The accompanying notes are an integral part of the condensed consolidated financial statements.
The accompanying notes are an integral part of the condensed consolidated financial statements.
The accompanying notes are an integral part of the condensed consolidated financial statements.
The accompanying notes are an integral part of the condensed consolidated financial statements.
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 Corporations (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 Companys most recent Annual Report on Form 10-K for the fiscal year ended
August 31, 2015.
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. 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 allowances 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
expect this standard to have a material impact on its consolidated financial statements.
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, 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 ASU requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefits in the income statement and to be classified along with other income tax cash flows as an operating activity on the statement of
cash flows. The effective date of ASU No. 2016-09 will be the first quarter of fiscal 2018 with early adoption permitted, and the standard will be adopted on a prospective basis. The Company is currently evaluating the effect that adopting this
new standard will have on its consolidated financial statements.
- 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, 2016 and May 31,
2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
($ and shares in thousands, except per share amounts)
|
|
May 31,
2016
|
|
|
May 31,
2015
|
|
|
May 31,
2016
|
|
|
May 31,
2015
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
9,644
|
|
|
$
|
12,927
|
|
|
$
|
12,459
|
|
|
$
|
29,490
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
10,709
|
|
|
|
11,690
|
|
|
|
10,997
|
|
|
|
11,965
|
|
Diluted effect of stock awards
|
|
|
23
|
|
|
|
30
|
|
|
|
22
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding assuming dilution
|
|
|
10,732
|
|
|
|
11,720
|
|
|
|
11,019
|
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings per share
|
|
$
|
0.90
|
|
|
$
|
1.11
|
|
|
$
|
1.13
|
|
|
$
|
2.46
|
|
Diluted net earnings per share
|
|
$
|
0.90
|
|
|
$
|
1.10
|
|
|
$
|
1.13
|
|
|
$
|
2.46
|
|
Certain stock options and restricted stock units were excluded from the computation of diluted net earnings per share because
their effect would have been anti-dilutive. Performance stock units are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied. The following table shows the securities
excluded from the computation of earnings per share because their effect would have been anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Note 4 Income Taxes
It is the Companys 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, 2016 and May 31, 2015.
The Company
recorded income tax expense of $4.4 million and $7.5 million for the three months ended May 31, 2016 and May 31, 2015, respectively. The Company recorded income tax expense of $5.8 million and $16.7 million for the nine months ended
May 31, 2016 and May 31, 2015, respectively. The estimated annual effective income tax rate was 31.8 percent and 36.2 percent for the fiscal year-to-date periods ended May 31, 2016 and May 31, 2015, respectively. The decrease in
the estimated annual effective income tax rate from May 2015 to May 2016 is primarily the result of proportionately higher earnings from foreign operations with tax rates lower than in the U.S.
Note 5 Inventories
Inventories consisted of the following as of May 31, 2016, May 31, 2015 and August 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
($ 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 8 -
Note 6 Long-Term Debt
The following table sets forth the outstanding principal balances of the Companys long-term debt as of the dates shown.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
August 31,
|
|
($ in thousands)
|
|
2016
|
|
|
2015
|
|
|
2015
|
|
Series A Senior Notes
|
|
$
|
115,000
|
|
|
$
|
115,000
|
|
|
$
|
115,000
|
|
Revolving Credit Facility
|
|
|
|
|
|
|
|
|
|
|
|
|
Elecsys Series 2006A Bonds
|
|
|
2,221
|
|
|
|
2,404
|
|
|
|
2,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
117,221
|
|
|
|
117,404
|
|
|
|
117,366
|
|
Less current portion
|
|
|
(196
|
)
|
|
|
(182
|
)
|
|
|
(193
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
117,025
|
|
|
$
|
117,222
|
|
|
$
|
117,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
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 consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Values of Derivative Instruments
|
|
|
|
Asset (Liability)
|
|
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
August 31,
|
|
($ in thousands)
|
|
Balance Sheet Classification
|
|
2016
|
|
|
2015
|
|
|
2015
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
Other current assets
|
|
$
|
858
|
|
|
$
|
19
|
|
|
$
|
217
|
|
Foreign currency forward contracts
|
|
Other current liabilities
|
|
|
(136
|
)
|
|
|
(216
|
)
|
|
|
(352
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives designated as hedging instruments
|
|
|
|
$
|
722
|
|
|
$
|
(197
|
)
|
|
$
|
(135
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
Other current assets
|
|
$
|
16
|
|
|
$
|
99
|
|
|
$
|
495
|
|
Foreign currency forward contracts
|
|
Other current liabilities
|
|
|
(50
|
)
|
|
|
|
|
|
|
(61
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
$
|
(34
|
)
|
|
$
|
99
|
|
|
$
|
434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (AOCI) included realized and unrealized after-tax gains of $5.9 million,
$5.6 million and $5.4 million at May 31, 2016, May 31, 2015 and August 31, 2015, respectively, related to derivative contracts designated as hedging instruments.
- 9 -
Net Investment Hedging Relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain/(Loss) Recognized
in OCI on Derivatives
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
($ in thousands)
|
|
May 31,
2016
|
|
|
May 31,
2015
|
|
|
May 31,
2016
|
|
|
May 31,
2015
|
|
Foreign currency forward contracts, net of tax (benefit) expense of $(260), $235, $149 and
$2,283
|
|
$
|
(448
|
)
|
|
$
|
384
|
|
|
$
|
450
|
|
|
$
|
3,597
|
|
For the three 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 $(1.4) 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, 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, 2016 and
May 31, 2015.
At May 31, 2016, May 31, 2015 and August 31, 2015, the Company had outstanding Euro foreign currency forward
contracts to sell 28.5 million Euro, 29.2 million Euro and 29.1 million Euro, respectively, at fixed prices to settle during the next fiscal quarter. At May 31, 2016, May 31, 2015 and August 31, 2015, 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 Companys 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, 2016, May 31, 2015 and August 31, 2015, the Company had $8.4 million, $4.8 million and $9.5 million of U.S. dollar
equivalent of foreign currency forward contracts outstanding that are not designated as hedging instruments.
Note 8 Fair Value Measurements
The following table presents the Companys financial assets and liabilities measured at fair value based upon the level within the fair
value hierarchy in which the fair value measurements fall, as of May 31, 2016, May 31, 2015 and August 31, 2015, respectively. There were no transfers between any levels for the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 31, 2016
|
|
($ 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 -
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, 2016 or May 31, 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.
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 EPAs list of priority superfund sites in
1989. Between 1993 and 1995, remediation plans for the site were approved by the EPA and fully implemented by the Company. Since 1998, the primary remaining contamination at the site has been the presence of volatile organic 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.
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 Companys remediation timeline. In the first quarter of fiscal 2015, the Company accrued $1.5 million of incremental operating costs to reflect its updated timeline.
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 developing and evaluating remediation alternatives, a proposed remediation plan and estimated costs. Based on preliminary 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 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 NDEQ during the third quarter of fiscal 2016 to review remediation alternatives
and proposed plans for the site. Based on guidance from third-party environmental experts and the preliminary discussions held in the third quarter of fiscal 2016, the Company anticipates that a definitive plan may not be agreed to until fiscal 2017
or later.
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 preliminary analysis 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 be 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 amount of costs that may exceed amounts accrued at this time. 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, 2016, May 31, 2015 and August 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Companys 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
|
|
($ in thousands)
|
|
May 31,
2016
|
|
|
May 31,
2015
|
|
Product warranty accrual balance, beginning of period
|
|
$
|
7,271
|
|
|
$
|
9,331
|
|
Liabilities accrued for warranties during the period
|
|
|
3,676
|
|
|
|
2,772
|
|
Warranty claims paid during the period
|
|
|
(3,853
|
)
|
|
|
(3,466
|
)
|
Changes in estimates
|
|
|
(636
|
)
|
|
|
(1,333
|
)
|
|
|
|
|
|
|
|
|
|
Product warranty accrual balance, end of period
|
|
$
|
6,458
|
|
|
$
|
7,304
|
|
|
|
|
|
|
|
|
|
|
Note 11 Share-Based Compensation
The Companys current share-based compensation plans, approved by the stockholders of the Company, provides for awards of stock
options, restricted shares, restricted stock units, stock appreciation rights, performance shares and performance stock units to employees and non-employee directors of the Company. The Company measures and 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 and $0.5 million for the three months ended May 31, 2016 and May 31, 2015, respectively.
Share-based compensation expense was $2.4 million and $2.6 million for the nine months ended May 31, 2016 and May 31, 2015, respectively.
Note 12 Other Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
($ 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 -
Note 13 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. During the three and nine
months ended May 31, 2016, the Company repurchased 219,578 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. The remaining amount available under the repurchase program
was $63.7 million as of May 31, 2016.
Note 14 Industry Segment Information
The Company manages its business activities in two reportable segments: irrigation and infrastructure. The Company evaluates the performance
of its reportable segments based on segment sales, gross profit and operating income, with operating income for segment purposes excluding unallocated corporate general and administrative expenses, interest income, interest expense, other income and
expenses and income taxes. Operating income for segment purposes includes general and administrative expenses, selling expenses, engineering and research expenses and other overhead charges directly attributable to the segment. There are no
inter-segment sales. The Company had no single customer who represented 10 percent or more of its total revenues during the three and nine months ended May 31, 2016 and May 31, 2015.
Irrigation -
This reporting segment includes the manufacture and marketing of center pivot, lateral move, and hose reel irrigation systems as well as
various water pumping stations, controls, filtration solutions and machine-to-machine (M2M) technology. The irrigation reporting segment consists of five operating segments that have similar economic characteristics and meet the
aggregation criteria, including similar products, production processes, type or class of customer and methods for distribution.
Infrastructure -
This reporting segment includes the manufacture and marketing of moveable barriers, specialty barriers, crash cushions and end terminals, and road marking and road safety equipment; the manufacture and sale of large diameter steel tubing and
railroad signals and structures; and the provision of outsourced manufacturing and production services. The infrastructure reporting segment consists of one operating segment.
- 13 -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
|
May 31,
|
|
($ 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 14 -