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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Form 10-Q

(Mark One)  

ý

 

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

For the quarterly period ended March 29,June 28, 2014

or

o

 

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

For the transition period from                             to                              

Commission file number 1-31429



Valmont Industries, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
 47-0351813
(I.R.S. Employer
Identification No.)

One Valmont Plaza,

 

 
Omaha, Nebraska 68154-5215
(Address of Principal Executive Offices) (Zip Code)

(402) 963-1000
(Registrant's telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last report)



        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 ý    No o

        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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ý    No o

        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 definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a
smaller
reporting company)
 Smaller reporting company o

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

26,883,33826,193,724
Outstanding shares of common stock as of AprilJuly 22, 2014

   


Table of Contents


VALMONT INDUSTRIES, INC.

INDEX TO FORM 10-Q

Page No. 

PART I. FINANCIAL INFORMATION

 

Item 1.

 

Financial Statements:

    

 

Condensed Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended March 29,June 28, 2014 and March 30,June 29, 2013

  3 

 

Condensed Consolidated Statements of Comprehensive Income for the thirteen and twenty-six weeks ended March 29,June 28, 2014 and March 30,June 29, 2013

  4 

 

Condensed Consolidated Balance Sheets as of March 29,June 28, 2014 and December 28, 2013

  5 

 

Condensed Consolidated Statements of Cash Flows for the thirteentwenty-six weeks ended March 29,June 28, 2014 and March 30,June 29, 2013

  6 

 

Condensed Consolidated Statements of Shareholders' Equity for the thirteentwenty-six weeks ended March 29,June 28, 2014 and March 30,June 29, 2013

  7 

 

Notes to Condensed Consolidated Financial Statements

  8 

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

  2934 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

  3744 

Item 4.

 

Controls and Procedures

  3744 

PART II. OTHER INFORMATION

 

Item 5.2.

 

Other InformationUnregistered Sales of Equity Securities and Use of Proceeds

  3845 

Item 6.

 

Exhibits

  3845 

Signatures

  3946 

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(Unaudited)


 Thirteen Weeks Ended  Thirteen Weeks Ended Twenty-six Weeks Ended 

 March 29,
2014
 March 30,
2013
  June 28,
2014
 June 29,
2013
 June 28,
2014
 June 29,
2013
 

Product sales

 $681,043 $740,447  $766,844 $794,341 $1,447,887 $1,534,788 

Services sales

 70,697 79,183  75,755 84,318 146,452 163,501 
              

Net sales

 751,740 819,630  842,599 878,659 1,594,339 1,698,289 

Product cost of sales

 497,843 529,161  573,067 563,306 1,070,910 1,092,467 

Services cost of sales

 46,915 55,100  49,055 53,882 95,970 108,982 
              

Total cost of sales

 544,758 584,261  622,122 617,188 1,166,880 1,201,449 
              

Gross profit

 206,982 235,369  220,477 261,471 427,459 496,840 

Selling, general and administrative expenses

 108,134 117,179  115,701 117,206 223,835 234,385 
              

Operating income

 98,848 118,190  104,776 144,265 203,624 262,455 
              

Other income (expenses):

              

Interest expense

 (8,197) (8,190) (8,304) (8,025) (16,501) (16,215)

Interest income

 1,739 1,353  1,577 1,852 3,316 3,205 

Other

 (5,812) 1,556  1,903 123 (3,909) 1,679 
              

 (12,270) (5,281) (4,824) (6,050) (17,094) (11,331)
              

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries

 86,578 112,909  99,952 138,215 186,530 251,124 
              

Income tax expense (benefit):

              

Current

 32,938 38,660  26,117 48,210 59,055 86,870 

Deferred

 (2,923) (3,687) 7,953 (1,042) 5,030 (4,729)
              

 30,015 34,973  34,070 47,168 64,085 82,141 
              

Earnings before equity in earnings of nonconsolidated subsidiaries

 56,563 77,936  65,882 91,047 122,445 168,983 

Equity in earnings of nonconsolidated subsidiaries

  204  (30) 269 (30) 473 
              

Net earnings

 56,563 78,140  65,852 91,316 122,415 169,456 

Less: Earnings attributable to noncontrolling interests

 (583) (571) (1,876) (1,753) (2,459) (2,324)
              

Net earnings attributable to Valmont Industries, Inc.

 $55,980 $77,569  $63,976 $89,563 $119,956 $167,132 
              
              

Earnings per share:

              

Basic

 $2.10 $2.92  $2.40 $3.36 $4.50 $6.28 
              
              

Diluted

 $2.08 $2.89  $2.38 $3.33 $4.46 $6.22 
              
              

Cash dividends declared per share

 $0.250 $0.225  $0.375 $0.250 $0.625 $0.475 
              
              

Weighted average number of shares of common stock outstanding—Basic (000 omitted)

 26,715 26,583  26,623 26,648 26,669 26,615 
              
              

Weighted average number of shares of common stock outstanding—Diluted (000 omitted)

 26,950 26,859  26,856 26,910 26,903 26,884 
              
              

   

See accompanying notes to condensed consolidated financial statements.


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)


 Thirteen Weeks Ended  Thirteen Weeks Ended Twenty-six Weeks Ended 

 March 29,
2014
 March 30,
2013
  June 28,
2014
 June 29,
2013
 June 28,
2014
 June 29,
2013
 

Net earnings

 $56,563 $78,140  $65,852 $91,316 $122,415 $169,456 
              

Other comprehensive income (loss), net of tax:

              

Foreign currency translation adjustments:

              

Unrealized translation gain (loss)

 11,637 (9,620) 13,869 (52,962) 25,506 (62,582)

Realized loss included in net earnings during the period

  (5,194)    (5,194)

Unrealized loss on cash flow hedge:

              

Amortization cost included in interest expense

 100 100  (33) 100 67 200 

Actuarial gain (loss) in defined benefit pension plan

 
(233

)
 
(936

)
 
(614

)
 
42
 
(847

)
 
(894

)
              

Other comprehensive income (loss)

 11,504 (15,650) 13,222 (52,820) 24,726 (68,470)
              

Comprehensive income

 68,067 62,490  79,074 38,496 147,141 100,986 

Comprehensive loss (income) attributable to noncontrolling interests

 88 1,640  (1,792) 1,549 (1,704) 3,189 
              

Comprehensive income attributable to Valmont Industries, Inc.

 $68,155 $64,130  $77,282 $40,045 $145,437 $104,175 
              
              

   

See accompanying notes to condensed consolidated financial statements.


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)


 March 29,
2014
 December 28,
2013
  June 28,
2014
 December 28,
2013
 

ASSETS

          

Current assets:

          

Cash and cash equivalents

 $488,195 $613,706  $455,927 $613,706 

Receivables, net

 529,693 515,440  543,608 515,440 

Inventories

 424,825 380,000  381,943 380,000 

Prepaid expenses

 57,913 22,997  66,916 22,997 

Refundable and deferred income taxes

 57,935 65,697  71,334 65,697 
          

Total current assets

 1,558,561 1,597,840  1,519,728 1,597,840 
          

Property, plant and equipment, at cost

 1,171,914 1,017,126  1,160,142 1,017,126 

Less accumulated depreciation and amortization

 559,711 482,916  521,288 482,916 
          

Net property, plant and equipment

 612,203 534,210  638,854 534,210 
          

Goodwill

 355,844 349,632  368,405 349,632 

Other intangible assets, net

 226,469 170,917  195,359 170,917 

Other assets

 132,789 123,895  136,258 123,895 
          

Total assets

 $2,885,866 $2,776,494  $2,858,604 $2,776,494 
          
          

LIABILITIES AND SHAREHOLDERS' EQUITY

          

Current liabilities:

          

Current installments of long-term debt

 $188 $202  $188 $202 

Notes payable to banks

 14,860 19,024  17,485 19,024 

Accounts payable

 234,218 216,121  208,834 216,121 

Accrued employee compensation and benefits

 86,327 122,967  95,365 122,967 

Accrued expenses

 91,110 71,560  91,631 71,560 

Income taxes payable

 9,967  

Dividends payable

 6,721 6,706  9,930 6,706 
          

Total current liabilities

 443,391 436,580  423,433 436,580 
          

Deferred income taxes

 104,642 78,924  95,674 78,924 

Long-term debt, excluding current installments

 479,141 470,907  478,498 470,907 

Defined benefit pension liability

 139,047 154,397  143,114 154,397 

Deferred compensation

 46,502 39,109  48,292 39,109 

Other noncurrent liabilities

 53,340 51,731  54,503 51,731 

Shareholders' equity:

          

Preferred stock of $1 par value—

          

Authorized 500,000 shares; none issued

      

Common stock of $1 par value—

          

Authorized 75,000,000 shares; 27,900,000 issued

 27,900 27,900  27,900 27,900 

Retained earnings

 1,615,696 1,562,670  1,672,287 1,562,670 

Accumulated other comprehensive income (loss)

 (35,510) (47,685) (22,204) (47,685)

Treasury stock

 (19,897) (20,860) (95,714) (20,860)
          

Total Valmont Industries, Inc. shareholders' equity

 1,588,189 1,522,025  1,582,269 1,522,025 
          

Noncontrolling interest in consolidated subsidiaries

 31,614 22,821  32,821 22,821 
          

Total shareholders' equity

 1,619,803 1,544,846  1,615,090 1,544,846 
          

Total liabilities and shareholders' equity

 $2,885,866 $2,776,494  $2,858,604 $2,776,494 
          
          

   

See accompanying notes to condensed consolidated financial statements.


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


 Thirteen Weeks Ended  Twenty-six Weeks Ended 

 March 29,
2014
 March 30,
2013
  June 28,
2014
 June 29,
2013
 

Cash flows from operating activities:

          

Net earnings

 $56,563 $78,140  $122,415 $169,456 

Adjustments to reconcile net earnings to net cash flows from operations:

          

Depreciation and amortization

 19,601 19,208  43,368 38,186 

Loss on investment

 3,386   3,501  

Stock-based compensation

 1,880 1,675  3,686 3,342 

Defined benefit pension plan expense

 662 1,633  1,334 3,245 

Contribution to defined benefit pension plan

 (17,484) (10,346) (17,484) (10,346)

Gain on sale of property, plant and equipment

 (127) (66) (102) (5,071)

Equity in earnings in nonconsolidated subsidiaries

  (204) 30 (473)

Deferred income taxes

 (2,923) (3,687) 5,030 (4,729)

Changes in assets and liabilities (net of acquisitions):

          

Receivables

 31,668 19,006  21,083 (3,331)

Inventories

 (37,911) (30,390) 6,624 (2,491)

Prepaid expenses

 (9,148) (2,786) (18,289) (5,910)

Accounts payable

 (12,471) (5,303) (28,633) 736 

Accrued expenses

 (29,889) (17,808) (30,415) 2,916 

Other noncurrent liabilities

 1,551 1,130  1,766 1,873 

Income taxes payable

 16,559 14,410 

Income taxes refundable

 (22,063) (11,810)
          

Net cash flows from operating activities

 21,917 64,612  91,851 175,593 
          

Cash flows from investing activities:

          

Purchase of property, plant and equipment

 (23,526) (21,845) (46,991) (54,258)

Proceeds from sale of assets

 1,391 29,415  1,151 39,054 

Acquisitions, net of cash acquired

 (120,483) (54,714) (120,483) (53,152)

Other, net

 (990) 2,789  (2,940) (133)
          

Net cash flows from investing activities

 (143,608) (44,355) (169,263) (68,489)
          

Cash flows from financing activities:

          

Net borrowings under short-term agreements

 (4,056) (573) (1,861) 2,620 

Proceeds from long-term borrowings

  68 

Principal payments on long-term borrowings

 (63) (16) (259) (303)

Dividends paid

 (6,706) (6,001) (13,427) (12,021)

Dividends to noncontrolling interest

 (351) (1,476) (1,340) (1,767)

Proceeds from exercises under stock plans

 7,860 11,697  11,996 14,098 

Excess tax benefits from stock option exercises

 2,296 226  3,576 305 

Purchase of treasury shares

 (77,084)  

Purchase of common treasury shares—stock plan exercises

 (8,574) (12,375) (11,984) (13,602)
          

Net cash flows from financing activities

 (9,594) (8,518) (90,383) (10,602)
          

Effect of exchange rate changes on cash and cash equivalents

 5,774 (5,872) 10,016 (20,154)
          

Net change in cash and cash equivalents

 (125,511) 5,867  (157,779) 76,348 

Cash and cash equivalents—beginning of year

 613,706 414,129  613,706 414,129 
          

Cash and cash equivalents—end of period

 $488,195 $419,996  $455,927 $490,477 
          
          

   

See accompanying notes to condensed consolidated financial statements.


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollars in thousands)

(Unaudited)


 Common
stock
 Additional
paid-in
capital
 Retained
earnings
 Accumulated
other
comprehensive
income (loss)
 Treasury
stock
 Noncontrolling
interest in
consolidated
subsidiaries
 Total
shareholders'
equity
  Common
stock
 Additional
paid-in
capital
 Retained
earnings
 Accumulated
other
comprehensive
income (loss)
 Treasury
stock
 Noncontrolling
interest in
consolidated
subsidiaries
 Total
shareholders'
equity
 

Balance at December 29, 2012

 $27,900 $ $1,300,529 $43,938 $(22,455)$57,098 $1,407,010  $27,900 $ $1,300,529 $43,938 $(22,455)$57,098 $1,407,010 

Net earnings

   77,569   571 78,140    167,132   2,324 169,456 

Other comprehensive income (loss)

    (13,439)  (2,211) (15,650)    (62,957)  (5,513) (68,470)

Cash dividends declared

   (6,020)    (6,020)   (12,713)    (12,713)

Dividends to noncontrolling interests

      (1,476) (1,476)      (1,767) (1,767)

Acquisition of Locker

      325 325       325 325 

Stock plan exercises; 77,955 shares acquired

     (12,375)  (12,375)

Stock options exercised; 156,342 shares issued

  (1,901) 659  12,939  11,697 

Stock plan exercises; 85,874 shares acquired

     (13,602)  (13,602)

Stock options exercised; 177,902 shares issued

  (3,647) 3,378  14,367  14,098 

Tax benefit from stock option exercises

  226     226   305     305 

Stock option expense

  1,313     1,313   2,627     2,627 

Stock awards; 2,667 shares issued

  362   373  735   715   373  1,088 
                              

Balance at March 30, 2013

 $27,900 $ $1,372,737 $30,499 $(21,518)$54,307 $1,463,925 

Balance at June 29, 2013

 $27,900 $ $1,458,326 $(19,019)$(21,317)$52,467 $1,498,357 
                              
                              

Balance at December 28, 2013

 $27,900 $ $1,562,670 $(47,685)$(20,860)$22,821 $1,544,846  $27,900 $ $1,562,670 $(47,685)$(20,860)$22,821 $1,544,846 

Net earnings

   55,980   583 56,563    119,956   2,459 122,415 

Other comprehensive income (loss)

    12,175  (671) 11,504     25,481  (755) 24,726 

Cash dividends declared

   (6,721)    (6,721)   (16,651)    (16,651)

Dividends to noncontrolling interests

      (351) (351)      (1,340) (1,340)

Acquisition of DS SM

      9,232 9,232       9,232 9,232 

Stock plan exercises; 57,854 shares acquired

     (8,574)  (8,574)

Stock options exercised; 110,339 shares issued

  (4,176) 3,767  8,269  7,860 

Addition of noncontrolling interest

      404 404 

Purchase of treasury shares; 490,172 shares acquired

     (77,084)  (77,084)

Stock plan exercises; 78,217 shares acquired

     (11,984)  (11,984)

Stock options exercised; 158,317 shares issued

  (7,262) 6,312  12,946  11,996 

Tax benefit from stock option exercises

  2,296     2,296   3,576     3,576 

Stock option expense

  1,263     1,263   2,525     2,525 

Stock awards; 8,290 shares issued

  617   1,268  1,885 

Stock awards; 8,822 shares issued

  1,161   1,268  2,429 
                              

Balance at March 29, 2014

 $27,900 $ $1,615,696 $(35,510)$(19,897)$31,614 $1,619,803 

Balance at June 28, 2014

 $27,900 $ $1,672,287 $(22,204)$(95,714)$32,821 $1,615,090 
                              
                              

   

See accompanying notes to condensed consolidated financial statements.


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        The Condensed Consolidated Balance Sheet as of March 29,June 28, 2014, the Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen and twenty-six weeks ended March 29,June 28, 2014 and March 30,June 29, 2013, and the Condensed Consolidated Statements of Cash Flows and Shareholders' Equity for the thirteentwenty-six week periods then ended have been prepared by the Company, without audit. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial statements as of March 29,June 28, 2014 and for all periods presented.

        Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2013. The accounting policies and methods of computation followed in these interim financial statements are the same as those followed in the financial statements for the year ended December 28, 2013. The results of operations for the period ended March 29,June 28, 2014 are not necessarily indicative of the operating results for the full year.

        Approximately 44%41% and 43% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of March 29,June 28, 2014 and December 28, 2013, respectively. All other inventory is valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market. Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured and finished goods. The excess of replacement cost of inventories over the LIFO value is approximately $45,601$47,141 and $45,204 at March 29,June 28, 2014 and December 28, 2013, respectively.

        Inventories consisted of the following:


 March 29,
2014
 December 28,
2013
  June 28,
2014
 December 28,
2013
 

Raw materials and purchased parts

 $183,412 $179,576  $178,366 $179,576 

Work-in-process

 39,617 27,294  27,242 27,294 

Finished goods and manufactured goods

 247,397 218,334  223,476 218,334 
          

Subtotal

 470,426 425,204  429,084 425,204 

Less: LIFO reserve

 45,601 45,204  47,141 45,204 
          

 $424,825 $380,000  $381,943 $380,000 
          
          

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries for the thirteen and twenty-six weeks ended March 29,June 28, 2014 and March 30,June 29, 2013, were as follows:


 Thirteen Weeks
Ended
  Thirteen Weeks
Ended
 Twenty-six Weeks
Ended
 

 2014 2013  2014 2013 2014 2013 

United States

 $71,694 $89,384  $65,096 $98,684 $136,790 $187,421 

Foreign

 14,884 23,525  34,856 39,531 49,740 63,703 
              

 $86,578 $112,909  $99,952 $138,215 $186,530 $251,124 
              
              

        The Company incurs expenses in connection with the Delta Pension Plan ("DPP"). The DPP was acquired as part of the Delta plc acquisition in fiscal 2010 and has no members that are active employees. In order to measure expense and the related benefit obligation, various assumptions are made including discount rates used to value the obligation, expected return on plan assets used to fund these expenses and estimated future inflation rates. These assumptions are based on historical experience as well as current facts and circumstances. An actuarial analysis is used to measure the expense and liability associated with pension benefits.

        The components of the net periodic pension expense for the thirteen and twenty-six weeks ended March 29,June 28, 2014 and March 30,June 29, 2013 were as follows:

 Thirteen Weeks
Ended
 Twenty-six Weeks
Ended
 

 2014 2013  2014 2013 2014 2013 

Net periodic benefit expense:

              

Interest cost

 $7,197 $6,571  $7,312 $6,487 $14,509 $13,058 

Expected return on plan assets

 (6,535) (4,938) (6,640) (4,875) (13,175) (9,813)
              

Net periodic benefit expense

 $662 $1,633  $672 $1,612 $1,334 $3,245 
              
              

        The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, non-vested stock awards and bonuses of common stock. At March 29,June 28, 2014, 1,476,4661,463,096 shares of common stock remained available for issuance under the plans. Shares and options issued and available are subject to changes in capitalization.

        Under the plans, the exercise price of each option equals the closing market price at the date of the grant. Options vest beginning on the first anniversary of the grant in equal amounts over three to six years or on the fifth anniversary of the grant.


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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Expiration of grants is from six to ten years from the date of grant. The Company's compensation expense (included in selling, general and administrative expenses) and associated income tax benefits related to stock options for the thirteen and twenty-six weeks ended March 29,June 28, 2014 and March 30,June 29, 2013, respectively, were as follows:


 Thirteen Weeks
Ended
  Thirteen Weeks
Ended
 Twenty-six Weeks
Ended
 

 2014 2013  2014 2013 2014 2013 

Compensation expense

 $1,263 $1,313  $1,262 $1,314 $2,525 $2,627 

Income tax benefits

 486 506  486 505 972 1,011 

        The Company has equity method investments in non-consolidated subsidiaries, which are recorded within "Other assets" on the Condensed Consolidated Balance Sheet. In February 2013, the Company sold its nonconsolidated investment in Manganese Materials Company Pty. Ltd. to the majority owner of the business for approximately $29,250. The profit on the sale was not significant, which included the recognition of $5,194 in currency translation adjustments previously recorded as part of "Accumulated other comprehensive income" on the Condensed Consolidated Balance Sheet. The Company also recognized certain deferred tax benefits of approximately $3,200 associated with the sale in the first quarter of fiscal 2013.

        The Company applies the provisions of Accounting Standards Codification 820,Fair Value Measurements ("ASC 820") which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other accounting pronouncements that require or permit fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

        ASC 820 establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

        The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

        Trading Securities: The assets and liabilities recorded for the investments held in the Valmont Deferred Compensation Plan of $34,175$35,852 ($27,133 inat December 2013) represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with Accounting Standards Codification 320,Accounting for Certain Investments in Debt and Equity Securities, considering the employee's ability to change investment allocation of their deferred compensation at any time. The Company's ownership in Delta EMD Pty. Ltd. (JSE:DTA) of $10,255$10,114 and $13,910 is recorded at fair value at March 29,June 28, 2014 and December 28, 2013, respectively. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.


  
 Fair Value Measurement Using:   
 Fair Value Measurement Using: 

 Carrying Value
March 29,
2014
 Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 Significant Other
Observable
Inputs
(Level 2)
 Significant
Unobservable
Inputs
(Level 3)
  Carrying Value
June 28,
2014
 Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 Significant Other
Observable
Inputs
(Level 2)
 Significant
Unobservable
Inputs
(Level 3)
 

Assets:

                  

Trading Securities

 $44,430 $44,430 $ $  $45,966 $45,966 $ $ 

 

 
  
 Fair Value Measurement Using: 
 
 Carrying Value
December 28,
2013
 Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 Significant Other
Observable
Inputs
(Level 2)
 Significant
Unobservable
Inputs
(Level 3)
 

Assets:

             

Trading Securities

 $41,043 $41,043 $ $ 

        Comprehensive income includes net earnings, currency translation adjustments, certain derivative-related activity and changes in net actuarial gains/losses from a pension plan. Results of operations for foreign subsidiaries are translated using the average exchange rates during the period. Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) consisted of the following at March 29,June 28, 2014 and December 28, 2013:


 Foreign
Currency
Translation
Adjustments
 Unrealized
Loss on Cash
Flow Hedge
 Defined
Benefit
Pension Plan
 Accumulated
Other
Comprehensive
Income
  Foreign
Currency
Translation
Adjustments
 Unrealized
Loss on Cash
Flow Hedge
 Defined
Benefit
Pension Plan
 Accumulated
Other
Comprehensive
Income
 

Balance at December 28, 2013

 $(20,165)$(2,535)$(24,985)$(47,685) $(20,165)$(2,535)$(24,985)$(47,685)

Current-period comprehensive income (loss)

 12,308 100 (233) 12,175  26,261 67 (847) 25,481 
                  

Balance at March 29, 2014

 $(7,857)$(2,435)$(25,218)$(35,510)

Balance at June 28, 2014

 $6,096 $(2,468)$(25,832)$(22,204)
                  
                  

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09,Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") 605,Revenue Recognition. The new revenue recognition standard requires entities to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2016 and is to be applied retrospectively. Early application is not permitted. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated results of operations and financial position.

(2) ACQUISITIONS

        On March 3, 2014, the Company purchased 90% of the outstanding shares of DS SM A/S, which was renamed Valmont SM. Valmont SM is a manufacturer of heavy complex steel structures for a diverse range of industries including wind energy, offshore oil and gas, and electricity transmission. Valmont SM's operations are reported in the Engineered Infrastructure Products Segment. Valmont SM's annual sales are approximately $190,000 and it operates two manufacturing locations in Denmark. The purchase price paid for the business at closing (net of $56 cash acquired) was $120,483, including the payoff of an intercompany loan.note payable by Valmont SM to its prior affiliates. The purchase is subject to an earn-out clause that is contingent on meeting future operational metrics for which no liability has been established based on current expectations. Additionally, the fair value measurements are subject to a trade working capital adjustment that has not yet been finalized. The acquisition, which was funded by cash held by the Company, was completed to participate in markets for wind energy, oil and gas exploration, power transmission and other related infrastructure markets.projects and to increase the Company's geographic footprint in Europe. The Company also funded a portion of the acquisition with an intercompany note payable. The excess purchase price over the fair value of assets resulted in goodwill, which is not deductible for tax purposes.

        The preliminary fair value measurement was completed at March 29, 2014,disclosed below is subject to management reviews and completion of the fair value measurements of the assets acquired and liabilities assumed. The Company expects the fair value measurement process and purchase price allocation to be completed in the secondthird quarter of 2014.

        The following table summarizes2014 in conjunction with the preliminary fair valuesfinalization of the assets acquired and liabilities assumed as of the date of acquisition.

 
 At March 3,
2014
 

Current assets

 $73,421 

Property, plant and equipment

  69,438 

Intangible assets

  59,110 

Goodwill

  4,885 
    

Total fair value of assets acquired

 $206,854 
    

Current liabilities

  50,953 

Deferred income taxes

  17,245 

Intercompany note payable

  37,448 

Long-term debt

  8,941 

Non-controlling interests

  9,232 
    

Total fair value of liabilities assumed

  123,819 
    

Net assets acquired

 $83,035 
    
    

        The Company's Condensed Consolidated Statements of Earnings for the thirteen weeks ended March 29, 2014 included net sales and net earnings of $17,304 and $1,178, respectively, resulting from Valmont SM's operations from March 3, 2014 to March 29, 2014. No pro forma information for 2014 has been provided as it does not have a material effect on the financial statements.trade working capital settlement.


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITIONS (Continued)

        The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the date of acquisition.

 
 At March 3,
2014
 

Current assets

 $73,421 

Property, plant and equipment

  88,917 

Intangible assets

  30,340 

Goodwill

  11,846 
    

Total fair value of assets acquired

 $204,524 
    

Current liabilities

  50,953 

Deferred income taxes

  14,915 

Intercompany note payable

  37,448 

Long-term debt

  8,941 
    

Total fair value of liabilities assumed

  112,257 

Non-controlling interests

  9,232 
    

Net assets acquired

 $83,035 
    
    

        The Company's Condensed Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended June 28, 2014 included net sales of $47,217 and $64,521 and net earnings of $2,925 and $4,102, respectively, resulting from Valmont SM's operations from March 3, 2014 to June 28, 2014. No proforma information for 2014 has been provided as it does not have a material effect on the financial statements.

Based on the preliminary fair value assessments, the Company allocated $59,110$30,340 of the purchase price to acquired intangible assets. The following table summarizes the major classes of Valmont SM's acquired intangible assets and the respective weighted average amortization periods:


 Amount Weighted
Average
Amortization
Period
(Years)
  Amount Weighted
Average
Amortization
Period
(Years)
 

Trade Names

 $12,986 Indefinite  $12,210 Indefinite 

Backlog

 3,145 1.5 

Customer Relationships

 46,124 15.0  14,985 15.0 
          

Total Intangible Assets

 $59,110    $30,340   
          

        On February 5, 2013, the Company purchased 100% of the outstanding shares of Locker Group Holdings Pty. Ltd. ("Locker"). Locker is a manufacturer of perforated and expanded metal for the non-residential market, industrial flooring and handrails for the access systems market, and screening media for applications in the industrial and mining sectors in Australia and Asia. Locker's operations are reported in the Engineered Infrastructure Products Segment. The purchase price paid for the


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITIONS (Continued)

business at closing (net of $116 cash acquired) was $53,152. In addition, a maximum of $7,911 additional purchase price may be paid to the sellers upon the achievement of certain gross profit and inventory targets over the next two years. The Company determined the present value of the potential additional purchase price at February 5, 2013 to be $7,178. The acquisition, which was funded by cash held by the Company, was completed to expand our product offering and sales coverage for access systems and related products in Asia Pacific.

        In December 2013, the Company purchased 100% of the outstanding shares of Armorflex International Ltd. ("Armorflex") for $10,000. Armorflex is a company holding proprietary intellectual property for products serving the highway safety market. In the preliminary measurement of fair values of assets acquired and liabilities assumed, we recorded goodwill of $6,864$6,823 and an aggregate of $3,792 for customer relationships, patented technology and other intangible assets. The fair value measurements are not yet complete, due to final working capital calculations and certain income tax measurements that have not been finalized. The Company expects these measurements to be completed in the second quarter of 2014. The goodwill is not deductible for tax purposes. Armorflex is included in the Engineered Infrastructure Products segment and was acquired to expand the Company's highway safety product offerings in the Asia Pacific region. This acquisition did not have a significant effect on the Company's fiscal 2013 financial results.

        The Company's Condensed Consolidated Statement of Earnings for the thirteen and twenty-six weeks ended March 29,June 28, 2014 included net sales of $34,581$69,473 and $104,054 and net earnings of $1,686$3,888 and $5,574 resulting from the Valmont SM, Locker, and


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITIONS (Continued)

Armorflex acquisitions. The pro forma effect of these acquisitions on the second quarter and first quarterhalf of 2013 Statement of Earnings was as follows:


 Thirteen weeks Ended
March 30, 2013
  Thirteen weeks Ended
June 29, 2013
 Twenty-six weeks Ended
June 29, 2013
 

Net sales

 $867,855  $929,722 $1,797,577 

Net earnings

 $79,433  $92,791 $172,224 

Earnings per share—diluted

 $2.96  $3.44 $6.41 

(3) GOODWILL AND INTANGIBLE ASSETS

        The components of amortized intangible assets at March 29,June 28, 2014 and December 28, 2013 were as follows:

 
 March 29, 2014
 
 Gross
Carrying
Amount
 Accumulated
Amortization
 Weighted
Average
Life

Customer Relationships

 $223,739 $79,746 13 years

Proprietary Software & Database

  3,949  2,942 6 years

Patents & Proprietary Technology

  11,463  7,671 8 years

Non-compete Agreements

  1,624  1,452 6 years
       

 $240,775 $91,811  
       
       


 
 December 28, 2013
 
 Gross
Carrying
Amount
 Accumulated
Amortization
 Weighted
Average
Life

Customer Relationships

 $177,495 $76,024 13 years

Proprietary Software & Database

  3,896  2,896 6 years

Patents & Proprietary Technology

  11,334  7,239 8 years

Non-compete Agreements

  1,620  1,438 6 years
       

 $194,345 $87,597  
       
       

        Amortization expense for intangible assets for the thirteen weeks ended March 29, 2014 and March 30, 2013, respectively was as follows:

2014 2013 
$4,103 $4,238 
 
 June 28, 2014
 
 Gross
Carrying
Amount
 Accumulated
Amortization
 Weighted
Average
Life

Customer Relationships

 $194,824 $84,034 13 years

Proprietary Software & Database

  3,977  2,985 5 years

Patents & Proprietary Technology

  11,397  8,148 8 years

Other

  4,731  2,153 3 years
       

 $214,929 $97,320  
       
       

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(3) GOODWILL AND INTANGIBLE ASSETS (Continued)


 
 December 28, 2013
 
 Gross
Carrying
Amount
 Accumulated
Amortization
 Weighted
Average
Life

Customer Relationships

 $177,495 $76,024 13 years

Proprietary Software & Database

  3,896  2,896 6 years

Patents & Proprietary Technology

  11,334  7,239 8 years

Other

  1,620  1,438 6 years
       

 $194,345 $87,597  
       
       

        Amortization expense for intangible assets for the thirteen and twenty-six weeks ended June 28, 2014 and June 29, 2013, respectively was as follows:

Thirteen Weeks
Ended
 Twenty-six Weeks
Ended
 
2014 2013 2014 2013 
$4,634 $3,458 $8,737 $7,696 

        Estimated annual amortization expense related to finite-lived intangible assets is as follows:


 Estimated
Amortization
Expense
  Estimated
Amortization
Expense
 

2014

 $18,211  $18,243 

2015

 17,923  17,436 

2016

 17,350  15,470 

2017

 17,302  15,421 

2018

 15,616  13,738 

        The useful lives assigned to finite-lived intangible assets included consideration of factors such as the Company's past and expected experience related to customer retention rates, the remaining legal or contractual life of the underlying arrangement that resulted in the recognition of the intangible asset and the Company's expected use of the intangible asset.


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(3) GOODWILL AND INTANGIBLE ASSETS (Continued)

        Intangible assets with indefinite lives are not amortized. The carrying values of trade names at March 29,June 28, 2014 and December 28, 2013 were as follows:


 March 29,
2014
 December 28,
2013
 Year
Acquired
  June 28,
2014
 December 28,
2013
 Year
Acquired
 

Webforge

 $17,952 $17,787 2010  $18,389 $17,787 2010 

Valmont SM

 12,059  2014 

Newmark

 11,111 11,111 2004  11,111 11,111 2004 

Ingal EPS/Ingal Civil Products

 9,475 9,387 2010  9,705 9,387 2010 

Donhad

 7,148 7,082 2010  7,322 7,082 2010 

Industrial Galvanizers

 4,156 4,117 2010  4,257 4,117 2010 

Valmont SM

 12,986  2014 

Other

 14,677 14,685    14,907 14,685   
              

 $77,505 $64,169    $77,750 $64,169   
              
              

        In its determination of these intangible assets as indefinite-lived, the Company considered such factors as its expected future use of the intangible asset, legal, regulatory, technological and competitive factors that may impact the useful life or value of the intangible asset and the expected costs to maintain the value of the intangible asset. The Company expects that these intangible assets will maintain their value indefinitely. Accordingly, these assets are not amortized.

        The Company's trade names were tested for impairment in the third quarter of 2013 (exclusive of Valmont SM acquired in the first quarter of 2014). The values of the trade names were determined using the relief-from-royalty method. Based on this evaluation, the Company determined that its trade names were not impaired.

        The carrying amount of goodwill by segment as of June 28, 2014 and December 28, 2013 was as follows:

 
 Engineered
Infrastructure
Products
Segment
 Utility
Support
Structures
Segment
 Coatings
Segment
 Irrigation
Segment
 Other Total 

Balance at December 28, 2013

 $175,442 $75,404 $77,062 $2,420 $19,304 $349,632 

Acquisitions

  11,846          11,846 

Foreign currency translation

  5,548    679  46  654  6,927 
              

Balance at June 28, 2014

 $192,836 $75,404 $77,741 $2,466 $19,958 $368,405 
              
              

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(3) GOODWILL AND INTANGIBLE ASSETS (Continued)

        The carrying amount of goodwill by segment as of March 29, 2014 and December 28, 2013 was as follows:

 
 Engineered
Infrastructure
Products
Segment
 Utility
Support
Structures
Segment
 Coatings
Segment
 Irrigation
Segment
 Other Total 

Balance at December 28, 2013

 $175,442 $75,404 $77,062 $2,420 $19,304 $349,632 

Acquisitions

  4,885          4,885 

Foreign currency translation

  1,310    (190) 27  180  1,327 
              

Balance at March 29, 2014

 $181,637 $75,404 $76,872 $2,447 $19,484 $355,844 
              
              

        The goodwill from acquisitions arose from the acquisition of Valmont SM in the first quarter of 2014. The Company's goodwill was tested for impairment during the third quarter of 2013. As a result of that testing, the Company determined that its goodwill was not impaired, as the valuation of the reporting units exceeded their respective carrying values. The Company continues to monitor changes in the global economy that could impact future operating results of its reporting units. If such conditions arise, the Company will test a given reporting unit for impairment prior to the annual test.

(4) CASH FLOW SUPPLEMENTARY INFORMATION

        The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the thirteentwenty-six weeks ended March 29,June 28, 2014 and March 30,June 29, 2013 were as follows:


 2014 2013  2014 2013 

Interest

 $736 $794  $16,564 $16,329 

Income taxes

 13,345 28,896  77,691 103,604 

        On May 13, 2014, the Company announced a new capital allocation philosophy which increased the dividend by 50% and covered a share repurchase program of up to $500 million of the Company's outstanding common stock to be acquired from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. As of June 28, 2014, the Company has acquired 490,172 shares for approximately $77.1 million.


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(5) EARNINGS PER SHARE

        The following table provides a reconciliation between Basic and Diluted earnings per share (EPS):


 Basic
EPS
 Dilutive
Effect of
Stock Options
 Diluted
EPS
  Basic
EPS
 Dilutive
Effect of
Stock Options
 Diluted
EPS
 

Thirteen weeks ended March 29, 2014:

       

Thirteen weeks ended June 28, 2014:

       

Net earnings attributable to Valmont Industries, Inc.

 $55,980 $ $55,980  $63,976 $ $63,976 

Shares outstanding

 26,715 235 26,950  26,623 233 26,856 

Per share amount

 $2.10 $(0.02)$2.08  $2.40 $(0.02)$2.38 

Thirteen weeks ended March 30, 2013:

       

Thirteen weeks ended June 29, 2013:

       

Net earnings attributable to Valmont Industries, Inc.

 $77,569 $ $77,569  $89,563 $ $89,563 

Shares outstanding

 26,583 276 26,859  26,648 262 26,910 

Per share amount

 $2.92 $(0.03)$2.89  $3.36 $(0.03)$3.33 

Twenty-six weeks ended June 28, 2014:

       

Net earnings attributable to Valmont Industries, Inc.

 $119,956 $ $119,956 

Shares outstanding

 26,669 234 26,903 

Per share amount

 $4.50 $(0.04)$4.46 

Twenty-six weeks ended June 29, 2013:

       

Net earnings attributable to Valmont Industries, Inc.

 $167,132 $ $167,132 

Shares outstanding

 26,615 269 26,884 

Per share amount

 $6.28 $(0.06)$6.22 

        At March 29, 2014 there were 1,172 outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share for the thirteen weeks ending March 29, 2014. At March 30, 2013, there were no outstanding stock options with exercise prices exceeding the market price of common stock.

(6) BUSINESS SEGMENTS

        The Company has four reportable segments based on its management structure. Each segment is global in nature with a manager responsible for segment operational performance and the allocation of capital within the segment. Net corporate expense is net of certain service-related expenses that are allocated to business units generally on the basis of employee headcounts and sales dollars.

        Reportable segments are as follows:

        ENGINEERED INFRASTRUCTURE PRODUCTS:    This segment consists of the manufacture of engineered metal structures and components for the global lighting and traffic, wireless communication, wind energy, offshore oil and gas, roadway safety and access systems applications;

        UTILITY SUPPORT STRUCTURES:    This segment consists of the manufacture of engineered steel and concrete structures for the global utility industry;

        COATINGS:    This segment consists of galvanizing, anodizing and powder coating services on a global basis; and


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(6) BUSINESS SEGMENTS (Continued)

        IRRIGATION:    This segment consists of the manufacture of agricultural irrigation equipment and related parts and services for the global agricultural industry.

        In addition to these four reportable segments, the Company has other businesses and activities that individually are not more than 10% of consolidated sales. These include the manufacture of forged steel grinding media for the mining industry, tubular products for industrial customers, electrolytic


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(6) BUSINESS SEGMENTS (Continued)

manganese dioxide for disposable batteries and the distribution of industrial fasteners and are reported in the "Other" category.

        The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its business segments based upon operating income and invested capital. The Company does not allocate interest expense, non-operating income and deductions, or income taxes to its business segments.


Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(6) BUSINESS SEGMENTS (Continued)

Summary by Business


 Thirteen Weeks Ended  Thirteen Weeks Ended Twenty-six Weeks Ended 

 March 29,
2014
 March 30,
2013
  June 28,
2014
 June 29,
2013
 June 28,
2014
 June 29,
2013
 

SALES:

              

Engineered Infrastructure Products segment:

              

Lighting, Traffic, and Roadway Products

 $138,977 $147,170  $164,753 $161,487 $303,730 $308,657 

Communication Products

 29,886 28,622  43,618 34,771 73,504 63,393 

Offshore Structures

 17,304   47,217  64,521  

Access Systems

 42,295 47,878  48,764 54,378 91,059 102,256 
              

Engineered Infrastructure Products segment

 228,462 223,670  304,352 250,636 532,814 474,306 

Utility Support Structures segment:

              

Steel

 191,437 211,011  179,574 200,650 371,011 411,661 

Concrete

 23,290 28,627  33,456 27,593 56,746 56,220 
              

Utility Support Structures segment

 214,727 239,638  213,030 228,243 427,757 467,881 

Coatings segment

 82,171 89,245  85,157 93,798 167,328 183,043 

Irrigation segment

 212,733 244,707  219,917 270,175 432,650 514,882 

Other

 58,602 77,869  61,786 83,679 120,388 161,548 
              

Total

 796,695 875,129  884,242 926,531 1,680,937 1,801,660 

INTERSEGMENT SALES:

              

Engineered Infrastructure Products segment

 19,565 29,452  18,166 22,169 37,731 51,621 

Utility Support Structures segment

 495 411  1,025 299 1,520 710 

Coatings segment

 14,953 14,330  14,770 14,448 29,723 28,778 

Irrigation segment

 9   4 1 13 1 

Other

 9,933 11,306  7,678 10,955 17,611 22,261 
              

Total

 44,955 55,499  41,643 47,872 86,598 103,371 

NET SALES:

              

Engineered Infrastructure Products segment

 208,897 194,218  286,186 228,467 495,083 422,685 

Utility Support Structures segment

 214,232 239,227  212,005 227,944 426,237 467,171 

Coatings segment

 67,218 74,915  70,387 79,350 137,605 154,265 

Irrigation segment

 212,724 244,707  219,913 270,174 432,637 514,881 

Other

 48,669 66,563  54,108 72,724 102,777 139,287 
              

Total

 $751,740 $819,630  $842,599 $878,659 $1,594,339 $1,698,289 
          ��   
              

OPERATING INCOME:

              

Engineered Infrastructure Products segment

 $13,709 $12,734  $28,625 $22,603 $42,334 $35,337 

Utility Support Structures segment

 32,757 46,155  26,375 42,121 59,132 88,276 

Coatings segment

 13,886 13,420  15,820 23,552 29,706 36,972 

Irrigation segment

 43,146 54,559  41,473 64,174 84,619 118,733 

Other

 8,550 10,787  8,343 13,025 16,893 23,812 

Corporate

 (13,200) (19,465) (15,860) (21,210) (29,060) (40,675)
              

Total

 $98,848 $118,190  $104,776 $144,265 $203,624 $262,455 
              
              

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION

        The Company has $450,000 principal amount of senior unsecured notes outstanding at a coupon interest rate of 6.625% per annum. The notes are guaranteed, jointly, severally, fully and unconditionally by certain of the Company's current and future direct and indirect domestic and foreign subsidiaries (collectively the "Guarantors"), excluding its other current domestic and foreign subsidiaries which do not guarantee the debt (collectively referred to as the "Non-Guarantors"). All Guarantors are 100% owned by the parent company.

        In 2014, the Company classified "Equity in earnings of nonconsolidated subsidiaries" as an adjustment to reconcile net earnings to operating cash flows, as part of "Net cash flows from operating activities" in the Condensed Consolidating Statement of Cash Flows. In the 2013 Condensed Consolidating Statement of Cash Flows, these amounts were classified within "Other, net", as part of "Net cash flows from investing activities". The Company revised its presentation for 2013 with respect to the supplemental information included in this footnote in order to achieve comparability in the Condensed Consolidating Statements of Cash Flows.

        The revisions consisted of recording the amounts previously reported in "Other, net" in cash flows from investing activities that were related to earnings from subsidiaries to "Equity in earnings of nonconsolidated subsidiaries" in cash flows from operating activities. Accordingly, the eliminations to reconcile consolidated net earnings are contained in the "Net cash flows from operating activities".

        The "Non-Guarantor" and "Total" columns were not affected by any of these revisions. There was also no effect on the consolidated (total) net cash flows or any other statements in this footnote. The following is a reconciliation of the columns affected for 2013.


 Parent Parent Guarantor Guarantor Eliminations Eliminations  Parent Parent Guarantor Guarantor Eliminations Eliminations 

 As previously
reported
 As revised As
previously
reported
 As revised As previously
reported
 As revised  As previously
reported
 As revised As
previously
reported
 As revised As previously
reported
 As revised 

2013

                          

Cash flows from operating activities:

                          

Equity in earnings of nonconsolidated subsidiaries

 $3 $(37,423)$ $(19,151)$ $56,577  $(266)$(85,146)$ $(42,385)$ $127,265 

Net cash flows from operating activities

 99,749 62,323 13,036 (6,115) (56,018) 559  180,493 95,613 68,144 25,759 (124,172) 3,093 

Cash flows from investing activities:

 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 

Other, net

 (39,236) (1,810) (54,761) (35,610) 56,018 (559) (53,317) 31,563 (99,472) (57,087) 124,172 (3,093)

Net cash flows from investing activities

 (48,790) (11,364) (61,845) (42,694) 56,018 (559) (74,677) 10,203 (118,009) (75,624) 124,172 (3,093)

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

        Consolidated financial information for the Company ("Parent"), the Guarantor subsidiaries and the Non-Guarantor subsidiaries is as follows:


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Thirteen weeks ended March 29,June 28, 2014


 Parent Guarantors Non-
Guarantors
 Eliminations Total  Parent Guarantors Non-
Guarantors
 Eliminations Total 

Net sales

 $376,642 $135,897 $300,281 $(61,080)$751,740  $378,642 $124,414 $387,715 $(48,172)$842,599 

Cost of sales

 271,759 99,816 234,634 (61,451) 544,758  280,054 91,536 298,764 (48,232) 622,122 
                      

Gross profit

 104,883 36,081 65,647 371 206,982  98,588 32,878 88,951 60 220,477 

Selling, general and administrative expenses

 47,790 12,991 47,353  108,134  50,164 12,670 52,867  115,701 
                      

Operating income

 57,093 23,090 18,294 371 98,848  48,424 20,208 36,084 60 104,776 
                      

Other income (expense):

                      

Interest expense

 (7,675) (10,880) (522) 10,880 (8,197) (7,691) (11,337) (613) 11,337 (8,304)

Interest income

 20 183 12,416 (10,880) 1,739  6 152 12,756 (11,337) 1,577 

Other

 67 (492) (5,387)  (5,812) 1,754 140 9  1,903 
                      

 (7,588) (11,189) 6,507  (12,270) (5,931) (11,045) 12,152  (4,824)
                      

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries

 49,505 11,901 24,801 371 86,578  42,493 9,163 48,236 60 99,952 
                      

Income tax expense (benefit):

                      

Current

 19,878 5,587 7,369 104 32,938  9,315 2,626 14,148 28 26,117 

Deferred

 (1,843) (412) (668)  (2,923) 7,672 2,079 (1,798)  7,953 
                      

 18,035 5,175 6,701 104 30,015  16,987 4,705 12,350 28 34,070 
                      

Earnings before equity in earnings of nonconsolidated subsidiaries

 31,470 6,726 18,100 267 56,563  25,506 4,458 35,886 32 65,882 

Equity in earnings of nonconsolidated subsidiaries

 
24,510
 
8,939
 
 
(33,449

)
 
  
38,470
 
16,964
 
 
(55,464

)
 
(30

)
                      

Net earnings

 55,980 15,665 18,100 (33,182) 56,563  63,976 21,422 35,886 (55,432) 65,852 

Less: Earnings attributable to noncontrolling interests

   (583)  (583)   (1,876)  (1,876)
                      

Net earnings attributable to Valmont Industries, Inc

 $55,980 $15,665 $17,517 $(33,182)$55,980  $63,976 $21,422 $34,010 $(55,432)$63,976 
                      
                      

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Twenty-six weeks ended June 28, 2014

 
 Parent Guarantors Non-
Guarantors
 Eliminations Total 

Net sales

 $755,284 $260,311 $687,996 $(109,252)$1,594,339 

Cost of sales

  551,813  191,352  533,398  (109,683) 1,166,880 
            

Gross profit

  203,471  68,959  154,598  431  427,459 

Selling, general and administrative expenses

  97,954  25,661  100,220    223,835 
            

Operating income

  105,517  43,298  54,378  431  203,624 
            

Other income (expense):

                

Interest expense

  (15,366) (22,217) (1,135) 22,217  (16,501)

Interest income

  26  335  25,172  (22,217) 3,316 

Other

  1,821  (352) (5,378)   (3,909)
            

  (13,519) (22,234) 18,659    (17,094)
            

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries

  91,998  21,064  73,037  431  186,530 
            

Income tax expense (benefit):

                

Current

  29,193  8,213  21,517  132  59,055 

Deferred

  5,829  1,667  (2,466)   5,030 
            

  35,022  9,880  19,051  132  64,085 
            

Earnings before equity in earnings of nonconsolidated subsidiaries

  56,976  11,184  53,986  299  122,445 

Equity in earnings of nonconsolidated subsidiaries

  
62,980
  
25,903
  
  
(88,913

)
 
(30

)
            

Net earnings

  119,956  37,087  53,986  (88,614) 122,415 

Less: Earnings attributable to noncontrolling interests

      (2,459)   (2,459)
            

Net earnings attributable to Valmont Industries, Inc

 $119,956 $37,087 $51,527 $(88,614)$119,956 
            
            

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Thirteen weeks ended March 30,June 29, 2013


 Parent Guarantors Non-
Guarantors
 Eliminations Total  Parent Guarantors Non-
Guarantors
 Eliminations Total 

Net sales

 $416,613 $170,849 $325,409 $(93,241)$819,630  $426,817 $169,027 $360,802 $(77,987)$878,659 

Cost of sales

 300,680 128,998 248,383 (93,800) 584,261  297,949 126,290 273,482 (80,533) 617,188 
                      

Gross profit

 115,933 41,851 77,026 559 235,369  128,868 42,737 87,320 2,546 261,471 

Selling, general and administrative expenses

 50,026 13,994 53,159  117,179  55,720 14,347 47,139  117,206 
                      

Operating income

 65,907 27,857 23,867 559 118,190  73,148 28,390 40,181 2,546 144,265 
                      

Other income (expense):

                      

Interest expense

 (7,755) (12,630) (434) 12,629 (8,190) (7,636) (11,944) (390) 11,945 (8,025)

Interest income

 7 253 13,722 (12,629) 1,353  8 237 13,552 (11,945) 1,852 

Other

 1,408 15 133  1,556  394 31 (302)  123 
                      

 (6,340) (12,362) 13,421  (5,281) (7,234) (11,676) 12,860  (6,050)
                      

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries

 59,567 15,495 37,288 559 112,909  65,914 16,714 53,041 2,546 138,215 
                      

Income tax expense (benefit):

                      

Current

 21,175 6,836 10,470 179 38,660  24,824 6,546 16,182 658 48,210 

Deferred

 (1,754) 303 (2,236)  (3,687) (750) 1,399 (1,691)  (1,042)
                      

 19,421 7,139 8,234 179 34,973  24,074 7,945 14,491 658 47,168 
                      

Earnings before equity in earnings of nonconsolidated subsidiaries

 40,146 8,356 29,054 380 77,936  41,840 8,769 38,550 1,888 91,047 

Equity in earnings of nonconsolidated subsidiaries

 
37,423
 
19,151
 
207
 
(56,577

)
 
204
  
47,723
 
23,234
 
 
(70,688

)
 
269
 
                      

Net earnings

 77,569 27,507 29,261 (56,197) 78,140  89,563 32,003 38,550 (68,800) 91,316 

Less: Earnings attributable to noncontrolling interests

   (571)  (571)   (1,753)  (1,753)
                      

Net earnings attributable to Valmont Industries, Inc

 $77,569 $27,507 $28,690 $(56,197)$77,569  $89,563 $32,003 $36,797 $(68,800)$89,563 
                      
                      

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Twenty-six weeks ended June 29, 2013

 
 Parent Guarantors Non-
Guarantors
 Eliminations Total 

Net sales

 $843,430 $339,876 $686,211 $(171,228)$1,698,289 

Cost of sales

  598,629  255,288  521,865  (174,333) 1,201,449 
            

Gross profit

  244,801  84,588  164,346  3,105  496,840 

Selling, general and administrative expenses

  105,746  28,341  100,298    234,385 
            

Operating income

  139,055  56,247  64,048  3,105  262,455 
            

Other income (expense):

                

Interest expense

  (15,391) (24,574) (824) 24,574  (16,215)

Interest income

  15  490  27,274  (24,574) 3,205 

Other

  1,802  46  (169)   1,679 
            

  (13,574) (24,038) 26,281    (11,331)
            

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries

  125,481  32,209  90,329  3,105  251,124 
            

Income tax expense (benefit):

                

Current

  45,999  13,382  26,652  837  86,870 

Deferred

  (2,504) 1,702  (3,927)   (4,729)
            

  43,495  15,084  22,725  837  82,141 
            

Earnings before equity in earnings of nonconsolidated subsidiaries

  81,986  17,125  67,604  2,268  168,983 

Equity in earnings of nonconsolidated subsidiaries

  
85,146
  
42,385
  
207
  
(127,265

)
 
473
 
            

Net earnings

  167,132  59,510  67,811  (124,997) 169,456 

Less: Earnings attributable to noncontrolling interests

      (2,324)   (2,324)
            

Net earnings attributable to Valmont Industries, Inc

 $167,132 $59,510 $65,487 $(124,997)$167,132 
            
            

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirteen weeks ended June 28, 2014

 
 Parent Guarantors Non-
Guarantors
 Eliminations Total 

Net earnings

 $63,976 $21,422 $35,886 $(55,432)$65,852 
            

Other comprehensive income (loss), net of tax:

                

Foreign currency translation adjustments:          

                

Unrealized gains (losses) arising during the period

    (8,954) 22,823    13,869 
            

    (8,954) 22,823    13,869 
            

Unrealized loss on cash flow hedge:

                

Amortization cost included in interest expense

  100    (133)   (33)
            

  100    (133)   (33)
            

Actuarial gain (loss) in defined benefit pension plan liability

      (614)   (614)

Equity in other comprehensive income

  
13,206
  
  
  
(13,206

)
 
 
            

Other comprehensive income (loss)

  13,306  (8,954) 22,076  (13,206) 13,222 
            

Comprehensive income

  77,282  12,468  57,962  (68,638) 79,074 

Comprehensive income attributable to noncontrolling interests

      (1,792)   (1,792)
            

Comprehensive income attributable to Valmont Industries, Inc. 

 $77,282 $12,468 $56,170 $(68,638)$77,282 
            
            

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Twenty-six weeks ended June 28, 2014

 
 Parent Guarantors Non-
Guarantors
 Eliminations Total 

Net earnings

 $119,956 $37,087 $53,986 $(88,614)$122,415 
            

Other comprehensive income (loss), net of tax:

                

Foreign currency translation adjustments:

                

Unrealized gains (losses) arising during the period

    (29,315) 54,821    25,506 
            

    (29,315) 54,821    25,506 
            

Unrealized loss on cash flow hedge:

                

Amortization cost included in interest expense

  200    (133)   67 
            

  200    (133)   67 
            

Actuarial gain (loss) in defined benefit pension plan liability

      (847)   (847)

Equity in other comprehensive income          

  
25,281
  
  
  
(25,281

)
 
 
            

Other comprehensive income (loss)

  25,481  (29,315) 53,841  (25,281) 24,726 
            

Comprehensive income

  145,437  7,772  107,827  (113,895) 147,141 

Comprehensive income attributable to noncontrolling interests

      (1,704)   (1,704)
            

Comprehensive income attributable to Valmont Industries, Inc. 

 $145,437 $7,772 $106,123 $(113,895)$145,437 
            
            

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirteen weeks ended MarchJune 29, 20142013


 Parent Guarantors Non-
Guarantors
 Eliminations Total  Parent Guarantors Non-
Guarantors
 Eliminations Total 

Net earnings

 $55,980 $15,665 $18,100 $(33,182)$56,563  $89,563 $32,003 $38,550 $(68,800)$91,316 
                      

Other comprehensive income (loss), net of tax:

                      

Foreign currency translation adjustments:

                      

Unrealized gains (losses) arising during the period

  (20,361) 31,998  11,637   65,807 (118,769)  (52,962)
                      

  (20,361) 31,998  11,637   65,807 (118,769)  (52,962)
                      

Unrealized loss on cash flow hedge:

                      

Amortization cost included in interest expense

 100    100  100    100 
                      

 100    100  100    100 
                      

Actuarial gain (loss) in defined benefit pension plan liability

   (233)  (233)   42  42 

Equity in other comprehensive income

 
12,075
 
 
 
(12,075

)
 
  
(49,618

)
 
 
 
49,618
 
 
                      

Other comprehensive income (loss)

 12,175 (20,361) 31,765 (12,075) 11,504  (49,518) 65,807 (118,727) 49,618 (52,820)
                      

Comprehensive income

 68,155 (4,696) 49,865 (45,257) 68,067  40,045 97,810 (80,177) (19,182) 38,496 

Comprehensive income attributable to noncontrolling interests

   88  88    1,549  1,549 
                      

Comprehensive income attributable to Valmont Industries, Inc.

 $68,155 $(4,696)$49,953 $(45,257)$68,155  $40,045 $97,810 $(78,628)$(19,182)$40,045 
                      
                      

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the ThirteenTwenty-six weeks ended March 30,June 29, 2013


 Parent Guarantors Non-
Guarantors
 Eliminations Total  Parent Guarantors Non-
Guarantors
 Eliminations Total 

Net earnings

 $77,569 $27,507 $29,261 $(56,197)$78,140  $167,132 $59,510 $67,811 $(124,997)$169,456 
                      

Other comprehensive income (loss), net of tax:

                      

Foreign currency translation adjustments:

                      

Unrealized gains (losses) arising during the period

  (38,321) 28,701  (9,620)  27,486 (90,068)  (62,582)

Realized (loss) included in net earnings during the period

   (5,194)  (5,194)

Realized loss included in net earnings during the period

   (5,194)  (5,194)
                      

  (38,321) 23,507  (14,814)  27,486 (95,262)  (67,776)
                      

Unrealized loss on cash flow hedge:

                      

Amortization cost included in interest expense

 100    100  200    200 
                      

 100    100  200    200 
                      

Actuarial gain (loss) in defined benefit pension plan liability

   (936)  (936)   (894)  (894)

Equity in other comprehensive income

 
(13,539

)
 
 
 
13,539
 
  
(63,157

)
 
 
 
63,157
 
 
                      

Other comprehensive income (loss)

 (13,439) (38,321) 22,571 13,539 (15,650) (62,957) 27,486 (96,156) 63,157 (68,470)
                      

Comprehensive income

 64,130 (10,814) 51,832 (42,658) 62,490  104,175 86,996 (28,345) (61,840) 100,986 

Comprehensive income attributable to noncontrolling interests

   1,640  1,640    3,189  3,189 
                      

Comprehensive income attributable to Valmont Industries, Inc.

 $64,130 $(10,814)$53,472 $(42,658)$64,130  $104,175 $86,996 $(25,156)$(61,840)$104,175 
                      
                      

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
March 29,June 28, 2014


 Parent Guarantors Non-Guarantors Eliminations Total  Parent Guarantors Non-Guarantors Eliminations Total 

ASSETS

                      

Current assets:

                      

Cash and cash equivalents

 $81,941 $29,825 $376,429 $ $488,195  $63,127 $49,455 $343,345 $ $455,927 

Receivables, net

 153,129 84,621 291,943  529,693  148,649 73,846 321,113  543,608 

Inventories

 153,676 67,478 203,671  424,825  123,369 59,580 198,994  381,943 

Prepaid expenses

 4,449 843 52,621  57,913  6,606 690 59,620  66,916 

Refundable and deferred income taxes

 34,436 8,558 14,941  57,935  51,058 6,285 13,991  71,334 
                      

Total current assets

 427,631 191,325 939,605  1,558,561  392,809 189,856 937,063  1,519,728 
                      

Property, plant and equipment, at cost

 533,430 127,203 511,281  1,171,914  548,424 126,706 485,012  1,160,142 

Less accumulated depreciation and amortization

 305,571 63,265 190,875  559,711  311,358 65,166 144,764  521,288 
                      

Net property, plant and equipment

 227,859 63,938 320,406  612,203  237,066 61,540 340,248  638,854 
                      

Goodwill

 20,108 107,542 228,194  355,844  20,108 107,542 240,755  368,405 

Other intangible assets

 333 47,257 178,879  226,469  319 46,052 148,988  195,359 

Investment in subsidiaries and intercompany accounts

 1,579,856 1,419,723 494,656 (3,494,235)   1,578,856 1,445,118 509,824 (3,533,798)  

Other assets

 38,829  93,960  132,789  40,228  96,030  136,258 
                      

Total assets

 $2,294,616 $1,829,785 $2,255,700 $(3,494,235)$2,885,866  $2,269,386 $1,850,108 $2,272,908 $(3,533,798)$2,858,604 
                      
                      

LIABILITIES AND SHAREHOLDERS' EQUITY

                      

Current liabilities:

                      

Current installments of long-term debt

 $188 $ $ $ $188  $188 $ $ $ $188 

Notes payable to banks

   14,860  14,860    17,485  17,485 

Accounts payable

 71,447 19,188 143,583  234,218  63,503 16,471 128,860  208,834 

Accrued employee compensation and benefits

 42,853 5,157 38,317  86,327  46,513 6,332 42,520  95,365 

Accrued expenses

 37,997 5,928 47,185  91,110  33,746 6,284 51,601  91,631 

Income taxes payable

 9,561 (9) 415  9,967 

Dividends payable

 6,721    6,721  9,930    9,930 
                      

Total current liabilities

 168,767 30,264 244,360  443,391  153,880 29,087 240,466  423,433 
                      

Deferred income taxes

 18,763 29,074 56,805  104,642  13,406 28,879 53,389  95,674 

Long-term debt, excluding current installments

 469,796 535,270 9,345 (535,270) 479,141  469,216 544,497 9,282 (544,497) 478,498 

Defined benefit pension liability

   139,047  139,047    143,114  143,114 

Deferred compensation

 39,420  7,082  46,502  41,134  7,158  48,292 

Other noncurrent liabilities

 9,681  43,659  53,340  9,481  45,022  54,503 

Shareholders' equity:

                      

Common stock of $1 par value

 27,900 457,950 254,982 (712,932) 27,900  27,900 457,950 254,982 (712,932) 27,900 

Additional paid-in capital

  150,286 1,034,236 (1,184,522)    150,286 1,034,236 (1,184,522)  

Retained earnings

 1,615,696 580,858 535,220 (1,116,078) 1,615,696  1,672,287 602,280 522,868 (1,125,148) 1,672,287 

Accumulated other comprehensive income (loss)

 (35,510) 46,083 (100,650) 54,567 (35,510) (22,204) 37,129 (70,430) 33,301 (22,204)

Treasury stock

 (19,897)    (19,897) (95,714)    (95,714)
                      

Total Valmont Industries, Inc. shareholders' equity

 1,588,189 1,235,177 1,723,788 (2,958,965) 1,588,189  1,582,269 1,247,645 1,741,656 (2,989,301) 1,582,269 
                      

Noncontrolling interest in consolidated subsidiaries

   31,614  31,614    32,821  32,821 
                      

Total shareholders' equity

 1,588,189 1,235,177 1,755,402 (2,958,965) 1,619,803  1,582,269 1,247,645 1,774,477 (2,989,301) 1,615,090 
                      

Total liabilities and shareholders' equity

 $2,294,616 $1,829,785 $2,255,700 $(3,494,235)$2,885,866  $2,269,386 $1,850,108 $2,272,908 $(3,533,798)$2,858,604 
                      
                      

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
December 28, 2013


 Parent Guarantors Non-Guarantors Eliminations Total  Parent Guarantors Non-Guarantors Eliminations Total 

ASSETS

                      

Current assets:

                      

Cash and cash equivalents

 $215,576 $49,053 $349,077 $ $613,706  $215,576 $49,053 $349,077 $ $613,706 

Receivables, net

 139,179 108,646 267,615  515,440  139,179 108,646 267,615  515,440 

Inventories

 132,953 70,231 176,816  380,000  132,953 70,231 176,816  380,000 

Prepaid expenses

 4,735 932 17,330  22,997  4,735 932 17,330  22,997 

Refundable and deferred income taxes

 41,167 8,351 16,179  65,697  41,167 8,351 16,179  65,697 
                      

Total current assets

 533,610 237,213 827,017  1,597,840  533,610 237,213 827,017  1,597,840 
                      

Property, plant and equipment, at cost

 522,734 125,764 368,628  1,017,126  522,734 125,764 368,628  1,017,126 

Less accumulated depreciation and amortization

 300,066 61,520 121,330  482,916  300,066 61,520 121,330  482,916 
                      

Net property, plant and equipment

 222,668 64,244 247,298  534,210  222,668 64,244 247,298  534,210 
                      

Goodwill

 20,108 107,542 221,982  349,632  20,108 107,542 221,982  349,632 

Other intangible assets

 346 48,461 122,110  170,917  346 48,461 122,110  170,917 

Investment in subsidiaries and intercompany accounts

 1,417,425 1,367,308 518,059 (3,302,792)   1,417,425 1,367,308 518,059 (3,302,792)  

Other assets

 30,759  93,136  123,895  30,759  93,136  123,895 
                      

Total assets

 $2,224,916 $1,824,768 $2,029,602 $(3,302,792)$2,776,494  $2,224,916 $1,824,768 $2,029,602 $(3,302,792)$2,776,494 
                      
                      

LIABILITIES AND SHAREHOLDERS' EQUITY

                      

Current liabilities:

                      

Current installments of long-term debt

 $188 $ $14 $ $202  $188 $ $14 $ $202 

Notes payable to banks

   19,024  19,024    19,024  19,024 

Accounts payable

 62,153 20,365 133,603  216,121  62,153 20,365 133,603  216,121 

Accrued employee compensation and benefits

 76,370 13,713 32,884  122,967  76,370 13,713 32,884  122,967 

Accrued expenses

 28,362 7,315 35,883  71,560  28,362 7,315 35,883  71,560 

Income Taxes Payable

      

Dividends payable

 6,706    6,706  6,706    6,706 
                      

Total current liabilities

 173,779 41,393 221,408  436,580  173,779 41,393 221,408  436,580 
                      

Deferred income taxes

 18,983 29,279 30,662  78,924  18,983 29,279 30,662  78,924 

Long-term debt, excluding current installments

 470,175 514,223 732 (514,223) 470,907  470,175 514,223 732 (514,223) 470,907 

Defined benefit pension liability

   154,397  154,397    154,397  154,397 

Deferred compensation

 32,339  6,770  39,109  32,339  6,770  39,109 

Other noncurrent liabilities

 7,615  44,116  51,731  7,615  44,116  51,731 

Shareholders' equity:

                      

Common stock of $1 par value

 27,900 457,950 254,982 (712,932) 27,900  27,900 457,950 254,982 (712,932) 27,900 

Additional paid-in capital

  150,286 891,236 (1,041,522)    150,286 891,236 (1,041,522)  

Retained earnings

 1,562,670 565,193 517,703 (1,082,896) 1,562,670  1,562,670 565,193 517,703 (1,082,896) 1,562,670 

Accumulated other comprehensive income

 (47,685) 66,444 (115,225) 48,781 (47,685) (47,685) 66,444 (115,225) 48,781 (47,685)

Treasury stock

 (20,860)    (20,860) (20,860)    (20,860)
                      

Total Valmont Industries, Inc. shareholders' equity

 1,522,025 1,239,873 1,548,696 (2,788,569) 1,522,025  1,522,025 1,239,873 1,548,696 (2,788,569) 1,522,025 
                      

Noncontrolling interest in consolidated subsidiaries

   22,821  22,821    22,821  22,821 
                      

Total shareholders' equity

 1,522,025 1,239,873 1,571,517 (2,788,569) 1,544,846  1,522,025 1,239,873 1,571,517 (2,788,569) 1,544,846 
                      

Total liabilities and shareholders' equity

 $2,224,916 $1,824,768 $2,029,602 $(3,302,792)$2,776,494  $2,224,916 $1,824,768 $2,029,602 $(3,302,792)$2,776,494 
                      
                      

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the ThirteenTwenty-six Weeks Ended March 29,June 28, 2014


 Parent Guarantors Non-Guarantors Eliminations Total  Parent Guarantors Non-Guarantors Eliminations Total 

Cash flows from operating activities:

                      

Net earnings

 $55,980 $15,665 $18,100 $(33,182)$56,563  $119,956 $37,087 $53,986 $(88,614)$122,415 

Adjustments to reconcile net earnings to net cash flows from operations:

                      

Depreciation and amortization

 6,041 3,278 10,282  19,601  12,539 6,584 24,245  43,368 

Loss on investment

   3,386  3,386      3,501  3,501 

Stock-based compensation

 1,880    1,880  3,686    3,686 

Defined benefit pension plan expense

   662  662    1,334  1,334 

Contribution to defined benefit pension plan

   (17,484)  (17,484)   (17,484)  (17,484)

Gain on sale of property, plant and equipment

 (9) (77) (41)  (127) 7 (74) (35)  (102)

Equity in earnings in nonconsolidated subsidiaries

 (24,510) (8,939)  33,449   (62,980) (25,903)  88,913 30 

Deferred income taxes

 (1,843) (412) (668)  (2,923) 5,829 1,667 (2,466)  5,030 

Changes in assets and liabilities (net of acquisitions):

                      

Receivables

 (13,949) 24,027 21,590  31,668  (9,471) 34,803 (4,249)  21,083 

Inventories

 (20,723) 2,753 (19,941)  (37,911) 9,584 10,651 (13,611)  6,624 

Prepaid expenses

 286 89 (9,523)  (9,148) (1,870) 241 (16,660)  (18,289)

Accounts payable

 9,294 (1,175) (20,590)  (12,471) 1,352 (3,892) (26,093)  (28,633)

Accrued expenses

 (22,614) (9,943) 2,668  (29,889) (23,205) (8,411) 1,201  (30,415)

Other noncurrent liabilities

 2,104  (553)  1,551  1,941  (175)  1,766 

Income taxes payable (refundable)

 16,640 586 (667)  16,559  (22,572) 1,071 (562)  (22,063)
                      

Net cash flows from operating activities

 8,577 25,852 (12,779) 267 21,917  34,796 53,824 2,932 299 91,851 
                      

Cash flows from investing activities:

                      

Purchase of property, plant and equipment

 (11,282) (1,767) (10,477)  (23,526) (27,046) (1,486) (18,459)  (46,991)

Proceeds from sale of assets

 19 77 1,295  1,391  21 88 1,042  1,151 

Acquisitions, net of cash acquired

   (120,483)  (120,483)   (120,483)  (120,483)

Other, net

 17,175 3,630 (21,528) (267) (990) 49,004 (25,784) (25,861) (299) (2,940)
                      

Net cash flows from investing activities

 5,912 1,940 (151,193) (267) (143,608) 21,979 (27,182) (163,761) (299) (169,263)
                      

Cash flows from financing activities:

                      

Net borrowings under short-term agreements

   (4,056)  (4,056)   (1,861)  (1,861)

Principal payments on long-term borrowings

   (63)  (63) (196)  (63)  (259)

Dividends paid

 (6,706)    (6,706) (13,427)    (13,427)

Intercompany dividends

 20,895 25,467 (46,362)   

Dividends to noncontrolling interest

   (351)  (351)   (1,340)  (1,340)

Intercompany interest on long-term note

  (48,174) 48,174     (54,398) 54,398   

Intercompany capital contribution

 (143,000)  143,000    (143,000)   143,000    

Proceeds from exercises under stock plans

 7,860    7,860  11,996    11,996 

Excess tax benefits from stock option exercises

 2,296    2,296  3,576    3,576 

Purchase of treasury shares

 (77,084)    (77,084)

Purchase of common treasury shares—stock plan exercises:

 (8,574)    (8,574) (11,984)    (11,984)
                      

Net cash flows from financing activities

 (148,124) (48,174) 186,704  (9,594) (209,224) (28,931) 147,772  (90,383)
                      

Effect of exchange rate changes on cash and cash equivalents

  1,154 4,620  5,774   2,691 7,325  10,016 
                      

Net change in cash and cash equivalents

 (133,635) (19,228) 27,352  (125,511) (152,449) 402 (5,732)  (157,779)

Cash and cash equivalents—beginning of year

 215,576 49,053 349,077  613,706  215,576 49,053 349,077  613,706 
                      

Cash and cash equivalents—end of period

 $81,941 $29,825 $376,429 $ $488,195  $63,127 $49,455 $343,345 $ $455,927 
                      
                      

Table of Contents


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the ThirteenTwenty-six Weeks Ended March 30,June 29, 2013


 Parent Guarantors Non-Guarantors Eliminations Total  Parent Guarantors Non-Guarantors Eliminations Total 

Cash flows from operations:

                      

Net earnings

 $77,569 $27,507 $29,261 $(56,197)$78,140  $167,132 $59,510 $67,811 $(124,997)$169,456 

Adjustments to reconcile net earnings to net cash flows from operations:

                      

Depreciation and amortization

 4,787 3,318 11,103  19,208  9,834 6,452 21,900  38,186 

Stock-based compensation

 1,675    1,675  3,342    3,342 

Defined benefit pension plan expense

   1,633  1,633    3,245  3,245 

Contribution to defined benefit pension plan

   (10,346)  (10,346)   (10,346)  (10,346)

Gain on sale of property, plant and equipment

 19 4 (89)  (66) 337 36 (5,444)  (5,071)

Equity in earnings of nonconsolidated subsidiaries

 (37,423) (19,151) (207) 56,577 (204) (85,146) (42,385) (207) 127,265 (473)

Deferred income taxes

 (1,754) 303 (2,236)  (3,687) (2,504) 1,702 (3,927)  (4,729)

Changes in assets and liabilities:

                      

Receivables

 7,323 701 10,982  19,006  453 5,235 (9,019)  (3,331)

Inventories

 (2,938) (8,666) (18,786)  (30,390) 10,524 1,643 (14,658)  (2,491)

Prepaid expenses

 1,249 194 (4,229)  (2,786) 579 318 (6,807)  (5,910)

Accounts payable

 (1,634) (5,014) 1,345  (5,303) (6,052) (2,877) 9,665  736 

Accrued expenses

 (6,374) (5,328) (6,106)  (17,808) 4,471 (1,932) 377  2,916 

Other noncurrent liabilities

 2,592  (1,462)  1,130  3,058  (1,185)  1,873 

Income taxes payable (refundable)

 17,232 17 (3,018) 179 14,410  (10,415) (1,943) (277) 825 (11,810)
                      

Net cash flows from operations

 62,323 (6,115) 7,845 559 64,612  95,613 25,759 51,128 3,093 175,593 
                      

Cash flows from investing activities:

                      

Purchase of property, plant and equipment

 (9,589) (7,084) (5,172)  (21,845) (22,826) (18,569) (12,863)  (54,258)

Proceeds from sale of assets

 35  29,380  29,415  1,466 32 37,556  39,054 

Acquisitions, net of cash acquired

   (54,714)  (54,714)   (53,152)  (53,152)

Other, net

 (1,810) (35,610) 40,768 (559) 2,789  31,563 (57,087) 28,484 (3,093) (133)
                      

Net cash flows from investing activities

 (11,364) (42,694) 10,262 (559) (44,355) 10,203 (75,624) 25 (3,093) (68,489)
                      

Cash flows from financing activities:

                      

Net borrowings under short-term agreements

   (573)  (573)   2,620  2,620 

Proceeds from long-term borrowings

   68  68 

Principal payments on long-term borrowings

   (16)  (16) (186)  (117)  (303)

Dividends paid

 (6,001)    (6,001) (12,021)    (12,021)

Dividend to noncontrolling interests

   (1,476)  (1,476)   (1,767)  (1,767)

Proceeds from exercises under stock plans

 11,697    11,697  14,098    14,098 

Excess tax benefits from stock option exercises

 226    226  305    305 

Purchase of common treasury shares—stock plan exercises

 (12,375)    (12,375) (13,602)    (13,602)
                      

Net cash flows from financing activities

 (6,453)  (2,065)  (8,518) (11,406)  804  (10,602)
                      

Effect of exchange rate changes on cash and cash equivalents

  107 (5,979)  (5,872)  (3,600) (16,554)  (20,154)
                      

Net change in cash and cash equivalents

 44,506 (48,702) 10,063  5,867  94,410 (53,465) 35,403  76,348 

Cash and cash equivalents—beginning of year

 40,926 83,203 290,000  414,129  40,926 83,203 290,000  414,129 
                      

Cash and cash equivalents—end of period

 $85,432 $34,501 $300,063 $ $419,996  $135,336 $29,738 $325,403 $ $490,477 
                      
                      

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        Management's discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which the Company operates, as well as management's perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions. Many factors could affect the Company's actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, risk factors described from time to time in the Company's reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, and actions and policy changes of domestic and foreign governments.

        This discussion should be read in conjunction with the financial statements and notes thereto, and the management's discussion and analysis included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2013. Segment sales in the table below are presented net of intersegment sales.


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Results of Operations

        Dollars in millions, except per share amounts


 Thirteen Weeks Ended  Thirteen Weeks Ended Twenty-six Weeks Ended 

 March 29,
2014
 March 30,
2013
 % Incr.
(Decr.)
  June 28,
2014
 June 29,
2013
 % Incr.
(Decr.)
 June 28,
2014
 June 29,
2013
 % Incr.
(Decr.)
 

Consolidated

                    

Net sales

 $751.7 $819.6 (8.3)% $842.6 $878.7 (4.1)%$1,594.3 $1,698.3 (6.1)%

Gross profit

 207.0 235.4 (12.1)% 220.5 261.5 (15.7)% 427.5 496.8 (13.9)%

as a percent of sales

 27.5% 28.7%    26.2% 29.8%   26.8% 29.3%   

SG&A expense

 108.1 117.2 (7.8)% 115.7 117.2 (1.3)% 223.9 234.4 (4.5)%

as a percent of sales

 14.4% 14.3%    13.7% 13.3%   14.0% 13.8%   

Operating income

 98.9 118.2 (16.3)% 104.8 144.3 (27.4)% 203.6 262.5 (22.4)%

as a percent of sales

 13.2% 14.4%    12.4% 16.4%   12.8% 15.5%   

Net interest expense

 6.5 6.8 (4.4)% 6.7 6.2 8.1% 13.2 13.0 1.5%

Effective tax rate

 34.7% 31.0%    34.1% 34.1%   34.4% 32.7%   

Net earnings

 $56.0 $77.6 (27.8)% $64.0 $89.6 (28.6)%$120.0 $167.1 (28.2)%

Diluted earnings per share

 $2.08 $2.89 (28.0)% $2.38 $3.33 (28.5)%$4.46 $6.22 (28.3)%

Engineered Infrastructure Products

                    

Net sales

 $208.9 $194.2 7.6% $286.2 $228.5 25.3%$495.1 $422.7 17.1%

Gross profit

 54.5 53.6 1.9% 73.9 64.8 14.0% 128.4 118.4 8.4%

SG&A expense

 40.8 40.9 % 45.3 42.2 7.3% 86.1 83.1 3.6%

Operating income

 13.7 12.7 7.9% 28.6 22.6 26.5% 42.3 35.3 19.8%

Utility Support Structures

                    

Net sales

 $214.2 $239.2 (10.5)% $212.0 $227.9 (7.0)%$426.2 $467.2 (8.8)%

Gross profit

 52.1 65.9 (20.9)% 45.9 62.1 (26.1)% 98.0 128.0 (23.4)%

SG&A expense

 19.3 19.7 (2.0)% 19.6 20.0 (2.0)% 38.9 39.7 (2.0)%

Operating income

 32.8 46.2 (29.0)% 26.3 42.1 (37.5)% 59.1 88.3 (33.1)%

Coatings

                    

Net sales

 $67.2 $74.9 (10.3)% $70.4 $79.4 (11.3)%$137.6 $154.3 (10.8)%

Gross profit

 23.3 23.1 0.9% 25.3 29.1 (13.1)% 48.6 52.2 (6.9)%

SG&A expense

 9.4 9.7 (3.1)% 9.5 5.5 72.7% 18.9 15.2 24.3%

Operating income

 13.9 13.4 3.7% 15.8 23.6 (33.1)% 29.7 37.0 (19.7)%

Irrigation

                    

Net sales

 $212.7 $244.7 (13.1)% $219.9 $270.2 (18.6)%$432.6 $514.9 (16.0)%

Gross profit

 64.7 76.5 (15.4)% 62.9 87.0 (27.7)% 127.6 163.5 (22.0)%

SG&A expense

 21.6 21.9 (1.4)% 21.3 22.9 (7.0)% 42.9 44.8 (4.2)%

Operating income

 43.1 54.6 (21.1)% 41.6 64.1 (35.1)% 84.7 118.7 (28.6)%

Other

                    

Net sales

 $48.7 $66.6 (26.9)% $54.1 $72.7 (25.6)%$102.8 $139.2 (26.1)%

Gross profit

 12.3 16.1 (23.6)% 12.4 18.3 (32.2)% 24.7 34.4 (28.2)%

SG&A expense

 3.7 5.3 (30.2)% 4.1 5.3 (22.6)% 7.8 10.6 (26.4)%

Operating income

 8.6 10.8 (20.4)% 8.3 13.0 (36.2)% 16.9 23.8 (29.0)%

Net corporate expense

                    

Gross profit

 $0.1 $0.2 NM  $0.1 $0.1 NM $0.2 $0.3 NM 

SG&A expense

 13.3 19.7 (32.1)% 16.0 21.3 (24.9)% 29.3 41.0 (28.5)%

Operating loss

 (13.2) (19.5) 32.3% (15.9) (21.2) 25.0% (29.1) (40.7) 28.5%

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Overview

        On a consolidated basis, the decrease in net sales in the second quarter and first quarterhalf of fiscal 2014, as compared with 2013, reflected lower sales in all reportable segments except for the Engineered Infrastructure Products (EIP) segment. Fiscal 2014 refers to the thirteen week period ended March 29, 2014 and fiscal 2013 refers to the thirteen week period ended March 30, 2013. The changes in net sales in the second quarter and first half of fiscal 2014, as compared with fiscal 2013, were as follows:


 First quarter  Second quarter 

 Total EIP Utility Coatings Irrigation Other  Total EIP Utility Coatings Irrigation Other 

Sales—2013

 $819.6 $194.2 $239.2 $74.9 $244.7 $66.6  $878.7 $228.5 $227.9 $79.4 $270.2 $72.7 

Volume

 (56.2) (1.7) (18.1) (2.0) (29.4) (5.0) (44.1) 11.0 2.0 (8.3) (46.5) (2.3)

Pricing/mix

 (5.6) 0.5 (5.4) (1.3) 1.5 (0.9) (20.6) (0.6) (17.8) 1.6 (0.9) (2.9)

Acquisitions/Divestiture

 16.0 23.0    (7.0) 38.9 50.1    (11.2)

Currency translation

 (22.1) (7.1) (1.5) (4.4) (4.1) (5.0) (10.3) (2.8) (0.1) (2.3) (2.9) (2.2)
                          

Sales—2014

 $751.7 $208.9 $214.2 $67.2 $212.7 $48.7  $842.6 $286.2 $212.0 $70.4 $219.9 $54.1 
                          
                          


 
 Year-to-date 
 
 Total EIP Utility Coatings Irrigation Other 

Sales—2013

 $1,698.3 $422.7 $467.2 $154.3 $514.9 $139.2 

Volume

  (109.5) 9.3  (25.6) (10.3) (75.8) (7.1)

Pricing/mix

  (16.9) (0.1) (13.9) 0.3  0.6  (3.8)

Acquisitions/Divestiture

  54.9  73.1        (18.2)

Currency translation

  (32.5) (9.9) (1.5) (6.7) (7.1) (7.3)
              

Sales—2014

 $1,594.3 $495.1 $426.2 $137.6 $432.6 $102.8 
              
              

        Volume effects are estimated based on a physical production or sales measure, products we sell are not uniform in nature, pricing and mix relate to a combination of changes in sales prices and the attributes of the product sold. Accordingly, pricing and mix changes do not necessarily directly result in operating income changes.

        Acquisitions included Locker Group Holdings ("Locker"), Armorflex International Ltd. ("Armorflex"), and DS SM A/S, ("DS SM").which was renamed Valmont SM. We acquired Locker in February 2013, Armorflex in December 2013, and DSValmont SM in March 2014. All of these acquisitions are reported in the Engineered Infrastructure Products segment. In the "Other" category, the decreasesales reduction of $7.0$18.2 million in the first half of 2014 reflects the deconsolidation of Delta EMD Pty. Ltd. ("EMD") in December 2013, following the reduction of our ownership in the operation to below 50%.

        In the second quarter and first quarterhalf of fiscal 2014, we realized a decrease in operating profit, as compared with fiscal 2013, due to currency translation effects. On average, the U.S. dollar strengthened in particular against the Australian dollar, Brazilian Real and South Africa Rand, resulting in less operating profit in U.S. dollar terms. The breakdown of this effect by segment was as follows:


 Total EIP Utility Coatings Irrigation Other Corporate  Total EIP Utility Coatings Irrigation Other Corporate 

Second quarter

 $(1.7)$(0.4)$ $(0.6)$(0.5)$(0.3)$0.1 

Year-to-date

 $(2.1)$(0.5)$(0.4)$(0.2)$(0.8)$(0.6)$0.4  $(3.8)$(0.9)$(0.4)$(0.8)$(1.3)$(0.9)$0.5 
                              
                              

        The decrease in gross margin (gross profit as a percent of sales) in fiscal 2014, as compared with 2013, was due to a combination of lower sales prices and an unfavorable sales mix, reduced sales volumes and slightly higher raw material costs in 2014, as compared with 2013.


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        Selling, general and administrative (SG&A) spending in the second quarter and first quarterhalf of fiscal 2014, as compared with the same periodperiods in 2013, decreased mainly due to the following factors:


        The above reductions in SG&A were partially offset by the following:

        The decrease in operating income on a reportable segment basis in 2014, as compared to 2013, was due to reduced operating performance in the Utility, Irrigation, and IrrigationCoatings segments. The EIP and Coatings segmentssegment showed slightly improved operating performance in 2014 compared to 2013.2013, primarily due to the acquisition of Valmont SM. The "Other" category reported reduced operating performance in 2014 comparecompared to 2013, mainly due to lower grinding media sales.

        Net interest expense decreasedincreased slightly in the firstsecond quarter of fiscal 2014, as compared with 2013, due to slightly higher interest expense and lower interest income of $0.4 million due to moreless cash on hand due to the stock repurchase program and available for investment. Interestthe Valmont SM acquisition. Net interest expense was consistent in the first quarterhalf of 2014 and 2013.

        The increase in other expense in the first quarterhalf of 2014, as compared with 2013, was mainly attributable to recording the change (loss) in fair value of the Company's investment in EMD of $3.4$3.5 million. The remaining increase is related to foreign exchange transaction losses due to currency volatility andvolatility. The decrease in other expense in the second quarter of 2014, as compared with 2013, was due to a smallerlarger increase in deferred compensation assets of $1.2 million in the first quarter of 2014, as comparedand foreign exchange transaction gains due to the same period in 2013.currency volatility.

        Our effective income tax rate in the firstsecond quarter of fiscal 2014 was higher thancomparable with the same period in fiscal 2013. The year-to-date effective tax rate in fiscal 2014 was higher than 2013, principallymainly due to approximately $3.2 million of non-cash tax benefits associated with the first quarter 2013 sale of our nonconsolidated investment in South Africa and higher$1.0 million of increased research and development tax credits in 2013.the U.S. The 2014 effective tax rate was also negatively affected by the unrealized loss in our investment in EMD being capital in nature and not resulting in an income tax benefit. After consideration of these factors, the effective tax rate for the first half of 2013 and 2014 were comparable and between 33% andat approximately 34%.

        Earnings in non-consolidated subsidiaries were lower in fiscal 2014, as compared with 2013, with nominimal activity in 2014. In 2013, the balance was minimal due to the sale of our 49% owned manganese materials operation in February 2013. There was no significant gain or loss on the sale.


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        Our cash flows provided by operations were approximately $21.9$91.9 million in the first quarterhalf of fiscal 2014, as compared with $64.6$175.6 million provided by operations in 2013. The decrease in operating cash flow in the first quarterhalf of fiscal 2014 was the result of decreased net earnings and higher net working capital, as compared with 2013.

        The increase in net sales in the second quarter and first quarterhalf of fiscal 2014 as compared with 2013 was mainly due to the acquisition of DSValmont SM in early March 2014.2014 and Armorflex in December 2013 ($50.1 million and $73.1 million). Global lighting sales in the second quarter and first quarterhalf of fiscal 2014 were slightly improved compared to the same period in fiscal 2013. In the second quarter and first quarterhalf of fiscal 2014, sales volumes in North Americathe U.S. were slightly higher in both the transportation and Europe were comparable withlighting markets as construction and installation activity picked up after first quarter delays caused by harsh weather conditions as compared to 2013. The transportation market for lighting and traffic structures in North America was lower in the first quarter of 2014, as compared to the same period in 2013, due to harsh weather conditions. The transportation market also continues to be challenging, due in part to the lack of long-term U.S. federal highway funding legislation. Sales volumes in other market channels suchCanada were down in the second quarter and first half of 2014 as salescompared to lighting fixture manufacturers and commercial construction projects in2013 due to the harsh weather conditions from the first quarter lingering into the second quarter.

        Sales in Europe increased primarily due to the positive impact of fiscal 2014 improved somewhat as compared with the same period in 2013, reflecting slightly stronger economic conditionscurrency translation. Increased volumes in the U.S.U.K. were offset by volume decreases in other regional areas. In the Asia Pacific region, sales improved in the second quarter and first quarterhalf of fiscal 2014 over 2013 due in part to the India plant that is now fully operational.operational and higher demand in the Philippines. Highway safety product sales improved in the second quarter and first half of 2014 compared to 2013, due to the acquisition of Armorflex in December 2013 (approximately $2.8 million and $4.1 million, respectively) and modestly improved market conditions in Australia and New Zealand due to more highway construction projects this year. This improvement is offset somewhat by negative currency translation effects of $1.0 million and $2.8 million, respectively.

        Communication product line sales were up slightly in the second quarter and first quarterhalf of fiscal 2014, as compared with the same period in fiscal 2013. On a regional basis, North AmericanAmerica sales in the second quarter and first quarterhalf of fiscal 2014 declined slightlyincreased over the same period in fiscal 2013. The decreaseincrease in North AmericaAmerican sales was mainly attributable to lower shipments of components, which we believe werehigher wireless communication structures sales due to harsh weather conditions that limited installation activity.the continued build out of wireless networks, offset by decreased communication component sales resulting from a large customer temporarily curtailing spending. In China, sales of wireless communication structures in the second quarter and first quarterhalf of fiscal 2014 waswere higher than the same periodperiods in fiscal 2013. Chinese wireless carriers are increasing investment in 4G upgrades, as the government began issuing licenses in late in 2013.


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        Access systems product line sales decreased in the second quarter and first quarterhalf of 2014, as compared with 2013, primarily due to the negative impact of currency translation of $5.0 million. Otherwise, access systems sales$2.9 million and $7.9 million and lower volumes. The volume decrease was primarily related to the slowdown in the first quarter of fiscal 2014 were comparable with 2013, asmining sector investment in Australia and was partially offset by the full 2014 effect of the Locker acquisition (approximately $4.5 million) that was largely offset by slownessacquired in mining sector investment in Australia. Highway safety product sales improved in the first quarter of 2014 compared to 2013, due to the acquisition of Armorflex in December 2013 (approximately $1.3 million) and modestly improved market conditions in Australia with more highway construction projects this year. This improvement is offset somewhat by negative currency translation effects.February 2013.

        Operating income for the segment in the second quarter and first quarterhalf of fiscal 2014 increased, as compared with the same period of fiscal 2013, due primarily to operating profit generated from DSthe acquisitions of Valmont SM and Armorflex of $1.9$5.7 million and $7.7 million, respectively, offset somewhat by unfavorable currency translation effects of $0.5 million.$0.4 million and $0.9 million, respectively.

        SG&A spending was flat when comparing the first quarter of 2014 to 2013.The increase in SG&A spending in the second quarter and first quarterhalf of 2014 includedwere due to costs related to the Armorflex and DSValmont SM acquisitions totaling $1.5 million.$4.4 million and $5.9 million, respectively. These increased costs in the second quarter and first half of 2014 were offset by currency effects of $1.2$0.3 million and approximately $0.7$1.5 million inand lower incentive expenses.costs of $0.9 million and $1.6 million, respectively.


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        In the Utility segment, the sales decrease in the firstsecond quarter of fiscal 2014 as compared with 2013, was due primarily to a combinationdecline in the percentage of lower sales volumes in North America and international markets and an unfavorablefrom very large transmission projects which changed the mix of utility structure sales order mix in North America.between the reporting periods. In North America, sales volumes in tons for steel utility structures were down slightly in both the second quarter and first half of 2014, as compared with 2013, offset by increases in part due to shipment delays and lower sales backlogs at the beginning of the quarter, as compared with 2013.volume for concrete structures. We believe industry supply and demand are now more aligned as compared with this time in 2013, as we and our competitors have increased production capacity to meet demand. We believe this has resulted in increased price competition for certain portions of the market where orders are awarded based on competitive bidding. InternationalFor the three-months ended June 30, 2014, as compared to the same period in 2013, international utility structures sales were lower inincreased due to higher sales volumes. For the first quarterhalf of 2014, as compared with the same period ofto 2013, primarilyinternational utility structures sales decreased due to lower sales in the Asia Pacific region. International utility sales are more dependent on bid projects than North America.volumes.

        Operating income in the second quarter and first quarterhalf of 2014, as compared with 2013, decreased due to lower sales volumes, less favorable sales pricing and mix and reduced leverage of fixed costs. The decreasecosts, and increased depreciation expense on plant capacity added in 2013. SG&A expense decreased in the second quarter and first quarterhalf of 2014, as compared with 2013, was mainly due to decreased employee incentives of $1.6 million due to lower incentive compensation tied to lower operating income,income. This SG&A decrease was partially offset by higher employee compensation due to increased headcount to support increased business levels in the lastsecond half of 2013 and capacity expansion to meet projected long-term growth.

        Coatings segment sales decreased in the second quarter and first quarterhalf of 2014, as compared with 2013, primarily due toto:

        The increasedecrease in segment operating income in the second quarter and first quarterhalf of 2014, as compared with 2013, was mainly associated with North America. Despite lower sales volumes in Asia Pacific, operating income in 2014 was comparable with 2013, principally due to cost containment measures, including the reduction$4.6 million gain recognized on the sale of capacity in Australiaan Australian galvanizing operation in the second quarter of fiscal 2013.


Table Operating income was also lower in the second quarter and first half of Contents2014, as compared with 2013, due to the lower sales volumes in both Australia and North America.

        The decrease in Irrigation segment net sales in the second quarter and first quarterhalf of fiscal 2014, as compared with 2013, was mainly due to sales volume decreases in the North American market. The decrease in North America was offset to an extent by increased sales volumes in Internationalinternational markets. In North America, lower expected net farm income in 2014, as compared with 2013, and much lower sales backlogs at the beginning of the year resulted in lower sales of irrigation equipment in 2014, as compared with 2013. In fiscal 2014, net farm income in the United States is expected to decrease 22% from the record levels of 2013, due in part to lower market prices for corn and soybeans. We believe this reduction contributed to lower demand for irrigation machines in North America in 2014, as compared with 2013.


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        In international markets, sales improved in the second quarter and first quarterhalf of fiscal 2014, as compared with 2013, mainly due to increased activity in Brazil, Eastern EuropeMiddle East, and Australia. On balance, sales in other international regions (excluding China) in the second quarter and first quarterhalf of fiscal 2014 were slightly higher or comparable to the same periods of a strong fiscal 2013.

        Operating income for the segment declined in the second quarter and first quarterhalf of fiscal 2014 over 2013, due to the sales volume decrease and associated operating deleverage of fixed operating costs. The most significant reasonprimary reasons for the slight decrease in SG&A expense in the second quarter and first half of fiscal 2014, as compared with 2013, related to decreasedreduced employee incentives of $0.5$1.9 million and $2.5 million, respectively, offset partially by increased product development spending. Additionally, SG&A expense decreased in the second quarter and first half of fiscal 2014, as compared to 2013, due to reduced operating profit.lower bad debt provisions for international receivables of $1.3 million and $1.4 million, respectively, and exchange rate translation effects.

        This unit includes the grinding media, industrial tubing, and industrial fasteners operations. The decrease in sales in the second quarter and first quarterhalf of fiscal 2014, as compared with 2013, was mainly due lower sales volumes due primarily to the deconsolidation of EMD in December 2013 (approximately $7.0 million)$11.2 million and $18.2 million, respectively), lower sales volumes in the grinding media operations and exchange rate translation effects. Grinding media volumes were negatively affected by less favorable Australian mining industry demand. Tubing sales in 2014 were comparable withslightly lower due to lower volumes and sales mix compared to 2013. Operating income in the second quarter and first quarterhalf of fiscal 2014 was lower than the same period in 2013, due to lower grinding media profitabilitysales volumes and currency translation effects.

        Net corporate expense in the second quarter and first quarterhalf of fiscal 2014 decreased over the same period in fiscal 2013. These decreases were mainly due to:

Liquidity and Capital Resources

        Working Capital and Operating Cash Flows—Net working capital was $1,115.2$1,096.3 million at March 29,June 28, 2014, as compared with $1,161.3 million at December 28, 2013. The decrease in net working capital in 2014 mainly resulted from decreased cash on hand due to the acquisition of DS SM.Valmont SM and cash used in the share repurchase program. Cash flow provided by operations was $21.9$91.9 million in the first quarter of fiscal 2014, as compared with $64.6$175.6 million in the first quarter of fiscal 2013. The decrease in operating cash flow in 2014 was the result of lower net earnings and higher working capital in 2014, as compared with 2013.

        Investing Cash Flows—Capital spending in the first quarterhalf of fiscal 2014 was $23.5$47.0 million, as compared with $21.8$54.3 million for the same period in 2013. The most significant capital spending projects


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in 2014 included certain investments in machinery and equipment across all businesses. We expect our capital spending for the 2014 fiscal year to be approximately $100 million. In 2013, investing cash flows


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included proceedsproceed from asset sales of $29.4$39.1 million, principally consisting of $29.2 million received from the sale of our 49% owned non-consolidated subsidiary in South Africa.Africa and $8.2 million received from the sale of the Western Australia galvanizing operation. Investing cash flows also includes $120.5 million paid for the DSValmont SM acquisition in the first quarter of 2014 and $54.7$53.2 million paid for the Locker acquisition in 2013.

        Financing Cash Flows—Our total interest-bearing debt increased slightly to $494.2$496.2 million at March 29,June 28, 2014 from $490.1 million at December 28, 2013. Financing cash flows overall were lowerchanged from a use of approximately $10.6 million in the first quarterhalf of fiscal 2014, as compared with2013 to a use of approximately $90.4 million in the same period in 2013.first half of fiscal 2014. The main reason for the decreaseincrease related to additional short-term borrowings, offset to an extent by lower dividends to noncontrolling interest and increased tax benefitsthe purchase of treasury shares in the second quarter of 2014 resulting from stock option exercises.the recently announced share repurchase program.

        On May 13, 2014, we announced a new capital allocation philosophy which covered both the quarterly dividend rate as well as a share repurchase program. Specifically, the Board of Directors authorized the purchase of up to $500 million of the Company's outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. The purchases will be funded from available working capital and short-term borrowings and will be made subject to market and economic conditions. We are not obligated to make any repurchases and may discontinue the program at any time. As of June 28, 2014, we have acquired 490,172 shares for approximately $77.1 million under this share repurchase program. As of July 22, 2014, the date as of which we report on the cover of this Form 10-Q the number of outstanding shares of our common stock, we have acquired a total of 1,039,092 shares for $159.5 million under the share repurchase program.This philosophy also authorizes dividends on common shares in the range of 15% of the prior year's fully diluted net earnings; the most recent quarterly dividend was $0.375 per share paid on July 15, 2014.

        We have historically funded our growth, capital spending and acquisitions through a combination of operating cash flows and debt financing. We have an internal long-term objective to maintain long-term debt as a percent of invested capital at or below 40%. At March 29,June 28, 2014, our long-term debt to invested capital ratio was 21.6%21.7%, as compared with 22.3% at December 28, 2013. Subject to our level of acquisition activity and steel industry operating conditions (which could affect the levels of inventory we need to fulfill customer commitments), we plan to maintain this ratio below 40% in 2014.

        Our debt financing at March 29,June 28, 2014 consisted primarily of long-term debt. We also maintain certain short-term bank lines of credit totaling $114.5$115.1 million, $100.5$98.5 million of which was unused at March 29,June 28, 2014. Our long-term debt principally consists of:



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        At March 29,June 28, 2014 and December 28, 2013, we had no outstanding borrowings under the revolving credit agreement. The revolving credit agreement has a termination date of August 15, 2017, and contains certain financial covenants that may limit our additional borrowing capability under the agreement. At March 29,June 28, 2014, we had the ability to borrow $382.4$382.3 million under this facility, after consideration of standby letters of credit of $17.6$17.7 million associated with certain insurance obligations and international sales commitments.


Table        Our senior unsecured notes and revolving credit agreement each contain cross-default provisions which permit the acceleration of Contentsour indebtedness to them if we default on other indebtedness that results in, or permits, the acceleration of such other indebtedness.

        TheseThe debt agreements contain covenants that require us to maintain certain coverage ratios and may limit us with respect to certain business activities, including capital expenditures. Our key debt covenants are as follows:

        At March 29,June 28, 2014, we were in compliance with all covenants related to thesethe debt agreements. The key covenant calculations at March 29,June 28, 2014 were as follows:

Interest-bearing debt

 $494,189  $496,171 

EBITDA—last four quarters

 545,715  505,269 

Leverage ratio

 0.91  0.98 

EBITDA—last four quarters

 
$

545,715
  
$

505,269
 

Interest expense—last four quarters

 32,509  32,788 

Interest earned ratio

 16.79  15.41 

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        The calculation of EBITDA—last four quarters (March 30,(June 29, 2013 through March 29,June 28, 2014) is as follows:

Net cash flows from operations

 $353,747  $312,701 

Interest expense

 32,509  32,788 

Income tax expense

 152,822  139,724 

Deconsolidation of subsidiary

 (12,011) (12,011)

Impairment of property, plant and equipment

 (12,161) (12,161)

Loss on investment

 (3,386) (3,501)

Deferred income tax benefit

 9,378  383 

Noncontrolling interest

 (1,984) (2,107)

Equity in earnings of nonconsolidated subsidiaries

 631  332 

Stock-based compensation

 (6,718) (6,857)

Pension plan expense

 (5,598) (4,658)

Contribution to pension plan

 24,757  24,757 

Valmont SM EBITDA—April 1, 2013—March 3, 2014

 25,656 

Valmont SM EBITDA—June 30, 2013—March 3, 2014

 18,826 

Changes in assets and liabilities

 (16,306) 17,704 

Other

 4,379  (651)
      

EBITDA

 $545,715  $505,269 
      
      

Net earnings attributable to Valmont Industries, Inc.

 $256,900  $231,313 

Interest expense

 32,509  32,788 

Income tax expense

 152,822  139,724 

Depreciation and amortization expense

 77,828  82,618 

Valmont SM EBITDA—April 1, 2013—March 3, 2014

 25,656 

Valmont SM EBITDA—June 30, 2013—March 3, 2014

 18,826 
      

EBITDA

 $545,715  $505,269 
      
      

        Our businesses are cyclical, but we have diversity in our markets, from a product, customer and a geographical standpoint. We have demonstrated the ability to effectively manage through business cycles and maintain liquidity. We have consistently generated operating cash flows in excess of our capital expenditures. Based on our available credit facilities, recent issuance of senior unsecured notes and our history of positive operational cash flows, we believe that we have adequate liquidity to meet our needs.


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        We have not made any provision for U.S. income taxes in our financial statements on approximately $652.5$675.5 million of undistributed earnings of our foreign subsidiaries, as we intend to reinvest those earnings. Of our cash balances at March 29,June 28, 2014, approximately $401.5$387.2 million is held in entities outside the United States.States with approximately $100.7 million specifically held within consolidated Delta Ltd., a wholly-owned subsidiary of the Company. Delta Ltd. sponsors a defined benefit pension plan and therefore, the Company is allowed to dividend out Delta Ltd.'s available cash only as long as that dividend does not negatively impact Delta Ltd.'s ability to meet its annual contribution requirements of the pension plan. We believe that the cash payments Delta Ltd. receives from its intercompany notes will provide sufficient funds to meet the pension funding requirements but additional analysis on pension funding requirements would have to be performed prior to the repatriation of the $100.7 million of Delta Ltd.'s cash balances.

        If we need to repatriate foreign cash balances to the United States to meet our cash needs, income taxes would be paid to the extent that those cash repatriations were undistributed earnings of our foreign subsidiaries. The income taxes that we would pay if cash were repatriated depends on the amounts to be repatriated and from which country. If all of our cash outside the United States were to


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be repatriated to the United States, we estimate that we would pay approximately $47.1$52.7 million in income taxes to repatriate that cash.

Financial Obligations and Financial Commitments

        There have been no material changes to our financial obligations and financial commitments as described on page 38 in our Form 10-K for the fiscal year ended December 28, 2013.

Off Balance Sheet Arrangements

        There have been no changes in our off balance sheet arrangements as described on page 38 in our Form 10-K for the fiscal year ended December 28, 2013.

Critical Accounting Policies

        There have been no changes in our critical accounting policies as described on pages 39-43 in our Form 10-K for the fiscal year ended December 28, 2013 during the quarter ended March 29,June 28, 2014.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

        There were no material changes in the company's market risk during the quarter ended March 29,June 28, 2014. For additional information, refer to the section "Risk Management" in our Form 10-K for the fiscal year ended December 28, 2013.

Item 4.    Controls and Procedures

        The Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934 is (1) accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.

        No changes in the Company's internal control over financial reporting occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.


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PART II. OTHER INFORMATION

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

Item 5.    Other InformationIssuer Purchases of Equity Securities

Submission of Matters to a Vote of Security Holders

        Valmont's annual meeting of stockholders was held on April 29, 2014. The stockholders elected three directors to serve three-year terms, approved, on an advisory basis, a resolution approving Valmont's named executive officer compensation, and ratified the appointment of Deloitte & Touche LLP to audit the Company's financial statements for fiscal 2014. For the annual meeting there were 26,844,959 shares outstanding and eligible to vote of which 24,493,352 were present at the meeting in person or by proxy. The tabulation for each matter voted upon at the meeting was as follows:

        Election of Directors:

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 Maximum
Number of Shares
that may yet be
Purchased under
the Program(1)
 

March 30, 2014 to April 26, 2014

          

April 27, 2014 to May 31, 2014

  319,300  158.11  319,300  449,515,000 

June 1, 2014 to June 28, 2014

  170,872  155.67  170,872  422,915,000 
           

Total

  490,172 $157.26  490,172  422,915,000 
           
           

 
 For Withheld Broker Non-Votes

Mogens C. Bay

 21,266,409 1,356,839 1,870,104

Walter Scott, Jr. 

 21,521,307 1,101,941 1,870,104

Clark T. Randt, Jr. 

 22,009,693 613,555 1,870,104

        Advisory vote on executive compensation:

For

22,097,976

Against

430,060

Abstain

95,212

Broker non-votes

1,870,104

        Proposal to ratify

(1)
On May 13, 2014, we announced a new capital allocation philosophy which covered both the appointment of Deloitte & Touche LLPquarterly dividend rate as independent auditors for fiscal 2014:

For

23,669,464

Against

789,276

Abstain

34,612

Amendments to Bylaws

        On April 29, 2014,well as a share repurchase program. Specifically, the Board of Directors authorized the purchase of Valmont approved amendmentsup to Article I, Sections 11 and 12 of Valmont's bylaws. The bylaw amendments require persons reporting stock ownership when proposing a stockholder resolution or recommending a director nominee to report all direct and indirect ownership and any derivative positions in Valmont stock. The amendments took effect upon adoption by the Board of Directors$500 million of the Company.

Company's outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. As of June 28, 2014, we have acquired 490,172 shares for approximately $77.1 million under this share repurchase program.

Item 6.    Exhibits

(a)
Exhibits

 
 Exhibit No. Description
     3.131.1 The Company's bylaws, as amended




  31.1


Section 302 Certificate of Chief Executive Officer

 

 

 

  31.2

 

Section 302 Certificate of Chief Financial Officer

 

 

 

  32.1

 

Section 906 Certifications of Chief Executive Officer and Chief Financial Officer

 

 

 

101 

 

The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended March 29,June 28, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf and by the undersigned hereunto duly authorized.

  VALMONT INDUSTRIES, INC.
(Registrant)

 

 

/s/ MARK C. JAKSICH

Mark C. Jaksich
Executive Vice President and
Chief Financial Officer (Principal Financial Officer)

Dated this 29th day of April,July, 2014.


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Index of Exhibits

 
 Exhibit No. Description
     3.131.1 The Company's bylaws, as amended




  31.1


Section 302 Certificate of Chief Executive Officer

 

 

 

  31.2

 

Section 302 Certificate of Chief Financial Officer

 

 

 

  32.1

 

Section 906 Certifications of Chief Executive Officer and Chief Financial Officer

 

 

 

101 

 

The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended March 29,June 28, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.