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## IRRIGATION SEGMENT REVIEW 

Lindsay Corporation is one of the world’s leading providers of irrigation and water management systems. Our product lines include center pivot and lateral move irrigation systems, hose reel travelers, integrated water-pumping stations, irrigation scheduling and controls, chemical injection systems, water fi ltration systems, and remote monitoring and control systems. Lindsay’s irrigation products are sold through more than 200 dealers in the U.S. and more than 140 dealers in international markets. Our products and systems help growers around the world conserve precious water, increase crop production, and reduce costs such as fuel and labor. 

Lindsay’s irrigation segment generates revenue from three primary sources: 1) conversion of dry land to irrigation; 2) conversion from less ef fi cient irrigation methods to mechanized systems; and 3) sales of replacement systems and parts. 

## IRRIGATION SEGMENT PERFORMANCE 

The irrigation segment provided 87 percent of Lindsay’s revenue in fi scal 2014 compared to 91 percent the prior year. Irrigation equipment sales in the U.S. accounted for approximately 61 percent of segment revenue, with international sales comprising approximately 39 percent. 

Operating margin for the irrigation segment was 17 percent in fi scal 2014 compared to 20 percent the prior year, primarily due to cost deleverage on lower sales. 

## IRRIGATION MARKET CONDITIONS 

In fi scal 2014, lower agricultural commodity prices continued to exert downward pressure on irrigation equipment demand in the U.S. In addition, in August the USDA forecasted 2014 net farm income to be 14 percent below 2013 levels, although still remaining above the 10-year average. Finally, enhanced Section 179 depreciation tax bene fi ts expired on December 31, 2013. These factors contributed to farmer sentiment being less inclined to make capital purchases. 

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However, the decrease in irrigation equipment sales was mitigated somewhat by revenue contributions from LAKOS fi ltration products, a business acquired at the end of fi scal 2013, along with higher than normal replacement sales due to severe spring and summer storms across the Midwest. With the superb responsiveness of our Nebraska factory and entire irrigation team, we were able to quickly meet the urgent needs of our dealers and their customers and provide the replacement equipment needed in the peak of the growing season. 

International markets remain important in Lindsay’s growth strategy. In fi scal 2014, international sales accounted for 39 percent of 

