EXHIBIT 99.1
Press Release dated December 23, 2002
AT THE COMPANY: AT FRB/WEBER SHANDWICK:
Bruce C. Karsk Marilyn Windsor Diane Hettwer Tim Grace
Executive VP and CFO General Inquiries Analyst Inquiries Media Inquiries
402-829-6803 702-515-1260 312-640-6760 312-640-6667
FOR IMMEDIATE RELEASE
MONDAY, DECEMBER 23, 2002
LINDSAY MANUFACTURING CO. REPORTS
FISCAL 2003 FIRST-QUARTER RESULTS
OMAHA, NEB., DECEMBER 23, 2002--LINDSAY MANUFACTURING CO. (NYSE: LNN), a leading
manufacturer of center pivot, lateral move, and hose reel irrigation systems,
today reported a 17 percent increase in revenues and a 25 percent increase in
operating income for its first quarter ended November 30, 2002. These results
were driven by revenue growth from both its domestic and international
irrigation equipment markets, as well as an improvement in gross margin. Net
earnings were $0.24 per diluted share, including a non-operating, non-taxable
item of $0.14 per diluted share. Excluding this item, net earnings for the
quarter were $0.10 per diluted share.
Total revenues for the first quarter were $33.5 million, up 17 percent from
$28.5 million for the prior year's first quarter. Irrigation equipment revenues
increased 23 percent to $30.6 million, while diversified products revenues, as
expected, declined 24 percent to $2.8 million as Lindsay's contract
manufacturing customers continued to decrease their reliance on outsourced
manufacturing. Excluding revenue from acquisitions made during fiscal 2002,
organic revenue growth in the quarter was $1.5 million, or 5 percent, year over
year.
Gross profit rose to $7.0 million from $5.6 million, resulting from the revenue
increase and improved pricing, offset somewhat by increased material prices.
Gross margin increased to 21.0 percent from 19.7 percent. Operating expenses
were higher in the first quarter primarily due to increased personnel and other
costs related to the previously mentioned acquisitions and the start up of
operations in South Africa. Combined, the new operations accounted for
approximately two-thirds of the increase in operating expenses. Operating income
rose 25 percent to $1.2 million from $1.0 million.
OTHER INCOME ITEM
During the first quarter of fiscal 2003, Lindsay recorded both other income and
other non-current assets of $1.7 million to reflect the cumulative cash value of
four life insurance policies that the Company maintains on current and former
executive officers. These policies were established in 1993 to insure the
potential liability under the supplemental retirement plan for these executives.
Lindsay is the sole named beneficiary and owner of these policies, which are
held in trust. The $1.7 million of current cumulative surrender value was
generated largely through annual
premium payments made from 1993 through 2000. The Company expensed the premiums
as incurred and had not previously recorded the increases in the cash surrender
value of the policies.
The change in the cash surrender value of these life insurance policies is not
material to Lindsay's net earnings for any previous year. The Company
anticipates that the future annual change in the cash value of these policies
will also not be material.
Because the income recorded for the cash value of these policies is non-taxable
income, Lindsay's effective tax rate for the quarter was reduced from 31 percent
of pretax income to 15.3 percent of pretax income.
Excluding the impact of this item, which amounted to $0.14 per share, net
earnings rose 6 percent to $1.2 million, or $0.10 per diluted share, compared
with $1.1 million, or $0.09 per diluted share, in last year's first quarter. Net
earnings including the other income item were $2.9 million, or $0.24 per diluted
share.
Lindsay's order backlog at November 30, 2002, totaled $19.4 million compared
with $26.4 million at November 30, 2001, and $18.9 million at August 31, 2002.
Shareholders' equity at November 30, 2002, was $93.2 million, or $7.95 per
outstanding common share, compared with $81.8 million, or $7.03 per outstanding
common share, at November 30, 2001. Cash and marketable securities at November
30, 2002, were $46.5 million compared with $44.5 million at November 30, 2001.
DOMESTIC AND INTERNATIONAL OPERATIONS
"We are pleased with our solid performance for the first quarter," said Rick
Parod, president and chief executive officer. "Our domestic irrigation equipment
revenues increased even though early orders for new irrigation equipment sales
have lagged somewhat despite recent dry weather conditions. While the U.S. 2002
Farm Bill legislation is generally positive for farmers, some growers are simply
waiting to make their purchase decisions until they know if they will receive a
subsidy for the purchase under the Environmental Quality Incentive Program.
Additionally, because improved commodity pricing reduced government commodity
price support payments, some farmers may be feeling near-term cash flow
pressure."
Lindsay's international operations made good progress during the quarter.
"International equipment revenues increased at a higher rate in the first
quarter than domestic equipment revenues, and we recorded our first revenues at
our South African location, which began operation early in the quarter by
reselling imported equipment. We anticipate that Lindsay Manufacturing Africa's
factory operations will be in production before the end of the current quarter.
All of our international operations met expectations for the quarter," Parod
commented.
OUTLOOK
Parod indicated that while commodity prices have softened somewhat recently,
they remain well above prior-year levels and are supporting positive
fundamentals in Lindsay's markets. "Our overall evaluation of market conditions
suggests good demand for our products during the
ii
remainder of the year," he commented. While retail activity has been somewhat
slower early in fiscal 2003, Parod believes that it will gather momentum in
conjunction with spring planting.
Parod commented, "Barring further unanticipated economic weakness or
geopolitical risks during fiscal 2003, we anticipate continued growth in
earnings on revenue growth of approximately 8 percent, excluding future
acquisitions. We will continue to search for appropriate acquisitions that are
congruent with our mission to be the worldwide leader in providing intelligent
water and plant nutrient management systems, and that will add incremental value
for our shareholders."
FIRST-QUARTER CONFERENCE CALL
Lindsay's fiscal 2003 first-quarter investor conference call is scheduled for 11
a.m. ET today. This call will be simulcast and available over the Internet via
the web site www.vcall.com. The webcast will be available for replay for a
period of 30 days.
ABOUT THE COMPANY
Lindsay manufactures and markets Zimmatic, Greenfield, and Perrot center pivot,
lateral move and hose reel irrigation systems and GrowSmart controls, all of
which are used by farmers to increase or stabilize crop production while
conserving water, energy, and labor. The Company also produces large diameter
steel tubing and provides outsourced manufacturing and production services for
other companies. At November 30, 2002, Lindsay had approximately 11.7 million
shares outstanding, which are traded on the New York Stock Exchange under the
symbol LNN.
CONCERNING FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements that are subject to risks and
uncertainties and which reflect management's current beliefs and estimates of
future economic circumstances, industry conditions, Company performance and
financial results. Forward-looking statements include the information concerning
possible or assumed future results of operations of the Company and those
statements preceded by, followed by or including the words "expectation,"
"outlook," "could," "may," "should," or similar expressions. For these
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
FOR MORE INFORMATION REGARDING LINDSAY MANUFACTURING CO.,
SEE LINDSAY'S WEBSITE AT www.lindsaymanufacturing.com
iii
LINDSAY MANUFACTURING CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2002 AND 2001
(UNAUDITED)
THREE MONTHS ENDED
---------------------
NOVEMBER NOVEMBER
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2002 2001
- ---------------------------------------- ----- ----
Operating revenues $33,462 $28,545
Cost of operating revenues 26,451 22,935
------- -------
Gross profit 7,011 5,610
------- -------
Operating expenses:
Selling expense 2,640 2,116
General and administrative expense 2,578 2,025
Engineering and research expense 598 512
------- -------
Total operating expenses 5,816 4,653
------- -------
Operating income 1,195 957
Interest income, net 423 437
Other income, net 1,787 179
------- -------
Earnings before income taxes 3,405 1,573
Income tax provision 521 478
------- -------
Net earnings $ 2,884 $ 1,095
======= =======
Basic net earnings per share $ 0.25 $ 0.09
======= =======
Diluted net earnings per share $ 0.24 $ 0.09
======= =======
Average shares outstanding 11,713 11,630
Diluted effect of stock options 217 162
------- -------
Average shares outstanding assuming dilution 11,930 11,792
======= =======
Cash dividends per share $ 0.035 $ 0.035
======= =======
iv
LINDSAY MANUFACTURING CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 2002 AND 2001 AND AUGUST 31, 2002
(UNAUDITED) (UNAUDITED)
NOVEMBER NOVEMBER AUGUST
($ IN THOUSANDS, EXCEPT PAR VALUES) 2002 2001 2002
- ----------------------------------- ---- ---- ----
ASSETS
Cash and cash equivalents $ 3,848 $ 15,864 $ 12,425
Marketable securities 15,337 4,621 13,289
Receivables, net 28,589 24,523 23,385
Inventories, net 16,812 13,555 15,583
Deferred income taxes 2,798 2,164 2,573
Other current assets 1,175 852 782
--------- --------- ---------
Total current assets 68,559 61,579 68,037
Long-term marketable securities 27,333 24,017 25,419
Property, plant and equipment, net 14,453 14,527 14,512
Other noncurrent assets 6,793 4,119 4,715
--------- --------- ---------
Total assets $ 117,138 $ 104,242 $ 112,683
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 7,898 $ 7,897 $ 6,068
Other current liabilities 13,917 12,415 13,640
--------- --------- ---------
Total current liabilities 21,815 20,312 19,708
Other noncurrent liabilities 2,108 2,088 2,311
--------- --------- ---------
Total liabilities 23,923 22,400 22,019
--------- --------- ---------
Shareholders' equity:
Preferred stock, ($1 par value, 2,000,000 shares
authorized, no shares issued and outstanding) -- -- --
Common stock, ($1 par value, 25,000,000 shares
authorized, 17,452,621, 17,362,743 and 17,430,348 shares
issued in November 2002 and 2001 and August 2002) 17,453 17,363 17,430
Capital in excess of stated value 2,454 1,824 2,472
Retained earnings 164,047 153,222 161,574
Less treasury stock, (at cost, 5,724,069 shares) (89,898) (89,898) (89,898)
Accumulated other comprehensive loss (841) (669) (914)
--------- --------- ---------
Total shareholders' equity 93,215 81,842 90,664
--------- --------- ---------
Total liabilities and shareholders' equity $ 117,138 $ 104,242 $ 112,683
========= ========= =========
v