company's year end balance sheet features strong financial ratios and no long term debt. RESULTS OF OPERATIONS The following "Fiscal Year 2001 Compared to 2000" and the "Fiscal Year 2000 Compared to 1999" sections present an analysis of Lindsay's consolidated operating results displayed in the Consolidated Statements of Earnings and should be read together with the industry segment information in Note M to the financial statements. FISCAL YEAR 2001 COMPARED TO 2000 The following table provides highlights for fiscal year 2001 compared with fiscal year 2000.
FOR THE YEARS ENDED PERCENT INCREASE AUGUST 31, (DECREASE) ---------- ---------- ($ IN THOUSANDS) 2001 2000 - ---------------- ---- ---- Consolidated Operating Revenues ........................... $126,669 $129,785 (2.4)% Cost of Operating Revenues ................... $ 98,739 $ 98,189 0.6 Gross Profit ................................. $ 27,930 $ 31,596 (11.6) Gross Margin ................................. 22.0% 24.3% Selling, Engineering and Research, and General and Administrative Expenses ....... $ 17,386 $ 15,170 14.6 Restructuring Charges ........................ $ 899 $ 0 NA Operating Income ............................. $ 9,645 $ 16,426 (41.3) Operating Margin ............................. 7.6% 12.7% Interest Income, net ......................... $ 1,754 $ 2,599 (32.5) Other Income, net ............................ $ 2 $ 118 (98.3) Income Tax Provision ......................... $ 3,440 $ 5,935 (42.0) Effective Income Tax Rate .................... 30.2% 31.0% Net Earnings ................................. $ 7,961 $ 13,208 (39.7) Irrigation Equipment Segment (See Note M) Operating Revenues ........................... $106,892 $115,618 (7.5) Operating Income ............................. $ 16,579 $ 23,266 (28.7) Operating Margin ............................. 15.5% 20.1% Diversified Products Segment (See Note M) Operating Revenues ........................... $ 19,777 $ 14,167 39.6 Operating Income ............................. $ 3,252 $ 2,670 21.8% Operating Margin ............................. 16.4% 18.8%
REVENUES Fiscal year 2001 operating revenues of $126.7 million were 2.4 percent less than fiscal year 2000's operating revenues of $129.8 million. Fiscal year 2001 irrigation equipment revenues totaled $106.9 million, 7.5 percent less than the prior year's irrigation equipment revenues of $115.6 million. Due to the soft agricultural economy that began in December 2000, the Company expects 8 that the worldwide agricultural irrigation market will incur a reduction of approximately 20 percent for calendar year 2001. For Lindsay, incremental irrigation equipment revenues from the Company's Greenfield mini-pivot product, acquired in August of 2000, and Perrot's irrigation equipment products manufactured in France, acquired in March 2001, helped dampen the negative impact of the soft economy. Other revenues are included in irrigation equipment revenues and totaled $2.7 million in fiscal year 2001 and $3.3 million in fiscal year 2000. Fiscal year 2001 diversified products revenues totaled $19.8 million, a 39.6 percent increase from the prior year's diversified product revenues of $14.2 million. Fiscal year 2001's revenue from sales of Lindsay's large diameter thin walled steel tubing products were less than the prior year, while revenues from outsource manufacturing services sales were significantly greater than those of the prior year. Deere & Company, Caterpillar Inc, and New Holland North America, Inc each continued to be important customers. Demand in the domestic market for almost all agricultural related capital equipment began to slow during Lindsay's second fiscal quarter (December through February) of 2001 due to lower agricultural commodity prices, the expectation of increased agricultural input costs (particularly energy and fertilizer), and the resulting prospect of lower farm income. Lindsay's fiscal year 2001 domestic irrigation revenues were negatively affected by this soft agricultural economy. Demand in Lindsay's international market for agricultural irrigation equipment improved, in total, during fiscal year 2001. The European and Middle Eastern regions had revenue growth during the year, in part due to Lindsay's acquisition during the year of Perrot located in France. The revenue growth in these regions more than offsets a reduction in revenues in Lindsay's other international markets, the result of a difficult market environment caused by the same low agricultural commodity prices that were present in the United States and by the strong U.S. dollar relative to certain other currencies. At August 31, 2001, Lindsay's order backlog for irrigation equipment was $17.1 million compared to $10.7 million at August 31, 2000. Lindsay's diversified products order backlog at August 31, 2001 was $6.0 million compared to $9.1 million at August 31, 2000. The combined order backlog of $23.1 million at August 31, 2001 represents a 17 percent increase from the prior year's $19.8 million. GROSS MARGIN Gross Margin of 22.0 percent for fiscal year 2001 was lower than the prior year's 24.3 percent. Fiscal year 2001's gross margin was negatively affected by a sales mix that was less favorable than that of the prior year, factory throughput that was lower than the prior year, and an unfavorable year-end inventory adjustment. Average selling prices for irrigation equipment increased slightly during the year while raw material cost reductions were offset by increased production labor and overhead costs. OPERATING EXPENSES Fiscal year 2001's selling, engineering and research, general and administrative (SG&A) expenses of $17.4 million were 15 percent higher than fiscal year 2000's SG&A expenses of $15.2 million. The Company opened retail outlets in Southwestern Kansas during the first quarter of fiscal year 2001 when it lost its independent dealer representation in the region. The costs associated with the Southwest Kansas outlets and the SG&A costs from its French operations, commencing during the Company's third quarter, account for the majority of the fiscal year 2001 increase in SG&A expense. Additionally, during its second quarter of fiscal year 2001, the Company recorded a $0.9 million non-recurring restructuring charge for writing down, to net realizable value, the value of manufacturing equipment and processes that were discontinued. INTEREST INCOME, OTHER INCOME AND TAXES The Company's interest income is primarily generated from its investments in short-term (0 to 12 months) and intermediate-term (12 to 42 month) investment grade municipal bonds, on which interest earnings are exempt from federal income taxes, and short-term investment grade commercial paper. Fiscal year 2001 interest income was $1.8 million, 33 percent less than the prior year's interest income of $2.6 million due to a lower amount invested in municipal bonds and a lower interest rate earned on these investments. Lindsay's fiscal year 2001 effective tax rate decreased to 30.2 percent from a 31.0 percent rate for fiscal year 2000. The fiscal year 2001 reduction in effective rate was the result of a larger portion of the Company's pre-tax earnings coming from municipal bond interest (exempt from federal income taxes) in fiscal year 2001 as compared to fiscal year 2000. In addition to the federal tax-free status on municipal bond interest income, the Company benefits from the foreign sales corporation federal tax provisions as they relate to export sales. 9 RESULTS OF OPERATIONS FISCAL YEAR 2000 COMPARED TO 1999 The following table provides highlights for fiscal year 2000 compared with fiscal year 1999.
FOR THE YEARS ENDED PERCENT INCREASE AUGUST 31, (DECREASE) ---------- -------- ($ IN THOUSANDS) 2000 1999 - ---------------- ---- ---- Consolidated Operating Revenues....................................... $ 129,785 $ 116,651 11.3% Cost of Operating Revenues............................... $ 98,189 $ 86,007 14.2 Gross Profit............................................. $ 31,596 $ 30,644 3.1 Gross Margin............................................. 24.3% 26.3% Selling, Engineering & Research, and General and Administrative Expenses................... $ 15,170 $ 15,625 (2.9) Operating Income......................................... $ 16,426 $ 15,019 9.4 Operating Margin......................................... 12.7% 12.9% Interest Income, net..................................... $ 2,599 $ 2,822 (7.9) Other Income, net........................................ $ 118 $ 348 (66.1) Income Tax Provision..................................... $ 5,935 $ 5,457 8.8 Effective Income Tax Rate................................ 31.0% 30.0% Net Earnings............................................. $ 13,208 $ 12,732 3.7 Irrigation Equipment Segment (See Note M) Operating Revenues....................................... $ 115,618 $ 101,369 14.1 Operating Income......................................... $ 23,266 $ 22,025 5.6 Operating Margin......................................... 20.1% 21.7% Diversified Products Segment (See Note M) Operating Revenues....................................... $ 14,167 $ 15,282 (7.3) Operating Income......................................... $ 2,670 $ 3,441 (22.4)% Operating Margin......................................... 18.8% 22.5%
REVENUES Fiscal year 2000 operating revenues increased 11 percent to $129.8 million from $116.7 million in fiscal year 1999. Irrigation equipment revenues totaled $115.6 million in fiscal year 2000, an increase of 14 percent from $101.4 million in the prior year. Of this $115.6 million in irrigation equipment revenues in fiscal year 2000, $93.6 million was from sales to U.S. dealers, a 19 percent increase from $79.0 million of U.S irrigation equipment revenues in fiscal year 1999. Fiscal year 2000 export irrigation equipment revenues of $22.0 million were essentially flat with the prior year's $22.4 million. Fiscal year 2000 diversified product revenues of $14.2 million were 7 percent lower than fiscal year 1999 diversified product revenues of $15.3 million. Other revenues are included in irrigation equipment and totaled $3.3 million in fiscal year 2000 and $3.2 million in fiscal year 1999. The fiscal year 2000 increase in U.S. irrigation equipment revenues occurred throughout the year with each quarter contributing to the 19 percent year over year increase. Somewhat stable (although low) agricultural commodity prices, better than anticipated farm income and below normal precipitation in some irrigation equipment markets led to the increased U.S. irrigation equipment sales activity and revenues. Export irrigation equipment sales and revenues during fiscal year 2000 continued to be constrained by the strength of the U.S. dollar relative to other currencies, particularly those of Western Europe. Additionally, sales activity and revenues from the Latin American region softened as the continued low agricultural commodity prices led to reduced demand for irrigation equipment in Argentina. Improved demand for irrigation equipment and revenues from the Middle East and Australia and New Zealand nearly offset the European and Latin American softness during fiscal year 2000. Diversified products revenues of $14.2 million in fiscal year 2000 were 7 percent lower than fiscal year 1999's $15.3 million. As compared to fiscal year 1999, revenues from sales of the Company's large diameter thin walled steel tubing products were essentially flat while revenues from outsource manufacturing services sales were lower. Caterpillar Inc., Deere & Company, and New Holland North America, Inc. were each significant outsource manufacturing customers during the year. 10 At August 31, 2000, Lindsay's order backlog for irrigation equipment was $10.7 million, an increase of 10 percent from $9.7 million at August 31, 1999. Lindsay's diversified products order backlog at August 31, 2000 was $9.1 million compared to $4.9 million at August 31, 1999. The combined order backlog of $19.8 million at August 31, 2000 was 36 percent higher than the prior year's $14.6 million. GROSS MARGIN Raw material, labor and overhead cost increases during the year combined with static average selling prices resulted in a fiscal year 2000 gross margin of 24.3 percent compared to a 26.3 percent gross margin in fiscal year 1999. OPERATING EXPENSES Fiscal year 2000's selling, engineering and research and general and administrative (SG&A) expenses of $15.2 million were 3 percent lower than fiscal year 1999's SG&A expenses of $15.6 million. Reduced salary and wage costs for the year were partially offset by increases in professional fees and depreciation costs. INTEREST INCOME, OTHER INCOME AND TAXES The Company's interest income is primarily generated from its investments in short-term (0 to 12 months) and intermediate-term (12 to 42 month) investment grade municipal bonds, on which interest earnings are exempt from federal income taxes, and short-term investment grade commercial paper. Fiscal year 2000 interest income was $2.6 million, slightly lower than the prior year's interest income of $2.8 million due to a lower amount invested in municipal bonds. Fiscal year 2000's other income of $0.1 million compares to fiscal year 1999's $0.3 million. FINANCIAL POSITION AND LIQUIDITY The discussion of financial position and liquidity focuses on the balance sheet and statement of cash flows. Lindsay requires cash for financing its receivables, inventories, capital expenditures, stock repurchases and dividends. Over the years, Lindsay has financed its growth through funds provided by operations. Cash flows provided by operations totaled $10.0 million in fiscal year 2001 compared to $8.1 million in fiscal year 2000. The cash flows provided by operating activities in fiscal year 2001 were primarily due to net earnings and decreased inventories, partially offset by increased receivables. Fiscal year 2000 cash flows provided by operating activities were principally due to net earnings, partially offset by increased receivables and inventories. Receivables at August 31, 2001, increased $3.7 million to $21.3 million from $17.6 million at August 31, 2000, which was primarily due to increased sales activity during the fourth quarter of the fiscal year and the increased use of a marketing program that offered deferred payment terms on some transactions to our dealers. Inventories of $10.1 million at August 31, 2001 decreased $1.2 million from $11.3 million at August 31, 2000. Inventory decreased at year end due to Lindsay's focus on inventory reduction during the fourth quarter. Current liabilities of $16.8 million at August 31, 2001, were slightly more than the $16.5 million at August 31, 2000. Cash flows provided by investing activities of $8.0 million for fiscal year 2001 compared to $1.1 million used in investing activities for fiscal year 2000. The cash flows provided by investing activities in fiscal year 2001 were primarily attributable to maturities of marketable securities, partially offset by purchases of marketable securities and capital expenditures. Fiscal year 2000 cash flows used in investing activities were primarily due to purchases of marketable securities and capital expenditures, partially offset by maturities of marketable securities. Lindsay's cash and short-term marketable securities totaled $24.4 million at August 31, 2001 as compared to $26.0 million at August 31, 2000. At August 31, 2001, Lindsay had $23.3 million invested in long-term marketable securities, as compared to $19.8 million at August 31, 2000. Lindsay's long-term marketable securities consist of municipal debt with maturities of 12 to 42 months. Cash flows used in financing activities of $3.6 million for fiscal year 2001 decreased from $18.1 million in fiscal year 2000 and for both periods was primarily attributable to dividends paid and to purchases of treasury stock. Capital expenditures of $2.9 million during fiscal year 2001 decreased from $3.5 million in fiscal year 2000. Fiscal year 2001 capital expenditures were used primarily for updating manufacturing plant and equipment and to further automate Lindsay's facility. Capital expenditures for fiscal year 2002 are expected to be approximately $3.0 to $4.0 million and will be used to improve the company's facilities, expand its manufacturing capabilities and increase productivity. Depreciation and amortization totaled $3.4 million in fiscal 2001 and is expected to increase to approximately $3.8 million in fiscal year 2002. Lindsay expended $1.9 million in fiscal 2001 to repurchase 108,800 shares of its common stock. In fiscal year 2000, Lindsay repurchased 965,032 shares of its common stock for $16.8 million. 11 Lindsay has an agreement with a commercial bank for a $10.0 million unsecured revolving line of credit through December 30, 2001. There have been no borrowings made under such unsecured revolving line of credit. Borrowings will bear interest at a rate equal to one percent per annum under the rate in effect from time to time and designated by the commercial bank as its National Base Rate (5.5 percent at August 31, 2001). The Company expects to renew this line of credit on substantially similar terms. Lindsay believes its capitalization (including cash and marketable securities balances), operating cash flow and bank line of credit are sufficient to cover expected working capital needs, planned capital expenditures, dividends and repurchases of common stock. FISCAL 2002 OUTLOOK Lindsay expects increased earnings on revenue growth of about 8 percent for fiscal year 2002. The majority of fiscal year 2002's increase in revenues and earnings are expected to occur during Lindsay's second (ending February 28th) and third (ending May 31st) quarters. In the domestic irrigation market equipment market, stable corn, soybean, wheat and stronger potato commodity prices, in combination with reduced energy and interest costs, should lead to a stronger farmer confidence level during fiscal year 2002 as compared to fiscal year 2001. Additionally, the Company's dealer strengthening and repair parts initiatives should result in increased revenues. In Lindsay's international markets, the addition of the Company's European manufacturing capability is expected to significantly improve its irrigation equipment market penetration during fiscal year 2002. Lindsay also expects to benefit during the year from several additional international growth initiatives which should improve the Company's international market position. Approximately 20%, 17%, and 19% of Lindsay's revenues were generated from international sales in fiscal years 2001, 2000, and 1999, respectively. Australia, Canada, Central and Western Europe, Mexico, the Middle East, South Africa and South America are expected to generate the majority of Lindsay's fiscal year 2002 international revenues. Lindsay's domestic and international irrigation equipment sales are highly dependent upon the need for irrigated agricultural crop production which, in turn, depends upon many factors including total worldwide crop production, the profitability of agricultural crop production, agricultural commodity prices, aggregate net cash farm income, governmental policies regarding the agricultural sector, water and energy conservation policies, the regularity of rainfall, and foreign currency exchange rate. Lindsay's diversified products segment consists of two major products: large-diameter thin-wall round steel tubing and outsource manufacturing services. Diversified products customers for both products primarily consist of agricultural and industrial capital goods manufacturers. Lindsay believes that its diversified product revenues will contract somewhat in fiscal year 2002 compared to fiscal year 2001. The Company anticipates that Caterpillar Inc., Deere & Company, and New Holland North America, Inc. will each continue to be significant outsource manufacturing customers during the year. Concerning Forward-Looking Statements - This Report on Form 10-K, including the Management's Discussion and Analysis, and other sections, contains forward-looking statements that are subject to risks and uncertainties and which reflect management's current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. Forward-looking statements include the information concerning possible or assumed future results of operations of the Company and those statements preceded by, followed by or include the words "future", "position", "anticipate(s)", "expect", "believe(s)", "see", "plan", "further improve", "outlook", "should", or similar expressions. For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Readers of this Form 10-K should understand that the following important factors, in addition to those discussed elsewhere in this document, could affect the future results of the Company and could cause those results to differ materially from those expressed in these forward-looking statements: availability of and price of raw materials, product pricing, competitive environment and related domestic and international market conditions, operating efficiencies and actions of domestic and foreign governments. Any changes in such factors could result in significantly different results. ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is not subject to material market risks with respect to its marketable securities because of their relatively short maturity (0 to 42 months) and the Company has the ability and intends to hold the investments in these marketable securities to maturity. Lindsay's export sales are principally U.S. dollar denominated. 12 ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA STATEMENT OF MANAGEMENT RESPONSIBILITY The consolidated financial statements and notes to the consolidated financial statements of Lindsay Manufacturing Co. have been prepared by management, which has the responsibility for their integrity and objectivity. The statements have been prepared in accordance with accounting principles generally accepted in the United States of America to reflect, in all material aspects, the substance of financial events and transactions occurring during the respective periods. /s/ Richard W. Parod /s/ Bruce C. Karsk - -------------------------- ---------------------------- Richard W. Parod Bruce C. Karsk President and Executive Vice President, Chief Financial Officer, Chief Executive Officer Treasurer and Secretary REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Shareholders Lindsay Manufacturing Co.: We have audited the accompanying consolidated balance sheet of Lindsay Manufacturing Co. as of August 31, 2001, and the related consolidated statements of operations, shareholders' equity and comprehensive income, and cash flows for the year then ended. In connection with our audit of the consolidated financial statements, we have also audited the information in the financial statement schedule for the year ended August 31, 2001 listed in Item 14(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 audit. The accompanying consolidated financial statements and financial statement schedule of Lindsay Manufacturing Co. for the years ended August 31, 2000 and 1999, were audited by other auditors whose report thereon dated September 28, 2000, expressed an unqualified opinion on those statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 audit provides a reasonable basis for our opinion. In our opinion, the 2001 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lindsay Manufacturing Co. as of August 31, 2001, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information for the year ended August 31, 2001, set forth therein. /s/ KPMG LLP --------------------- KPMG LLP Omaha, Nebraska October 5, 2001 13 LINDSAY MANUFACTURING CO. CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED AUGUST 31, ---------------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2001 2000 1999 - ---------------------------------------- ---- ---- ---- Operating revenues ............................... $126,669 $129,785 $116,651 Cost of operating revenues ....................... 98,739 98,189 86,007 -------- -------- -------- Gross profit ..................................... 27,930 31,596 30,644 -------- -------- -------- Operating expenses: Selling expense ............................... 7,200 5,660 5,178 General and administrative expense ............ 7,885 7,446 8,559 Engineering and research expense .............. 2,301 2,064 1,888 Restructuring charges ......................... 899 0 0 -------- -------- -------- Total operating expenses ......................... 18,285 15,170 15,625 -------- -------- -------- Operating income ................................. 9,645 16,426 15,019 Interest income, net ............................. 1,754 2,599 2,822 Other income, net ................................ 2 118 348 -------- -------- -------- Earnings before income taxes ..................... 11,401 19,143 18,189 Income tax provision ............................. 3,440 5,935 5,457 -------- -------- -------- Net earnings ..................................... $ 7,961 $ 13,208 $ 12,732 ======== ======== ======== Basic net earnings per share ..................... $ 0.68 $ 1.08 $ 0.99 ======== ======== ======== Diluted net earnings per share ................... $ 0.67 $ 1.06 $ 0.96 ======== ======== ======== Average shares outstanding ....................... 11,684 12,199 12,884 Diluted effect of stock options .................. 216 304 401 -------- -------- -------- Average shares outstanding assuming dilution ..... 11,900 12,503 13,285 ======== ======== ======== Cash dividends per share ......................... $ 0.140 $ 0.140 $ 0.140 ======== ======== ========
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
SHARES OF CAPITAL IN ACCUMULATED ---------------------- EXCESS OTHER TOTAL COMMON TREASURY COMMON OF STATED RETAINED TREASURY COMPREHENSIVE SHAREHOLDERS' ($ IN THOUSANDS) STOCK STOCK STOCK VALUE EARNINGS STOCK INCOME (LOSS) EQUITY ---------- ---------- -------- ---------- --------- -------- ------------- ------------ Balance at August 31, 1998 ......... 16,993,949 3,399,788 $ 16,994 $ 855 $ 123,764 $(50,733) $ -- $ 90,880 Net earnings ....................... -- -- -- -- 12,732 -- -- 12,732 Cash dividends ($0.140 per share) .. -- -- -- -- (1,788) -- -- (1,788) Net shares issued under stock option plan ..................... 80,542 -- 80 740 -- -- -- 820 Stock option tax benefits .......... -- -- -- 523 -- -- -- 523 Acquisitions of common stock ....... -- 1,250,449 -- -- -- (20,469) -- (20,469) ---------- --------- -------- ------- --------- -------- -------- -------- Balance at August 31, 1999 ......... 17,074,491 4,650,237 17,074 2,118 134,708 (71,202) -- 82,698 Comprehensive income: Net earnings .................... -- -- -- -- 13,208 -- -- 13,208 Other comprehensive income: Minimum pension liability ..... -- -- -- -- -- -- (303) (303) ------- Total comprehensive income ......... -- -- -- -- -- -- -- 12,905 Cash dividends ($0.140 per share) .. -- -- -- -- (1,700) -- -- (1,700) Net shares issued under stock option plan ...................... 235,706 -- 236 237 -- -- -- 473 Stock option tax expense ........... -- -- -- (144) -- -- -- (144) Acquisitions of common stock ....... -- 965,032 -- -- -- (16,800) -- (16,800) ---------- --------- -------- ------- --------- -------- -------- -------- Balance at August 31, 2000 ......... 7,310,197 5,615,269 17,310 2,211 146,216 (88,002) (303) 77,432 Comprehensive income: Net earnings .................... -- -- -- -- 7,961 -- -- 7,961 Other comprehensive income: Currency translation .......... -- -- -- -- -- -- (4) (4) Minimum pension liability ..... -- -- -- -- -- -- (367) (367) ------- Total comprehensive income ......... -- -- -- -- -- -- -- 7,590 Cash dividends ($0.140 per share) .. -- -- -- -- (1,636) -- -- (1,636) Net shares issued under stock option plan ..................... 57,832 -- 58 (78) -- -- -- (20) Stock option tax expense ........... -- -- -- (54) -- -- -- (54) Acquisitions of common stock ....... -- 108,800 -- -- -- (1,896) -- (1,896) ---------- --------- -------- ------- --------- -------- -------- -------- Balance at August 31, 2001 ......... 17,368,029 5,724,069 $ 17,368 $ 2,079 $ 152,541 $(89,898) $ (674) $ 81,416 ========== ========= ======== ======= ========= ======== ======== ========
The accompanying notes are an integral part of the financial statements. 14 LINDSAY MANUFACTURING CO. CONSOLIDATED BALANCE SHEETS
AT AUGUST 31, ------------- ($ IN THOUSANDS, EXCEPT PAR VALUES) 2001 2000 - ----------------------------------- --------- --------- ASSETS Current assets: Cash and cash equivalents ........................................................... $ 17,575 $ 3,105 Marketable securities ............................................................... 6,845 22,894 Receivables ......................................................................... 21,316 17,589 Inventories ......................................................................... 10,112 11,335 Deferred income taxes ............................................................... 2,164 3,106 Other current assets ................................................................ 474 164 ---------- --------- Total current assets ............................................................. 58,486 58,193 Long-term marketable securities ..................................................... 23,299 19,780 Property, plant and equipment, net .................................................. 14,893 15,938 Other noncurrent assets ............................................................. 3,578 1,905 ---------- --------- Total assets ........................................................................... $ 100,256 $ 95,816 ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable, trade ............................................................. $ 5,590 $ 4,556 Other current liabilities ........................................................... 11,234 11,914 ---------- --------- Total current liabilities ........................................................ 16,824 16,470 Other noncurrent liabilities ........................................................ 2,016 1,914 ---------- --------- Total liabilities ...................................................................... 18,840 18,384 ---------- --------- Commitments and Contingencies Shareholders' equity: Preferred stock, ($1 par value, 2,000,000 shares authorized, no shares issued and outstanding in 2001 and 2000) ................... 0 0 Common stock, ($1 par value, 25,000,000 shares authorized, 17,368,029 and 17,310,197 shares issued in 2001 and 2000, respectively) .......... 17,368 17,310 Capital in excess of stated value ................................................... 2,079 2,211 Retained earnings ................................................................... 152,541 146,216 Less treasury stock, (at cost, 5,724,069 shares in 2001 and 5,615,269 shares in 2000) .................................................................. (89,898) (88,002) Accumulated other comprehensive income .............................................. (674) (303) ---------- --------- Total shareholders' equity ............................................................. 81,416 77,432 ---------- --------- Total liabilities and shareholders' equity .......................................... $ 100,256 $ 95,816 ========== =========
The accompanying notes are an integral part of the financial statements. 15 LINDSAY MANUFACTURING CO. CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED AUGUST 31, ---------------------- ($ IN THOUSANDS) 2001 2000 1999 - ---------------- ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings .............................................................. $ 7,961 $ 13,208 $ 12,732 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization .......................................... 3,359 2,960 2,626 Non-cash restructuring charges relating to write-down of equipment ..... 749 0 0 Amortization of marketable securities premiums, net .................... (311) (29) 183 Loss (gain) on sale of fixed assets .................................... 10 (106) (119) Loss (gain) on maturities of marketable securities held-to-maturity .... 0 12 (18) Provision for uncollectible accounts receivable ........................ 87 (276) (22) Deferred income taxes .................................................. 942 697 58 Stock option tax (payables) benefits ................................... (54) (144) 523 Other net, ............................................................. (4) 0 0 Changes in assets and liabilities: Receivables ............................................................ (2,488) (4,394) 1,179 Inventories ............................................................ 2,898 (3,578) 2,539 Other current assets ................................................... (245) (79) 7 Accounts payable, trade ................................................ (584) 475 (855) Other current liabilities .............................................. (1,143) (1,434) 105 Current taxes payable .................................................. (426) 743 752 Other noncurrent assets and liabilities ................................ (714) 7 (46) -------- -------- -------- Net cash provided by operating activities .............................. 10,037 8,062 19,644 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment ................................ (2,929) (3,464) (3,993) Acquisitions of businesses, net of cash acquired .......................... (1,985) (545) 0 Proceeds from sale of property, plant and equipment ....................... 58 134 141 Purchases of marketable securities held-to-maturity ....................... (10,049) (18,414) (2,756) Proceeds from maturities of marketable securities held-to-maturity ........ 22,890 21,222 18,994 -------- -------- -------- Net cash provided by (used in) investing activities ....................... 7,985 (1,067) 12,386 -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments under capital lease obligation ......................... 0 (95) (155) (Repurchases and cancellations) proceeds from issuance of common stock under stock option plan, net ........................................ (20) 473 820 Dividends paid ............................................................ (1,636) (1,700) (1,788) Purchases of treasury stock ............................................... (1,896) (16,800) (20,469) -------- -------- -------- Net cash used in financing activities ..................................... (3,552) (18,122) (21,592) -------- -------- -------- Effect of exchange rate changes on cash ................................... 0 0 0 Net increase (decrease) in cash and cash equivalents ...................... 14,470 (11,127) 10,438 Cash and cash equivalents, prior year ..................................... 3,105 14,232 3,794 -------- -------- -------- Cash and cash equivalents, current year ................................... $ 17,575 $ 3,105 $ 14,232 ======== ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Income taxes paid ......................................................... $ 3,587 $ 4,517 $ 4,617 Interest paid ............................................................. $ 82 $ 32 $ 8
The accompanying notes are an integral part of the financial statements. 16 LINDSAY MANUFACTURING CO. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. SIGNIFICANT ACCOUNTING POLICIES Lindsay Manufacturing Co. (the "Company" or "Lindsay") manufactures and distributes irrigation systems and manufactures other special metal products serving both domestic and international markets. The Company's principal facilities are located in Lindsay, Nebraska, USA. The principal accounting policies of the Company are as follows: (1) PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany balances and transactions are eliminated in consolidation. (2) REVENUE RECOGNITION Revenues and related cost of revenues for all irrigation and diversified products are generally recognized upon delivery of product to dealers or customers. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements". Lindsay has complied with the provisions of SAB No. 101, and that compliance did not have any impact on the Company's consolidated financial position or results of operation. (3) WARRANTY COSTS Cost of operating revenues include warranty costs of $1,645,000, $1,026,000 and $834,000 for the years ended August 31, 2001, 2000 and 1999, respectively. Provision for the estimated warranty costs is made in the period in which such costs become probable. This provision is periodically adjusted to reflect actual experience. (4) CASH EQUIVALENTS, MARKETABLE SECURITIES AND LONG-TERM MARKETABLE SECURITIES Cash equivalents are included at cost, which approximates market. At August 31, 2001, Lindsay's cash equivalents were held primarily by one financial institution. Marketable securities and long-term marketable securities are categorized as held-to-maturity and are carried at amortized cost. Lindsay considers all highly liquid investments with original maturities of three months or less to be cash equivalents, while those having original maturities in excess of three months are classified as marketable securities or as long-term marketable securities when maturities are in excess of one year. Marketable securities and long-term marketable securities consist of investment-grade municipal bonds. The total amortized cost, gross unrealized holding gains, gross unrealized holding losses, and aggregate fair value for held-to-maturity securities at August 31, 2001, were $30,144,000, $421,000, $28,000 and $30,537,000, respectively, of which $6,845,000 in marketable securities mature within one year and $23,299,000 in long term marketable securities have maturities ranging from 12 to 42 months. In the opinion of management, the Company is not subject to material market risks with respect to its marketable securities. (5) INVENTORIES Inventories are stated at the lower of cost or market. Cost is determined by the last-in, first-out (LIFO) method for all inventories. (6) PROPERTY, PLANT AND EQUIPMENT Property, plant, equipment and capitalized lease assets are stated at cost. The Company's policy is to capitalize expenditures for major renewals and betterments and to charge 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 -- 20 to 30 years; equipment -- three to 10 years; other -- two to 20 years; and leasehold improvements -- term of lease. All of the Company's long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected discounted future cash flows is less than the carrying amount of the asset, a loss is recognized. The cost and accumulated depreciation relating to assets retired or otherwise disposed of are eliminated from the respective accounts at the time of disposition. The resultant gain or loss is included in the consolidated statements of operations. 17 During the second quarter of fiscal year 2001, the Company took a pre-tax non-recurring restructuring charge of $899,000 or $0.05 per share after tax. Of this total restructuring charge, $749,000 is for a write-down to net realizable value, the value of fixed assets associated with a manufacturing process under development since 1998 that was discontinued due to difficulty in ensuring quality consistency that would satisfy our customers' needs and $150,000 for other costs related to manufacturing processes for which the decision and plan to discontinue were made in the second quarter of fiscal year 2001. (7) GOODWILL Goodwill represents the excess of the purchase price over the fair value of net assets acquired and is being amortized on a straight line basis over 20 years. (8) NET EARNINGS PER SHARE Basic net earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding. Diluted net earnings per share includes the dilutive effect of stock options. Options to purchase 232,000 shares of common stock at a weighted average price of $22.21 per share were outstanding during the fourth quarter of fiscal 2001, but were not included in the computation of diluted EPS because the options' exercise price was greater that the average market price of the common shares. These options expire on or between September 3, 2007 and April 27, 2011. (9) USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. (10) RECLASSIFICATIONS Certain reclassifications have been made to prior financial statements amounts to conform to the current-year presentation. (11) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In October 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets", replacing SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". The provisions of Statement No. 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001 and will not have a material impact on the Company's consolidated financial position or results of operations. In August 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement Obligations". The provisions of Statement No. 143 are effective for financial statements issued for fiscal years beginning after June 15, 2002 and will not have a material impact on the Company's consolidated financial position or results of operations. In July 2001, the FASB issued SFAS No. 141 "Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets". The provisions of Statement No. 141 require that the purchase method be used for business combinations initiated after June 30, 2001, and the provisions of Statement No. 142 are effective for financial statements issued for fiscal years beginning after December 15, 2001. Statement No. 142 replaces the requirement to amortize goodwill and intangible assets with indefinite lives with a requirement for an impairment test on a periodic basis. Neither statement is expected to have a material impact on the Company's consolidated financial position or results of operations. (12) ACQUISITIONS In March 2001, the Company acquired 100% of the stock of Perrot SA (now Lindsay Europe SA), a manufacturer of irrigation systems located in La Chapelle d' Aligne, France, for approximately $1.0 million in cash. The acquisition was accounted for under the purchase method of accounting. The purchase resulted in the recording of approximately $0.3 million of goodwill, representing the amount of cash paid in excess of the estimated fair value of the assets acquired less liabilities assumed, which is currently being amortized using a useful life of 20 years. The transaction may require the payment of additional consideration totaling approximately $0.2 million, which is contingent upon the achievement of certain earn-out and other provisions included under the share purchase agreement. This additional consideration will not be paid or recorded by the Company until the related contingencies are resolved. As a result, the purchase price allocation for Perrot SA as recorded by the Company is preliminary and subject to future adjustment as further information is obtained. The results of operations for Perrot SA, which were not material to the Company's consolidated results for the year ended August 31, 2001, have been included in the Company's consolidated results from the acquisition date. 18 Lindsay purchased the assets of Oasis Enterprises, Inc. based in Nunn, Colorado in August 2000. This separate line of center pivot and lateral move irrigation equipment for use on small fields 1 to 60 acres is manufactured and marketed under the Company's Greenfield tradename (trademark applied for). The purchase was a cash transaction with an annual earnout provision if certain revenue levels are achieved during the first four years. Lindsay recorded a goodwill asset from this purchase which is recorded in the Company's consolidated balance sheets under other noncurrent assets (see Note G). The goodwill asset from this purchase will increase if and when annual earnouts are incurred over the four year earnout period. Management expects the aggregate earnout to be less than $1.0 million. B. OTHER INCOME, NET FOR THE YEARS ENDED AUGUST 31, ------------------------------ $ IN THOUSANDS 2001 2000 1999 - -------------- ---- ---- ---- Other income, net: Litigation settlement ......................... $ 0 $ (30) $ 0 (Loss) gain on sales of fixed assets........... (10) 106 119 State economic development tax credits ........ 0 0 176 Finance charges................................ 31 56 27 All other, net................................. (19) (14) 26 ------ ----- ----- Total other income, net ......................... $ 2 $ 118 $ 348 ====== ===== ===== C. INCOME TAX PROVISION FOR THE YEARS ENDED AUGUST 31, ------------------------------ $ IN THOUSANDS 2001 2000 1999 - -------------- ---- ---- ---- Current taxes ................................... $2,498 $5,238 $5,399 Deferred taxes .................................. 942 697 58 ------ ------ ------ Total income tax provision ...................... $3,440 $5,935 $5,457 ====== ====== ====== Total tax provisions resulted in effective tax rates differing from that of the statutory federal income tax rates. The reasons for these differences are:
FOR THE YEARS ENDED AUGUST 31, ------------------------------ 2001 2000 1999 ---- ---- ---- $ IN THOUSANDS AMOUNT % AMOUNT % AMOUNT % - -------------- ------ ---- ------ ---- ------ ---- U.S. statutory rate.............................. $ 3,876 34.0 $ 6,622 34.6 $ 6,244 34.3 State and local taxes............................ 207 1.8 269 1.4 227 1.3 Qualified export activity........................ (165) (1.4) (113) (0.6) (164) (0.9) Municipal bond interest income................... (480) (4.2) (702) (3.7) (816) (4.5) Other............................................ 2 0.0 (141) (0.7) (34) (0.2) ------- ---- ------- ---- -------- ---- Total ........................................... $ 3,440 30.2 $ 5,935 31.0 $ 5,457 30.0 ======= ==== ======= ==== ======== ====
19 Significant components of the Company's deferred tax assets and liabilities are as follows: FOR THE YEARS ENDED AUGUST 31, ------------------------------ $ IN THOUSANDS 2001 2000 - -------------- ---- ---- Book depreciation less than tax ................. $ (137) $ (13) Employee benefits................................ 1,601 2,333 Inventory adjustments ........................... 160 154 Accruals not currently deductible for taxes...... 540 632 ------ ------- Net deferred tax assets ........................ $2,164 $ 3,106 ====== ======= Management does not believe there are uncertainties surrounding realization of the net deferred tax assets. D. RECEIVABLES AUGUST 31, ---------- $ IN THOUSANDS 2001 2000 - -------------- ---- ---- Trade accounts and notes ........................ $ 21,893 $ 18,034 Less allowance for doubtful accounts ............ 577 445 -------- -------- Net receivables ................................ $ 21,316 $ 17,589 ======== ======== E. INVENTORIES AUGUST 31, ---------- $ IN THOUSANDS 2001 2000 - -------------- ---- ---- First-in, first-out (FIFO) inventory ............ $ 13,292 $ 15,374 LIFO reserves ................................... (2,551) (3,408) Obsolescence reserve ............................ (629) (631) -------- -------- Total Inventories . ............................. $ 10,112 $ 11,335 ======== ======== The estimated percentage distribution between major classes of inventory before reserves is as follows: AUGUST 31, ---------- 2001 2000 ---- ---- Raw materials ................................... 12% 13% Work in process ................................. 5% 6% Finished goods and purchased parts .............. 83% 81% F. PROPERTY, PLANT & EQUIPMENT AUGUST 31, ---------- $ IN THOUSANDS 2001 2000 - -------------- ---- ---- Land ........................................ $ 70 $ 70 Buildings ................................... 8,628 8,352 Equipment ................................... 32,416 30,269 Other ....................................... 2,339 3,300 -------- -------- Total plant, equipment........................... 43,453 41,991 Accumulated depreciation and amortization........ (28,560) (26,053) -------- -------- Property, plant and equipment, net ............. $ 14,893 $ 15,938 ======== ======== 20 G. OTHER NONCURRENT ASSETS
AUGUST 31, ---------- $ IN THOUSANDS 2001 2000 - -------------- ---- ---- Goodwill, net of accumulated amortization of $20 and $3....... $ 737 $ 416 Intangible pension asset....................................... 580 649 Split dollar life insurance.................................... 858 840 Other.......................................................... 1,403 0 -------- -------- Other noncurrent assets........................................ $ 3,578 $ 1,905 ======== ========
H. OTHER CURRENT LIABILITIES AUGUST 31, ---------- $ IN THOUSANDS 2001 2000 - -------------- ---- ---- Current state and federal income taxes.............. $ 10 $ 974 Payroll and vacation................................ 2,349 2,621 Retirement plans.................................... 1,912 2,368 Taxes, other than income............................ 760 222 Insurance........................................... 1,301 1,550 Dealer service, commission and related items........ 1,921 2,222 Export freight...................................... 215 212 Warranty............................................ 1,396 757 Legal settlements................................... 200 221 Other ............................................. 1,170 767 -------- -------- Total other current liabilities..................... $ 11,234 $ 11,914 ======== ======== I. CREDIT ARRANGEMENTS Lindsay has an agreement with a commercial bank for a $10.0 million unsecured revolving line of credit through December 30, 2001. Proceeds from this line of credit, if any, are to be used for working capital and general corporate purposes including stock repurchases. There have been no borrowings made under such unsecured revolving line of credit. Borrowings will bear interest at a rate equal to one percent per annum under the rate in effect from time to time and designated by the commercial bank as its National Base Rate (5.5 percent at August 31, 2001). No covenants limit the ability of Lindsay to merge or consolidate, to encumber assets, to sell significant portions of its assets, to pay dividends, or to repurchase common stock. J. COMMITMENTS AND CONTINGENCIES In the normal course of business, Lindsay is contingently liable under arrangements with its third-party financing vendors for limited financing guarantees aggregating up to a maximum exposure of approximately $1.0 million at August 31, 2001 compared to $0.9 million at August 31, 2000. These limited financing guarantees relate to financing provided by third-party financing vendors to facilitate the financing of the Company's irrigation equipment sold through its authorized dealer network to the dealer's customers. Additionally, the Company has issued a guarantee to facilitate the issuance of long term debt to a strategic third party totaling approximately $1.1 million at August 31, 2001 and August 31, 2000. The risk of loss to the Company under the above agreements is minimal due to the value of the leased irrigation equipment, a reserve included in the allowance for doubtful accounts and the specific nature of the various guarantees or agreements. Management believes these guarantees and agreements will not adversely affect its consolidated financial position, results of operations or cash flows. The Company and its subsidiaries are defendants in various legal actions arising in the course of their business activities. In the opinion of management, an unfavorable outcome with respect to any existing legal action will not result in a material adverse effect on Lindsay's consolidated financial position, results of operations or cash flows. 21 K. RETIREMENT PLANS During 1996, Lindsay adopted an amended and restated defined contribution profit-sharing plan to include a 401(k) provision covering all 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 Lindsay. Lindsay's total contributions charged to expense under this plan were $283,000 for the year ended August 2001 and $750,000 for each of the years ended August 2000 and 1999. A supplementary non-qualified, non-funded retirement plan for certain key 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. Cost and the assumptions for the Company's supplemental retirement plan includes the following components:
FOR THE YEARS ENDED AUGUST 31, ------------------------------ $ IN THOUSANDS 2001 2000 1999 - -------------- ---- ---- ---- Change in benefit of obligation: Benefit obligation at beginning of year ................................$ 2,778 $ 1,868 $ 1,937 Service cost ........................................................... 13 75 81 Interest cost .......................................................... 187 131 136 Actuarial (gain)/loss .................................................. 395 704 (286) Benefits Paid .......................................................... (136) 0 0 ------- ------- ------- Benefit obligation at end of year ......................................$ 3,237 $ 2,778 $ 1,868 ------- ------- ------- Funded status ..........................................................$(3,237) $(2,778) $(1,868) Unrecognized net actuarial loss ........................................ 1,326 1,009 357 ------- ------- ------- Net amount recognized ..................................................$(1,911) $(1,769) $(1,511) ======= ======= ======= Amounts recognized in the statement of financial position consist of: Accrued benefit cost ...................................................$ 1,911 $ 1,769 $ 1,511 Intangible pension asset ............................................... (580) (649) 0 Additional benefit liability ........................................... 1,250 952 0 Other comprehensive income ............................................. (670) (303) 0 ------- ------- ------- Net amount recognized ..................................................$ 1,911 $ 1,769 $ 1,511 ======= ======= ======= Weighted-average assumptions as of year ends: Discount Rate .......................................................... 7.00% 7.00% 7.00% Assumed rates of compensation increases ................................ 3.50% 3.50% 3.50% Components of net periodic benefit cost: Service cost ...........................................................$ 13 $ 75 $ 81 Interest cost .......................................................... 187 131 136 Net Amortization and Deferral .......................................... 78 52 69 ------- ------- ------- Total ..................................................................$ 278 $ 258 $ 286 ======= ======= =======
22 L. STOCK OPTIONS The Company adopted a Long-Term Incentive Plan in October 1988, (1988 Plan) which provides for awards of stock options, stock appreciation rights, stock indemnification rights and restricted stock (collectively stock awards) to officers and key employees. Options may be granted at, above or below the fair market value of the stock at the date of the grant and are exercisable within periods specified by the Company's Compensation Committee. Options currently vest ratably over five years and expire ten years from the grant dates. In February 1992, the shareholders approved the 1991 Long-Term Incentive Plan (1991 Original Plan) which is similar in most material respects to the 1988 Plan except that the 1991 Original Plan provides for non-qualified stock options to directors who are not officers or employees of the Company or its subsidiaries. The 1991 Original Plan was amended and restated in its entirety as the Amended and Restated 1991 Long Term Incentive Plan (1991 Plan) in April, 2000 by the Board of Directors. This action was necessary to clarify certain provisions of the 1991 Original Plan and to eliminate certain provisions no longer necessary. No substantive changes were made which would require shareholder approval. On January 30, 2001, the shareholders approved the Lindsay Manufacturing Co. 2001 Long-Term Incentive Plan (the "2001 Plan"). The 2001 Plan supercedes the 1988 Plan and 1991 Plan and no further options or other awards will be granted under the 1988 Plan and 1991 Plan (the "Prior Plans"). The 2001 Plan is similar in most material respects to the 1991 Plan and provides for awards of stock options, restricted stock or stock appreciation rights ("SARs") to employees of the Company and for annual awards of stock options to nonemployee directors. A total of 900,000 shares of the Company's common stock may be issued under the Plan, subject to adjustments to reflect stock splits and similar events. If options or restricted stock awarded under the 2001 Plan (or options issued under the Prior Plans or outside of the Prior Plans) terminate without being fully vested or exercised, the number of shares represented thereby will be available again for grant under the 2001 Plan. No more than 180,000 shares of common stock may be issued to employees other than through options having an exercise price of not less than the fair market value of the underlying shares. The 2001 Plan also limits the total awards that may be made to any individual. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123 (SFAS No. 123), "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized for the stock option shares. Had compensation cost for the Company's stock option shares been determined based on the fair value at the grant date for awards in fiscal 2001, 2000 and 1999 consistent with the provisions of SFAS No. 123, net earnings and net earnings per share would have been reduced to the pro forma amounts indicated below:
AUGUST 31, ---------- $ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS 2001 2000 1999 - ---------------------------------------- ---- ---- ---- Net earnings - as reported..................... $ 7,961 $ 13,208 $ 12,732 Net earnings - pro forma....................... $ 6,967 $ 12,389 $ 12,447 Net earnings per share - as reported........... $ 0.67 $ 1.06 $ 0.96 Net earnings per share - pro forma............. $ 0.59 $ 0.99 $ 0.94
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for all grants in fiscal 2001, 2000 and 1999, dividend yield of 0.7% to 0.8%, expected volatility of 34.9% to 36.0%, risk-free interest rates ranging from 5.2% to 6.4%, and expected lives of the options of 7 years. 23 A summary of the status of the Company's stock plans is presented below:
FOR THE YEARS ENDED AUGUST 31, RESTRICTED SHARES ------------------------------ $ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS 2001 2000 1999 - ---------------------------------------- ---- ---- ---- Number of shares issued.............................. 0 50,625 66,225 Average price........................................ $ 0.00 $ 17.06 $ 20.49 Total value of shares issued......................... $ 0 $ 864 $ 1,357 Total compensation cost recognized in the statements of operations.......................... $ 0 $ (58) $ 1,155
OPTION SHARES NUMBER OF SHARES AVERAGE PRICE - ------------- ---------------- ------------- Officers, Directors and Key Employees: Outstanding at August 31, 1998........................................ 833,499 $ 9.89 Granted............................................................ 116,250 16.13 Exercised.......................................................... (61,855) 6.31 Cancelled.......................................................... (1,350) 8.37 ------- Outstanding at August 31, 1999........................................ 886,544 10.96 ======= Exercisable at August 31, 1999........................................ 625,357 7.49 ======= Weighted average fair value of options granted during fiscal 1999..... 7.70 Outstanding at August 31, 1999........................................ 886,544 10.96 Granted............................................................ 390,500 14.33 Exercised.......................................................... (263,344) 3.76 Cancelled.......................................................... (96,757) 16.00 ------- Outstanding at August 31, 2000........................................ 916,943 13.93 ======= Exercisable at August 31, 2000........................................ 385,106 11.23 ======= Weighted average fair value of options granted during fiscal 2000..... 9.91 Outstanding at August 31, 2000........................................ 916,943 13.93 Granted............................................................ 172,750 18.44 Exercised.......................................................... (107,525) 8.59 ------- Outstanding at August 31, 2001..................................... 982,168 15.30 ======= Exercisable at August 31, 2001........................................ 391,318 13.51 ======= Weighted average fair value of options granted during fiscal 2001..... $ 8.63
The number of stock awards available for grant under the 1988, 1991 and 2001 plans are 868,149, 140,899 and 135,265 shares as of August 31, 2001, 2000 and 1999, respectively. The following table summarizes information about the Company's Common Stock options outstanding at August 31, 2001:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------- ------------------- WEIGHTED AVERAGE RANGE OF NUMBER REMAINING WEIGHTED NUMBER WEIGHTED EXERCISE OUTSTANDING CONTRACTUAL AVERAGE EXERCISABLE AVERAGE PRICES AT 8/31/01 LIFE PRICE AT 8/31/01 PRICE ------ ---------- ---- ----- ---------- ----- $ 8.37-10.52 222,905 2.09 years $ 9.24 222,905 $ 9.24 14.00-20.00 669,638 8.49 years 15.63 114,638 15.04 $ 26.17-28.17 89,625 6.16 years $ 27.94 53,775 $27.94 ------- ------- 982,168 391,318 ======= =======
24 M. INDUSTRY SEGMENT INFORMATION The Company has adopted SFAS No. 131 "Disclosures About Segments of an Enterprise and Related Information" in fiscal year 1999 which changes the way the Company reports information about its operating segments. The Company manages its business activities in two reportable segments: Irrigation: This segment includes the manufacture and marketing of center pivot and lateral move and hose reel irrigation systems. Diversified Products: This segment includes providing outsource manufacturing services and selling large diameter steel tubing. The accounting policies of the two reportable segments are the same as those described in the "Accounting Policies" in Note A. The Company evaluates the performance of its operating segments based on segment sales, gross profit and operating income, with operating income for segment purposes excluding general and administrative expenses (which include corporate expenses) engineering and research expenses, interest income net, other income and expenses, net income taxes, and assets. Operating income for segment purposes does include selling expenses and restructuring charges directly attributable to the segment. There are no intersegment sales. Summarized financial information concerning the Company's reportable segments is shown in the following table:
FOR THE YEARS ENDED AUGUST 31, ------------------------------ $ IN MILLIONS 2001 2000 1999 - ------------- ---- ---- ---- Operating revenues: Irrigation......................................................... $ 106.9 $ 115.6 $ 101.4 Diversified products............................................... 19.8 14.2 15.3 ------- -------- ------- Total operating revenues.............................................. $ 126.7 129.8 $ 116.7 ======= ======== ======= Operating income: Irrigation......................................................... $ 16.6 $ 23.2 $ 22.0 Diversified products............................................... 3.2 2.7 3.5 ------- -------- ------- Segment operating income.............................................. 19.8 25.9 25.5 Unallocated general & administrative and engineering & research expenses.................................... (10.2) (9.5) (10.5) Interest and other income, net........................................ 1.8 2.7 3.2 ------- -------- ------- Earnings before income taxes.......................................... $ 11.4 $ 19.1 $ 18.2 ======= ======== ======= Geographic area revenues: United States...................................................... $ 102.0 $ 107.8 $ 94.1 Europe, Africa & Middle East...................................... 14.7 8.9 8.1 Mexico & Latin America............................................ 3.2 5.1 6.7 Other International................................................ 6.8 8.0 7.8 ------- -------- ------- Total revenues..................................................... $ 126.7 $ 129.8 $ 116.7 ======= ======== =======
25 N. QUARTERLY RESULTS OF OPERATIONS (unaudited) The follow is a tabulation of the unaudited quarterly results of operations for the years ended August 31, 2001 and 2000. QUARTERLY DATA
FOR THE THREE MONTHS ENDED THE LAST DAY OF ------------------------------------------ $ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS NOVEMBER FEBRUARY MAY AUGUST - ---------------------------------------- -------- -------- --- ------ Fiscal 2001 Operating revenues...................... $ 33,956 $28,275 $ 39,032 $ 25,406 Cost of operating revenues.............. 26,228 21,616 29,580 21,315 Earnings before income taxes............ 3,676 1,114 5,680 931 Net earnings............................ 2,536 769 3,931 725 Diluted net earnings per share.......... $ 0.21 $ 0.06 $ 0.33 $ 0.06 Market price (NYSE) High.................................. $ 22.19 $ 26.00 $ 20.00 $ 19.15 Low................................... $ 18.00 $ 19.69 $ 17.00 $ 17.40 Fiscal 2000 Operating revenues...................... $ 24,503 $34,996 $ 46,603 $ 23,683 Cost of operating revenues.............. 18,763 26,058 34,540 18,828 Earnings before income taxes............ 2,433 5,796 8,762 2,152 Net earnings............................ 1,703 4,057 5,963 1,485 Diluted net earning per share........... $ 0.13 $ 0.32 $ 0.48 $ 0.12 Market price (NYSE) High................................. $ 21.13 $ 18.25 $ 20.81 $ 20.56 Low.................................. $ 16.38 $ 16.13 $ 14.00 $ 17.00
2001: Fourth-quarter adjustments resulting in a net decrease in pre-tax earnings of $426,000 were made to inventory accounts (due to physical inventory), the LIFO inventory reserve and the obsolete inventory reserve. Additional fourth-quarter accrual adjustments, for insurance and compensation costs including bonus earnouts and vacation pay, increased pre-tax earnings $804,000 and $152,000 respectively. 2000: Fourth-quarter adjustments resulting in a net increase in pre-tax earnings of $440,000 were made to inventory accounts (due to physical inventory), the LIFO inventory reserve and the obsolete inventory reserve. Additional fourth-quarter accrual adjustments, for insurance and warranty, increased pre-tax earnings $286,000 and $178,000 respectively. Share amounts and per share results for all periods are stated on a diluted basis. 26 ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Reported in Form 8-K as Filed by the Company on October 4, 2001. PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The Company will file with the Securities and Exchange Commission a definitive Proxy Statement not later than 120 days after the close of its fiscal year ended August 31, 2001. Information about the Directors required by item 401 of Regulation S-K is incorporated by reference from the Proxy Statement. Information about Executive Officers is shown on page 6 of this filing. Section 16(a) Beneficial Ownership Reporting Compliance - Item 405 of Regulation S-K calls for disclosure of any known late filing or failure by an insider to file a report required by Section 16 of the Securities Exchange Act. The Company believes that it complied with all section 16 filing requirements during the fiscal year ended August 31, 2001 except for late filings of Form 3 Initial Statement of Beneficial Ownership of Securities; (1) Matthew T. Cahill, due November 3, 2000, filed December 4, 2000 (2) Dirk A. Lenie, due November 21, 2000, filed December 4, 2000 (3) William F. Welsh II due April 13, 2001, filed April 25, 2001 and Form 5 Annual Statement of Beneficial Ownership of Securities for Eduardo R. Enriquez due October 15, 2001, filed October 31, 2001. ITEM 11 - EXECUTIVE COMPENSATION The information required by this Item is incorporated by reference from the Proxy Statement. ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is incorporated by reference from the Proxy Statement. ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is incorporated by reference from the Proxy Statement. 27 PART IV ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) Financial Statements The following financial statements of Lindsay Manufacturing Co. are included in Part II Item 8.
PAGE ---- Report of Independent Accountants......................................................................... 13 Consolidated Statements of Operations for the Years ended August 31, 2001, 2000 and 1999................................................................ 14 Consolidated Balance Sheets at August 31, 2001 and 2000............................................................................ 15 Consolidated Statements of Shareholders' Equity and Comprehensive Income for the years ended August 31, 2001, 2000 and 1999.................................................. 14 Consolidated Statements of Cash Flows for the Years ended August 31, 2001, 2000 and 1999................................................................ 16 Notes to Consolidated Financial Statement................................................................. 17-26
(a)(2) Financial Statement Schedule
PAGE ---- Report of Independent Accountants......................................................................... 13 Schedule Valuation and Qualifying Accounts - Years ended August 31, 2001, 2000 and 1999.......................................................... 32
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. 28 a(3) EXHIBIT INDEX Sequential Exhibit Page Number Description Number - ------- ----------- --------- 3(a) Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3(a) to the Company's Report on Form 10-Q for the fiscal quarter ended February 28, 1997. - 3(b) By-Laws of the Company amended and restated by the Board of Directors on April 28, 2000, incorporated by reference to Exhibit 3(b) of the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2000. - 3(c) Certificate of Amendment of the Restated Certificate of Incorporation of Lindsay Manufacturing Co. dated February 7, 1997, incorporated by reference to Exhibit 3(b) to the Company's Report on Form 10-Q for the fiscal quarter ended February 28, 1997. - 4(a) Specimen Form of Common Stock Certificate incorporated by reference to Exhibit 4 to the Company's report on Form 10-Q for the fiscal quarter ended November 30, 1997. - 10(a) Lindsay Manufacturing Co. Executive Compensation Plan incorporated by reference to Exhibit 10(a) to the Company's report on Form 10-Q for the fiscal quarter ended February 28, 1998. - 10(b) Agreement between the Company and Gary D. Parker, effective December 1, 1999 incorporated by reference to Exhibit 10(a) to the Company's Report on Form 10-Q for the fiscal quarter ended November 30, 1999. - 10(c) Indemnification Agreement between the Company and its directors and officers, dated October 10, 1988, incorporated by reference to Exhibit 10(f) of the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1988. - 10(d) Lindsay Manufacturing Co. Long-Term Incentive Plan, incorporated by reference to amended Exhibit 10(h) of Amendment No. 3 to the Company's Registration Statement on Form S-1 (Registration No. 33-23084), filed September 23, 1988. - 29 a(3) EXHIBIT INDEX Sequential Exhibit Page Number Description Number - ------- ----------- --------- 10(e) Lindsay Manufacturing Co. Profit Sharing Plan, incorporated by reference to Exhibit 10(i) of the Company's Registration Statement on Form S-1 (Registration No. 33-23084), filed July 15, 1988. - 10(f) Lindsay Manufacturing Co. amended and restated 1991 Long-Term Incentive Plan, incorporated by reference to Exhibit 10(f) of the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 2000. - 10(g) Employment Agreement between the Company and Richard W. Parod effective March 8, 2000, incorporated by reference to Exhibit 10(a) of the Company's Report on Form 10-Q for the fiscal quarter ended May 31, 2000. - 10(h) Lindsay Manufacturing Co. Supplemental Retirement Plan, incorporated by reference to Exhibit 10(j) of the Company's Annual Report on Form 10K for the fiscal year ended August 31, 1994. - 10(i) Lindsay Manufacturing Co. 2001 Amended and Restated Long-Term Incentive Plan. 33-48 21 Subsidiaries of the Company 49 23 Consent of KPMG LLP 50 23(a) Consent of PricewaterhouseCoopers LLP 51 24(a) The Power of Attorney authorizing Richard W. Parod and Bruce C. Karsk to sign the Annual Report on Form 10-K for fiscal year 2001 on behalf of certain directors. 52 99 Report of Independent Accountants of PricewaterhouseCoopers LLP 53 (b) Reports on Form 8-K. The registrant did not file any reports on Form 8-K during the fourth quarter of Fiscal year 2001. 30 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 29th day of November, 2001. LINDSAY MANUFACTURING CO. By: /s/ Bruce C. Karsk ------------------ Name: Bruce C. Karsk Title: Executive Vice President, Chief Financial Officer, Treasurer and Secretary 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 29th day of November, 2001. /s/ RICHARD W. PAROD Director, President and Chief Executive Officer - ----------------------------- Richard W. Parod /s/ BRUCE C. KARSK Executive Vice President, - ----------------------------- Chief Financial Officer, Bruce C. Karsk Treasurer and Secretary /s/ RALPH J. KROENKE Controller - ----------------------------- Ralph J. Kroenke /s/ LARRY H. CUNNINGHAM(1) Director - ----------------------------- Larry H. Cunningham /s/ HOWARD G. BUFFETT(1) Director - ----------------------------- Howard G. Buffett /s/ JOHN W. CROGHAN(1) Chairman of the Board of Directors - ----------------------------- John W. Croghan /s/ Michael N. Christodolou(1) Director - ----------------------------- Michael N. Christodolou /s/ WILLIAM F. WELSH II(1) Director - ----------------------------- William F. Welsh II (1) By: /s/ Bruce C. Karsk --------------------------------- Bruce C. Karsk, Attorney-In-Fact. 31 LINDSAY MANUFACTURING CO. VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED AUGUST 31, 2001, 2000 AND 1999 (DOLLARS IN THOUSANDS)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E -------- -------- ----------------------- -------- -------- ADDITIONS --------- BALANCE AT CHARGED TO CHARGED TO BALANCE AT BEGINNING COSTS AND OTHER END DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD ----------- --------- ---------- --------- ---------- ---------- Year ended August 31, 2001: Deducted in the balance sheet from the assets to which they apply: - Allowance for doubtful accounts........................ $ 445 $ 180 $ 45 $ 93(a) $ 577 ===== ======= ======= ==== ====== - Allowance for inventory obsolescence................... $ 631 $ 65 $ 0 $ 67(b) $ 629 ===== ======= ======= ==== ====== Year ended August 31, 2000: Deducted in the balance sheet from the assets to which they apply: - Allowance for doubtful accounts........................ $ 721 $ 0 $ 0 $276(a) $ 445 ===== ======= ======= ==== ====== - Allowance for inventory obsolescence................... $ 935 $ 0 $ 0 $304(b) $ 631 ===== ======= ======= ==== ====== Year ended August 31, 1999: Deducted in the balance sheet from the assets to which they apply: - Allowance for doubtful accounts........................ $ 743 $ 0 $ 0 $ 22(a) $ 721 ===== ======= ======= ==== ====== - Allowance for inventory obsolescence................... $ 935 $ 0 $ 0 $ 0(b) $ 935 ===== ======= ======= ==== ======
Notes: (a) Deductions consist of uncollectable items written off, less recoveries of items previously written off. (b) Deductions consist of obsolete items sold or scrapped. See accompanying independent auditor's reports. 32 EX-10.(I) 3 c66282ex10-i.txt 2001 AMENDED & RESTATED LONG-TERM INCENTIVE PLAN EXHIBIT 10(I) LINDSAY MANUFACTURING CO. AMENDED AND RESTATED 2001 LONG-TERM INCENTIVE PLAN The Lindsay Manufacturing Co. 2001 Long-Term Incentive Plan (the "Plan"), as originally adopted by the Board of Directors of Lindsay Manufacturing Co. as of the 18th day of December, 2000, and approved by the shareholders of the Company on January 30, 2001 (the "Original Plan"), is hereby amended and restated in its entirety as provided herein by this Amended and Restated 2001 Long-Term Incentive Plan (the "Plan") as of the 27th day of July, 2001. ARTICLE I PURPOSE SECTION 1.01. OFFICERS AND KEY EMPLOYEES. The Plan is intended to advance the interests of Lindsay Manufacturing Co., its shareholders and its subsidiaries by attracting, retaining and stimulating the performance of officers and other key employees upon whose judgment, initiative and effort Lindsay Manufacturing Co. is largely dependent for the successful conduct of its business, and to encourage and enable such officers and other key employees ("Employee Participants") to acquire and retain a proprietary interest in Lindsay Manufacturing Co. by ownership of its stock. Options granted may, if so intended by the Committee, be Incentive Stock Options designed to meet the requirements of Section 422 of the Internal Revenue Code of 1986. SECTION 1.02. NONEMPLOYEE DIRECTORS. The Plan is also intended to promote the interests of Lindsay Manufacturing Co. by offering nonemployee members of the Board of Directors ("Director Participants") of the Company the opportunity to receive Nonqualified Stock Options to provide them with significant incentives to remain in the service of the Company. Only Nonqualified Stock Options will be granted to Director Participants under this Plan. ARTICLE II DEFINITIONS "Automatic Grant Date" shall be September 3 of each year, beginning with September 3, 2001, provided, that in the event the Common Stock is not sold in the regular way on the New York Stock Exchange or other national securities exchange or on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") on September 3 of a particular year, the Automatic Grant Date shall be the first preceding day on which there were such sales. Automatic Grant as used in the Plan shall mean the automatic grant which occurs on the Automatic Grant Date. "Award" means a grant of an Incentive Stock Option, Nonqualified Stock Option, Restricted Stock, SAR or Performance Award under this Plan. "Board" means the Board of Directors of the Company. "Change in Control" shall mean any one of the following events: (a) a dissolution or liquidation of the Company, (b) a sale of substantially all of the assets of the Company, (c) a merger or combination involving the Company after which the owners of Common Stock of the Company immediately prior to the merger or combination own less than 50% of the outstanding shares of common stock of the surviving corporation, or (d) the acquisition of more than 50% of the outstanding shares of Common Stock of the Company, whether by tender offer or otherwise, by any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company. The decision of the Committee as to whether a Change in Control has occurred shall be conclusive and binding. "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Committee" means the Compensation Committee of the Board; provided that the Committee is intended to consist solely of persons who, at the time of their appointment, each qualified as a "Non-Employee Director" under Rule 16b-3(b)(3)(i) promulgated under the Securities Exchange Act of 1934 and, to the extent that relief from the limitation of Section 162(m) of the Code is sought, as an "Outside Director" under Section 1.162-27(e)(3)(i) of the Treasury Regulations issued under Section 162 of the Code. "Common Stock" means the Company's $1.00 par value common stock. "Company" means Lindsay Manufacturing Co., a Delaware corporation. "Date of Grant" means the date on which an Award is granted under the Plan to an Employee Participant or Director Participant. "Director Participant" means a Director who is not an employee of the Company or any of its Subsidiaries to whom a Nonqualified Stock Option, which has not expired, has been granted under the Plan. "Employee Participant" means an officer or key employee (or any person who agrees to become an officer or key employee) of the Company or its Subsidiaries to whom an Award, which has not expired, has been granted under the Plan. "Fair Market Value" means the last price per share at which the Common Stock is sold in the regular way on the New York Stock Exchange or other national securities exchange or NASDAQ on the Date of Grant or, in the absence of any reported sales on such day, the first preceding day on which there were such sales. "Incentive Stock Option" means a stock option granted to an Employee Participant under the Plan which is intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986. "Long-Term Incentive Plan Agreement" means an agreement between the Company and an Employee Participant or Director Participant under which the Participant may receive an Award under this Plan. "Nonqualified Stock Option" means a stock option granted to either an Employee Participant or Director Participant that is not intended to meet the requirements of Section 422 of the Internal Revenue Code of 1986. "Option" means a Nonqualified Stock Option or an Incentive Stock Option granted under the Plan. "Options" when granted to Director Participants under the Plan shall be limited to a Nonqualified Stock Options received on an Automatic Grant Date. "Performance Award" means a grant of Restricted Stock, SARs, cash payments or stock awards which are contingent on the achievement of performance or other objectives during a specified period. "Period of Restriction" means the period starting from the Date of Grant, during which the transfer of shares of Restricted Stock is restricted pursuant to Article VIII of this Plan, or other such period that may be assigned to any Options granted under the Plan. "Plan" means the Lindsay Manufacturing Co. 2001 Long-Term Incentive Plan. "Restricted Stock" means Common Stock granted to an Employee Participant pursuant to Article VIII of this Plan. "Serious Misconduct" means embezzlement or misappropriation of corporate funds, other acts of dishonesty, significant activities harmful to the reputation of the Company or its Subsidiaries, a significant violation of Company or Subsidiary policy, willful refusal to perform or substantial disregard of the duties properly assigned to the Employee or Director Participant, or a significant violation of any contractual, statutory or common law duty of loyalty to the Company or its Subsidiaries. "Stock Appreciation Right" or "SAR" is the right of an Employee Participant to receive, without payment to the Company, a number of shares of Common Stock, cash or any combination thereof, the amount of which is determined pursuant to the formula set forth in Article VII. "Subsidiary" or "Subsidiaries" means a subsidiary corporation or corporations of the Company as defined in Section 424 of the Internal Revenue Code of 1986. ARTICLE III PARTICIPANTS SECTION 3.01. EMPLOYEE PARTICIPANTS. The Committee may grant Restricted Stock, Options, or SARs to Employee Participants as it shall determine in its sole discretion from time to time in accordance with the terms and conditions of the Plan. SECTION 3.02. DIRECTOR PARTICIPANTS. Automatic grants of Nonqualified Stock Options will be granted to each person who, on or after September 3, 2001, is or becomes a Director Participant as provided in Section 6.02 hereof. ARTICLE IV ADMINISTRATION SECTION 4.01. COMMITTEE. The Plan shall be administered by the Committee. Subject to the express provisions of the Plan, the Committee shall have sole discretion and authority to determine, from among eligible officers and other key employees (or persons who agree to become officers or key employees) those to whom and the time or times at which Awards may be granted to any Employee Participants and the number of shares of Restricted Stock that may be awarded or the number of shares of Common Stock to be subject to each Option or SAR. Subject to the express provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to it, to determine the details and provisions of each Long-Term Incentive Plan Agreement, and to make all the determinations necessary or advisable in the administration of the Plan as it relates to Employee and Director Participants. All such actions and determinations by the Committee shall be conclusively binding for all purposes and upon all persons. SECTION 4.02. MAJORITY RULE. A majority of the members of the Committee shall constitute a quorum, and any action taken by a majority present at a meeting at which a quorum is present or any action taken without a meeting evidenced by a writing executed by a majority of the whole Committee shall constitute the action of the Committee. SECTION 4.03. COMPANY ASSISTANCE. The Company shall supply full and timely information to the Committee on all matters relating to eligible employees, their employment, death, retirement, disability or other termination of employment, and such other pertinent facts as the Committee may require. The Company shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties. ARTICLE V SHARES OF STOCK SUBJECT TO PLAN SECTION 5.01. LIMITATIONS; AGGREGATE. Subject to adjustment pursuant to the provisions of Section 5.04 hereof, the number of shares of Common Stock which may be issued to Employee and Director Participants hereunder shall be 900,000 shares of Common Stock. All such shares may be issued pursuant to Incentive Stock Options. No more than 180,000 shares of Common Stock may be issued to Employee Participants other than as Options having an exercise price of not less than the Fair Market Value of the underlying shares. Such shares may be either authorized but unissued shares, shares issued and reacquired by the Company or shares bought on the market for the purposes of the Plan. Automatic awards of Nonqualified Stock Options to Director Participants shall be counted for purposes of the limitations in this Section 5.01. The number of shares of Common Stock which may be issued to Employee Participants and Director Participants hereunder shall not be increased (except as provided for in Section 5.04 hereto) without the approval of the Company's stockholders. Notwithstanding the foregoing limitations, shares of Common Stock which are again available for grant pursuant to Section 5.03 of this Plan shall not be counted for purposes of the limitations in this Section 5.01. SECTION 5.02. LIMITATIONS; INDIVIDUAL. No Employee Participant or Director Participant may receive an Award under this Plan if such Award results in the Employee Participant or Director Participant receiving an Option or Restricted Stock of more than 350,000 shares of Common Stock during any rolling 36-month period. No Employee Participant or Director Participant may receive any cash awards under this Plan in excess of $5,000,000 in any rolling 36-month period. SECTION 5.03. RESTRICTED STOCK AND OPTIONS GRANTED UNDER PLAN. Shares of Common Stock with respect to which Restricted Stock shall have vested or Options granted to Employee Participants or Nonqualified Stock Options granted to Director Participants hereunder that have been exercised shall not again be available for grant hereunder; provided, however, that shares of Common Stock exercised and immediately surrendered to the Company as payment of the exercise price or applicable taxes may again be available for grant hereunder. If Restricted Stock or an Option granted to Employee Participants or Nonqualified Stock Options granted to Director Participants hereunder (or such awards which are outstanding as of December 1, 2000 under the Company's Amended and Restated 1988 and 1991 Long-Term Incentive Plans or the stock options for 350,000 shares of Common Stock granted to Richard W. Parod on March 8, 2000) shall terminate for any reason without being wholly vested or exercised, the number of shares to which such Restricted Stock or Option termination relates shall again be available for grant hereunder. SECTION 5.04. ANTIDILUTION. In the event that the outstanding shares of Common Stock hereafter are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up, or stock dividend, or in the event that there should be any other stock splits, stock dividends or other relevant changes in capitalization occurring after the effective date of this Plan: (a) The aggregate number and kind of Restricted Stock and shares subject to Options or other Awards which may be granted hereunder shall be adjusted appropriately; and (b) Rights under outstanding Restricted Stock and Options or other Awards granted to Employee Participants or Nonqualified Stock Options granted to Director Participants hereunder, both as to the number of subject shares and the Option price, shall be adjusted appropriately. Where dissolution or liquidation of the Company or any merger or combination in which the Company is not a surviving corporation is involved, each outstanding Restricted Stock award and Option granted hereunder shall terminate, but the Employee Participant and Director Participant shall have the right, immediately prior to such dissolution, liquidation, merger, or combination, to receive the Common Stock or to exercise any Option in whole or in part, to the extent that it shall not have been exercised, without regard to any vesting restriction or installment exercise provisions. The foregoing adjustments and the manner of application of the foregoing provisions shall be determined solely by the Committee, and any such adjustment may provide for the elimination of fractional share interests. ARTICLE VI OPTIONS SECTION 6.01. OPTION GRANT AND AGREEMENT, EMPLOYEE PARTICIPANTS. Each Option granted hereunder to an Employee Participant shall be evidenced by minutes of a meeting or the written consent of the Committee and by a written Long-Term Incentive Plan Agreement dated as of the Date of Grant and executed by the Company and the Employee Participant. The Long-Term Incentive Plan Agreement shall set forth such terms and conditions as may be determined by the Committee to be consistent with the Plan, but may include additional provisions and restrictions, provided that they are not inconsistent with the Plan. SECTION 6.02. AUTOMATIC OPTION GRANT AND AGREEMENT, DIRECTOR PARTICIPANTS. (a) A Director Participant who was not a Director on September 3, 2000 will be granted a Nonqualified Stock Option to purchase 25,312 shares of Common Stock as of the Automatic Grant Date first occurring after he or she is first appointed or elected to the Board of Directors. All such Nonqualified Stock Options shall have an exercise price equal to the Fair Market Value per share as of the applicable Automatic Grant Date. (b) Director Participants as of each Automatic Grant Date after the first Automatic Grant Date on which a Director Participant receives a grant pursuant to Section 6.02(a) or under the Lindsay Manufacturing Co. Amended and Restated 1991 Long-Term Incentive Plan will be granted a Nonqualified Stock Option to purchase 5,062 shares of Common Stock. All such Nonqualified Stock Options shall have an exercise price equal to the Fair Market Value per share as of the applicable Automatic Grant Date. (c) Nonqualified Stock Options granted hereunder shall be evidenced by a written Long-Term Incentive Plan Agreement dated as of the Automatic Grant Date and executed by the Company and the Director Participant. The Long-Term Incentive Plan Agreement shall set forth such terms and conditions as consistent with the Plan, but may include additional provisions and restrictions, provided that they are not inconsistent with the Plan. SECTION 6.03. EXERCISE PRICE. (a) The exercise price per share for all Options issued under the Plan shall be determined by the Committee in its discretion, and may be at, below or above the Fair Market Value except that: (i) the exercise price of any Incentive Stock Option shall equal or exceed the Fair Market Value of the Common Stock as of the Date of Grant; (ii) the exercise price for any Incentive Stock Option granted to a "10% owner" (as defined in Article IX) shall be determined as provided in Article IX(a) hereof; and (iii) the exercise price of any Nonqualified Stock Option granted to a Director Participant shall be the Fair Market Value as of the applicable Automatic Grant Date. (b) The Committee shall not without the approval of the Company's stockholders: (i) reduce the exercise price of an Option; or (ii) cancel or settle for cash or other consideration an outstanding Option and grant a replacement Option at a lower exercise price, with six months before or after the cancellation. SECTION 6.04. OPTION PERIOD; EMPLOYEE PARTICIPANT. Options may be granted to Employee Participants at any time after the effective date of the Plan and prior to the termination of the Plan, provided that the period during which each Option may be exercised shall be not later than 10 years from the date such Option is granted; and provided further that Incentive Stock Options granted to a "10% owner" (as defined in Article IX) must be exercised within five years from the Date of Grant thereof. The period for the exercise of each Option shall be determined by the Committee. SECTION 6.05. OPTION PERIOD; DIRECTOR PARTICIPANTS. Nonqualified Stock Options will be granted to Director Participants as provided in Section 6.02 on each Automatic Grant Date occurring prior to termination of the Plan. Nonqualified Stock Options may be exercised as provided for in 6.06(c). The period during which each Nonqualified Stock Option may be exercised shall not be later than 10 years from the Date of Grant thereof. SECTION 6.06. OPTION EXERCISE BY DIRECTOR PARTICIPANT OR EMPLOYEE PARTICIPANT. (a) Options granted hereunder may not be exercised unless and until the Employee Participant shall have been or remained in the employ of the Company or its Subsidiaries, or Director Participant shall have been or remained a Director of the Company, for six months (or such longer time as may be established by the Committee) from and after the Date of Grant, except as otherwise provided in the Plan. (b) Options may be exercised in whole or part (but only with respect to whole shares of Common Stock and only for a minimum of the lesser of (i) 50 shares of Common Stock or (ii) all shares of Common Stock which are then vested and eligible to be exercised) at any time within the period permitted for the exercise thereof, and shall be exercised by written notice of intent to exercise the Option delivered to the Secretary of the Company at its principal executive offices. (c) Unless otherwise determined by the Committee, Options granted to a Director Participant pursuant to Section 6.02 will become exercisable by him at the rate of 20% per year beginning on the first anniversary of the applicable Automatic Grant Date and continuing at the rate of 20% per year thereafter, subject to other provisions as provided in the Plan. (d) The Committee may impose such restrictions or conditions on the exercise of any Option or on any shares of Common Stock acquired pursuant to the exercise of an Option under this Plan as it may deem advisable, including, without limitation, restrictions imposed by applicable federal or state securities laws or the requirements of any stock exchange on which such shares of Common Stock are then listed. In that regard, the Committee may require as a condition to the exercise of any Option that the exercising Employee Participant or Director Participant (or his heirs, legatees, or legal representative, as the case may be) deliver to the Company a written representation of present intention to purchase the Common Stock for investment purposes only and not with a view for distribution. In the event such representation is required to be delivered, an appropriate legend may be placed upon each certificate evidencing the Common Stock issued upon the exercise of such Option. SECTION 6.07. PAYMENT. The exercise price for shares of Common Stock purchased upon exercise of Options by Employee Participants or Director Participants shall be paid in cash, in shares of Common Stock of the Company (not subject to limitations on transfer) valued at the then Fair Market Value of such shares, in a combination of cash and Common Stock, or in any other manner approved by the Committee. In addition to, and at the time of payment of, the exercise price, Employee Participants and Director Participants shall pay to the Company in cash or in Common Stock of the Company the minimum amount of all federal and state withholding or other employment taxes applicable to the taxable income resulting from such exercise which are required to be withheld. Notwithstanding the foregoing, no shares of Common Stock of the Company may be used as payment of the exercise price of any Option or for withholding and other employment taxes unless such shares have been owned by the Employee Participant or Director Participant for at least 6 months prior to exercise of the Options. SECTION 6.08. NONTRANSFERABILITY OF OPTION. No Option shall be transferred by an Employee Participant or Director Participant otherwise than by will or the laws of descent and distribution or designation of a beneficiary in a form acceptable to the Committee. During the lifetime of an Employee Participant or Director Participant the Option shall be exercisable only by him, or, in the case of an Employee Participant or Director Participant who is mentally incapacitated, the Option shall be exercisable by his guardian or legal representative. Notwithstanding the foregoing, the Committee may approve certain transfers of Nonqualified Stock Options to a family member or trust benefiting a family member of an Employee Participant or Director Participant. SECTION 6.09. EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYEE PARTICIPANT. (a) Except as otherwise provided in this Section 6.09, if, prior to a date six months from the Date of Grant of an Option (or such longer time as may be established by the Committee), an Employee Participant's employment with the Company and its Subsidiaries shall be terminated by the Company or Subsidiary for any reason, or by the act of the Employee Participant, the Employee Participant's right to exercise such Option shall terminate and all rights thereunder shall cease, unless otherwise determined by the Committee. (b) If, on or after six months from the Date of Grant of an Option (or such longer time as may be established by the Committee), an Employee Participant's employment with the Company or its Subsidiaries shall be terminated for any reason other than death, retirement, permanent and total disability or serious misconduct, the Employee Participant shall have the right, during the period ending upon the shorter of 60 days after such termination or the remaining time available under the Option, to exercise such Option to the extent that it was exercisable at the date of such termination of employment and shall not have been exercised, unless otherwise determined by the Committee. (c) If an Employee Participant shall die while in the employ of the Company or its Subsidiaries or within 60 days after termination of such employment, the executor or administrator of the estate of the decedent or the person or persons to whom an Option granted hereunder shall have been validly transferred by the executor or the administrator pursuant to will or the laws of descent and distribution or pursuant to a proper designation of beneficiary by the Employee Participant shall have the right, during the period ending upon the shorter of one year after the date of the Employee Participant's death or the remaining time available under the Option, to exercise the Employee Participant's Option to the extent that it was exercisable at the date of death and shall not have been exercised, unless otherwise determined by the Committee. (d) If an Employee Participant shall retire after attaining age 65 or become permanently and totally disabled while in the employ of the Company, the Employee Participant (or in the case of an Employee Participant who is mentally incapacitated, his guardian or legal representative) shall have the right, during a period ending upon the shorter of one year after such retirement or permanent and total disability or the remaining time available under the Option, to exercise such Option to the extent that it was exercisable at the date of termination of employment due to retirement or permanent and total disability and shall not have been exercised, unless otherwise determined by the Committee. (e) If an Employee Participant's employment with the Company or its Subsidiaries shall be terminated by the Company or a Subsidiary for Serious Misconduct, the Employee Participant's right to exercise any Option shall immediately terminate and all rights thereunder shall cease, unless otherwise determined by the Committee. (f) No transfer of an Option by an Employee Participant shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and such other evidence as the Committee may reasonably deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of such Option. SECTION 6.10. EFFECT OF DEATH OR OTHER TERMINATION OF DIRECTOR PARTICIPANT. (a) Except as otherwise provided in this Section 6.10 and Section 11.04, if, prior to a date six months from an Automatic Grant Date relating to any Nonqualified Stock Option, a Director Participant ceases to be a member of the Company's Board of Directors for any reason, the Director Participant's right to exercise such Nonqualified Stock Option shall terminate and all rights thereunder shall cease, unless otherwise determined by the Committee. (b) If, on or after six months from an Automatic Grant Date relating to any Nonqualified Stock Option, a Director Participant ceases to be a member of the Company's Board of Directors for any reason other than death, retirement, permanent and total disability or serious misconduct, the Director Participant shall have the right, during the period ending upon the shorter of 60 days after such termination or the remaining time available under the Nonqualified Stock Option, to exercise such Nonqualified Stock Option to the extent that it was exercisable at the date of such cessation of membership and shall not have been exercised, unless otherwise determined by the Committee. (c) If a Director Participant shall die while a Director of the Company or within 60 days after termination as a Director of the Company, the executor or administrator of the estate of the decedent or the person or persons to whom any Nonqualified Stock Option granted hereunder shall have been validly transferred by the executor or the administrator pursuant to will or the laws of descent and distribution or pursuant to a proper designation of beneficiary by the Director Participant shall have the right, during the period ending upon the shorter of one year after the date of the Director Participant's death or the remaining time available under the Nonqualified Stock Option, to exercise any Nonqualified Stock Option to the extent that it was exercisable at the date of death and shall not have been exercised, unless otherwise determined by the Committee. (d) If a Director Participant shall retire after attaining age 70 or become permanently and totally disabled while a Director of the Company, the Director Participant (or in the case of a Director Participant who becomes mentally incapacitated, his guardian or legal representative) shall have the right, during the period ending upon the shorter of one year after such retirement or permanent and total disability or the remaining time available under the Nonqualified Stock Option, to exercise such Option to the extent that it was exercisable at the date of termination as a Director due to retirement or permanent and total disability, and shall not have been exercised, unless otherwise determined by the Committee. (e) If a Director Participant's membership on the Board of Directors shall be terminated by the Company for Serious Misconduct, the Director Participant's right to exercise any Nonqualified Stock Option shall immediately terminate and all rights thereunder shall cease, unless otherwise determined by the Committee. (f) No transfer of a Nonqualified Stock Option by a Director Participant shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and such other evidence as the Committee may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of a Nonqualified Stock Option. SECTION 6.11. RIGHTS AS SHAREHOLDER; EMPLOYEE PARTICIPANT. An Employee Participant or a transferee of an Option shall have no rights as a shareholder with respect to any shares subject to such Option prior to the purchase of such shares by exercise of such Option as provided herein. SECTION 6.12. RIGHTS AS SHAREHOLDER; DIRECTOR PARTICIPANT. A Director Participant or a transferee of a Nonqualified Stock Option shall have no rights as a shareholder with respect to any shares subject to such Nonqualified Stock Option prior to the purchase of such shares by exercise of such Nonqualified Stock Option as provided herein. Nothing contained herein or in any Long-Term Incentive Plan Agreement shall be construed or interpreted so as to affect adversely or otherwise impair the right to remove any Director Participant from service on the Board of Directors of the Company at any time in accordance with the provisions of applicable law. ARTICLE VII STOCK APPRECIATION RIGHTS SECTION 7.01. SAR GRANTS. An SAR may be granted to Employee Participants (a) with respect to any Option granted under this Plan, either concurrently with the grant of such Option or at such later time as determined by the Committee (as to all or any portion of the shares of Common Stock subject to the Option), or (b) alone, without reference to any related Option. Each SAR granted by the Committee under this Plan shall be subject to the terms and conditions contained in this Article VIII. SECTION 7.02. NUMBER. Each SAR granted to any Employee Participant shall relate to such number of shares of Common Stock as shall be determined by the Committee, subject to adjustment as provided in Section 5.04. In the case of an SAR granted with respect to an Option, the number of shares of Common Stock to which the SAR pertains shall be reduced in the same proportion that the Employee Participant exercises the related Option. SECTION 7.03. DURATION. Subject to earlier termination as provided in Section 6.04 or 6.09(e), the term of each SAR shall be determined by the Committee, but shall not exceed 10 years from the Date of Grant. Unless otherwise provided by the Committee, each SAR shall become exercisable at such time or times, to such extent and upon such conditions as the Option, if any, to which it relates is exercisable. No SAR may be exercised during the first six months of its term (or such longer period as may be established by the Committee), unless otherwise determined by the Board. Except as provided in the preceding sentence, the Committee may in its discretion accelerate the exercisability of any SAR in the manner described in Section 6.04. SECTION 7.04. EXERCISE. An SAR may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of SARs which the Employee Participant wishes to exercise. Upon receipt of such written notice, the Company shall, within 90 days thereafter, deliver to the exercising Employee Participant certificates for the shares of Common Stock or cash or both, as determined by the Committee, to which the holder is entitled pursuant to Section 7.05. SECTION 7.05. PAYMENT. Subject to the right of the Committee to deliver cash in lieu of shares of Common Stock (which, as it pertains to officers of the Company, shall comply with all requirements of the Securities Exchange Act of 1934, as amended, and regulations adopted thereunder), the number of shares of Common Stock which shall be issuable upon the exercise of an SAR shall be determined by dividing: (a) the number of shares of Common Stock as to which the SAR is exercised multiplied by the amount of the appreciation in such shares (for this purpose, the "appreciation" shall be the amount by which the Fair Market Value of the shares of Common Stock subject to the SAR on the exercise date exceeds (i) in the case of an SAR related to an option, the purchase price of the shares of Common Stock under the Option or (ii) in the case of an SAR granted alone, without reference to a related Option, an amount which shall be determined by the Committee at the time of grant, subject to adjustment under Section 5.04); by (b) the Fair Market Value of a share of Common Stock on the exercise date. In lieu of issuing only shares of Common Stock upon the exercise of a SAR, the Committee may elect to pay the holder of the SAR cash or any combination of cash or Common Stock equal to the Fair Market Value on the exercise date of any or all of the shares which would otherwise be issuable. No fractional shares of Common Stock shall be issued upon the exercise of an SAR; instead, the holder of the SAR shall be entitled to receive a cash adjustment equal to the same fraction of the Fair Market Value of a share of Common Stock on the exercise date or to purchase the portion necessary to make a whole share at its Fair Market Value on the date of exercise. SECTION 7.06. EMPLOYMENT TAXES. The Company shall retain the minimum required amount of all federal and state withholding or other employment taxes applicable to the taxable income of the Employee Participant resulting from the exercise of the SAR. ARTICLE VIII RESTRICTED STOCK SECTION 8.01. GRANT OF RESTRICTED STOCK. The Committee, at any time and from time to time, may grant shares of Restricted Stock under the Plan to such Employee Participants and in such amounts as it shall determine. Each grant of Restricted Stock shall be evidenced by minutes of a meeting or the written consent of the Committee and by a written Long-Term Incentive Plan Agreement dated as of the Date of Grant and executed by the Company and the Employee Participant. The Long-Term Incentive Plan Agreement shall specify the Period(s) of Restriction and the time or times at which such period(s) shall lapse with respect to a specified number of shares of Restricted Stock and shall set forth such other terms and conditions as may be determined by the Committee to be consistent with the Plan, but may include additional provisions and restrictions, provided that they are not inconsistent with the Plan. The Periods of Restriction shall not exceed 10 years from the Date of Grant of the Restricted Stock. SECTION 8.02. NONTRANSFERABILITY. Except as provided in Section 8.08 hereof, the shares of Restricted Stock granted hereunder may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated for such period of time as shall be specified in the Long-Term Incentive Plan Agreement, or upon earlier satisfaction of other conditions as specified by the Committee in its sole discretion and set forth in the Long-Term Incentive Plan Agreement. SECTION 8.03. OTHER RESTRICTIONS. The provisions of Section 6.06(d) shall be applicable to grants of Restricted Stock. SECTION 8.04. VOTING RIGHTS. Employee Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares during the Period of Restriction. SECTION 8.05. DIVIDENDS, STOCK SPLITS AND OTHER DISTRIBUTIONS. During the Period of Restriction, Employee Participants holding shares of Restricted Stock granted hereunder shall be entitled to receive all dividends, stock splits and other distributions paid with respect to those shares while they are so held. If any such dividends or distributions are paid in shares of Common Stock, those shares shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid. SECTION 8.06. TERMINATION OF EMPLOYMENT DUE TO RETIREMENT. In the event that an Employee Participant terminates his employment on or after his sixty-fifth birthday, the Periods of Restriction applicable to the Restricted Stock pursuant to Section 8.02 hereof shall lapse automatically and, except as otherwise provided in Section 8.03, the shares of Restricted Stock shall thereby be free of restrictions and freely transferable. In the event that an Employee Participant terminates his employment with the Company or its Subsidiaries by retiring prior to his sixty-fifth birthday, all shares of Restricted Stock shall be forfeited and returned to the Company; provided, however, that the Committee in its sole discretion may waive the restrictions remaining on any or all shares of Restricted Stock. SECTION 8.07. TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. In the event an Employee Participant's employment with the Company or its Subsidiaries terminates because of his death or permanent and total disability during the Periods of Restriction, the restrictions applicable to the shares of Restricted Stock pursuant to Section 8.02 hereof shall lapse automatically and the shares of Restricted Stock shall thereby be free of restrictions and freely transferable. SECTION 8.08. TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN DEATH, DISABILITY, OR RETIREMENT. In the event that an Employee Participant's employment with the Company or its Subsidiaries is voluntarily terminated by the Employee Participant for any reason other than those set forth in Section 8.06 and 8.07 during the Periods of Restriction, any shares of Restricted Stock still subject to restrictions at the date of such termination automatically shall be forfeited and returned to the Company. In the event of termination of the employment of an Employee Participant by the Company other than a termination for serious misconduct as defined in Section 6.09(e), the Committee in its sole discretion may waive the automatic forfeiture of any or all Restricted Stock and may waive any and all restrictions. SECTION 8.09. EMPLOYMENT TAXES. The Company shall retain the minimum required amount of all federal and state withholding or other employment taxes applicable to the taxable income of the Employee Participant resulting from such exercise. ARTICLE IX TEN-PERCENT OWNERS Notwithstanding any other provisions of this Plan, the following terms and conditions shall apply to Incentive Stock Options granted hereunder to a "10% owner." For this purpose, a "10% owner" shall mean an Employee Participant who, at the time the Incentive Stock Option is granted, owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary. With respect to a 10% owner: (a) the price at which shares of stock may be purchased under an Incentive Stock Option granted pursuant to this Plan shall be not less than 110% of the Fair Market Value thereof; and (b) the period during which any such Incentive Stock Option may be exercised, to be fixed by the Committee in the manner described in Section 6.04, above, shall expire not later than five years from the date the Incentive Stock Option is granted. ARTICLE X ANNUAL LIMITS Incentive Stock Options shall not be granted to any individual pursuant to this Plan, the effect of which would be to permit such person to first exercise Incentive Stock Options, in any calendar year, for the purchase of shares having a Fair Market Value in excess of $100,000 (determined at the time of the grant of the Incentive Stock Options). An Employee Participant hereunder may exercise Incentive Stock Options for the purchase of shares valued in excess of $100,000 (determined at the time of grant of the Incentive Stock Options) in a calendar year, but only if the right to exercise such Incentive Stock Options shall have first become available in prior calendar years. Nothing in this Article X is intended to prohibit an Employee Participant from exercising all of his Incentive Stock Options which may be accelerated as a result of a Change in Control. ARTICLE XI OTHER TERMS AND CONDITIONS SECTION 11.01. INCENTIVE STOCK OPTIONS. Any Incentive Stock Option granted hereunder shall contain such other and additional terms, not inconsistent with the terms of this Plan, which are deemed necessary or desirable by the Committee, which such terms, together with the terms of this Plan, shall constitute such Incentive Stock Option as an "Incentive Stock Option" within the meaning of Section 422 of the Code and lawful regulations thereunder. SECTION 11.02. PERFORMANCE AWARDS. The Committee may designate whether any Performance Award to any Employee Participant is intended to be "performance-based compensation" as that term is used in Section 162(m) of the Code. Any such Performance Awards designated as intended to be "performance-based compensation" shall be conditioned on the achievement of one or more performance measures, to the extent required by Section 162(m) of the Code. The performance measures that may be used by the Committee for such Performance Awards shall be based on any one or more of the following, as selected by the Committee: earnings per share and/or growth in earnings per share in relation to target objectives, excluding the effect of extraordinary or nonrecurring items; operating cash flow and/or growth in operating cash flow in relation to target objectives; cash available in relation to target objectives; net income and/or growth in net income in relation to target objectives, excluding the effect of extraordinary or nonrecurring items; revenue and/or growth in revenue in relation to target objectives; total shareholder return (measured as the total of the appreciation of and dividends declared on the Common Stock) in relation to target objectives; economic value added; stock price; return on invested capital in relation to target objectives; return on shareholder equity in relation to target objectives; return on assets in relation to target objectives; and return on common book equity in relation to target objectives. If the Committee determines that, as a result of a change in the business, operations, corporate structure or capital structure of the Company, or the manner in which the Company conducts its business, or any other events or circumstances, the Performance Goals are no longer suitable, the Committee may in its discretion modify such Performance Goals or the related minimum acceptable level of achievement, in whole or in part, with respect to a period as the Committee deems appropriate and equitable. For Performance Awards and the establishment of the performance measures shall be made during the period required under Section 162(m) of the Code. SECTION 11.03. DIVIDENDS AND DIVIDEND EQUIVALENTS. An Award may provide an Employee Participant or Director Participant with the right to receive dividend payments or dividend equivalent payments with respect to Common Stock subject to the Award (both before and after the Common Stock subject to the Award is earned, vested or acquired), which payments may be either made currently or credited to an account for such Employee Participant or Director Participant, and may be settled in cash or shares of Common Stock, as determined by the Committee. Any such settlements, and any such crediting of dividends or dividend equivalents or reinvestment in shares of Common Stock, may be subject to such conditions, restrictions and contingencies as the Committee shall establish, including the reinvestment of such credited amounts in shares of Common Stock. SECTION 11.04. CHANGE IN CONTROL. Notwithstanding any other provision of this Plan to the contrary, all unvested or unexercisable Awards shall automatically vest and become exercisable without further action by the Board or Committee upon a Change in Control, except as may be otherwise provided in any Long-Term Incentive Plan Agreement. ARTICLE XII STOCK CERTIFICATES SECTION 12.01. CONDITIONS. The Company shall not be required to issue or deliver any certificate for shares of Common Stock received pursuant to a grant of Restricted Stock or other Award purchased upon the exercise of any Option granted to Employee Participants or Nonqualified Stock Options granted to Director Participants hereunder or any portion thereof prior to fulfillment of all of the following conditions: (a) The completion of any registration or other qualification of such shares under any federal or state law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Committee shall in its sole discretion deem necessary or advisable; (b) The obtaining of any approval or other clearance from any federal or state governmental agency which the Committee shall in its sole discretion determine to be necessary or advisable; (c) The lapse of such reasonable period of time following the Period of Restriction or the exercise of the Option as the Committee from time to time may establish for reasons of administrative convenience; (d) Satisfaction by the Employee Participant or Director Participant of all applicable withholding taxes or other withholding liabilities; and (e) Specific requirements as provided for in Section 6.06(d). SECTION 12.02. LEGENDS. The Company reserves the right to legend any certificate for shares of Common Stock conditioning sales of such shares upon compliance with applicable federal and state securities laws and regulations. ARTICLE XIII TERMINATION, AMENDMENT, AND MODIFICATION OF PLAN The Board may at any time, upon recommendation of the Committee, terminate, and may at any time and from time to time and in any respect amend or modify, the Plan; provided, however, that no such action shall impair the rights of any holder of an Award theretofore granted; and further provided, that no such action of the Board or Committee without approval of the shareholders of the Company may: (a) increase the total number of shares of Common Stock subject to the Plan, except as contemplated in Sections 5.03 and 5.04 hereof or (b) amend Sections 5.01 or 6.03 of this Plan. No termination, amendment, or modification of the Plan shall in any manner adversely affect any Restricted Stock or Option theretofore granted under the Plan without the consent of the Employee Participant or Director Participant holding such Restricted Stock or Option. ARTICLE XIV MISCELLANEOUS SECTION 14.01. EMPLOYMENT OR BOARD MEMBERSHIP. Nothing in the Plan or in any Award granted hereunder or in any Long-Term Incentive Plan Agreement relating thereto shall confer upon any employee the right to continue in the employ of the Company or any Subsidiary, or any Director the right to remain on the Board of the Company. SECTION 14.02. OTHER COMPENSATION PLANS. Except as provided in Section 14.08 hereof, the adoption of the Plan shall not affect any other stock option or long-term incentive or other compensation plans in effect for the Company or any Subsidiary, nor shall the Plan preclude the Company from establishing any other forms of incentive or other compensation for employees of the Company or any Subsidiary. SECTION 14.03. PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the Company, its successors and assigns, and on each Employee Participant or Director Participant, his executor, administrator and permitted transferees. SECTION 14.04. SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender. SECTION 14.05. HEADINGS NO PART OF PLAN. Headings of Articles and Sections hereof are inserted for convenience and reference; they constitute no part of the Plan. SECTION 14.06. REPURCHASE OF SHARES. Nothing contained herein or in any Long-Term Incentive Plan Agreement shall create an obligation on the part of the Company to repurchase any shares of Common Stock issued hereunder. SECTION 14.07. EFFECTIVE DATE. Subject to the approval of the Company's stockholders prior to December 1, 2001, the Plan shall be effective as of December 1, 2000; provided, however, that to the extent Awards are granted under the Plan prior to its approval by the Company's stockholders, the Awards shall be contingent on approval of the Plan by the Company's stockholders prior to December 1, 2001. SECTION 14.08. PRIOR PLANS. Upon shareholder approval of this Plan pursuant to Section 14.07, no new awards will be granted under the Company's 1988 and 1991 Long-Term Incentive Plans, and any awards for shares of stock granted under those Plans after December 1, 2000 will reduce the number of shares available under this Plan. EX-21 4 c66282ex21.txt SUBSIDIARIES OF THE COMPANY EXHIBIT 21 SUBSIDIARIES OF LINDSAY MANUFACTURING CO. Ownership Percentage Lindsay International Sales Corporation - Delaware 100% Lindsay Transportation, Inc. - Nebraska 100% Lindsay Foreign Sales Corporation - Virgin Islands 100% Lindsay - Irrigation Pty., Ltd. - Australia (Inactive) 100% Lindsay DISC, Inc. - Delaware (Inactive) 100% Lindsay Europe SA - France 100% LMC Professional Supply, Inc. - Delaware (Inactive) 100% EX-23 5 c66282ex23.txt CONSENT OF KPMG LLP EXHIBIT (23) INDEPENDENT AUDITORS' CONSENT To the Board of Directors of Lindsay Manufacturing Co.: We consent to the incorporation by reference in the registration statement (No. 333-00769) on Form S-8 of Lindsay Manufacturing Co. of our report dated October 5, 2001, with respect to the consolidated balance sheet of Lindsay Manufacturing Co. as of August 31, 2001, and the related consolidated statements of operations, shareholders' equity and comprehensive income, and cash flows for the year ended August 31, 2001, and related 2001 financial statement schedule, which report appears in the August 31, 2001, annual report on Form 10-K of Lindsay Manufacturing Co. /s/ KPMG LLP ------------ KPMG LLP Omaha, Nebraska November 26, 2001 EX-23.(A) 6 c66282ex23-a.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP EXHIBIT 23(a) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the registration statement of Lindsay Manufacturing Co. on Form S-8 (File No. 333-00769) of our report dated September 28, 2000 on our audit of the consolidated financial statements and financial statement schedule of Lindsay Manufacturing Co., as of August 31, 2000 and for each of the two years in the period ended August 31, 2000, which report is in the Company's Annual Report on Form 10-K for the year ended August 31, 2001. /s/ PricewaterhouseCoopers LLP ------------------------------ PRICEWATERHOUSECOOPERS LLP Omaha, Nebraska November 28, 2001 EX-24.(A) 7 c66282ex24-a.txt POWER OF ATTORNEY EXHIBIT 24(a) POWER OF ATTORNEY Each person whose signature appears below hereby constitutes Richard W. Parod and Bruce C. Karsk, and each of them singly, such person's true and lawful attorney-in-fact, with full power to them and each of them to sign for such person and in such person's name and capacity indicated below any and all instruments, reports and amendments which said attorney-in-fact or any one of them may deem necessary or advisable to enable Lindsay Manufacturing Co., (the "Company") to comply with the Securities Exchange Act of 1934, as amended (the "1934 Act"), and any rules, regulations and requirements of the Securities and Exchange Commission under the 1934 Act, specifically, the power and authority to sign for us or any of us in our names and in the capacities on the Company's Annual Report on Form 10-K for fiscal year 2001, and we do hereby ratify and confirm all that said attorneys-in-fact, or any of them, shall do or cause to be done by virtue of this Power of Attorney. Executed below by the following persons in the capacities and on the dates indicated. Signature Capacity Date --------- -------- ---- /s/ HOWARD G. BUFFETT Director November 15, 2001 - --------------------------- Howard G. Buffett /s/ MICHAEL N. CHRISTODOLOU Director November 14, 2001 - --------------------------- Michael N. Christodolou /s/ LARRY H. CUNNINGHAM Director November 20, 2001 - --------------------------- Larry H. Cunningham /s/ JOHN W. CROGHAN Chairman of the November 15, 2001 - --------------------------- Board of Directors John W. Croghan /s/ WILLIAM F. WELSH II Director November 14, 2001 - --------------------------- William F. Welsh II EX-99 8 c66282ex99.txt REPORT OF INDEPENDENT ACCOUTANTS EXHIBIT 99 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders' of Lindsay Manufacturing Co.: In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a)(1) on page 28, present fairly, in all material respects, the financial position of Lindsay Manufacturing Co. and its subsidiaries at August 31, 2000, and the results of their operations and their cash flows for each of the two years in the period ended August 31, 2000, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 14(a)(2), presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP ------------------------------ PricewaterhouseCoopers LLP Omaha, Nebraska September 28, 2000 -----END PRIVACY-ENHANCED MESSAGE-----