Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q



FORM 10‑Q



(MARK ONE)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31,November 30, 2016

OR



¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-13419



Lindsay Corporation

(Exact name of registrant as specified in its charter)





Delaware

47-0554096

Delaware

47‑0554096

(State or other jurisdiction of


incorporation or organization)

(I.R.S. Employer


Identification No.)

2222 N. 111th Street, Omaha, Nebraska

68164

(Address of principal executive offices)

(Zip Code)

402-829-6800

402‑829-6800

(Registrant’sRegistrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x   No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x   No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:



Large accelerated filer

  ☒  

x

Accelerated filer

¨

  ☐  

Non‑accelerated filer

  ☐  

Non-accelerated filer¨  (Do

(Do not check if smaller reporting company)

Smaller reporting company

¨

  ☐  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨   No x

As of June 24,December 16, 2016, 10,630,12410,653,479 shares of the registrant’s common stock were outstanding.



 




Lindsay

Lindsay Corporation

INDEX FORM 10-Q





-  2  -


Part I – FINANCIALFINANCIAL INFORMATION

ITEM 1 -FinancialFinancial Statements

Lindsay



 

 

 

 

 

 



 

 

 

 

 

 

Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



 

 

 

 

 

 



 

Three months ended



 

November 30,

 

November 30,

($ and shares in thousands, except per share amounts)

 

2016

 

2015

Operating revenues

 

$

110,390 

 

$

121,622 

Cost of operating revenues

 

 

82,016 

 

 

87,208 

Gross profit

 

 

28,374 

 

 

34,414 



 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Selling expense

 

 

9,982 

 

 

9,992 

General and administrative expense

 

 

11,355 

 

 

9,015 

Engineering and research expense

 

 

4,302 

 

 

3,659 

Total operating expenses

 

 

25,639 

 

 

22,666 



 

 

 

 

 

 

Operating income

 

 

2,735 

 

 

11,748 



 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

Interest expense

 

 

(1,209)

 

 

(1,196)

Interest income

 

 

165 

 

 

164 

Other expense, net

 

 

(356)

 

 

(320)



 

 

 

 

 

 

Earnings before income taxes

 

 

1,335 

 

 

10,396 



   

 

 

 

 

 

Income tax expense

 

 

462 

 

 

3,452 



 

 

 

 

 

 

Net earnings

 

$

873 

 

$

6,944 



 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

    Basic

 

$

0.08 

 

$

0.62 

    Diluted

 

$

0.08 

 

$

0.62 



 

 

 

 

 

 

Shares used in computing earnings per share:

 

 

 

 

 

 

    Basic

 

 

10,638 

 

 

11,259 

    Diluted

 

 

10,666 

 

 

11,288 



 

 

 

 

 

 

Cash dividends declared per share

 

$

0.29 

 

$

0.28 



 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

-  3  -




 

 

 

 

 

 



 

 

 

 

 

 

Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



 

 

 

 

 

 



 

Three months ended



 

November 30,

 

November 30,

($ in thousands)

 

2016

 

2015

Net earnings

 

$

873 

 

$

6,944 

Other comprehensive income (loss):

 

 

 

 

 

 

Defined benefit pension plan adjustment, net of tax

 

 

37 

 

 

Foreign currency translation adjustment, net of hedging activities and tax

 

 

(1,434)

 

 

(1,566)

Total other comprehensive loss, net of tax expense of $566 and $644, respectively

 

 

(1,397)

 

 

(1,561)

Total comprehensive (loss) income

 

$

(524)

 

$

5,383 



 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

-  4  -




 

 

 

 

 

 

 

 

 

Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



 

 

 

 

 

 

 



 

November 30,

 

November 30,

 

August 31,

($ and shares in thousands, except par values)

 

2016

 

2015

 

2016

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 Cash and cash equivalents

 

$

103,058 

 

$

129,260 

 

$

101,246 

 Restricted cash

 

 

 —

 

 

2,027 

 

 

2,030 

 Receivables, net of allowance of $7,808,  $8,485, and $8,312, respectively

 

 

69,774 

 

 

70,403 

 

 

80,610 

 Inventories, net

 

 

80,139 

 

 

78,246 

 

 

74,750 

 Prepaid expenses

 

 

3,295 

 

 

3,570 

 

 

3,671 

 Other current assets

 

 

18,622 

 

 

12,897 

 

 

14,468 

      Total current assets

 

 

274,888 

 

 

296,403 

 

 

276,775 



 

 

 

 

 

 

 

 

 

Property, plant, and equipment:

 

 

 

 

 

 

 

 

 

 Cost

 

 

182,848 

 

 

183,630 

 

 

182,696 

 Less accumulated depreciation

 

 

(107,287)

 

 

(104,641)

 

 

(105,069)

    Property, plant, and equipment, net

 

 

75,561 

 

 

78,989 

 

 

77,627 



 

 

 

 

 

 

 

 

 

Intangibles, net

 

 

45,998 

 

 

50,598 

 

 

47,200 

Goodwill

 

 

76,562 

 

 

76,497 

 

 

76,803 

Deferred income tax assets

 

 

3,134 

 

 

3,242 

 

 

4,225 

Other noncurrent assets

 

 

4,800 

 

 

5,540 

 

 

4,885 

    Total assets

 

$

480,943 

 

$

511,269 

 

$

487,515 



 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 Accounts payable

 

$

32,533 

 

$

39,106 

 

$

32,268 

 Current portion of long-term debt

 

 

198 

 

 

194 

 

 

197 

 Other current liabilities

 

 

51,866 

 

 

48,254 

 

 

55,395 

      Total current liabilities

 

 

84,597 

 

 

87,554 

 

 

87,860 



 

 

 

 

 

 

 

 

 

Pension benefits liabilities

 

 

6,789 

 

 

6,500 

 

 

6,869 

Long-term debt

 

 

116,926 

 

 

117,124 

 

 

116,976 

Deferred income tax liabilities

 

 

2,338 

 

 

8,237 

 

 

1,223 

Other noncurrent liabilities

 

 

22,105 

 

 

10,162 

 

 

23,020 

    Total liabilities

 

 

232,755 

 

 

229,577 

 

 

235,948 



 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

Preferred stock of $1 par value -

 

 

 

 

 

 

 

 

 

Authorized 2,000 shares; no shares issued and outstanding

 

 

 —

 

 

 —

 

 

 —

Common stock of $1 par value - authorized 25,000 shares;

 

 

 

 

 

 

 

 

 

18,737,  18,713, and 18,713 shares issued, respectively

 

 

18,737 

 

 

18,713 

 

 

18,713 

Capital in excess of stated value

 

 

57,548 

 

 

55,287 

 

 

57,338 

Retained earnings

 

 

464,710 

 

 

462,713 

 

 

466,926 

Less treasury stock - at cost, 8,083,  7,531, and 8,083 shares, respectively

 

 

(277,238)

 

 

(238,152)

 

 

(277,238)

Accumulated other comprehensive loss, net

 

 

(15,569)

 

 

(16,869)

 

 

(14,172)

Total shareholders' equity

 

 

248,188 

 

 

281,692 

 

 

251,567 

Total liabilities and shareholders' equity

 

$

480,943 

 

$

511,269 

 

$

487,515 



 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

-  5  -




 

 

 

 

 

 

Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



 

 

 



 

Three months ended



 

November 30,

 

November 30,

($ in thousands)

 

2016

 

2015

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

  Net earnings

 

$

873 

 

$

6,944 

  Adjustments to reconcile net earnings to net cash
   provided by operating activities:

 

 

 

 

 

 

     Depreciation and amortization

 

 

4,035 

 

 

4,295 

     Provision for uncollectible accounts receivable

 

 

(255)

 

 

153 

     Deferred income taxes

 

 

1,541 

 

 

2,060 

     Share-based compensation expense

 

 

935 

 

 

906 

     Other, net

 

 

388 

 

 

1,648 

  Changes in assets and liabilities:

 

 

 

 

 

 

     Receivables

 

 

10,436 

 

 

2,503 

     Inventories

 

 

(5,741)

 

 

(3,749)

     Other current assets

 

 

3,000 

 

 

982 

     Accounts payable

 

 

415 

 

 

733 

     Other current liabilities

 

 

(2,232)

 

 

(6,322)

     Current income taxes payable

 

 

(4,344)

 

 

(1,036)

     Other noncurrent assets and liabilities

   

 

(947)

 

 

(614)

  Net cash provided by operating activities

 

 

8,104 

 

 

8,503 



 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

  Purchases of property, plant and equipment

 

 

(1,390)

 

 

(4,705)

  Proceeds from settlement of net investment hedges

 

 

 —

 

 

231 

  Payments for settlement of net investment hedges

 

 

(159)

 

 

(512)

  Other investing activities, net

 

 

134 

 

 

749 

  Net cash used in investing activities

 

 

(1,415)

 

 

(4,237)



 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

  Proceeds from exercise of stock options

 

 

 —

 

 

72 

  Common stock withheld for payroll tax withholdings

 

 

(635)

 

 

(719)

  Principal payments on long-term debt

 

 

(49)

 

 

(48)

  Repurchase of common shares

 

 

 —

 

 

(9,249)

  Dividends paid

 

 

(3,089)

 

 

(3,134)

  Net cash used in financing activities

 

 

(3,773)

 

 

(13,078)

 

 

 

 

 

 

 

  Effect of exchange rate changes on cash and cash equivalents

 

 

(1,104)

 

 

(1,021)

  Net change in cash and cash equivalents

 

 

1,812 

 

 

(9,833)

  Cash and cash equivalents, beginning of period

 

 

101,246 

 

 

139,093 

  Cash and cash equivalents, end of period

 

$

103,058 

 

$

129,260 



 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION

 

 

 

 

 

 

Income taxes paid

 

$

3,061 

 

$

4,897 

Interest paid

 

$

97 

 

$

70 



 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

-  6  -


Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

   Three months ended  Nine months ended 
   May 31,  May 31,  May 31,  May 31, 

($ and shares in thousands, except per share amounts)

  2016  2015  2016  2015 

Operating revenues

  $141,319   $160,707   $383,514   $436,641  

Cost of operating revenues

   99,511    114,321    274,847    313,785  
  

 

 

  

 

 

  

 

 

  

 

 

 

Gross profit

   41,808    46,386    108,667    122,856  
  

 

 

  

 

 

  

 

 

  

 

 

 

Operating expenses:

     

Selling expense

   10,606    10,682    30,961    30,330  

General and administrative expense

   11,882    10,719    43,925    35,270  

Engineering and research expense

   3,995    3,497    11,402    9,330  
  

 

 

  

 

 

  

 

 

  

 

 

 

Total operating expenses

   26,483    24,898    86,288    74,930  
  

 

 

  

 

 

  

 

 

  

 

 

 

Operating income

   15,325    21,488    22,379    47,926  

Other income (expense):

     

Interest expense

   (1,179  (1,144  (3,576  (1,424

Interest income

   127    134    520    468  

Other expense, net

   (208  (55  (1,055  (748
  

 

 

  

 

 

  

 

 

  

 

 

 

Earnings before income taxes

   14,065    20,423    18,268    46,222  

Income tax expense

   4,421    7,496    5,809    16,732  
  

 

 

  

 

 

  

 

 

  

 

 

 

Net earnings

  $9,644   $12,927   $12,459   $29,490  
  

 

 

  

 

 

  

 

 

  

 

 

 

Earnings per share:

     

Basic

  $0.90   $1.11   $1.13   $2.46  

Diluted

  $0.90   $1.10   $1.13   $2.46  

Shares used in computing earnings per share:

     

Basic

   10,709    11,690    10,997    11,965  

Diluted

   10,732    11,720    11,019    12,000  

Cash dividends declared per share

  $0.28   $0.27   $0.84   $
0.81
  

The accompanying notes are an integral part of the condensed consolidated financial statements.

- 3 -


Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

   Three months ended  Nine months ended 

($ in thousands)

  May 31,
2016
   May 31,
2015
  May 31,
2016
  May 31,
2015
 

Net earnings

  $9,644    $12,927   $12,459   $29,490  
  

 

 

   

 

 

  

 

 

  

 

 

 

Other comprehensive income (loss):

      

Defined benefit pension plan adjustment, net of tax

   33     33    71    97  

Unrealized gain on cash flow hedges, net of tax

   76     —      —      —    

Foreign currency translation adjustment, net of hedging activities and tax

   1,804     (2,638  (269  (10,909
  

 

 

   

 

 

  

 

 

  

 

 

 

Total other comprehensive gain (loss), net of tax expense (benefit) of ($138), $136, $253 and $1,873

   1,913     (2,605  (198  (10,812
  

 

 

   

 

 

  

 

 

  

 

 

 

Total comprehensive income:

  $11,557    $10,322   $12,261   $18,678  
  

 

 

   

 

 

  

 

 

  

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

- 4 -


Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

($ and shares in thousands, except par values)

  May 31,
2016
  May 31,
2015
  August 31,
2015
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

  $91,498   $154,018   $139,093  

Receivables, net of allowance of $7,979, $2,607 and $9,706, respectively

   81,915    93,399    74,063  

Inventories, net

   82,845    79,123    74,930  

Deferred income taxes

   14,519    16,922    15,807  

Other current assets

   20,470    17,641    18,274  
  

 

 

  

 

 

  

 

 

 

Total current assets

   291,247    361,103    322,167  
  

 

 

  

 

 

  

 

 

 

Property, plant and equipment:

    

Cost

   184,740    178,606    181,598  

Less accumulated depreciation

   (105,580  (101,752  (102,942
  

 

 

  

 

 

  

 

 

 

Property, plant and equipment, net

   79,160    76,854    78,656  
  

 

 

  

 

 

  

 

 

 

Intangibles, net

   48,367    52,103    51,920  

Goodwill

   76,778    75,124    76,801  

Other noncurrent assets, net of allowance of $0, $2,021 and $0, respectively

   6,153    12,710    6,924  
  

 

 

  

 

 

  

 

 

 

Total assets

  $501,705   $577,894   $536,468  
  

 

 

  

 

 

  

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

  $40,805   $46,560   $38,814  

Current portion of long-term debt

   196    182    193  

Other current liabilities

   55,651    64,343    56,105  
  

 

 

  

 

 

  

 

 

 

Total current liabilities

   96,652    111,085    95,112  
  

 

 

  

 

 

  

 

 

 

Pension benefits liabilities

   6,362    6,389    6,569  

Long-term debt

   117,025    117,222    117,173  

Deferred income taxes

   13,423    18,685    18,971  

Other noncurrent liabilities

   23,307    9,818    10,083  
  

 

 

  

 

 

  

 

 

 

Total liabilities

   256,769    263,199    247,908  
  

 

 

  

 

 

  

 

 

 

Shareholders’ equity:

    

Preferred stock of $1 par value - Authorized 2,000 shares; no shares issued and outstanding

   —      —      —    

Common stock of $1 par value - authorized 25,000 shares; 18,713, 18,678 and 18,684 shares issued, respectively

   18,713    18,678    18,684  

Capital in excess of stated value

   56,766    54,268    55,184  

Retained earnings

   462,201    465,246    458,903  

Less treasury stock - at cost, 8,083, 7,174 and 7,394 shares, respectively

   (277,238  (210,484  (228,903

Accumulated other comprehensive loss, net

   (15,506  (13,013  (15,308
  

 

 

  

 

 

  

 

 

 

Total shareholders’ equity

   244,936    314,695    288,560  
  

 

 

  

 

 

  

 

 

 

Total liabilities and shareholders’ equity

  $501,705   $577,894   $536,468  
  

 

 

  

 

 

  

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

- 5 -


Lindsay Corporation and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

   Nine months ended 
   May 31,  May 31, 

($ in thousands)

  2016  2015 

CASH FLOWS FROM OPERATING ACTIVITIES:

   

Net earnings

  $12,459   $29,490  

Adjustments to reconcile net earnings to net cash provided by operating activities:

   

Depreciation and amortization

   12,771    12,148  

Provision for uncollectible accounts receivable

   (1,161  569  

Deferred income taxes

   (4,737  (1,541

Share-based compensation expense

   2,440    2,599  

Other, net

   755    4,196  

Changes in assets and liabilities:

   

Receivables

   (6,704  (6,326

Inventories

   (7,732  (1,244

Other current assets

   (1,425  (2,560

Accounts payable

   1,452    6,212  

Other current liabilities

   (33  (6,340

Current income taxes payable

   (225  (3,730

Other noncurrent assets and liabilities

   12,389    1,912  
  

 

 

  

 

 

 

Net cash provided by operating activities

   20,249    35,385  
  

 

 

  

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

   

Purchases of property, plant and equipment

   (10,073  (11,228

Acquisition of business, net of cash acquired

   —      (67,176

Proceeds from settlement of net investment hedges

   2,317    7,363  

Payments for settlement of net investment hedges

   (2,719  (606

Other investing activities, net

   1,118    (1,724
  

 

 

  

 

 

 

Net cash used in investing activities

   (9,357  (73,371
  

 

 

  

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

   

Proceeds from exercise of stock options

   113    256  

Common stock withheld for payroll tax withholdings

   (712  (1,706

Proceeds from issuance of long-term debt

   —      115,000  

Principal payments on long-term debt

   (144  (75

Issuance costs related to debt

   —      (618

Excess tax benefits from share-based compensation

   53    510  

Repurchase of common shares

   (48,335  (78,464

Dividends paid

   (9,161  (9,610
  

 

 

  

 

 

 

Net cash provided by (used in) financing activities

   (58,186  25,293  
  

 

 

  

 

 

 

Effect of exchange rate changes on cash and cash equivalents

   (301  (5,131
  

 

 

  

 

 

 

Net change in cash and cash equivalents

   (47,595  (17,824

Cash and cash equivalents, beginning of period

   139,093    171,842  
  

 

 

  

 

 

 

Cash and cash equivalents, end of period

  $91,498   $154,018  
  

 

 

  

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION

   

Income taxes paid

  $13,608   $21,221  

Interest paid

  $2,413   $159  

The accompanying notes are an integral part of the condensed consolidated financial statements.

- 6 -


Lindsay Corporation and Subsidiaries

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Condensed Consolidated Financial Statements

The condensed consolidated financial statements are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all of the disclosures normally required by U.S. generally accepted accounting principles (“U.S. GAAP”) as contained in Lindsay Corporation’s (the “Company”) Annual Report on Form 10-K.  Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the fiscal year ended August 31, 2015.2016.

In the opinion of management, the condensed consolidated financial statements of the Company reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the periods presented.  The results for interim periods are not necessarily indicative of trends or results expected by the Company for a full year.  The condensed consolidated financial statements were prepared using U.S. GAAP. These principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from these estimates.  Certain reclassifications have been made to prior financial statements and notes to conform to the current year presentation.

Note 2 – New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,Revenue from Contracts with Customers. In August 2015, the FASB issued ASU No. 2015-14,Revenue from Contracts with Customers: Deferral of the Effective Date. The standard provides a single model for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of goods or services. The ASU will replace existing revenue recognition guidance in U.S. GAAP and becomes effective in the first quarter of fiscal year 2019. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.in fiscal 2018. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. The Company is currently evaluating the impact the adoption will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method, nor has it determined the effect of the standard on its ongoing financial reporting.

In November 2015, the FASB issued ASU No. 2015-17,Income Taxes: Balance Sheet Classification of Deferred Taxes. The standard requires an entity to classify all deferred tax assets and liabilities as noncurrent. In addition, companies will no longer allocate valuation allowances between current and noncurrent because all valuation allowancesdeferred tax assets will also be classified as noncurrent. The effective date of ASU No. 2015-17 will be the first quarter of fiscal 2018 with early adoption permitted.  The guidance allows companies to apply the update either on a retrospective or prospective basis. The Company does not expecthas early adopted this standardASU during the first quarter of fiscal 2017 on a retrospective basis.  Accordingly, the Company reclassified current deferred tax assets and liabilities to have a material impactnon-current on its November 30, 2015 and August 31, 2016 condensed consolidated financial statements.balance sheets, which increased net non-current deferred tax assets by $2.0 million and $3.3 million, respectively, and decreased non-current deferred tax liabilities by $10.3 million and $12.0 million, respectively.

In February 2016, the FASB issued ASU No. 2016-02,Leases (Topic 842). The standard replaces the current codification topic 840 with updated guidance on accounting for leases and requires a lessee to recognize assets and liabilities arising from an operating lease on the balance sheet. Previous U.S. GAAP did not require lease assets and liabilities to be recognized for most leases. Furthermore,Additionally, companies are permitted to make an accounting policy election to not recognize lease assets and liabilities for leases with a term of 12 months or less. For both finance leases and operating leases, the lease liability should be initially measured at the present value of the lease payments. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee will not significantly change under this new guidance.  The effective date of ASU No. 2016-02 will be the first quarter of fiscal 2020 with early adoption permitted. The Company is currently evaluating the effect that adopting this standard will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09,Improvements to Employee Share-Based Payment Accounting.The standard provides guidance for employee share-based compensation payments, including the income tax consequences, classification of awards as either equity or liabilities and the classification on the statement of cash flows.  The Company elected to early adopt this ASU requiresas of the beginning of fiscal 2017.  For the first quarter of fiscal 2017, the Company recognized all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefitsbenefit in the income statement and to be classified along with otherquarter. An income tax cash flows as an operating activity on the statementbenefit of cash flows. The effective date of ASU No. 2016-09 will beapproximately $0.1 million was recognized in the first quarter of fiscal 2018 with early2017 as a result of the adoption permitted, andof ASU 2016-09. Additionally, as required by the standard will be adoptednew guidance, when calculating diluted earnings per share, excess tax benefits were excluded from the calculation of assumed proceeds since such amounts are recognized in the income statement.  ASU 2016-09 also allows an entity to elect, as an accounting policy, either to estimate the number of forfeited awards or to account for forfeitures as they occur.  The Company has elected to account for forfeitures as they occur.  This change did not have a material impact on estimated

-  7  -


expense.  The Company elected to present the cash flow statement on a prospective basis. The Company is currently evaluatingretrospective transition method and prior periods have been adjusted to present the effect that adopting this new standard will have on its consolidated financial statements.excess tax benefits as part of cash flows from operating activities. This resulted in an increase in cash flows from operating activities and a decrease in cash flows from financing activities of $0.1 million in the first quarter of fiscal 2016.

- 7 -


Note 3 – Net Earnings per Share

Basic earnings per share is calculated on the basis of weighted average outstanding common shares.  Diluted earnings per share is calculated on the basis of basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, restricted stock unit awards and other dilutive securities.

The following table shows the computation of basic and diluted net earnings per share for the three and nine months ended May 31,November 30, 2016 and May 31,November 30, 2015:



 

 

 

 

 

Three months ended

  Three months ended   Nine months ended 

 

November 30,

 

November 30,

($ and shares in thousands, except per share amounts)

  May 31,
2016
   May 31,
2015
   May 31,
2016
   May 31,
2015
 

 

2016

 

2015

Numerator:

        

 

 

 

 

 

 

Net earnings

  $9,644    $12,927    $12,459    $29,490  

 

$

873 

 

$

6,944 

 

 

 

 

 

Denominator:

        

 

 

 

 

Weighted average shares outstanding

   10,709     11,690     10,997     11,965  

 

10,638 

 

11,259 

Diluted effect of stock awards

   23     30     22     35  

 

 

28 

 

 

29 
  

 

   

 

   

 

   

 

 

Weighted average shares outstanding assuming dilution

   10,732     11,720     11,019     12,000  

 

 

10,666 

 

 

11,288 
  

 

   

 

   

 

   

 

 

 

 

 

 

 

 

Basic net earnings per share

  $0.90    $1.11    $1.13    $2.46  

 

$

0.08 

 

$

0.62 

Diluted net earnings per share

  $0.90    $1.10    $1.13    $2.46  

 

$

0.08 

 

$

0.62 

Certain stock options and restricted stock units were excluded from the computation of diluted net earnings per share because their effect would have been anti-dilutive.  Performance stock units are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied.  TheIn addition, the following table shows the securities excluded from the computation of earnings per share because their effect would have been anti-dilutive:



   Three months ended   Nine months ended 

Units and options in thousands

  May 31,
2016
   May 31,
2015
   May 31,
2016
   May 31,
2015
 

Restricted stock units

   1     —       6     4  

Stock options

   104     47     84     52  



 

 

 

 



 

Three months ended



 

November 30,

 

November 30,

(Units and options in thousands)

 

2016

 

2015

Restricted stock units

 

33 

 

15 

Stock options

 

148 

 

63 

Note 4 – Income Taxes

It is the Company’s policy to report income tax expense for interim periods using an estimated annual effective income tax rate. However, the tax effects of significant or unusual items are not considered in the estimated annual effective income tax rate. The tax effects of such discrete events are recognized in the interim period in which the events occur. The Company recorded no material discrete items for the three and nine months ended May 31,November 30, 2016 and May 31,November 30, 2015.

The Company recorded income tax expense of $4.4$0.5 million and $7.5$3.5 million for the three months ended May 31,November 30, 2016 and May 31, 2015, respectively. The Company recorded income tax expense of $5.8 million and $16.7 million for the nine months ended May 31, 2016 and May 31,November 30, 2015, respectively. The estimated annual effective income tax rate was 31.834.6 percent and 36.233.2 percent for the fiscal year-to-date periods ended May 31,November 30, 2016 and May 31,November 30, 2015, respectively. The decreaseincrease in the estimated annual effective income tax rate from MayNovember 2015 to MayNovember 2016 is primarily relates to the resultearnings mix among jurisdictions.

-  8  -


Note 5 – Inventories

Inventories consisted of the following as of May 31,November 30, 2016, May 31,November 30, 2015, and August 31, 2015:2016:



($ in thousands)

  May 31,
2016
   May 31,
2015
   August 31,
2015
 

Raw materials and supplies

  $25,903    $25,953    $29,427  

Work in process

   7,730     8,789     7,318  

Finished goods and purchased parts

   53,731     51,220     44,269  
  

 

 

   

 

 

   

 

 

 

Total inventory value before LIFO adjustment

   87,364     85,962     81,014  

Less adjustment to LIFO value

   (4,519   (6,839   (6,084
  

 

 

   

 

 

   

 

 

 

Inventories, net

  $82,845    $79,123    $74,930  
  

 

 

   

 

 

   

 

 

 



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

November 30,

 

November 30,

 

August 31,

($ in thousands)

 

2016

 

2015

 

2016

Raw materials and supplies

 

$

27,898 

 

$

26,611 

 

$

26,599 

Work in process

 

 

8,001 

 

 

8,623 

 

 

5,742 

Finished goods and purchased parts

 

 

49,917 

 

 

48,569 

 

 

47,805 

Total inventory value before LIFO adjustment

 

 

85,816 

 

 

83,803 

 

 

80,146 

Less adjustment to LIFO value

 

 

(5,677)

 

 

(5,557)

 

 

(5,396)

Inventories, net

 

$

80,139 

 

$

78,246 

 

$

74,750 



 

 

 

 

 

 

 

 

 

 

- 8 -


Note 6 – Long-Term Debt

The following table sets forth the outstanding principal balances of the Company’s long-term debt as of the dates shown.



 

 

 

 

 

 

 

 

 

 

 

 

  May 31,   May 31,   August 31, 

 

November 30,

 

November 30,

 

August 31,

($ in thousands)

  2016   2015   2015 

 

2016

 

2015

 

2016

Series A Senior Notes

  $115,000    $115,000    $115,000  

 

$

115,000 

 

$

115,000 

 

$

115,000 

Revolving Credit Facility

   —       —       —    

 

 

 —

 

 

 —

 

 

 —

Elecsys Series 2006A Bonds

   2,221     2,404     2,366  

 

 

2,124 

 

 

2,318 

 

 

2,173 
  

 

   

 

   

 

 

Total debt

   117,221     117,404     117,366  

 

 

117,124 

 

117,318 

 

 

117,173 

Less current portion

   (196   (182   (193

 

 

(198)

 

 

(194)

 

 

(197)
  

 

   

 

   

 

 

Total long-term debt

  $117,025    $117,222    $117,173  

 

$

116,926 

 

$

117,124 

 

$

116,976 
  

 

   

 

   

 

 

 

 

 

 

 

 

 

 

 

Principal payments on the debt are due as follows:



Due within:

  $ in thousands 

1 year

  $196  

2 years

   200  

3 years

   204  

4 years

   208  

5 years

   212  

Thereafter

   116,201  
  

 

 

 
  $117,221  
  

 

 

 

Due within

$ in thousands

1 year

$

198 

2 years

202 

3 years

206 

4 years

210 

5 years

214 

Thereafter

116,094 

$

117,124 

-  9  -


Note 7 – Financial Derivatives

The Company uses certain financial derivatives to mitigate its exposure to volatility in foreign currency exchange rates.  The Company uses these derivative instruments to hedge exposures in the ordinary course of business and does not invest in derivative instruments for speculative purposes.  The Company manages market and credit risks associated with its derivative instruments by establishing and monitoring limits as to the types and degree of risk that may be undertaken, and by entering into transactions with counterparties that have investment grade credit ratings.  Financial derivatives consistFair values of the following:derivative instruments are as follows:



 Fair Values of Derivative Instruments 

 

 

 

 

 

 

 

 

 

Asset (Liability)

 

 

 

 

 

 

 

 

 

 May 31, May 31, August 31, 

 

Balance sheet

 

November 30,

 

November 30,

 

August 31,

($ in thousands)

 

Balance Sheet Classification

 2016 2015 2015 

 

location

 

2016

 

2015

 

2016

Derivatives designated as hedging instruments:

    

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts

 Other current assets $858  $19  $217 

 

Other current assets

 

$

1,546 

 

$

2,092 

 

$

40 

Foreign currency forward contracts

 Other current liabilities (136 (216 (352

 

Other current liabilities

 

 

(204)

 

 

(31)

 

 

(385)
  

 

  

 

  

 

 

Total derivatives designated as hedging instruments

  $722  $(197 $(135

 

 

 

$

1,342 

 

$

2,061 

 

$

(345)
  

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives not designated as hedging instruments:

    

Foreign currency forward contracts

 Other current assets $16  $99  $495 

 

Other current assets

 

$

123 

 

$

63 

 

$

33 

Foreign currency forward contracts

 Other current liabilities (50  —     (61

 

Other current liabilities

 

 

(48)

 

 

(311)

 

 

(210)
  

 

  

 

  

 

 

Total derivatives not designated as hedging instruments

  $(34 $99  $434 

 

 

 

$

75 

 

$

(248)

 

$

(177)
  

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive income (“AOCI”) included realized and unrealized after-tax gains of $5.9$6.5 million, $6.7 million, and $5.6 million and $5.4 million at May 31,November 30, 2016, May 31,November 30, 2015, and August 31, 2015,2016, respectively, related to derivative contracts designated as hedging instruments.



- 9 -


Net Investment Hedging Relationships

The amount of gain or (loss) recognized in other comprehensive income is as follows:



 

 

 

 

  Amount of Gain/(Loss) Recognized
in OCI on Derivatives
 

 

Three months ended

  Three months ended   Nine months ended 

 

November 30,

 

November 30,

($ in thousands)

  May 31,
2016
   May 31,
2015
   May 31,
2016
   May 31,
2015
 

 

2016

 

2015

Foreign currency forward contracts, net of tax (benefit) expense of $(260), $235, $149 and $2,283

  $(448  $384    $450    $3,597  

Foreign currency forward contracts, net of tax expense of $610 and $649, respectively

 

$

918 

 

$

1,212 

For the three months ended May 31,November 30, 2016 and May 31,November 30, 2015, the Company settled foreign currency forward contracts resulting in an after-tax net (loss) gainloss of $(1.4)$0.1 million and $2.3 million, respectively, which were included in other comprehensive income as part of a currency translation adjustment. For the nine months ended May 31, 2016 and May 31, 2015, the Company settled foreign currency forward contracts resulting in an after-tax net (loss) gain of $(0.2) million and $4.1 million, respectively,each quarter, which were included in other comprehensive income as part of a currency translation adjustment.  There were no amounts recorded in the condensed consolidated statement of operations related to ineffectiveness of foreign currency forward contracts related to net investment hedges for the three and nine months ended May 31,November 30, 2016 and May 31,November 30, 2015.

At May 31,November 30, 2016, May 31,November 30, 2015 and August 31, 2015,2016, the Company had outstanding Euro foreign currency forward contracts to sell 28.532.6 million Euro, 29.228.8 million Euro, and 29.132.6 million Euro, respectively, at fixed prices to settle during the next fiscal quarter. At May 31,November 30, 2016, May 31,November 30, 2015, and August 31, 2015,2016, the Company had an outstanding South African Rand foreign currency forward contract to sell 43.0 million South African Rand at fixed prices to settle during the next fiscal quarter.  The Company’s foreign currency forward contracts qualify as hedges of a net investment in foreign operations.

Derivatives Not Designated as Hedging Instruments

The Company generally does not elect hedge accounting treatment for derivative contracts related to future settlements of foreign denominated intercompany receivables and payables.  If the Company does not elect hedge accounting treatment for a derivative, the Company carries the derivative at its fair value in the condensed consolidated balance sheet and recognizes any subsequent changes in its fair value during a period through earnings in the condensed consolidated statement of operations.  At May 31,November 30, 2016, May 31,November 30, 2015, and August 31, 2015,2016, the Company had $8.4$6.9 million, $4.8$9.6 million, and $9.5$8.2 million, respectively, of U.S. dollar equivalent of foreign currency forward contracts outstanding that are not designated as hedging instruments.

-  10  -


Note 8 – Fair Value Measurements

The following table presents the Company’s financial assets and liabilities measured at fair value based upon the level within the fair value hierarchy in which the fair value measurements fall, as of May 31,November 30, 2016, May 31,November 30, 2015, and August 31, 2015,2016, respectively. There were no transfers between any levels for the periods presented.



   May 31, 2016 

($ in thousands)

  Level 1   Level 2   Level 3   Total 

Cash and cash equivalents

  $91,498    $—      $—      $91,498  

Derivative assets

   —       874     —       874  

Derivative liabilities

   —       (186   —       (186
   May 31, 2015 

($ in thousands)

  Level 1   Level 2   Level 3   Total 

Cash and cash equivalents

  $154,018    $—      $—      $154,018  

Derivative assets

   —       118     —       118  

Derivative liabilities

   —       (216   —       (216
   August 31, 2015 

($ in thousands)

  Level 1   Level 2   Level 3   Total 

Cash and cash equivalents

  $139,093    $—      $—      $139,093  

Derivative assets

   —       712     —       712  

Derivative liabilities

   —       (413   —       (413

- 10 -




 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

November 30, 2016

($ in thousands)

 

Level 1

 

Level 2

 

Level 3

 

Total

Cash and cash equivalents

 

$

103,058 

 

$

 —

 

$

 —

 

$

103,058 

Derivative assets

 

 

 —

 

 

1,669 

 

 

 —

 

 

1,669 

Derivative liabilities

 

 

 ��

 

 

(252)

 

 

 —

 

 

(252)



 

 

 

 

 

 

 

 

 

 

 

 



 

November 30, 2015

($ in thousands)

 

Level 1

 

Level 2

 

Level 3

 

Total

Cash and cash equivalents

 

$

129,260 

 

$

 —

 

$

 —

 

$

129,260 

Derivative assets

 

 

 —

 

 

2,155 

 

 

 —

 

 

2,155 

Derivative liabilities

 

 

 —

 

 

(342)

 

 

 —

 

 

(342)



 

 

 

 

 

 

 

 

 

 

 

 



 

August 31, 2016

($ in thousands)

 

Level 1

 

Level 2

 

Level 3

 

Total

Cash and cash equivalents

 

$

101,246 

 

$

 —

 

$

 —

 

$

101,246 

Derivative assets

 

 

 —

 

 

73 

 

 

 —

 

 

73 

Derivative liabilities

 

 

 —

 

 

(595)

 

 

 —

 

 

(595)



 

 

 

 

 

 

 

 

 

 

 

 

There were no required fair value adjustments for assets and liabilities measured at fair value on a non-recurring basis for the three and nine months ended May 31,November 30, 2016 or May 31,November 30, 2015.

Note 9 – Commitments and Contingencies

In the ordinary course of its business operations, the Company enters into arrangements that obligate it to make future payments under contracts such as lease agreements.  Additionally, the Company is involved, from time to time, in commercial litigation, employment disputes, administrative proceedings, business disputes and other legal proceedings.  The Company has established accruals for certain proceedings based on an assessment of probability of loss.  The Company believes that any potential loss in excess of the amounts accrued other than the environmental remediation matters discussed separately below, would not have a material effect on the business or its consolidated financial statements.  Such proceedings are exclusive of environmental remediation matters which are discussed separately below.

Environmental Remediation

In 1992, the Company entered into a consent decree with the U.S. Environmental Protection Agency (the “EPA”) in which the Company committed to remediate environmental contamination of the groundwater that was discovered from 1982 through 1990 at and adjacent to its Lindsay, Nebraska facility (the “site”).  The site was added to the EPA’s list of priority superfund sites in 1989.  Between 1993 and 1995, remediation plans for the site were approved by the EPA and fully implemented by the Company.  Since 1998, the primary remaining contamination at the site has been the presence of volatile organic compounds in the soil and groundwater.  To date, the remediation process has consisted primarily of drilling wells into the aquifer and pumping water to the surface to allow these contaminants to be removed by aeration.

In fiscal 2012, the Company undertook an investigation to assess further potential site remediation and containment actions.  In connection with the receipt of preliminary results of this investigation and other evaluations, the Company estimated that it would incur $7.2 million in remediation of source area contamination and operating costs and accrued that undiscounted amount.  In addition to this source area, the Company determined that volatile organic compounds also existed under one of the manufacturing buildings on the site.  Due to the location, the Company had not yet determined the extent of these compounds or the extent to which they were contributing to groundwater contamination.  Based on the uncertainty of the remediation actions that might be required with respect to this affected area, the Company believed that meaningful estimates of costs or range of costs could not be made and accordingly were not accrued.accrued at that time.

In December 2014, the EPA requested that the Company prepare a feasibility study related to the site, including the area covered by the building, which resulted in a revision to the Company’s remediation timeline.  In the first quarter of fiscal 2015, the Company accrued $1.5 million of incremental operating costs to reflect its updated timeline.

-  11  -


The Company began soil and groundwater testing in preparation for developing this feasibility study during the first quarter of fiscal 2016. During the second quarter of fiscal 2016, the Company completed its testing which clarified the extent of contamination, including the identification of a source of contamination near the manufacturing building that was not part of the area for which reserves were previously established.  The Company, with the assistance of third-party environmental experts, is developingdeveloped and evaluatingevaluated remediation alternatives, a proposed remediation plan, and estimated costs.  Based on preliminarythese estimates of future remediation and operating costs, the Company accrued an additional $13.0 million in the second quarter of fiscal 2016 and included the related expenses in general and administrative expenses in the condensed consolidated statement of operations.

The current estimated aggregate accrued cost of $19.6$18.8 million is based on consideration of several remediation options that would use different technologies, each of which the Company believes could be successful in meeting the long-term regulatory requirements of the site. However, the remediation options are still being evaluated, cost estimates are preliminary, and no plan has been approved by the EPA or the Nebraska Department of Environmental Quality (the “NDEQ”). The Company participated in a preliminary meeting with the EPA and the NDEQNebraska Department of Environmental Quality (the “NDEQ”) during the third quarter of fiscal 2016 to review remediation alternatives and proposed plans for the site.site and submitted its remedial alternatives evaluation report to the EPA in August 2016.  The proposed remediation plan is preliminary and has not been approved by the EPA or the NDEQ.  Based on guidance from third-party environmental experts and further discussions with the preliminary discussions held inEPA and the third quarter of fiscal 2016,NDEQ, the Company anticipates that a definitive plan maywill not be agreed toupon until later in fiscal 2017 or later.beyond.

The Company accrues the anticipated cost of investigation and remediation when the obligation is probable and can be reasonably estimated. While the Company believes the current accrual is a good faith estimate of the long-term cost of remediation at this site based on the preliminary analysis currently available, at this time, the estimate of costs and their timing could change as a result of a number of factors, including (1) EPA and NDEQ input on the proposed remediation plan and any changes which they may subsequently require, (2) refinement of cost estimates and length of time required to complete remediation and post-remediation operations and maintenance, (3) effectiveness of the technology chosen in remediation of the site as well as changes in technology that may bebecome available in the future, and (4) unforeseen circumstances existing at the site. As a result of these factors, it is not possible to provide a reasonable estimate of the actual amount of costs that mayincurred by the Company in connection with the remediation of contamination of its Lindsay, Nebraska site could exceed the amounts currently accrued atfor this time.expense.  While any revisions could be material to the operating results of any fiscal quarter or fiscal year, the Company does not expect such additional expenses would have a material adverse effect on its liquidity or financial condition.

- 11 -


The following table summarizes the undiscounted environmental remediation liability classifications included in the balance sheet as of May 31,November 30, 2016, May 31,November 30, 2015, and August 31, 2015:2016:



 

 

 

 

 

 

 

 

 



 

November 30,

 

November 30,

 

August 31,

($ in thousands)

 

2016

 

2015

 

2016



 

 

 

 

 

 

 

 

 

Other current liabilities

 

$

1,122 

 

$

1,343 

 

$

722 

Other noncurrent liabilities

 

 

17,714 

 

 

6,100 

 

 

18,255 

Total environmental remediation liabilities

 

$

18,836 

 

$

7,443 

 

$

18,977 



 

 

 

 

 

 

 

 

 

 

Environmental Remediation Liabilities

 

($ in thousands)

Balance Sheet Classification

  May 31,
2016
   May 31,
2015
   August 31,
2015
 

Other current liabilities

  $980    $1,119    $1,431  

Other noncurrent liabilities

   18,571     6,475     6,100  
  

 

 

   

 

 

   

 

 

 

Total environmental remediation liabilities

  $19,551    $7,594    $7,531  
  

 

 

   

 

 

   

 

 

 

Note 10 – Warranties

The following table provides the changes in the Company’s product warranties:

  Three months ended 

($ in thousands)

  May 31,
2016
   May 31,
2015
 

Product warranty accrual balance, beginning of period

  $6,431    $8,467  

Liabilities accrued for warranties during the period

   1,372     1,374  

Warranty claims paid during the period

   (1,267   (1,258

Changes in estimates

   (78   (1,279
  

 

   

 

 

Product warranty accrual balance, end of period

  $6,458    $7,304  

The following table provides the changes in the Company’s product warranties:

 

 

 

 

  

 

   

 

 

 

 

 

 

 

Three months ended

  Nine months ended 

 

November 30,

 

November 30,

($ in thousands)

  May 31,
2016
   May 31,
2015
 

 

2016

 

2015

Product warranty accrual balance, beginning of period

  $7,271    $9,331  

 

$

7,443 

 

$

7,271 

Liabilities accrued for warranties during the period

   3,676     2,772  

 

1,001 

 

1,357 

Warranty claims paid during the period

   (3,853   (3,466

 

(1,202)

 

(1,860)

Changes in estimates

   (636   (1,333

 

 

330 

 

 

(483)
  

 

   

 

 

Product warranty accrual balance, end of period

  $6,458    $7,304  

 

$

7,572 

 

$

6,285 
  

 

   

 

 

 

 

 

 

 

 

Note 11 – Share-Based Compensation

The Company’s current share-based compensation plans, approved by the stockholders of the Company, provides for awards of stock options, restricted shares, restricted stock units (“RSUs”), stock appreciation rights, performance shares and performance stock units (“PSUs”) to employees and non-employee directors of the Company.  The Company measures and

-  12  -


recognizes compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. Share-based compensation expense was $0.9 million for each of the three month periods ended November 30, 2016 and $0.5 million for2015.

The following table illustrates the type and fair value of the share-based compensation awards granted during the three month periods ended November 30, 2016 and 2015:



 

 

 

 

 

 

 

 

 



Three months ended November 30,



2016

 

2015



Number of units granted

 

Weighted average grant-date
fair value per award

 

Number of units granted

 

Weighted average grant-date
fair value per award

Stock options

47,223 

 

$

26.25 

 

39,999 

 

$

27.88 

RSUs

37,033 

 

$

74.80 

 

38,438 

 

$

64.37 

PSUs

15,902 

 

$

74.80 

 

16,466 

 

$

64.37 

The RSUs granted during the three months ended May 31,November 30, 2016 and May 31,2015 consisted of 3,634 and 3,496, respectively of awards that will be settled in cash. The weighted average stock price on the date of the grant was $78.23 and $67.68 for 2016 and 2015, respectively. Share-based compensation expense was $2.4 million and $2.6 million for

The following table provides the nine monthsassumptions used in determining the fair value of the stock options awarded during the three month periods ended May 31,November 30, 2016 and May 31, 2015, respectively.2015:



 

 

 



Grant Year



2016

 

2015

Weighted-average dividend yield

1.5% 

 

1.7% 

Weighted-average volatility

36.5% 

 

46.3% 

Range of risk-free interest rates

1.5% 

 

1.8% 

Weighted-average expected lives

7 years

 

7 years

Note 12 – Other Current Liabilities



($ in thousands)

  May 31,
2016
   May 31,
2015
   August 31,
2015
 

Other current liabilities:

      

Compensation and benefits

  $17,468    $16,031    $16,168  

Deferred revenues

   6,876     9,334     6,146  

Warranties

   6,458     7,304     7,271  

Customer deposits

   5,497     3,429     3,161  

Dealer related liabilities

   4,656     5,287     5,328  

Income taxes payable

   3,830     8,401     4,034  

Other

   10,866     14,557     13,997  
  

 

 

   

 

 

   

 

 

 

Total other current liabilities

  $55,651    $64,343    $56,105  
  

 

 

   

 

 

   

 

 

 



- 12 -




 

 

 

 

 

 

 

 

 



 

November 30,

 

November 30,

 

August 31,

($ in thousands)

 

2016

 

2015

 

2016

Other current liabilities:

 

 

 

 

 

 

 

 

 

    Compensation and benefits

 

$

14,154 

 

$

12,752 

 

$

19,044 

    Warranties

 

 

7,572 

 

 

6,285 

 

 

7,443 

    Deferred revenues

 

 

7,227 

 

 

5,709 

 

 

7,594 

    Customer deposits

 

 

4,648 

 

 

4,843 

 

 

3,399 

    Dealer related liabilities

 

 

3,384 

 

 

4,822 

 

 

4,978 

    Tax related liabilities

 

 

3,592 

 

 

3,255 

 

 

4,200 

    Other

 

 

11,289 

 

 

10,588 

 

 

8,737 

Total other current liabilities

 

$

51,866 

 

$

48,254 

 

$

55,395 

Note 13 – Share Repurchases

On January 3, 2014, the Company announced that

In accordance with its Board of Directors authorized the Company to repurchase up to $150.0 million of common stock through January 2, 2016. On July 22, 2015, the Company announced that its Board of Directors increased its outstanding share repurchase authorization by $100.0 million with no expiration. Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. During the three and nine months ended May 31, 2016, the Company repurchased 219,578136,263 shares and 688,790 shares, respectively, of common stock for an aggregate purchase price of $16.1$9.2 million and $48.3 million, respectively. Duringduring the three and nine months ended May 31, 2015,November 30, 2015. There were no share repurchases during the Company repurchased 371,886 shares and 977,812 shares, respectively, of common stock for an aggregate purchase price of $29.1 million and $78.5 million, respectively.three months ended November 30, 2016.  The remaining amount available under the repurchase program was $63.7 million as of May 31,November 30, 2016.

Note 14 – Industry Segment Information

The Company manages its business activities in two reportable segments: irrigation and infrastructure.  The Company evaluates the performance of its reportable segments based on segment sales, gross profit and operating income, with operating income for segment purposes excluding unallocated corporate general and administrative expenses, interest income, interest expense, other income and expenses and income taxes.  Operating income for segment purposes includes general and administrative expenses, selling expenses, engineering and research expenses and other overhead charges directly attributable to the segment.  There are no inter-segment sales.sales included in the amounts disclosed. The Company had no single customer

-  13  -


who represented 10 percent or more of its total revenues during the three and nine monthsmonth periods ended May 31,November 30, 2016 and May 31,November 30, 2015.

Irrigation -This reporting segment includes the manufacture and marketing of center pivot, lateral move, and hose reel irrigation systems as well as various water pumping stations, controls, filtration solutions and machine-to-machine (“M2M”) technology.  The irrigation reporting segment consists of fivethree operating segments that have similar economic characteristics and meet the aggregation criteria, including similar products, production processes, type or class of customer and methods for distribution.

Infrastructure -This reporting segment includes the manufacture and marketing of moveable barriers, specialty barriers, crash cushions and end terminals, and road marking and road safety equipment; the manufacture and sale of large diameter steel tubing and railroad signals and structures; and the provision of outsourced manufacturing and production services.  The infrastructure reporting segment consists of one operating segment.



 

 

 

 

 

 



 

 

 

 

 

 



 

Three months ended



 

November 30,

 

November 30,

($ in thousands)

 

2016

 

2015

Operating revenues:

 

 

 

 

 

 

    Irrigation

 

$

89,852 

 

$

101,327 

    Infrastructure

 

 

20,538 

 

 

20,295 

Total operating revenues

 

$

110,390 

 

$

121,622 



 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

    Irrigation

 

$

5,150 

 

$

12,692 

    Infrastructure

 

 

2,974 

 

 

3,082 

Segment operating income

 

 

8,124 

 

 

15,774 



 

 

 

 

 

 

Unallocated general and administrative expenses

 

 

(5,389)

 

 

(4,026)

Interest and other expense, net

 

 

(1,400)

 

 

(1,352)

Earnings before income taxes

 

$

1,335 

 

$

10,396 



 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

    Irrigation

 

$

950 

 

$

3,152 

    Infrastructure

 

 

440 

 

 

1,553 

    Corporate

 

 

 —

 

 

 —



 

$

1,390 

 

$

4,705 

Depreciation and amortization:

 

 

 

 

 

 

    Irrigation

 

$

2,823 

 

$

2,953 

    Infrastructure

 

 

1,109 

 

 

1,201 

    Corporate

 

 

103 

 

 

141 



 

$

4,035 

 

$

4,295 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

November 30,

 

November 30,

 

August 31,

($ in thousands)

 

2016

 

2015

 

2016

Total assets:

 

 

 

 

 

 

 

 

 

    Irrigation

 

$

340,711 

 

$

335,920 

 

$

341,972 

    Infrastructure

 

 

80,002 

 

 

78,551 

 

 

83,531 

    Corporate

 

 

60,230 

 

 

96,798 

 

 

62,012 



 

$

480,943 

 

$

511,269 

 

$

487,515 



 

 

 

 

 

 

 

 

 



-  1314  -


   Three months ended   Nine months ended 
   May 31,   May 31,   May 31,   May 31, 

($ in thousands)

  2016   2015   2016   2015 

Operating revenues:

        

Irrigation

  $117,325    $131,289    $321,733    $354,336  

Infrastructure

   23,994     29,418     61,781     82,305  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenues

  $141,319    $160,707    $383,514    $436,641  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income:

        

Irrigation

  $16,560    $19,860    $40,333    $47,771  

Infrastructure

   4,654     6,498     9,268     16,216  
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating income

   21,214     26,358     49,601     63,987  

Unallocated general and administrative expenses(1)

   (5,889   (4,870   (27,222   (16,061

Interest and other expense, net

   (1,260   (1,065   (4,111   (1,704
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before income taxes

  $14,065    $20,423    $18,268    $46,222  
  

 

 

   

 

 

   

 

 

   

 

 

 

Capital expenditures:

        

Irrigation

  $2,157    $4,102    $7,363    $9,567  

Infrastructure

   524     550     2,710     1,661  
  

 

 

   

 

 

   

 

 

   

 

 

 
  $2,681    $4,652    $10,073    $11,228  
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and amortization:

        

Irrigation

  $3,077    $2,925    $9,235    $8,450  

Infrastructure

   1,158     1,206     3,536     3,698  
  

 

 

   

 

 

   

 

 

   

 

 

 
  $4,235    $4,131    $12,771    $12,148  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)Includes environmental remediation expenses of $13.0 million and $1.5 million for the nine months ended May 31, 2016 and May 31, 2015, respectively. There were no environmental remediation expenses for the three months ended May 31, 2016 and May 31, 2015, respectively.

   May 31,   May 31,   August 31, 

($ in thousands)

  2016   2015   2015 

Total assets:

      

Irrigation

  $394,739    $447,988    $429,224  

Infrastructure

   106,966     129,906     107,244  
  

 

 

   

 

 

   

 

 

 
  $501,705    $577,894    $536,468  
  

 

 

   

 

 

   

 

 

 
Table of Contents

 

- 14 -


ITEITEMM 2- Management’s Management's Discussion and Analysis of Financial Condition and Results of Operations

ConcerningForward-Looking Forward‑Looking Statements

This Quarterly Report on Form 10-Q contains not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Statements that are not historical are forward-looking and reflect information concerning possible or assumed future results of operations and planned financing of the Company.  In addition, forward-looking statements may be made orally or in press releases, conferences, reports, on the Company’s worldwideCompany's web site, or otherwise, in the future by or on behalf of the Company.  When used by or on behalf of the Company, the words “expect,” “anticipate,” “estimate,” “believe,” “intend,” “will,” “plan,”"expect," "anticipate," "estimate," "believe," "intend," "will," "plan," “predict,” “project,” “outlook,” “could,” “may,” “should”"project," "outlook," "could," "may," "should" or similar expressions generally identify forward-looking statements.  The entire section entitled “Executive Overview and Outlook” should be considered forward-looking statements.  For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve a number of risks and uncertainties, including but not limited to those discussed in the “Risk Factors” section in the Company’s Annual Report on Form 10-K for the year ended August 31, 2015.2016.  Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results or conditions, which may not occur as anticipated.  Actual results or conditions could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described herein and in the Company’s other public filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2015,2016, as well as other risks and uncertainties not now anticipated.  The risks and uncertainties described herein and in the Company’s other public filings are not exclusive and further information concerning the Company and its businesses, including factors that potentially could materially affect the Company’sCompany's financial results, may emerge from time to time.  Except as required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Accounting Policies

In preparing the Company’s condensed consolidated financial statements in conformity with U.S. GAAP, management must make a variety of decisions which impact the reported amounts and the related disclosures.  These decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates.  In making these decisions, management applies its judgment based on its understanding and analysis of the relevant circumstances and the Company’s historical experience.

The Company’s accounting policies that are most important to the presentation of its results of operations and financial condition, and which require the greatest use of judgments and estimates by management, are designated as its critical accounting policies.  See discussion of the Company’s critical accounting policies under Item 7 in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2015.2016.  Management periodically re-evaluates and adjusts its critical accounting policies as circumstances change.  There were no changes in the Company’s critical accounting policies during the three and nine months ended May 31,November 30, 2016.

New Accounting Pronouncements

See Note 2 – New Accounting Pronouncements to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Executive Overview and Outlook

Net earnings for the three months ended May 31,November 30, 2016 were $9.6$0.9 million, or $0.90$0.08 per diluted share, compared with net earnings of $12.9$6.9 million, or $1.10$0.62 per diluted share, for the three months ended May 31,November 30, 2015.  Operating margin for the three months ended May 31,November 30, 2016 was 10.82.5 percent, as compared to 13.49.7 percent for the three months ended May 31,November 30, 2015.  The decrease in earnings and operating margin was primarily attributable to lower revenues, which declined 129 percent to $141.3$110.4 million from $160.7$121.6 million, reduced gross margin, and higher operating expenses of $1.6$3.0 million.

The reduction in revenue is mainly attributable to both the infrastructure segment, in which sales decreased 18 percent to $24.0 million, and the irrigation segment, where sales decreased 11 percent to $117.3$89.9 million. InfrastructureThe decline in irrigation revenues was slightly offset by an increase in revenue from the infrastructure segment, revenues decreased duein which sales increased one percent to lower Road Zipper Systems™ project sales compared to the prior year.$20.5 million.  In the irrigation segment, the decrease in revenue reflects the combined effect of loweris primarily due to a reduction in irrigation system unit volume as falling commodity prices and reduced market pricing, passing throughfarm income negatively impacted demand for irrigation equipment.  The increase in infrastructure revenues results from higher sales volume in road safety products offset, in part, by lower materials costs. The strengthening of the U.S. dollar against the value of other currencies, including the Brazilian realRoad Zipper® system project sales and South African rand, negatively affected revenues by $1.6 million and operating income by $0.1 million for the three months ended May 31, 2016 as compared to the three months ended May 31, 2015.

lease revenue.



-  15  -


The Company’s irrigation revenues are highly dependent upon the need for irrigated agricultural crop production, which, in turn, depends upon many factors, including the following primary drivers:



·

Agricultural commodity pricesprices - As of MayNovember 2016, corn andprices have decreased approximately 10 percent while soybean prices have increased approximately 15 to 2017 percent compared tofrom November 2015.  Although there has been an increase in soybean prices from the same period in the prior year. However,previous year, both corn and soybean prices remained approximately 35 percentremain substantially lower and soybeans prices approximately 25 percent lower, compared tothan the peak prices observed during the same period in 2013.last five years.  Among other things, favorable growing conditions in the United States throughout the beginning of the 2016 growing season have led to estimates of record harvests which, combined with the current high stock of commodities, may continue to contribute to low prices for agricultural commodities.



·

Net farm income - As of MayNovember 2016, the U.S. Department of Agriculture (the “USDA”) estimated U.S. 2016 net farm income to be $54.8$66.9 billion, down 317 percent from the USDA’s estimate offinal U.S. 2015 net farm income of $56.4$80.9 billion.  The 2016If the USDA’s estimate represents the third consecutive year of a decrease in estimated net farm income and is down 56 percent from the peak USDA estimate ofproves accurate,  net farm income in 2013 of $123.3 billion.2016 would be at its lowest level since 2009.



·

Weather conditions – Demand for irrigation equipment is often positively affected by damaging stormsstorm damage and prolonged periods of drought conditions as producers look for ways to reduce the risk of low crop production and crop failures.  Conversely, demand for irrigation equipment can be negatively affected during periods of more predictable natural precipitation.precipitation, such as the conditions experienced during 2016.  



·

Governmental policies - A number of governmental laws and regulations can affect the Company’s business, including:

·

The Agricultural Act of 2014 provides a degree of certainty to growers by adopting a five-year farm bill. This law continued many of the existing programs, including funding for the Environmental Quality Incentives Program (EQIP), which provides financial assistance to farmers to implement conservation practices, and is frequently used to assist in the purchase of center pivot irrigation systems.

 

In December 2015, certain tax incentives such as the Section 179 income tax deductions and bonus depreciation that are intended to encourage equipment purchases were granted long-term extensions.

·

Current tax incentives, such as the Section 179 income tax deduction and bonus depreciation, are intended to encourage equipment purchases.  These incentives could benefit equipment sales in the future.



·

Various U.S. and global trade sanctions, as well as market fluctuations and political hostility, could negatively affect irrigation equipment sales to certain geographic markets around the world.



On November 30, 2015, the Environmental Protection Agency finalized requirements for the amount of ethanol and other renewable fuels blended into the overall U.S. fuel supply in 2016. The Company believes the requirement, while less than the original mandate, still provides for continued growth in demand for the current calendar year as the goal is to achieve 18 billion gallons of renewable fuels for 2016.

·

Biofuel production continues to be a major demand driver for irrigated corn, sugar cane and soybeans as these crops are used in high volumes to produce ethanol and biodiesel.  Annual biofuel production targets established by the U.S. Environmental Protection Agency in November 2016 project a six percent increase in ethanol production and a five percent increase in biodiesel production from 2016 to 2017.



·

Many international markets are affected by government policies such as subsidies and other agriculturally related incentives.  While these policies can have a significant effect on individual markets, they typically do not have a material effect on the consolidated results of the Company.



·

Currency – The value of the U.S. dollar has been rising in relation to the value of currencies in a number of countries to which the Company exports products and in which the Company maintains local operations, including the Brazilian real and the South African rand. Thisoperations. The strengthening of the dollar increases the cost in the local currency of the products exported from the U.S. into these countries and, therefore, could negatively impactaffect the Company’s international sales and margins. In addition, the U.S. dollar value of sales made in any affected foreign currencies will decline as the value of the dollar rises in relation to these other currencies.

As the Company continues to manage through a prolonged downturn in the agricultural cycle, there has not been a sufficient catalyst to improvement in the short-term.short term. While commodity prices have rebounded somewhat during the first quarter of fiscal 2017, net farm income in the U.S. is projected to be at the lowest level since 2002,2009, leading to uncertainty among growers and resulting in downward pressure on irrigation equipment demand and pricing.  In the international markets, regional political and economic factors, currency conditions and local competition create a challenging environment.  Additionally, international results are heavily dependent upon project sales which tend to fluctuate more and can be difficult to forecast.

forecast accurately. 



-  16  -


The Company remains confident in the long-term drivers for efficient agricultural irrigation and water use efficiency globally.  The Company has expanded global capacity with the opening of a factory in Turkey that began manufacturing operations in March 2015.  While the additional capacity from the plant in Turkey has created some short-term fixed expenseoverhead cost absorption challenges, the Company is confident in the incremental profit potential of global expansion plans and the long-term growth opportunities throughout the region, including in the European, Middle Eastern and African markets.

Demand

In a global environment of constrained government spending, demand for the Company’s transportation safety products continues to be driven by population growth and the need for improved safety, resulting in consistency in a global environment of constrained government spending.safety.  In the United States, the December 2015 enactment of a $305 billion highway-funding bill in December 2015 to fund highway, bridge and transit projects over the nextsubsequent five years creates opportunities for market growth in each of the road safety product lines.  While the outlook for infrastructure products in international markets continues to be positive, global or economic slowdowns could negatively impact government spending and have a resultant negative impact on demand for the Company’s products in certain regions.  Domestically, the Federal Highway Administration has mandated a change to certification standards for road safety products to be phased in beginning in 2018, however,2018.  However, individual states may mandate the adoption of these standards earlier.  The requirement to comply with these standardsThis change has required additional research and development spending and could cause an increase to the Company’s R&D spend and have an impact on sales in the future.competitive positioning of the Company’s highway safety products.  Overall, the Company’s outlook for infrastructure continues to be positive, although somewhat mitigated by the possibilities of a global economic slowdown and increased regulatory requirements.

As of May 31,November 30, 2016, the Company had an order backlog of $61.2$55.9 million compared with $53.2$61.9 million at May 31,November 30, 2015 and $48.0$50.7 million at August 31, 2015.2016.  The Company’s backlog can fluctuate from period to period due to the seasonality, cyclicality, timing and execution of contracts.  Backlog typically represents long-term projects as well as short lead-time orders, and therefore is generally not a good indication of the next fiscal quarter’s revenues.

The global drivers for the Company’s markets of population growth, expanded food production, efficient water use and infrastructure expansion support the Company’s long-term growth goals.  The most significant opportunities for growth over the next several years are in international markets, where irrigation use is less developed and demand is driven primarily by food security, water scarcity and population growth.  In the United States, the focus on converting dryland acres to irrigated cropland while increasing the efficiency of water utilization will have an impact on future irrigation equipment demand.

 

-  17  -


Results of Operations

For the Three Months ended May 31,November 30, 2016 compared to the Three Months ended May 31,November 30, 2015

The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of operations for the three months ended May 31,November 30, 2016 and May 31,November 30, 2015.It should be read together with the industry segment information in Note 14 to the condensed consolidated financial statements:

   Three months ended  Percent 

($ in thousands)

  May 31,
2016
  May 31,
2015
  Increase
(Decrease)
 

Consolidated

    

Operating revenues

  $141,319   $160,707    (12%) 

Gross profit

  $41,808   $46,386    (10%) 

Gross margin

   29.6  28.9 

Operating expenses(1)

  $26,483   $24,898    6

Operating income

  $15,325   $21,488    (29%) 

Operating margin

   10.8  13.4 

Other (expense), net

  $(1,260 $(1,065  18

Income tax expense

  $4,421   $7,496    (41%) 

Effective income tax rate

   31.4  36.7 

Net earnings

  $9,644   $12,927    (25%) 

Irrigation Equipment Segment

    

Segment operating revenues

  $117,325   $131,289    (11%) 

Segment operating income (2)

  $16,560   $19,860    (17%) 

Segment operating margin(2)

   14.1  15.1 

Infrastructure Products Segment

    

Segment operating revenues

  $23,994   $29,418    (18%) 

Segment operating income (2)

  $4,654   $6,498    (28%) 

Segment operating margin(2)

   19.4  22.1 

(1)Includes $5.9 million and $4.9 million of unallocated general and administrative expenses for the three months ended May 31, 2016 and May 31, 2015, respectively.
(2)Excludes unallocated general and administrative expenses.



 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

Three months ended

 

Percent



 

November 30,

 

November 30,

 

Increase

($ in thousands)

 

2016

 

2015

 

(Decrease)

Consolidated

 

 

 

 

 

 

 

 

    Operating revenues

 

$

110,390 

 

$

121,622 

 

(9%)

    Gross profit

 

$

28,374 

 

$

34,415 

 

(18%)

    Gross margin

 

 

25.7% 

 

 

28.3% 

 

 



 

 

 

 

 

 

 

 

    Operating expenses (1)

 

$

25,639 

 

$

22,666 

 

13%

    Operating income

 

$

2,735 

 

$

11,748 

 

(77%)

    Operating margin

 

 

2.5% 

 

 

9.7% 

 

 



 

 

 

 

 

 

 

 

    Other (expense), net

 

$

(1,400)

 

$

(1,352)

 

4%

    Income tax expense

 

$

462 

 

$

3,452 

 

(87%)

    Effective income tax rate

 

 

34.6% 

 

 

33.2% 

 

 

    Net earnings

 

$

873 

 

$

6,944 

 

(87%)



 

 

 

 

 

 

 

 

Irrigation Equipment Segment

 

 

 

 

 

 

 

 

    Segment operating revenues

 

$

89,852 

 

$

101,327 

 

(11%)

    Segment operating income (2)

 

$

5,150 

 

$

12,692 

 

(59%)

    Segment operating margin (2)

 

 

5.7% 

 

 

12.5% 

 

 



 

 

 

 

 

 

 

 

Infrastructure Products Segment

 

 

 

 

 

 

 

 

    Segment operating revenues

 

$

20,538 

 

$

20,295 

 

1%

    Segment operating income (2)

 

$

2,974 

 

$

3,082 

 

(3%)

    Segment operating margin (2)

 

 

14.5% 

 

 

15.2% 

 

 



 

 

 

 

 

 

 

 

(1) Includes $5.4 million and $4.0 million of unallocated general and administrative expenses for the three months ended November 30, 2016 and November 30, 2015, respectively.

(2) Excludes unallocated general and administrative expenses. 



Revenues

Operating revenues for the three months ended May 31,November 30, 2016 declined 12nine percent to $141.3$110.4 million from $160.7$121.6 million for the three months ended May 31,November 30, 2015, as infrastructure revenues decreased $5.4 million and irrigation revenues decreased $14.0$11.5 million and infrastructure revenues increased $0.2 million.  The irrigation segment provided 8381 percent of the Company’s revenue for the three months ended May 31,November 30, 2016 as compared to 8283 percent offor the three months ended May 31,November 30, 2015.

U.S. irrigation revenues for the three months ended May 31,November 30, 2016 of $73.4$50.3 million decreased $15.6$8.9 million or 1815 percent from $89.0$59.2 million for the three months ended May 31,November 30, 2015,  reflecting the combined effect of lowerprimarily due to a reduction in irrigation system unit volume as falling commodity prices and reduced market pricing, passing through lower materials costs.farm income negatively impacted demand for irrigation equipment.  

International irrigation revenues for the three months ended May 31,November 30, 2016 of $43.9$39.5 million increased $1.6decreased $2.6 million or 4six percent from $42.3$42.1 million for the three months ended May 31,November 30, 2015.  Changes in foreign currency translation rates compared to the same prior year period negatively impactedhad a favorable impact on revenues by 4of approximately three percent.  International irrigation revenue excludingExcluding the effect of foreign currency translation, actually increased 8international irrigation revenues decreased nine percent for the three months ended May 31,November 30, 2016 compared to the prior period due to an increase in volume. Sales improved in several markets over levels of thesame prior year period, but declinedas improved sales volume in Brazil, Africa and certain exportthe Middle East were more than offset by declines in other markets.

Infrastructure segment revenues for the three months ended May 31,November 30, 2016 of $24.0$20.5 million decreased $5.4increased $0.2 million or 18one percent from $29.4$20.3 million for the three months ended May 31,November 30, 2015.  The decrease is primarily due toincrease resulted from higher sales volume in road safety products offset by lower Road Zipper Systems™Zipper® system project sales and lease revenue compared with the same period in the prior year period.

year.



-  18  -


Gross MarginProfit

Gross profit for the three months ended May 31,November 30, 2016 of $41.8$28.4 million decreased 1018 percent from $46.4$34.4 million for the three months ended May 31,November 30, 2015.  The decrease in gross profit was primarily due to thelower irrigation sales and a decline in sales, partially offset by an increase in gross margin to 29.625.7 percent for the three months ended May 31,November 30, 2016 from 28.928.3 percent for the three months ended May 31,November 30, 2015.  GrossImproved gross margin in boththe infrastructure segment was more than offset by lower gross margin in the irrigation and infrastructure segments increased approximately onesegment.  Irrigation margin decreased over three percentage pointpoints compared to the prior year. Irrigation grossyear due to lower overhead cost absorption from lower unit volume, increased product warranty costs due to a specific component field-fix, and changes in the international regional mix of sales.  Infrastructure margin improved primarily due to the benefit of lower materials costs. Improved infrastructure gross margins were primarilyalmost two percentage points as the result of revenue growth and cost leverage in Europe while U.S. margins remained relatively flat overall with improved cost absorption in Road Zipper® system production and volume leverage infrom road safety products partially offset by the impact of lower Road Zipper Systems™ revenue.product sales.

Operating Expenses

The Company’s operatingOperating expenses of $26.5$25.6 million for the three months ended May 31,November 30, 2016 increased by $1.6$3.0 million over operating expenses in the three months ended May 31,November 30, 2015.  The increase resulted primarily from increased outside professional fees of $0.8 million and increased engineering and research spending of $0.5 million. The increase in outside professional services is due to both an increase in professional fees, as well as a shiftOperating expenses in the timingfirst quarter of certain activity into the thirdprior year were lowered by the reversal of a $1.2 million bad debt reserve related to the collection of a previously reserved account.  Increased operating expenses in the first quarter of the current year. Increased engineering and research spending is drivenyear resulted primarily byfrom higher new product development.development and testing costs, some specific project-related legal and outside consulting service fees, and higher personnel-related costs.  Operating expenses were 18.723.2 percent of sales for the three months ended May 31,November 30, 2016 compared to 15.518.6 percent of sales for the three months ended May 31,November 30, 2015.

Income Taxes

The Company recorded income tax expense of $4.4$0.5 million and $7.5$3.5 million for the three months ended May 31,November 30, 2016 and May 31,November 30, 2015, respectively.  The effective income tax rate was 31.434.6 percent and 36.733.2 percent for the three months ended May 31,November 30, 2016 and May 31,November 30, 2015, respectively.  The decreaseincrease in the effective income tax rate from MayNovember 2015 to MayNovember 2016 is primarily the result of proportionately higher earnings from foreign operations with tax rates lower than in the U.S.

- 19 -


For the Nine Months ended May 31, 2016 comparedrelates to the Nine Months ended May 31, 2015

The following section presents an analysis of the Company’s operating results displayed in the condensed consolidated statements of operations for the nine months ended May 31, 2016 and May 31, 2015. It should be read together with the industry segment information in Note 14 to the condensed consolidated financial statements:earnings mix among jurisdictions.

 

   Nine months ended  Percent 
   May 31,  May 31,  Increase 

$ in thousands

  2016  2015  (Decrease) 

Consolidated

    

Operating revenues

  $383,514   $436,641    (12%) 

Gross profit

  $108,667   $122,856    (12%) 

Gross margin

   28.3  28.1 

Operating expenses(1)

  $86,288   $74,930    15

Operating income

  $22,379   $47,926    (53%) 

Operating margin

   5.8  11.0 

Other (expense), net

  $(4,111 $(1,704  141

Income tax expense

  $5,809   $16,732    (65%) 

Effective income tax rate

   31.8  36.2 

Net earnings

  $12,459   $29,490    (58%) 

Irrigation Equipment Segment

    

Segment operating revenues

  $321,733   $354,336    (9%) 

Segment operating income (2)

  $40,333   $47,771    (16%) 

Segment operating margin(2)

   12.5  13.5 

Infrastructure Products Segment

    

Segment operating revenues

  $61,781   $82,305    (25%) 

Segment operating income (2)

  $9,268   $16,216    (43%) 

Segment operating margin(2)

   15.0  19.7 

(1)Includes $27.2 million and $16.1 million of unallocated general and administrative expenses for the nine months ended May 31, 2016 and May 31, 2015, respectively. Unallocated general and administrative expenses includes environmental remediation expenses of $13.0 million and $1.5 million for the nine months ended May 31, 2016 and May 31, 2015, respectively.
(2)Excludes unallocated general and administrative expenses.

Revenues

Operating revenues for the nine months ended May 31, 2016 declined 12 percent to $383.5 million from $436.6 million for the nine months ended May 31, 2015, as irrigation revenues decreased $32.6 million and infrastructure revenues decreased by $20.5 million. The irrigation segment provided 84 percent of the Company’s revenue for the nine months ended May 31, 2016 as compared to 81 percent of the Company’s revenue for the nine months ended May 31, 2015.

U.S. irrigation revenues for the nine months ended May 31, 2016 of $204.9 million decreased $14.8 million or 7 percent from $219.7 million for the nine months ended May 31, 2015, primarily due to a volume decline in the number of irrigation systems sold as compared to the prior year. Revenues were also affected by reduced market pricing representing the pass-through effects of lower materials costs.

International irrigation revenues for the nine months ended May 31, 2016 of $116.8 million decreased $17.8 million or 13 percent from $134.6 million for the nine months ended May 31, 2015. Changes in foreign currency translation rates as compared to the prior year reduced international irrigation revenues by $11.3 million or 8 percent, while the remainder of the decline was attributable to lower sales volumes in a number markets, most notably in Brazil.

- 20 -


Infrastructure segment revenues for the nine months ended May 31, 2016 of $61.8 million decreased $20.5 million or 25 percent from $82.3 million for the nine months ended May 31, 2015. The decrease is primarily due to the completion of a few larger Road Zipper Systems™ projects in the prior year, including the $12.7 million Golden Gate Bridge project.

Gross Margin

Gross profit for the nine months ended May 31, 2016 of $108.7 million decreased 12 percent from $122.9 million for the nine months ended May 31, 2015. The decrease in gross profit was primarily due to the decline in sales from the prior period. Gross margin remained relatively flat at 28.3 percent for the nine months ended May 31, 2016 compared to 28.1 percent for the nine months ended May 31, 2015. Gross margin in irrigation increased by approximately 1 percentage point and infrastructure gross margin decreased by approximately 2 percentage points. Irrigation gross margin increased primarily as a result of a change in sales mix with the addition of Elecsys Corporation in the current year, while competitive pricing pressures were largely offset by lower input costs. The decrease in infrastructure gross margin was primarily due to the completion of the Road Zipper Systems™ projects in the prior period that were at higher margins.

Operating Expenses

The Company’s operating expenses of $86.3 million for the nine months ended May 31, 2016 increased by $11.4 million over operating expenses for the nine months ended May 31, 2015. The change in operating expenses includes $11.5 million of incremental environmental remediation expenses and $5.1 million of incremental expenses related to acquired companies, offset by reductions in acquisition and integration related expenses of $1.9 million, personnel related expenses of $1.7 million, and collections on accounts receivable that were reserved for in the prior periods of $1.7 million. Operating expenses were 22.5 percent of sales for the nine months ended May 31, 2016 compared to 17.2 percent of sales for the nine months ended May 31, 2015.

Income Taxes

The Company recorded income tax expense of $5.8 million and $16.7 million for the nine months ended May 31, 2016 and May 31, 2015, respectively. The effective income tax rate was 31.8 percent and 36.2 percent for the nine months ended May 31, 2016 and May 31, 2015, respectively. The decrease in the effective income tax rate from May 2015 to May 2016 is primarily the result of proportionately higher earnings from foreign operations with tax rates lower than in the U.S.

Liquidity and Capital Resources

The Company’sCompany's cash and cash equivalents totaled $91.5$103.1 million at May 31,November 30, 2016 compared with $154.0$129.3 million at May 31,November 30, 2015 and $139.1$101.2 million at August 31, 2015.2016.  The Company requires cash for financing its receivables and inventories, paying operating expenses and capital expenditures, and for dividends and share repurchases.  The Company meets its liquidity needs and finances its capital expenditures from its available cash and funds provided by operations along with borrowings under its credit arrangements described below.  The Company believes its current cash resources, projected operating cash flow, and remaining capacity under its continuing bank lines of credit are sufficient to cover all of its expected working capital needs, planned capital expenditures and dividends.  The Company may require additional borrowings to fund potential acquisitions in the future.

The Company’s total cash and cash equivalents held by foreign subsidiaries was approximately $27.0$38.8 million, $27.1$30.8 million and $23.5$34.6 million as of May 31,November 30, 2016,  May 31,November 30, 2015 and August 31, 2015,2016, respectively.  The Company considers earnings in foreign subsidiaries to be permanently reinvested in those subsidiaries and would need to accrue and pay taxes if such earnings were repatriated to the United States.  Accordingly, the Company does not intend to repatriate the funds, and does not expect these funds to have a significant impact on the Company’s overall liquidity.

Net working capital was $194.6$190.3 million at May 31,November 30, 2016, as compared with $250.0$208.8 million at May 31,November 30, 2015 and $227.1$188.9 million at August 31, 2015.2016. Cash provided by operations totaled $20.2$8.1 million during the ninethree months ended May 31,November 30, 2016, a decrease of $15.1$0.4 million compared to cash provided by operations of $35.4$8.5 million during the ninethree months ended May 31,November 30, 2015.  This decrease was primarily due to the decrease in net earnings as well as changes in working capital.

Cash flows used in investing activities totaled $9.4$1.4 million during the ninethree months ended May 31,November 30, 2016 compared to $73.4$4.2 million used in investing activities during the ninethree months ended May 31,November 30, 2015.  The large decrease is primarily attributable to $67.2 million of acquisition spending, net of cash acquired,a decrease in the prior period.capital spending.  Capital spending of $10.1was  $1.4 million in the first ninethree months of fiscal 2016 decreased2017 compared to capital spending of $11.2$4.7 million in the same period of the prior fiscal year.



- 21 -


Cash flows used in financing activities totaled $58.2$3.8 million during the ninethree months ended May 31,November 30, 2016 compared to cash flows provided byused in financing activities of $25.3$13.1 million during the same prior year period.  The increasedecrease in cash used in financing activities was primarily due to the prior period including $115.0 of private placement debt funding, offset by a $30.1$9.2 million reduction in the repurchasingrepurchase of common shares.shares for fiscal 2017 compared to the prior fiscal year.  

Capital Allocation Plan

The Company’s capital allocation plan is to continue investing in revenue and earnings growth, combined with a defined process for enhancing returns to stockholders. Under the Company’s announced capital allocation plan in January 2014, the priorities for uses of cash include:

-  19  -


·

Investment in organic growth including capital expenditures and expansion of international markets,

·

Dividends to stockholders, along with expectations to increase dividends on an annual basis,

·

Synergistic water-related acquisitions that provide attractive returns to stockholders, and

·

Opportunistic share repurchases taking into account cyclical and seasonal fluctuations.



Dividends to stockholders, along with expectations to increase dividends on an annual basis,

Synergistic water-related acquisitions that provide attractive returns to stockholders, and

Opportunistic share repurchases taking into account cyclical and seasonal fluctuations.

Capital Expenditures

Capital expenditures for fiscal 20162017 are estimated to be between $12.0$14.0 million and $15.0$17.0 million largely focused on manufacturing product safetycapacity expansion and productivity improvements.  The Company’s management does maintain flexibility to modify the amount and timing of some of the planned expenditures in response to economic conditions.

Dividends

In the thirdfirst quarter of fiscal 2016,2017, the Company paid a quarterly cash dividend of $0.28$0.29 per common share, or $3.0a total of $3.1 million, to stockholders as compared to $0.27$0.28 per common share or $3.1 million in the thirdfirst quarter of fiscal 2015. During fiscal 2016, the Company has paid total quarterly cash dividends of $0.84 per common share or $9.2 million to stockholders as compared to $0.81 per common share or $9.6 million during the same period of fiscal 2015.2016.  

Share Repurchases

On January 3, 2014, the Company announced that its Board of Directors authorized the Company to repurchase up to $150.0 million of common stock through January 2, 2016.  On July 22, 2015, the Company announced that its Board of Directors increased its outstanding share repurchase authorization by $100.0 million with no expiration.  Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.  There were no share repurchases for the three months ended November 30, 2016.  During the three and nine months ended May 31, 2016,November 30, 2015, the Company repurchased 219,578136,263 shares and 688,790 shares, respectively, of common stock for an aggregate purchase price of $16.1 million and $48.3 million, respectively. During the three and nine months ended May 31, 2015, the Company repurchased 371,886 shares and 977,812 shares, respectively, of common stock for an aggregate purchase price of $29.1 million and $78.5 million, respectively.$9.2 million.  The remaining amount available under the repurchase program was $63.7 million as of May 31,November 30, 2016.

Long-Term Borrowing Facilities

Series A, Senior Notes.On February 19, 2015, the Company issued $115.0 million in aggregate principal amount of Senior Notes, Series A (the “Senior Notes”).  The entire principal of the Senior Notes is due and payable on February 19, 2030.  Interest on the Senior Notes is payable semi-annually at a fixed annual rate of 3.82 percent and borrowings under the Senior Notes are unsecured.  The Company intends to use the proceeds of the sale of the Senior Notes for general corporate purposes, including acquisitions and dividends.

Revolving Credit Facility.On February 18, 2015, the Company entered into a $50 million unsecured Amended and Restated Revolving Credit Facility (the “Revolving Credit Facility”) with Wells Fargo Bank, National Association.Association (“Wells Fargo”). The Revolving Credit Facility replacesreplaced a previous revolving credit facility from the same lenderWells Fargo originally entered into on January 24, 2008 and last amended on January 22, 2014.  The Company intends to use borrowings under the Revolving Credit Facility for working capital purposes and to fund acquisitions. At May 31,November 30, 2016 and May 31,November 30, 2015, the Company had no outstanding borrowings under the Revolving Credit Facility.  The amount of borrowings available at any time under the Revolving Credit Facility is reduced by the amount of standby letters of credit issued by Wells Fargo then outstanding.  At May 31,November 30, 2016, the Company had the ability to borrow up to $43.9$43.8 million under this facility,the Revolving Credit Facility, after consideration of outstanding standby letters of credit of $6.1$6.2 million. Borrowings under the Revolving Credit Facility bear interest at a variable rate equal to LIBOR plus 90 basis points (1.37(1.52 percent at May 31,November 30, 2016), subject to adjustment as set forth in the loan documents for the Revolving Credit Facility.  Interest is paid on a monthly to quarterly basis depending on loan type.  The Company also pays an annual commitment fee of 0.25 percent on the unused portion of the Revolving Credit Facility.  Unpaid principal and interest on the Revolving Credit Facility is due by February 18, 2018.



- 22 -


Borrowings under the Revolving Credit Facility have equal priority with borrowings under the Company’s Senior Notes.  Each of the credit arrangements described above include certain covenants relating primarily to the Company’s financial condition. These financial covenants include a funded debt to EBITDA leverage ratio and an interest coverage ratio.  Upon the occurrence of any event of default of these covenants, including a change in control of the Company, all amounts outstanding thereunder may be declared to be immediately due and payable.  At May 31,November 30, 2016,  May 31,November 30, 2015 and August 31, 2015,2016, the Company was in compliance with all financial loan covenants contained in its credit arrangements in place as of each of those dates.

Elecsys Series 2006A Bonds.Elecsys Corporation, a wholly owned subsidiary of the Company, has outstanding $2.2$2.1 million in principal amount of industrial revenue bonds that were issued in 2006 (the “Series 2006A Bonds”).  Principal and interest on the Series 2006A Bonds are payable monthly through maturity on September 1, 2026.  The interest rate is adjustable based on the yield of the 5-year United States Treasury Notes, plus 0.45 percent (1.82(2.28 percent as of May 31,November 30, 2016).  The obligations under the Series 2006A Bonds are secured by a first priority security interest in certain real estate.

-  20  -


Contractual Obligations and Commercial Commitments

There have been no material changes in the Company’s contractual obligations and commercial commitments as described in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2015.2016.

ITEM 3 – Qu- Quantitativeantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the Company’s quantitative and qualitative disclosures about market risk previously disclosed in the Company’s most recent Annual Report filed on Form 10-K.  See discussion of the Company’s quantitative and qualitative disclosures about market risk under Part II, Item 7A in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2015.2016.

ITEM 4 – ControlsControls and Procedures

The Company carried out an evaluation under the supervision and the participation of the Company’s management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e).  Based upon that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of May 31,November 30, 2016.

Additionally, the CEO and CFO determined that there has not been any change to the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II – OTHER INFORMATIONINFORMATION

ITITEMEM 1 –Legal Proceedings

See the disclosure in Note 9 – Commitments and Contingencies to the condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is hereby incorporated herein by reference.

ITEITEMM 1A –Risk Factors

There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussion of the Company’s risk factors under Part I, Item 1A in the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended August 31, 2015.

2016.



- 23 -


ITITEMEM 2 –Unregistered Sales of Equity Securities and Use of Proceeds

The table below sets forth information with respect to purchases of the Company’s common stock made by or on behalf of the Company during the three months ended May 31, 2016:

ISSUER PURCHASES OF EQUITY SECURITIES

Period

  Total Number
of Shares
Purchased
   Average
Price
Paid Per
Share
   Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
   Approximate
Dollar Value of
Shares That May
Yet Be Purchased
Under the Plans  or

Programs (1)
($ in thousands)
 

March 1, 2016 to March 31, 2016

   93,279     75.42     93,279     72,807  

April 1, 2016 to April 30, 2016

   113,914     71.32     113,914     64,682  

May 1, 2016 to May 31, 2016

   12,385     77.50     12,385     63,722  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

   219,578    $73.41     219,578    $63,722  
  

 

 

   

 

 

   

 

 

   

 

 

 

(1)On January 3, 2014, the Company announced that its Board of Directors authorized the Company to repurchase up to $150.0 million of common stock through January 2, 2016. On July 22, 2015, the Company announced that its Board of Directors increased its outstanding share repurchase authorization by $100.0 million with no expiration. Under the program, shares may be repurchased in privately negotiated and/or open market transactions as well as under formalized trading plans in accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.
None.



ITEM  3 – Defaults Upon Senior Securities

None.

ITEM 4 – Mine Safety Disclosures

Not applicable.

ITEM  5 – Other Information

None.

-  2421  -


ITITEMEM 6 –Exhibits



Exhibit
No.

Exhibit
No.

Description

3.1

Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company’sCompany's Current Report on Form 8-K filed on December 14, 2006.

3.2

Amended and RestatedBy-Laws By‑Laws of the Company, effective May 2, 2014, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on May 5, 2014.

4.1

Specimen Form of Common Stock Certificate, incorporated by reference to Exhibit 4(a) of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2006.

10.1*

Lindsay Corporation Management Incentive Plan (MIP) 2017 Plan Year.†**

  10.1*

10.2*

Employment Agreement, dated May 9, 2016, between the Company

Lindsay Corporation Policy on Payment of Director Fees and Randy A. Wood.Expenses.

  10.2

31.1*

Employment Agreement, dated April 5, 2016, between the Company and Brian L. Ketcham, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on April 5, 2016.
  31.1*

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350.

31.2*

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350.

32.1*

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 18 U.S.C. Section 1350.

101*

Interactive Data Files.



*Filed herein.



† Management contract or compensatory plan or arrangement required to be filed as an exhibit hereto pursuant to Item 6 of Part II of Form 10-Q.

* Filed herein.

** Certain confidential portions of this Exhibit were omitted by means of redacting a portion of the text.  This Exhibit has been filed separately with the Securities and Exchange Commission with the redacted text pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

-  2522  -


SIGSIGNATURESNATURES

Pursuant to the requirements 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 121st day of JulyDecember 2016.



LINDSAY CORPORATION

By:

By: 

/s/ BRIAN L. KETCHAM

Name:

Name: 

Brian L. Ketcham

Title:

Title: 

VicePresidentandChiefFinancialOfficer (on

(on behalf of the registrant and as principal financial officer)

 

-  2623  -