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| LNN > SEC Filings for LNN > Form 10-Q on 3-Jul-2012 | All Recent SEC Filings |
3-Jul-2012
Quarterly Report
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 and Section 21E of the Securities Exchange Act of 1934. Statements that are not historical are forward-looking and reflect expectations for future Company conditions or performance. In addition, forward-looking statements may be made orally or in press releases, conferences, reports, on the Company's worldwide web site, or otherwise, in the future by or on behalf of the Company. When used by or on behalf of the Company, the words "expect," "anticipate," "estimate," "believe," "intend," "will," and similar expressions generally identify forward-looking statements. The entire section entitled "Market Conditions and Fiscal 2012 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, 2011. 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, as well as others not now anticipated. The risks and uncertainties described herein are not exclusive and further information concerning the Company and its businesses, including factors that potentially could materially affect the Company's financial results, may emerge from time to time. Except as required by law, the Company assumes no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.
Accounting Policies
In preparing the Company's condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles, 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 further discussion of the Company's critical accounting policies under Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the Company's year ended August 31, 2011. Management periodically re-evaluates and adjusts its critical accounting policies as circumstances change. The Company's critical accounting policies have not changed since the filing of the Annual Report on Form 10-K except as discussed below for environmental remediation liabilities.
Environmental Remediation Liabilities
The Company accrues for environmental remediation liabilities when it is probable that obligations have been incurred and the associated amounts can be reasonably estimated. Management estimates the cost of environmental remediation liabilities by considering all available information, including engineering estimates and legal advice. Environmental remediation liability estimates may be affected by changing assessments from governmental or other third parties for claims of the Company's environmental remediation liability and the acceptability of the Company's remediation plan to federal and state environmental regulators. Inherent uncertainties exist in such estimated costs primarily due to unknown environmental conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies. The Company reviews the environmental remediation liabilities for discounting if both the timing and amounts of future cash flows are fixed or reliably determinable. The recorded liabilities are adjusted periodically as remediation efforts progress, or as additional technical or legal information becomes available.
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Overview
Operating revenues for the three months ended May 31, 2012 increased by $18.7 million or 12.2 percent to $172.1 million compared with $153.4 million for the three months ended May 31, 2011. The increase is attributable to a $22.7 million increase in irrigation revenues offset in part by a $4.1 million decrease in infrastructure revenues. Net earnings were $18.8 million or $1.47 per diluted share for the three months ended May 31, 2012 compared with $15.3 million or $1.20 per diluted share for the same prior year period.
Farm incomes and commodity prices have driven positive farmer sentiment, leading to increased domestic irrigation demand. The increase in sales, along with cost reductions and efficiency improvements across the Company's business segments have resulted in higher operating margins in the third quarter. Government funded infrastructure spending remained challenging due to global governmental budget constraints.
Operating revenues for the nine months ended May 31, 2012 increased by $60.6 million or 16.7 percent to $423.4 million compared with $362.8 million for the nine months ended May 31, 2011. The increase is attributable to an $88.8 million increase in irrigation revenues offset in part by a $28.2 million decrease in infrastructure revenues. Net earnings were $34.5 million or $2.70 per diluted share for the nine months ended May 31, 2012 compared with $30.9 million or $2.44 per diluted share for the same prior year period.
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Results of Operations
For the Three Months ended May 31, 2012 compared to the Three Months ended May 31, 2011
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, 2012 and 2011. It should be read together with the industry segment information in Note 13 to the condensed consolidated financial statements:
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