Valmont Industries (VMI) 8-K Other events

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EXHIBIT 99.1

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

        The following consolidated financial statements of the Company and its subsidiaries are included herein as listed below:

Consolidated Financial Statements
	Report of Independent Registered Public Accounting Firm	2
	Consolidated Balance Sheets—December 27, 2003 and December 28, 2002	4
	Consolidated Statements of Operations—Three-Year Period Ended December 27, 2003	3
	Consolidated Statements of Shareholders' Equity—Three-Year Period Ended December 27, 2003	6
	Consolidated Statements of Cash Flows—Three-Year Period Ended December 27, 2003	5
	Notes to Consolidated Financial Statements—Three-Year Period Ended December 27, 2003	7-34

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Valmont Industries, Inc.
Omaha, Nebraska

        We have audited the accompanying consolidated balance sheets of Valmont Industries, Inc. and Subsidiaries as of December 27, 2003 and December 28, 2002, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three fiscal years in the period ended December 27, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Valmont Industries, Inc. and subsidiaries as of December 27, 2003 and December 28, 2002, and the results of their operations and their cash flows for each of the three fiscal years in the period ended December 27, 2003 in conformity with accounting principles generally accepted in the United States of America.

        As discussed in Note 1, in 2003 the Company changed its method of accounting for variable interest entities and in 2002 the Company changed its method of accounting for goodwill and other intangibles.

DELOITTE & TOUCHE LLP

Omaha, Nebraska
February 27, 2004 (July 23, 2004 as to Notes 17 and 19)

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Valmont Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Three-year period ended December 27, 2003
(Dollars in thousands, except per share amounts)

			2003			2002			2001
Net sales			$	837,625		$	854,898		$	872,380
Cost of sales				629,635			623,422			654,759
	Gross profit			207,990			231,476			217,621
Selling, general and administrative expenses				153,367			161,187			152,600
	Operating income			54,623			70,289			65,021
Other income (deductions):
	Interest expense			(9,897	)		(11,722	)		(17,080	)
	Interest income			1,095			1,048			1,050
	Miscellaneous			(276	)		(337	)		(524	)
				(9,078	)		(11,011	)		(16,554	)
Earnings before income taxes, minority interest, equity in losses of nonconsolidated subsidiaries and cumulative effect of change in accounting principle				45,545			59,278			48,467
Income tax expense:
	Current			11,684			17,777			14,073
	Deferred			4,850			3,860			3,827
				16,534			21,637			17,900
Earnings before minority interest, equity in losses of nonconsolidated subsidiaries and cumulative effect of change in accounting principle				29,011			37,641			30,567
Minority interest				(2,222	)		(1,170	)		(509	)
Equity in losses of nonconsolidated subsidiaries				(936	)		(2,342	)		(3,365	)
Cumulative effect of change in accounting principle				(366	)		(500	)		—
	Net earnings		$	25,487		$	33,629		$	26,693
Earnings per share:
	Basic:
		Income from continuing operations before cumulative effect of change in accounting principle	$	1.09		$	1.42		$	1.10
		Cumulative effect of change in accounting principle		(0.02	)		(0.02	)		—
		Net earnings	$	1.07		$	1.40		$	1.10
	Diluted:
		Income from continuing operations before cumulative effect of change in accounting principle	$	1.06		$	1.39		$	1.09
		Cumulative effect of change in accounting principle		(0.01	)		(0.02	)		—
		Net earnings	$	1.05		$	1.37		$	1.09
Cash dividends per share			$	0.315		$	0.290		$	0.260

See accompanying notes to consolidated financial statements.

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Valmont Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 27, 2003 and December 28, 2002
(Dollars in thousands, except per share amounts)

			2003			2002
ASSETS
Current assets:
	Cash and cash equivalents		$	33,345		$	19,514
	Receivables, less allowance for doubtful receivables of $4,363 in 2003 and $3,957 in 2002			151,765			132,697
	Inventories			116,475			120,837
	Prepaid expenses			8,622			4,868
	Refundable and deferred income taxes			10,903			17,012
		Total current assets		321,110			294,928
Property, plant and equipment, at cost				448,678			415,828
	Less accumulated depreciation and amortization			258,575			222,653
		Net property, plant and equipment		190,103			193,175
Goodwill				56,022			55,671
Other intangible assets				14,358			15,646
Other assets				23,204			19,151
		Total assets	$	604,797		$	578,571
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt		$	15,009		$	10,849
	Notes payable to banks			15,500			3,149
	Accounts payable			63,256			55,198
	Accrued expenses			55,856			69,828
	Dividends payable			1,921			1,792
		Total current liabilities		151,542			140,816
Deferred income taxes				22,748			18,240
Long-term debt, excluding current installments				134,653			155,542
Other noncurrent liabilities				22,116			15,371
Minority interest in consolidated subsidiaries				8,244			6,582
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; issued 27,900,000 shares		27,900			27,900
	Additional paid-in capital			—			—
	Retained earnings			306,920			289,105
	Accumulated other comprehensive loss			(2,147	)		(10,049	)
				332,673			306,956
Less:
	Cost of common shares in treasury—4,074,847 shares in 2003 (4,016,515 shares in 2002)			65,975			64,936
	Unearned restricted stock—51,333 shares in 2003			1,204			—
		Total shareholders' equity		265,494			242,020
		Total liabilities and shareholders' equity	$	604,797		$	578,571

See accompanying notes to consolidated financial statements.

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Valmont Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three-year period ended December 27, 2003
(Dollars in thousands)

				2003			2002			2001
Cash flows from operations:
	Net earnings			$	25,487		$	33,629		$	26,693
	Adjustments to reconcile net earnings to net cash flows from operations:
		Depreciation and amortization			34,597			33,942			36,324
		Loss on sale of property, plant and equipment			802			1,083			1,050
		Cumulative effect of change in accounting principle			366			500			—
		Equity in losses in nonconsolidated subsidiaries			936			2,342			3,365
		Minority interest in net losses of consolidated subsidiaries			2,222			1,170			509
		Deferred income taxes			4,850			3,860			3,827
		Other adjustments			881			(332	)		(1,420	)
	Changes in assets and liabilities:
		Receivables			(10,515	)		3,774			10,234
		Inventories			8,999			(10,172	)		35,714
		Prepaid expenses			(3,249	)		(235	)		946
		Accounts payable			2,203			284			(12,513	)
		Accrued expenses			(16,026	)		10,625			(1,160	)
		Other noncurrent liabilities			1,170			(809	)		(586	)
		Income taxes payable			7,058			(10,208	)		6,856
			Net cash flows from operations		59,781			69,453			109,839
Cash flows from investing activities:
	Purchase of property, plant and equipment				(17,679	)		(13,942	)		(25,652	)
	Purchase of minority interest				(200	)		(855	)		—
	Investment in nonconsolidated subsidiary				(1,715	)		—			—
	Acquisitions, net of cash acquired				—			—			(34,079	)
	Proceeds from sale of property, plant and equipment				645			2,961			341
	Proceeds from sale to minority shareholder				76			1,253			—
	Other, net				(2,243	)		(3,143	)		(2,330	)
			Net cash flows from investing activities		(21,116	)		(13,726	)		(61,720	)
Cash flows from financing activities:
	Net borrowings (repayments) under short-term agreements				10,367			(8,171	)		(26,416	)
	Proceeds from long-term borrowings				767			1,249			30,216
	Principal payments on long-term obligations				(27,388	)		(33,070	)		(42,718	)
	Dividends paid				(7,414	)		(6,758	)		(6,308	)
	Proceeds from exercises under stock plans				1,192			8,591			1,256
	Purchase of common treasury shares:
		Stock repurchases			(3,351	)		(14,250	)		(1,373	)
		Stock plan exercises			(615	)		(6,898	)		(186	)
			Net cash flows from financing activities		(26,442	)		(59,307	)		(45,529	)
Effect of exchange rate changes on cash and cash equivalents					1,608			(1,428	)		(1,244	)
Net change in cash and cash equivalents					13,831			(5,008	)		1,346
Cash and cash equivalents—beginning of year					19,514			24,522			23,176
Cash and cash equivalents—end of year				$	33,345		$	19,514		$	24,522

See accompanying notes to consolidated financial statements.

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Valmont Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three-year period ended December 27, 2003
(Dollars in thousands, except per share amounts)

			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income			Treasury stock			Unearned restricted stock			Total shareholders' equity
Balance at December 30, 2000				27,900		471			244,858			(6,948	)		(74,357	)		(13	)		191,911
Comprehensive income:
	Net earnings			—		—			26,693			—			—			—			26,693
	Currency translation adjustment			—		—			—			(5,009	)		—			—			(5,009	)
		Total comprehensive income		—		—			—			—			—			—			21,684
Cash dividends ($0.26 per share)				—		—			(6,383	)		—			—			—			(6,383	)
Issuance of 1,215,333 shares in connection with PiRod Acquisition				—		—			(1,078	)		—			20,361			—			19,283
Purchase of treasury shares:
	Stock repurchases, 103,500 shares			—		—			—			—			(1,373	)		—			(1,373	)
	Stock plan exercises, 11,326 shares			—		—			—			—			(197	)		—			(197	)
Stock options exercised; 38,734 shares issued				—		(543	)		764			—			268			—			489
Tax benefit from exercise of stock options				—		67			—			—			—			—			67
Stock awards; 19,754 shares issued				—		5			—			—			312			13			330
Balance at December 29, 2001			$	27,900	$	—		$	264,854		$	(11,957	)	$	(54,986	)	$	—		$	225,811
Comprehensive income:
	Net earnings			—		—			33,629			—			—			—			33,629
	Currency translation adjustment			—		—			—			1,908			—			—			1,908
		Total comprehensive income		—		—			—			—			—			—			35,537
Cash dividends ($0.29 per share)				—		—			(6,952	)		—			—			—			(6,952	)
Purchase of treasury shares:
	Stock repurchases, 820,932 shares			—		—			—			—			(14,250	)		—			(14,250	)
	Stock plan exercises, 291,935 shares			—		—			—			—			(6,898	)		—			(6,898	)
Stock options exercised; 507,723 shares issued				—		(1,975	)		(2,426	)		—			10,916			—			6,515
Tax benefit from exercise of stock options				—		1,882			—			—			—			—			1,882
Stock awards; 18,795 shares issued				—		93			—			—			282			—			375
Balance at December 28, 2002			$	27,900	$	—		$	289,105		$	(10,049	)	$	(64,936	)	$	—		$	242,020
Comprehensive income:
	Net earnings								25,487												25,487
	Currency translation adjustment											7,902									7,902
		Total comprehensive income																			33,389
Cash dividends ($0.315 per share)									(7,543	)											(7,543	)
Purchase of treasury shares:
	Stock repurchases, 175,959 shares														(3,351	)					(3,351	)
	Stock plan exercises, 29,224 shares														(615	)					(615	)
Stock options exercised; 75,876 shares issued						(141	)		(129	)					1,462						1,192
Tax benefit from exercise of stock options						146															146
Stock awards; 70,975 shares issued						(5	)								1,465			(1,204	)		256
Balance at December 27, 2003			$	27,900	$	—		$	306,920		$	(2,147	)	$	(65,975	)	$	(1,204	)	$	265,494

See accompanying notes to consolidated financial statements.

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Valmont Industries, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three-year period ended December 27, 2003
(Dollars in thousands, except per share amounts)

(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

        The consolidated financial statements include the accounts of Valmont Industries, Inc. and its wholly and majority-owned subsidiaries (the Company). Investments in 20% to 50% owned affiliates are accounted for by the equity method and investments in less than 20% owned affiliates are accounted for by the cost method. All significant intercompany items have been eliminated. Certain 2002 items have been reclassified to conform with 2003 presentation.

Operating Segments

        ENGINEERED SUPPORT STRUCTURES: This segment consists of the manufacture of engineered metal structures and components for the lighting and traffic, utility, and wireless communication industries, and for other specialty applications;

        COATINGS: This segment consists of galvanizing, anodizing and powder coating services;

        IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment and related parts and services; and

        TUBING: This segment consists of the manufacture of tubular products for industrial customers.

Fiscal Year

        The Company operates on a 52 or 53 week fiscal year with each year ending on the last Saturday in December. Accordingly, the Company's fiscal years ended December 27, 2003, December 28, 2002, and December 29, 2001 consisted of 52 weeks.

Inventories

        At December 27, 2003, approximately 52% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market. All other inventory is valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market. The excess of replacement cost of inventories over the LIFO value is approximately $9,800 and $9,600 at December 27, 2003 and December 28, 2002, respectively.

Long-Lived Assets

        Property, plant and equipment are recorded at historical cost. The Company uses the straight-line method in computing depreciation and amortization for financial reporting purposes and generally uses accelerated methods for income tax purposes. The annual provisions for depreciation and amortization have been computed principally in accordance with the following ranges of asset lives: buildings 15 to 40 years, machinery and equipment 3 to 12 years, and intangible assets 3 to 40 years.

        An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its fair value. In 2002, the Company recognized an impairment loss of $1.1 million related to its nonconsolidated investment of an irrigation dealership in North America. In 2001, the Company recognized an impairment loss of $1.0 million related to its nonconsolidated investment in Argentina.

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Change in Accounting

        The Financial Accounting Standards Board (FAS) Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46), was revised in December 2003 and is applicable to public entities that have interests in variable interest entities for periods ending after December 15, 2003. Under FIN 46, the assets, liabilities and results of activities of variable interest entities are required to be reported in the consolidated financial statements of their primary beneficiaries. The Company assessed its relationships with variable interest entities and determined that it is the primary beneficiary in a variable interest entity related to the Company's lease of transportation equipment. In the fourth quarter of 2003, the Company recorded a cumulative effect of a change in accounting of $366 (net of related tax effects of $210). In addition, the Company recorded a net increase to property, plant and equipment of $9,305 and an increase to interest-bearing debt of $9,881.

        Effective December 30, 2001, the Company adopted Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets." This standard established new accounting and reporting requirements for goodwill and other intangible assets. Under SFAS 142, all amortization of goodwill and intangible assets with indefinite lives ceased effective December 30, 2001. Also, recorded goodwill was tested for impairment by comparing the fair value to its carrying value. Based on the initial impairment test, the Company recorded a cumulative effect of change in accounting principle of $0.5 million loss related to its investment in a consulting business in the Irrigation segment that provides environmental and wastewater management consulting services.

Income Taxes

        The Company uses the asset and liability method to calculate deferred income taxes. Deferred tax assets and liabilities are recognized on temporary differences between financial statement and tax bases of assets and liabilities using enacted tax rates. The effect of tax rate changes on deferred tax assets and liabilities is recognized in income during the period that includes the enactment date.

Foreign Currency Translations

        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. Cumulative translation adjustments are included as a separate component of accumulated other comprehensive income. These translation adjustments are the Company's only component of other comprehensive income.

Revenue Recognition

        Revenue is recognized upon shipment of the product or delivery of the service to the customer, which coincides with passage of title and risk of loss to the customer.

Use of Estimates

        Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.

Stock Options

        The Company accounts for its stock plans under the recognition and measurement principles of APB Opinion 25, "Accounting for Stock Issued to Employees", and related Interpretations. No stock-based compensation cost is reflected in net income, as all options granted under these plans had an

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exercise price equal to the market value of the underlying common stock on the date of grant. Note 8 to the Consolidated Financial Statements provides a detailed discussion of the Company's stock option plans.

        The following table illustrates the effect on net income and earnings per share if the company had applied the fair value recognition provision of FASB Statement No. 123, "Accounting for Stock-Based Compensation", to stock-based employee compensation.

		2003		2002		2001
Net earnings as reported		$	25,487	$	33,629	$	26,693
	Deduct: Total stock-based employee Compensation expense determined under fair value based method for all awards, net of related tax effects	$	2,294	$	2,823	$	2,712
	Pro forma	$	23,193	$	30,806	$	23,981
Earnings per share as reported:
	Basic	$	1.07	$	1.40	$	1.10
	Diluted	$	1.05	$	1.37	$	1.09
Pro forma:
	Basic	$	0.97	$	1.29	$	0.99
	Diluted	$	0.95	$	1.25	$	0.98

        The fair value of each option grant was estimated as of the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2003, 2002 and 2001:

	2003	2002	2001
Expected volatility	35%	46%	50%
Risk-free interest rate	1.97%	1.95%	3.84%
Expected life from vesting date	2.3 yrs.	2.9 yrs.	2.6 yrs.
Dividend yield	1.53%	1.48%	1.54%

(2)   CASH FLOW SUPPLEMENTARY INFORMATION

        The Company considers all highly liquid temporary cash investments purchased with a 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) were as follows:

	2003		2002		2001
Interest	$	9,947	$	11,701	$	18,263
Income taxes		4,294		26,233		8,020

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(3)   PROPERTY, PLANT AND EQUIPMENT

        Property, plant and equipment, at cost, consists of the following:

	2003		2002
Land and improvements	$	21,905	$	20,984
Buildings and improvements		115,914		111,084
Machinery and equipment		236,286		224,390
Transportation equipment		18,279		6,336
Office furniture and equipment		51,660		44,290
Construction in progress		4,634		8,744
	$	448,678	$	415,828

        The Company leases certain facilities, machinery, computer equipment and transportation equipment under operating leases with unexpired terms ranging from one to fifteen years. Rental expense for operating leases amounted to $9,202, $10,262 and $10,779 for fiscal 2003, 2002 and 2001, respectively.

        Minimum lease payments under operating leases expiring subsequent to December 27, 2003 are:

Fiscal year ending
	2004		6,494
	2005		5,656
	2006		4,854
	2007		3,893
	2008		2,485
Subsequent			2,895
Total minimum lease payments		$	26,277

(4)   GOODWILL AND INTANGIBLE ASSETS

        Effective December 30, 2001 the Company adopted Statement of Financial Accounting Standards No. 142 (SFAS 142) "Goodwill and Other Intangible Assets". This standard established new accounting and reporting requirements for goodwill and other intangible assets. Under SFAS 142, all amortization of goodwill and intangible assets with indefinite lives ceased effective December 30, 2001. Also, recorded goodwill was tested for impairment at December 31, 2001 by comparing the fair value to its carrying value. Based on the initial impairment test, the Company recorded a cumulative effect of change in accounting principle of $0.5 million loss ($0.02 per diluted share) on the Condensed Consolidated Statement of Operations for the thirty-nine weeks ended September 28, 2002 related to its investment in a consulting business in the Irrigation segment that provides environmental and wastewater management consulting services. Fair value was determined using a discounted cash flow methodology.

        The Company's annual impairment testing on its reporting units was performed during the third quarter of 2003. As a result of that testing, it was determined the goodwill and other intangible assets on the Company's Consolidated Balance Sheet were not impaired.

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Amortized Intangible Assets

        The components of amortized intangible assets at December 27, 2003 and December 28, 2002 are as follows:

	As of December 27, 2003
	Gross Carrying Amount		Accumulated Amortization		Life
Customer Relationships	$	11,500	$	2,634	12 years
Proprietary Software & Database		1,650		908	5 years
	$	13,150	$	3,542

	As of December 28, 2002
	Gross Carrying Amount		Accumulated Amortization		Life
Customer Relationships	$	11,500	$	1,677	12 years
Proprietary Software & Database		1,650		577	5 years
	$	13,150	$	2,254

        Amortization expense for intangible assets was $1,288, $1,288 and $966 for the fifty-two week periods ended December 27, 2003, December 28, 2002, and December 27, 2001, respectively. Estimated annual amortization expense related to amortized intangible assets is as follows:

	Estimated Amortization Expense
2004	1,288
2005	1,288
2006	1,040
2007	958
2008	958

Non-amortized intangible assets

        Under the provisions of SFAS 142, intangible assets with indefinite lives are not amortized. The carrying value of the PiRod trade name is $4,750 and has not changed in the fifty-two weeks ended December 27, 2003.

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Goodwill

        The carrying amount of goodwill as of December 27, 2003 is as follows:

	Engineered Support Structures Segment		Coatings Segment		Irrigation Segment		Tubing Segment		Total
Balance December 28, 2002	$	12,236	$	42,192	$	981	$	262	$	55,671
Foreign Currency Translation		351		—		—		—		351
Balance December 27, 2003	$	12,587	$	42,192	$	981	$	262	$	56,022

        The carrying amount of goodwill as of December 28, 2002 is as follows:

	Engineered Support Structures Segment		Coatings Segment		Irrigation Segment			Tubing Segment		Total
Balance December 29, 2001	$	11,954	$	42,192	$	1,481		$	262	$	55,889
Impairment charge		—		—		(500	)		—		(500	)
Foreign Currency Translation		282		—		—			—		282
Balance December 28, 2002	$	12,236	$	42,192	$	981		$	262	$	55,671

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The effect of the adoption of SFAS 142 on net earnings and earnings per share is as follows:

	Year Ended December 27, 2003		Year Ended December 28, 2002		Year Ended December 29, 2001
Reported net earnings	$	25,487	$	33,629	$	26,693
Add back: Goodwill amortization, net of tax		—		—		2,789
Adjusted net earnings	$	25,487	$	33,629		29,482
Add back: Cumulative effect of change in accounting principle		—		500		—
Adjusted net earnings before cumulative effect of change in accounting principle	$	25,487	$	34,129	$	29,482
Basic earnings per share:
Reported basic earnings per share	$	1.07	$	1.40	$	1.10
Add back: Goodwill amortization		—		—		0.11
Adjusted basic earnings per share	$	1.07	$	1.40	$	1.21
Add back: Cumulative effect of change in accounting principle		—		0.02		—
Adjusted basic earnings per share before cumulative effect of change in accounting principle in 2002	$	1.07	$	1.42	$	1.21
Diluted earnings per share:
Reported diluted earnings per share	$	1.05	$	1.37	$	1.09
Add back: Goodwill amortization		—		—		0.11
Adjusted diluted earnings per share	$	1.05	$	1.37	$	1.20
Add back: Cumulative effect of change in accounting principle		—		0.02		—
Adjusted diluted earnings per share before cumulative effect of change in accounting principle in 2002	$	1.05	$	1.39	$	1.20

(5)    BANK CREDIT ARRANGEMENTS

        The Company maintains various lines of credit for short-term borrowings totaling $25,473. The interest rates charged on these lines of credit vary in relation to the banks' costs of funds. The unused borrowings under the lines of credit were $13,099 at December 27, 2003. The lines of credit can be modified at any time at the option of the banks. The Company pays no fees in connection with these lines of credit. In addition to the lines of credit, the Company also maintains other short-term bank loans. The weighted average interest rate on short-term borrowings was 3.16% at December 27, 2003 and 7.32% at December 28, 2002.

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(6)    INCOME TAXES

        Income tax expense (benefit) consists of:

		2003		2002		2001
Current:
	Federal	$	5,299	$	12,874	$	9,684
	State		738		1,192		1,082
	Foreign		5,647		3,711		3,307
		$	11,684	$	17,777	$	14,073
Deferred:
	Federal	$	4,402	$	3,351	$	4,326
	State		170		348		214
	Foreign		278		161		(713	)
		$	4,850	$	3,860	$	3,827
		$	16,534	$	21,637	$	17,900

        The reconciliations of the statutory Federal income tax rate and the effective tax rate follows:

	2003		2002		2001
Statutory Federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of Federal benefit	1.6	%	2.0	%	2.2	%
Carryforwards, credits and changes in valuation allowances	(1.0	)%	(1.7	)%	(2.1	)%
Other	0.7	%	1.2	%	1.8	%
	36.3	%	36.5	%	36.9	%

        Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax

14

purposes, and (b) operating loss and tax credit carryforwards. The tax effects of significant items comprising the Company's net deferred income tax liabilities are as follows:

			2003			2002
Deferred income tax assets:
	Accrued expenses and allowances		$	11,874		$	11,938
	Tax credit carryforwards			1,690			1,494
	Inventory allowances			2,449			3,118
	Warranty expense not currently deductible			1,682			1,277
	Deferred compensation			9,387			8,038
	Nonconsolidated subsidiaries			2,213			1,527
		Gross deferred income tax assets		29,295			27,392
	Valuation allowance			(2,838	)		(1,527	)
		Net deferred income tax assets	$	26,457		$	25,865
Deferred income tax liabilities:
	Property, plant and equipment		$	17,253		$	14,707
	Lease transactions			5,695			5,699
	Other liabilities			15,354			12,664
		Total deferred income tax liabilities		38,302			33,070
		Net deferred income tax liabilities	$	11,845		$	7,205

        At December 27, 2003, and at December 28, 2002, management of the Company reviewed recent operating results and projected future operating results. The Company's belief that realization of its net deferred tax assets is more likely than not is based on, among other factors, changes in operations that have occurred in recent years, as well as available tax planning strategies. Valuation allowances have been established for certain operating losses that reduce deferred tax assets to an amount that will, more likely than not, be realized. The currency translation adjustments in accumulated other comprehensive income are not adjusted for income taxes as they relate to indefinite investments in non-US subsidiaries.

        Provision has not been made for United States income taxes on a portion of the undistributed earnings of the Company's foreign subsidiaries (approximately $42,583 and $31,418 at December 27, 2003 and December 28, 2002, respectively) because the Company intends to reinvest those earnings. Such earnings would become taxable upon the sale or liquidation of these foreign subsidiaries or upon remittance of dividends. It is not practicable to estimate the amount of the deferred tax liability on such earnings.

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(7)    LONG-TERM DEBT

		2003		2002
6.80% to 8.08% promissory notes, unsecured(a)		$	80,000	$	90,000
Revolving credit agreement(b)			40,000		56,000
6.91% secured loan(c)			9,881		—
IDR Bonds(d)			8,500		8,500
1.24% to 6.50% notes			11,281		11,891
	Total long-term debt		149,662		166,391
Less current installments of long-term debt			15,009		10,849
	Long-term debt, excluding current installments	$	134,653	$	155,542

(a)

The unsecured promissory notes are advances under a facility for a maximum of $200,000. These notes payable are due in varying annual principal installments through 2012. The notes are subject to prepayment in whole or in part with or without premium as specified in the agreement.



(b)

The revolving credit agreement is an unsecured facility with a group of banks for a maximum of $150,000. The facility has a termination date of August 21, 2006. The funds borrowed may be repaid at any time without penalty, or additional funds may be borrowed up to the facility limit. The Company may choose from the following three interest rate alternatives: the higher of prime rate or Federal Funds Rate plus 0.5%, the applicable Eurodollar rate plus a leverage ratio-based spread (which at December 27, 2003 was 0.6875%) or up to $60,000 at a rate determined through a competitive bid process. The effective interest rate at December 27, 2003 was 1.81% and at December 28, 2002 was 2.07%.



(c)

The secured loan is through a finance company and is related to transportation equipment, as described in Note 1 under "Change in Accounting". The loan payments are required until November 2010, with a payment of $5.9 million due at the end of the loan. The loan may be prepaid at any time without penalty.



(d)

The Industrial Development Revenue Bonds were issued to finance the construction of a manufacturing facility in Jasper, Tennessee. Variable interest is payable until final maturity June 1, 2025. The effective interest rate at December 27, 2003 was 1.35%.

        The lending agreements place certain restrictions on working capital, capital expenditures, payment of dividends, purchase of Company stock and additional borrowings. Under the most restrictive covenants of the agreements at December 27, 2003, the Company may make payments of cash dividends and purchases of shares of Company common stock authorized for repurchase by the Board of Directors up to $32,889. The company is in compliance with all debt covenants at December 27, 2003.

        The minimum aggregate maturities of long-term debt for each of the four years following 2004 are: $20,029, $55,095, $5,106, and $10,023.

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(8)    STOCK PLANS

        The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Compensation Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards and bonuses of common stock. At December 27, 2003, 1,412,370 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 market price at the time 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. Expiration of grants is from six to ten years from the date of grant.

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        Following is a summary of the activity of the stock plans during 2001, 2002 and 2003:

	Number of Shares		Weighted Average Exercise Price
Outstanding at December 30, 2000	3,125,346		$	16.70
Granted	533,800			14.70
Exercised	(38,734	)		(12.26	)
Forfeited	(155,568	)		(18.35	)
Outstanding at December 29, 2001	3,464,844		$	16.37
Options exercisable at December 29, 2001	2,089,299		$	16.41
Weighted average fair value of options granted during 2001			$	5.92

	Number of Shares		Weighted Average Exercise Price
Outstanding at December 29, 2001	3,464,844		$	16.37
Granted	597,101			20.96
Exercised	(507,723	)		(12.63	)
Forfeited	(85,434	)		(17.93	)
Outstanding at December 28, 2002	3,468,788		$	17.67
Options exercisable at December 28, 2002	2,074,549		$	17.34
Weighted average fair value of options granted during 2002			$	8.88

	Number of Shares		Weighted Average Exercise Price
Outstanding at December 28, 2002	3,468,788		$	17.67
Granted	326,300			22.81
Exercised	(75,876	)		(15.81	)
Forfeited	(15,032	)		(18.44	)
Outstanding at December 27, 2003	3,704,180		$	18.16
Options exercisable at December 27, 2003	2,651,056		$	17.75
Weighted average fair value of options granted during 2003			$	6.62

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        Following is a summary of the status of stock options outstanding at December 27, 2003:

Outstanding and Exercisable By Price Range
Options Outstanding			Options Exercisable
Exercise Price Range	Number	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number	Weighted Average Exercise Price
$  6.00-16.69	1,672,872	5.69 years	$	14.85	1,258,957	$	14.87
17.28-21.78	1,271,466	5.39 years		19.65	1,146,950		19.70
21.80-25.23	759,842	7.84 years		22.93	245,149		23.42
	3,704,180				2,651,056

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

		Basic EPS		Dilutive Effect of Stock Options	Diluted EPS
2003:
	Net earnings	$	25,487	—	$	25,487
	Shares outstanding (000's)		23,805	553		24,358
	Per share amount	$	1.07	—	$	1.05
2002:
	Net earnings	$	33,629	—	$	33,629
	Shares outstanding (000's)		23,947	609		24,556
	Per share amount	$	1.40	—	$	1.37
2001:
	Net earnings	$	26,693	—	$	26,693
	Shares outstanding (000's)		24,280	244		24,524
	Per share amount	$	1.10	—	$	1.09

        At the end of fiscal years 2003, 2002, and 2001, there were 0.1 million, 0.4 million, and 2.0 million options outstanding, respectively, with exercise prices exceeding the market value of common stock that were therefore excluded from the computation of shares contingently issuable upon exercise of the options.

(10)    TREASURY STOCK

        The Company's Board of Directors has authorized management to repurchase 1.5 million shares of the Company's common stock. Repurchased shares are recorded as "Treasury Stock" and result in a reduction of "Shareholders' Equity." When treasury shares are reissued, the Company uses the last-in, first-out method, and the difference between the repurchase cost and reissuance price is charged or credited to "Additional Paid-In Capital." As of December 27, 2003, a total of 1.0 million shares had been repurchased at a cost of $17,282.

(11)    EMPLOYEE RETIREMENT SAVINGS PLAN

        Established under Internal Revenue Code Section 401(k), the Valmont Employee Retirement Savings Plan ("VERSP") is a defined contribution plan available to all eligible employees. Participants can elect to contribute up to 15% of annual pay, on a pretax and/or after-tax basis. The Company may also make basic, matching and/or supplemental contributions to the Plan. In 2001, the defined contribution plan covering the employees of Microflect was merged into the VERSP plan. In addition, the Company has a money purchase pension plan and a profit sharing plan covering the employees of

19

PiRod, Inc., which were merged into the VERSP plan in 2002. The 2003, 2002 and 2001 Company contributions to these plans amounted to approximately $5,200, $5,700 and $6,200, respectively.

        The Company also offers a fully-funded, non-qualified deferred contribution plan for certain Company executives who otherwise would be limited in making pretax contributions into VERSP under Internal Revenue Service regulations. The invested assets and related liabilities to these participants were $13.1 million and $9.8 million at December 27, 2003 and December 28, 2002, respectively. Such amounts are included in "Other assets" and "Other noncurrent liabilities" on the Consolidated Balance Sheets.

(12)    RESEARCH AND DEVELOPMENT

        Research and development costs are charged to operations in the year incurred. These costs are a component of "Selling, general & administrative expenses" on the income statement. Research and development expenses were approximately $6,000 in 2003, $5,400 in 2002, and $3,900 in 2001.

(13)    DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

        The carrying amount of cash and cash equivalents, receivables, accounts payable, notes payable to banks and accrued expenses approximate fair value because of the short maturity of these instruments. The fair values of each of the Company's long-term debt instruments are based on the amount of future cash flows associated with each instrument discounted using the Company's current borrowing rate for similar debt instruments of comparable maturity. The fair value estimates are made at a specific point in time and the underlying assumptions are subject to change based on market conditions. At December 27, 2003, the carrying amount of the Company's long-term debt was $149,662 with an estimated fair value of approximately $159,264.

(14)    GUARANTEES

        In November 2002, the Financial Accounting Standards Board (FASB) issued Interpretation 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45). This Interpretation elaborates on the existing disclosure requirements for most guarantees, including loan guarantees and standby letters of credit. It also requires, at the time a company issues a guarantee, the recognition of an initial liability for the fair value, or market value, of the obligations it assumes under the guarantee, and must disclose that information in its interim and annual financial statements. The provisions related to recognizing a liability at inception of the guarantee for the fair value of the guarantor's obligations do not apply to product warranties or to guarantees accounted for as derivatives. The initial recognition and initial measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002.

        The Company has guaranteed the repayment of two bank loans of certain nonconsolidated equity investees. The guarantees continue until the loans, including accrued interest and fees, have been paid in full. The maximum amount of the guarantees may vary, but are limited to the sum of the total due and unpaid principal amounts, accrued and unpaid interest and any other related expenses. As of December 27, 2003, the maximum amount of the guarantees was approximately $7.1 million. These loan guarantees are in proportion to our ownership percentage of these companies or are accompanied by a guarantee from the majority owner to the Company. In accordance with FIN 45, the Company recorded the fair value of that guarantee of $1.1 million in "Other noncurrent liabilities" at December 27, 2003. In September 2003, the Company refinanced the synthetic lease on its corporate headquarters building. The lease has an initial term of 5 years and the Company may, at any time, elect

20

to exercise a purchase option. If the Company elects not to purchase the building or renew the lease, the building is returned to the lessor for remarketing. As part of the new lease, the Company issued a residual value guarantee of $30.1 million. In accordance with FIN 45, the Company recorded the fair value of that guarantee of $1.7 million in "Other noncurrent liabilities" at December 27, 2003.

        The Company's product warranty accrual reflects management's best estimate of probable liability under its product warranties. Historical product claims data is used to estimate the cost of product warranties at the time revenue is recognized.

        Changes in the product warranty accrual for the years ended December 27, 2003 and December 28, 2002 were as follows:

	2003			2002
Balance, beginning of period	$	6,450		$	6,568
Payments made		(6,549	)		(7,559	)
Change in liability for warranties issued during the period		6,636			7,720
Change in liability for pre-existing warranties		1,303			(279	)
Balance, end of period	$	7,840		$	6,450

(15)    STOCKHOLDERS' RIGHT PLAN

        Each share of common stock carries with it one half preferred stock purchase right ("Right"). The Right becomes exercisable ten days after a person (other than Robert B. Daugherty and his related persons and entities) acquires or commences a tender offer for 15% or more of the Company's common stock. Each Right entitles the holder to purchase one one-thousandth of a share of a new series of preferred stock at an exercise price of $100, subject to adjustment. The Right expires on December 19, 2005 and may be redeemed at the option of the Company at $.01 per Right, subject to adjustment. Under certain circumstances, if (i) any person becomes an Acquiring Person or (ii) the Company is acquired in a merger or other business combination, each holder of a Right (other than the Acquiring Person) will have the right to receive, upon exercise of the Right, shares of common stock (of the Company under (i) and of the acquiring company under (ii)) having a value of twice the exercise price of the Right.

(16)    ACQUISITIONS

        On March 30, 2001, the Company's Engineered Support Structures segment acquired all the outstanding shares of PiRod Holdings, Inc. and subsidiary (PiRod), a manufacturer of towers, components and poles located in Plymouth, Indiana. The Company issued 1.2 million shares of Company common stock and $33.4 million of cash was paid to retire PiRod long-term debt. The excess of purchase price over fair value of net assets acquired was $5.4 million and was recorded as goodwill. Intangible assets arising from the transaction are being amortized over their estimated useful lives. The Company's summary proforma results of operations for the fifty-two week period ended December 29, 2001, assuming the transaction occurred at the beginning of the period is as follows:

	Fifty-two Weeks Ended December 29, 2001
Net sales	$	887,508
Net earnings		27,676
Earnings per share—diluted		1.11

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        This acquisition was accounted for under the purchase method of accounting. The results of operations of the acquired businesses are included in the consolidated financial statements from the dates of acquisition.

(17)    BUSINESS SEGMENTS

        The Company has aggregated its businesses into four reportable segments:

ENGINEERED SUPPORT STRUCTURES:    This segment consists of the manufacture of engineered metal structures and components for the lighting and traffic, utility, and wireless communication industries, and for other specialty applications;

COATINGS:    This segment consists of galvanizing, anodizing and powder coating services;

IRRIGATION:    This segment consists of the manufacture of agricultural irrigation equipment and related parts and services; and

TUBING:    This segment consists of the manufacture of tubular products for industrial customers.

        In addition to these four reportable segments, the Company has other businesses that individually are not more than 10% of consolidated sales. These businesses, which include wind energy development, machine tool accessories and industrial fasteners, are reported in the "Other" category. Prior period information is presented in accordance with the current reportable segment structure.

        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. In the first quarter of 2004, the Company changed its segment reporting methodology by presenting net corporate expense separately in the segment operating income disclosure. In the past, net corporate expense was allocated to each reportable segment. The Company believes the current presentation methodology provides for better reporting of segment operating results and, accordingly, has reclassified net corporate expense for all periods presented. Intersegment sales prices are both cost and market based.

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Summary by Business Segments

				2003		2002		2001
SALES:
	Engineered Support Structures segment:
		Lighting & Traffic		$	250,874	$	231,894	$	218,122
		Utility			86,040		127,312		135,876
		Specialty			69,926		77,490		121,558
			Engineered Support Structures segment		406,840		436,696		475,556
	Coatings segment				103,692		111,704		116,245
	Irrigation segment				280,780		264,844		238,657
	Tubing segment				57,783		57,716		51,881
	Other				17,676		16,974		20,153
			Total		866,771		887,934		902,492
INTERSEGMENT SALES:
	Coatings				12,553		15,669		17,048
	Irrigation				872		162		78
	Tubing				12,950		12,326		9,513
	Other				2,771		4,879		3,473
			Total		29,146		33,036		30,112
NET SALES:
	Engineered Support Structures segment:
		Lighting & Traffic		$	250,874	$	231,894	$	218,122
		Utility			86,040		127,312		135,876
		Specialty			69,926		77,490		121,558
			Engineered Support Structures segment		406,840		436,696		475,556
	Coatings segment				91,139		96,035		99,197
	Irrigation segment				279,908		264,682		238,579
	Tubing segment				44,833		45,390		42,368
	Other				14,905		12,095		16,680
			Total net sales	$	837,625	$	854,898	$	872,380

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			2003			2002			2001
OPERATING INCOME (LOSS):
	Engineered Support Structures segment			20,701			44,237			40,105
	Coatings segment			6,798			13,832			11,219
	Irrigation segment			34,574			30,827			20,389
	Tubing segment			6,506			8,050			6,722
	Other			(2,134	)		(1,663	)		2,209
	Net corporate expense			(11,822	)		(24,994	)		(15,623	)
		Total operating income		54,623			70,289			65,021
Interest expense, net				(8,802	)		(10,674	)		(16,030	)
Miscellaneous				(276	)		(337	)		(524	)
Earnings before income taxes, minority interest, and equity in losses of nonconsolidated subsidiaries and cumulative effect of change in accounting principle			$	45,545		$	59,278		$	48,467
TOTAL ASSETS:
	Engineered Support Structures		$	296,221		$	268,110		$	287,046
	Coatings			93,140			97,537			100,832
	Irrigation			140,833			136,800			131,284
	Tubing			24,060			29,447			27,437
	Other			9,712			9,294			8,496
	Corporate			40,831			37,383			33,802
		Total	$	604,797		$	578,571		$	588,897
CAPITAL EXPENDITURES:
	Engineered Support Structures		$	10,014		$	1,238		$	15,511
	Coatings			1,919			5,955			1,866
	Irrigation			4,072			5,081			4,248
	Tubing			500			617			2,199
	Other			557			925			106
	Corporate			617			126			1,722
		Total	$	17,679		$	13,942		$	25,652
DEPRECIATION AND AMORTIZATION:
	Engineered Support Structures		$	16,487		$	16,649		$	15,486
	Coatings			5,167			4,943			7,646
	Irrigation			8,235			8,163			9,446
	Tubing			1,978			1,930			1,988
	Other			588			392			405
	Corporate			2,142			1,865			1,353
		Total	$	34,597		$	33,942		$	36,324

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Summary by Geographical Area by Location of Valmont Facilities:

			2003		2002		2001
NET SALES:
	United States		$	630,479	$	687,802	$	725,643
	France			61,663		50,826		52,593
	Other			145,483		116,270		94,144
		Total	$	837,625	$	854,898	$	872,380
OPERATING INCOME:
	United States		$	35,795	$	55,605	$	54,610
	France			888		2,537		2,551
	Other			17,940		12,147		7,860
		Total	$	54,623	$	70,289	$	65,021
LONG-LIVED ASSETS:
	United States		$	248,746	$	250,870	$	274,501
	France			13,417		12,807		11,806
	Other			21,524		19,966		17,992
		Total	$	283,687	$	283,643	$	304,299

        No single customer accounted for more than 10% of net sales in 2003, 2002, or 2001. Net sales by geographical area are based on the location of the facility producing the sales.

        Operating income by business segment and geographical areas are based on net sales less identifiable operating expenses and allocations.

        Long-lived assets consist of property, plant and equipment, net of depreciation, goodwill and other assets. Long-lived assets by geographical area are based on location of facilities.

(18)    SUBSEQUENT EVENT (unaudited)

        On February 23, 2004, the Company signed a definitive agreement to acquire Newmark International, Inc. (Newmark), a manufacturer of concrete and steel poles primarily for the utility industry. The Company agreed to purchase all the shares of Newmark for approximately $105 million in cash from Newmark's parent company, Pfleiderer AG of Neumarkt, Germany. Additionally, Newmark has approximately $10 million in interest-bearing debt. Newmark, whose sales exceed $75 million annually, has its headquarters in Birmingham, Alabama. The transaction has been approved by the boards of directors of both companies and is subject to the satisfaction of customary closing conditions, including review under the Hart-Scott-Rodino Antitrust Improvements Act.

(19)    GUARANTOR / NON-GUARANTOR FINANCIAL INFORMATION

        On May 4, 2004, the Company completed a $150,000,000 offering of 6⁷/8% Senior Subordinated Notes. The Notes are guaranteed, jointly and severally, on a senior subordinated basis by certain of our current and future direct and indirect domestic 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".

25

        Condensed consolidated financial information for the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries is as follows:

Condensed Consolidated Statement of Operations
For the year ended December 27, 2003

		Parent			Guarantors			Non- guarantors			Eliminations			Total
Net Sales		$	531,634		$	104,774		$	254,757		$	(53,540	)	$	837,625
Cost of Sales			404,793			87,758			191,128			(54,044	)		629,635
	Gross Profit		126,841			17,016			63,629			504			207,990
Selling, general and administrative expenses			90,064			18,554			44,749			—			153,367
	Operating income		36,777			(1,538	)		18,880			504			54,623
Other income (deductions):
	Interest expense		(9,010	)		(26	)		(1,129	)		268			(9,897	)
	Interest income		289			—			1,074			(268	)		1,095
	Miscellaneous		(410	)		14			120			—			(276	)
			(9,131	)		(12	)		65			—			(9,078	)
Earnings before income taxes, minority interest, equity in losses of nonconsolidated subsidiaires and cumulative effect of change in accounting principle			27,646			(1,550	)		18,945			504			45,545
Income tax expense:
	Current		8,328			(2,422	)		5,778			—			11,684
	Deferred		2,807			1,637			406			—			4,850
			11,135			(785	)		6,184			—			16,534
Earnings before minority interest, equity in losses of nonconsolidated subsidiaires and cumulative effect of change in accounting principle			16,511			(765	)		12,761			504			29,011
Minority interest			—			—			(2,222	)		—			(2,222	)
Equity in losses of nonconsolidated subsidiaries			8,838			—			—			(9,774	)		(936	)
Cumulative effect of change in accounting principle			(366	)		—			—			—			(366	)
	Net earnings	$	24,983		$	(765	)	$	10,539		$	(9,270	)	$	25,487

26

Condensed Consolidated Balance Sheet
December 27, 2003

			Parent		Guarantors		Non- guarantors			Eliminations			Total
ASSETS
Current assets:
	Cash and cash equivalents		$	1,982	$	612	$	30,751		$	—		$	33,345
	Receivables, net			60,935		17,660		73,269			(99	)		151,765
	Inventories			62,290		15,659		39,100			(574	)		116,475
	Prepaid expenses			2,978		451		5,193			—			8,622
	Refundable and deferred income taxes			9,784		933		186			—			10,903
		Total current assets		137,969		35,315		148,499			(673	)		321,110
Property, plant and equipment, at cost				313,542		38,926		96,210			—			448,678
	Less accumulated depreciation and amortization			183,524		18,748		56,303			—			258,575
		Net property, plant and equipment		130,018		20,178		39,907			—			190,103
Goodwill				20,370		30,747		4,905			—			56,022
Other intangible assets				—		14,358		—			—			14,358
Investment in subsidiaries and intercompany accounts				190,685		50,271		4,073			(245,029	)		—
Other assets				26,430		—		174			(3,400	)		23,204
Deferred income taxes				—		2,757		—			(2,757	)		—
		Total assets	$	505,472	$	153,626	$	197,558		$	(251,859	)	$	604,797
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt		$	14,843	$	61	$	105		$	—		$	15,009
	Notes payable to banks			—		—		15,500			—			15,500
	Accounts payable			15,340		7,893		40,023			—			63,256
	Accrued expenses			34,240		4,587		17,128			(99	)		55,856
	Dividends payable			1,921		—		—			—			1,921
		Total current liabilities		66,344		12,541		72,756			(99	)		151,542
Deferred income taxes				22,641		—		2,864			(2,757	)		22,748
Long-term debt, excluding current installments				128,191		120		9,742			(3,400	)		134,653
Other noncurrent liabilites				20,081		—		2,035			—			22,116
Minority interest in consolidated subsidiaries				—		—		8,244			—			8,244
Shareholders' equity:
	Preferred stock			—		—		—			—			—
	Common stock			27,900		14,248		21,429			(35,677	)		27,900
	Additional paid-in capital			—		68,978		46,340			(115,318	)		—
	Retained earnings			307,494		57,739		36,295			(94,608	)		306,920
	Accumulated other comprehensive loss			—		—		(2,147	)		—			(2,147	)
				335,394		140,965		101,917			(245,603	)		332,673
Less:
	Cost of common shares in treasury			65,975		—		—			—			65,975
	Unearned restricted stock			1,204		—		—			—			1,204
		Total shareholders' equity		268,215		140,965		101,917			(245,603	)		265,494
		Total liabilities and shareholders' equity	$	505,472	$	153,626	$	197,558		$	(251,859	)	$	604,797

27

Condensed Consolidated Statement of Cash Flows
For the year ended December 27, 2003

			Parent			Guarantors			Non- guarantors			Eliminations			Total
Cash flows from operations:
	Net earnings (loss)		$	24,983		$	(765	)	$	10,539		$	(9,270	)	$	25,487
	Adjustments to reconcile net earnings to net cash flows from operations:
		Depreciation and amortization		22,656			4,945			6,996			—			34,597
		Loss on sale of property, plant and equipment		151			102			549						802
		Cumulative effect of change in accounting principle		366			—			—			—			366
		Equity in losses in nonconsolidated subsidiaries		936			—			—			—			936
		Minority interest in net losses of consolidated subsidiaries		—			—			2,222			—			2,222
		Deferred income taxes		2,807			1,637			406			—			4,850
		Other adjustments		384			—			497			—			881
	Changes in assets and liabilities:
		Receivables		(7,543	)		(1,599	)		(1,140	)		(233	)		(10,515	)
		Inventories		6,957			1,383			811			(152	)		8,999
		Prepaid expenses		(714	)		(14	)		(2,521	)		—			(3,249	)
		Accounts payable		4,106			(3,962	)		2,059			—			2,203
		Accrued expenses		(14,678	)		(3,200	)		1,619			233			(16,026	)
		Other noncurrent liabilities		703			—			467			—			1,170
		Income taxes payable		6,368			(685	)		1,375			—			7,058
				47,482			(2,158	)		23,879			(9,422	)		59,781
Cash flows from investing activities:
	Purchase of property, plant and equipment			(10,874	)		(983	)		(5,822	)		—			(17,679	)
	Purchase of minority interest			—			—			(200	)		—			(200	)
	Investment in nonconsolidated subsidiary			(2,001	)		—			286			—			(1,715	)
	Proceeds from sale of property, plant and equipment			190			26			429			—			645
	Proceeds from sale to minority shareholder			—			—			76			—			76
	Other, net			(4,127	)		3,170			(9,608	)		8,322			(2,243	)
				(16,812	)		2,213			(14,839	)		8,322			(21,116	)
Cash flows from financing activities:
	Net borrowings (repayments) under short-term agreements			—			—			10,367			—			10,367
	Proceeds from long-term borrowings			101			—			666			—			767
	Principal payments on long-term obligations			(26,767	)		(134	)		(1,587	)		1,100			(27,388	)
	Dividends paid			(7,414	)		—			—			—			(7,414	)
	Proceeds from exercises under stock plans			1,192			—			—			—			1,192
	Purchase of common treasury shares:
		Stock repurchases		(3,351	)		—			—			—			(3,351	)
		Stock plan exercises		(615	)		—			—			—			(615	)
				(36,854	)		(134	)		9,446			1,100			(26,442	)
Effect of exchange rate changes on cash and cash equivalents				—			—			1,608			—			1,608
Net change in cash and cash equivalents				(6,184	)		(79	)		20,094			—			13,831
Cash and cash equivalents—beginning of year				8,166			691			10,657			—			19,514
Cash and cash equivalents—end of year			$	1,982		$	612		$	30,751		$	—		$	33,345

28

Condensed Consolidated Statement of Operations
For the year ended December 28, 2002

		Parent			Guarantors			Non- guarantors			Eliminations			Total
Net Sales		$	581,027		$	121,711		$	216,182		$	(64,022	)	$	854,898
Cost of Sales			425,403			98,616			163,119			(63,716	)		623,422
	Gross Profit		155,624			23,095			53,063			(306	)		231,476
Selling, general and administrative expenses			104,685			19,617			36,885			—			161,187
	Operating income		50,939			3,478			16,178			(306	)		70,289
Other income (deductions):
	Interest expense		(10,532	)		(58	)		(1,537	)		405			(11,722	)
	Interest income		562			7			884			(405	)		1,048
	Miscellaneous		35			21			(393	)		—			(337	)
			(9,935	)		(30	)		(1,046	)		—			(11,011	)
Earnings before income taxes, minority interest, equity in losses of nonconsolidated subsidiaires and cumulative effect of change in accounting principle			41,004			3,448			15,132			(306	)		59,278
Income tax expense:
	Current		12,213			944			4,620			—			17,777
	Deferred		3,340			478			42			—			3,860
			15,553			1,422			4,662			—			21,637
Earnings before minority interest, equity in losses of nonconsolidated subsidiaires and cumulative effect of change in accounting principle			25,451			2,026			10,470			(306	)		37,641
Minority interest			—			—			(1,170	)		—			(1,170	)
Equity in losses of nonconsolidated subsidiaries			8,484			—			—			(10,826	)		(2,342	)
Cumulative effect of change in accounting principle			—			—			(500	)		—			(500	)
	Net earnings	$	33,935		$	2,026		$	8,800		$	(11,132	)	$	33,629

29

Condensed Consolidated Balance Sheet
December 28, 2002

			Parent		Guarantors		Non- guarantors			Eliminations			Total
ASSETS
Current assets:
	Cash and cash equivalents		$	8,166	$	691	$	10,657		$	—		$	19,514
	Receivables, net			53,392		16,061		63,576			(332	)		132,697
	Inventories			69,248		17,041		35,274			(726	)		120,837
	Prepaid expenses			2,264		437		2,167			—			4,868
	Refundable and deferred income taxes			14,613		1,885		514			—			17,012
		Total current assets		147,683		36,115		112,188			(1,058	)		294,928
Property, plant and equipment, at cost				293,209		39,893		82,726			—			415,828
	Less accumulated depreciation and amortization			160,742		16,912		44,999			—			222,653
		Net property, plant and equipment		132,467		22,981		37,727			—			193,175
Goodwill				20,370		30,747		4,554			—			55,671
Other intangible assets				—		15,646		—			—			15,646
Investment in subsidiaries and intercompany accounts				190,214		53,404		(5,342	)		(238,276	)		—
Other assets				22,213		1		1,437			(4,500	)		19,151
Deferred income taxes				—		3,443		—			(3,443	)		—
		Total assets	$	512,947	$	162,337	$	150,564		$	(247,277	)	$	578,571
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt		$	10,481	$	133	$	235		$	—		$	10,849
	Notes payable to banks			—		—		3,149			—			3,149
	Accounts payable			11,524		12,645		31,029			—			55,198
	Accrued expenses			48,818		6,997		14,345			(332	)		69,828
	Dividends payable			1,792		—		—			—			1,792
		Total current liabilities		72,615		19,775		48,758			(332	)		140,816
Deferred income taxes				18,898		—		2,785			(3,443	)		18,240
Long-term debt, excluding current installments				149,337		182		10,523			(4,500	)		155,542
Other noncurrent liabilites				13,803		—		1,568			—			15,371
Minority interest in consolidated subsidiaries				—		—		6,582			—			6,582
Shareholders' equity:
	Preferred stock			—		—		—			—			—
	Common stock			27,900		14,248		21,124			(35,372	)		27,900
	Additional paid-in capital			—		69,867		40,139			(110,006	)		—
	Retained earnings			290,500		58,265		29,134			(88,794	)		289,105
	Accumulated other comprehensive loss			—		—		(10,049	)		—			(10,049	)
				318,400		142,380		80,348			(234,172	)		306,956
Less:
	Cost of common shares in treasury			60,106		—		—			4,830			64,936
		Total shareholders' equity		258,294		142,380		80,348			(239,002	)		242,020
		Total liabilities and shareholders' equity	$	512,947	$	162,337	$	150,564		$	(247,277	)	$	578,571

30

Condensed Consolidated Statement of Cash Flows
For the year ended December 28, 2002

			Parent			Guarantors			Non- guarantors			Eliminations			Total
Cash flows from operations:
	Net earnings		$	33,935		$	2,026		$	8,800		$	(11,132	)	$	33,629
	Adjustments to reconcile net earnings to net cash flows from operations:
		Depreciation and amortization		22,906			5,177			5,859			—			33,942
		Loss on sale of property, plant and equipment		2,086			(1,138	)		135			—			1,083
		Cumulative effect of change in accounting principle		—			—			500			—			500
		Equity in losses in nonconsolidated subsidiaries		2,342			—			—			—			2,342
		Minority interest in net losses of consolidated subsidiaries		—			—			1,170			—			1,170
		Deferred income taxes		3,340			478			42			—			3,860
		Other adjustments		357			—			(689	)		—			(332	)
	Changes in assets and liabilities:
		Receivables		9,864			7,657			(13,502	)		(245	)		3,774
		Inventories		(5,268	)		2,852			(7,955	)		199			(10,172	)
		Prepaid expenses		(394	)		(326	)		485			—			(235	)
		Accounts payable		(4,786	)		(539	)		5,609			—			284
		Accrued expenses		11,442			(2,791	)		1,730			244			10,625
		Other noncurrent liabilities		(849	)		—			40			—			(809	)
		Income taxes payable		(10,453	)		3,443			245			(3,443	)		(10,208	)
				64,522			16,839			2,469			(14,377	)		69,453
Cash flows from investing activities:
	Purchase of property, plant and equipment			(8,128	)		(3,311	)		(2,503	)		—			(13,942	)
	Purchase of minority interest			—			—			(855	)		—			(855	)
	Proceeds from sale of property, plant and equipment			409			2,552			—			—			2,961
	Proceeds from sale to minority shareholder			—			—			1,253			—			1,253
	Other, net			(3,714	)		(16,264	)		4,958			11,877			(3,143	)
				(11,433	)		(17,023	)		2,853			11,877			(13,726	)
Cash flows from financing activities:
	Net borrowings (repayments) under short-term agreements			—			—			(8,171	)		—			(8,171	)
	Proceeds from long-term borrowings			627			234			388			—			1,249
	Principal payments on long-term obligations			(31,913	)		(164	)		(3,493	)		2,500			(33,070	)
	Dividends paid			(6,758	)		—			—			—			(6,758	)
	Proceeds from exercises under stock plans			8,591			—			—			—			8,591
	Purchase of common treasury shares:
		Stock repurchases		(14,250	)		—			—			—			(14,250	)
		Stock plan exercises		(6,898	)		—			—			—			(6,898	)
				(50,601	)		70			(11,276	)		2,500			(59,307	)
Effect of exchange rate changes on cash and cash equivalents				—			—			(1,428	)		—			(1,428	)
Net change in cash and cash equivalents				2,488			(114	)		(7,382	)		—			(5,008	)
Cash and cash equivalents—beginning of year				5,678			805			18,039			—			24,522
Cash and cash equivalents—end of year			$	8,166		$	691		$	10,657		$	—		$	19,514

31

Condensed Consolidated Statement of Operations
For the year ended December 29, 2001

		Parent			Guarantors			Non- guarantors			Eliminations			Total
Net Sales		$	576,673		$	164,970		$	195,851		$	(65,114	)	$	872,380
Cost of Sales			435,864			136,854			146,690			(64,649	)		654,759
	Gross Profit		140,809			28,116			49,161			(465	)		217,621
Selling, general and administrative expenses			89,751			25,629			37,220			—			152,600
	Operating income		51,058			2,487			11,941			(465	)		65,021
Other income (deductions):
	Interest expense		(15,085	)		(41	)		(2,165	)		211			(17,080	)
	Interest income		317			43			901			(211	)		1,050
	Miscellaneous		(20	)		3			(507	)		—			(524	)
			(14,788	)		5			(1,771	)		—			(16,554	)
Earnings before income taxes, minority interest, equity in losses of nonconsolidated subsidiaires and cumulative effect of change in accounting principle			36,270			2,492			10,170			(465	)		48,467
Income tax expense:
	Current		9,375			657			4,041			—			14,073
	Deferred		4,472			(67	)		(578	)		—			3,827
			13,847			590			3,463			—			17,900
Earnings before minority interest, equity in losses of nonconsolidated subsidiaires and cumulative effect of change in accounting principle			22,423			1,902			6,707			(465	)		30,567
Minority interest			—			—			(509	)		—			(509	)
Equity in losses of nonconsolidated subsidiaries			4,735			—			28			(8,128	)		(3,365	)
	Net earnings	$	27,158		$	1,902		$	6,226		$	(8,593	)	$	26,693

32

Condensed Consolidated Statement of Cash Flows
For the year ended December 29, 2001

			Parent			Guarantors			Non- guarantors			Eliminations			Total
Cash flows from operations:
	Net earnings		$	27,158		$	1,902		$	6,226		$	(8,593	)	$	26,693
	Adjustments to reconcile net earnings to net cash flows from operations:
		Depreciation and amortization		23,010			7,613			5,701			—			36,324
		Loss on sale of property, plant and equipment		903			104			43						1,050
		Equity in losses in nonconsolidated subsidiaries		3,393			—			(28	)		—			3,365
		Minority interest in net losses of consolidated subsidiaries		—			—			509			—			509
		Deferred income taxes		4,472			(67	)		(578	)		—			3,827
		Other adjustments		(403	)		—			(1,017	)		—			(1,420	)
	Changes in assets and liabilities:
		Receivables		7,774			(829	)		3,061			228			10,234
		Inventories		19,037			13,758			2,392			527			35,714
		Prepaid expenses		705			(78	)		319						946
		Accounts payable		(16,303	)		5,128			(1,338	)		—			(12,513	)
		Accrued expenses		(3,776	)		1,278			1,740			(402	)		(1,160	)
		Other noncurrent liabilities		(745	)		—			159						(586	)
		Income taxes payable		9,969			(2,376	)		(737	)		—			6,856
				75,194			26,433			16,452			(8,240	)		109,839
Cash flows from investing activities:
	Purchase of property, plant and equipment			(19,052	)		(2,118	)		(4,482	)					(25,652	)
	Acquisitions, net of cash acquired			(34,079	)		—									(34,079	)
	Proceeds from sale of property, plant and equipment			111			115			115						341
	Other, net			18,268			(24,453	)		(4,385	)		8,240			(2,330	)
				(34,752	)		(26,456	)		(8,752	)		8,240			(61,720	)
Cash flows from financing activities:
	Net borrowings (repayments) under short-term agreements			(17,997	)		—			(8,419	)		—			(26,416	)
	Proceeds from long-term borrowings			30,059			52			105			—			30,216
	Principal payments on long-term obligations			(46,044	)		(61	)		3,387						(42,718	)
	Dividends paid			(6,308	)		—			—			—			(6,308	)
	Proceeds from exercises under stock plans			1,256						—			—			1,256
	Purchase of common treasury shares:
		Stock repurchases		(1,373	)		—			—			—			(1,373	)
		Stock plan exercises		(186	)		—			—			—			(186	)
				(40,593	)		(9	)		(4,927	)		—			(45,529	)
Effect of exchange rate changes on cash and cash equivalents				—			—			(1,244	)		—			(1,244	)
Net change in cash and cash equivalents				(151	)		(32	)		1,529			—			1,346
Cash and cash equivalents—beginning of year				5,829			837			16,510			—			23,176
Cash and cash equivalents—end of year			$	5,678		$	805		$	18,039		$	—		$	24,522

33

QUARTERLY FINANCIAL DATA (Unaudited)

(Dollars in thousands, except per share amounts)

						Net Earnings
								Per Share				Stock Price
		Net Sales		Gross Profit												Dividends Declared
						Amount		Basic		Diluted		High		Low
2003
	First	$	207,294	$	52,853	$	7,293	$	0.31	$	0.30	$	21.88	$	18.48	$	0.075
	Second		200,666		51,488		6,367		0.27		0.26		22.85		18.30		0.080
	Third		202,498		47,806		4,093		0.17		0.17		21.88		17.65		0.080
	Fourth		227,167		55,843		7,734		0.32		0.32		24.22		18.96		0.080
Year		$	837,625	$	207,990	$	25,487	$	1.07	$	1.05	$	24.22	$	17.65	$	0.315
2002
	First	$	208,648	$	55,233	$	6,769	$	0.28	$	0.28	$	21.40	$	14.15	$	0.065
	Second		225,090		61,082		10,306		0.43		0.42		21.40		16.61		0.075
	Third		205,504		54,803		8,050		0.33		0.32		25.15		18.32		0.075
	Fourth		215,656		60,358		8,504		0.36		0.35		25.50		17.24		0.075
Year		$	854,898	$	231,476	$	33,629	$	1.40	$	1.37	$	25.50	$	14.15	$	0.29
2001
	First	$	204,267	$	49,738	$	4,791	$	0.20	$	0.20	$	20.69	$	14.50	$	0.065
	Second		232,889		59,232		8,468		0.34		0.34		18.30		14.12		0.065
	Third		209,287		53,134		6,951		0.28		0.28		18.16		12.12		0.065
	Fourth		225,937		55,517		6,483		0.26		0.26		16.38		12.51		0.065
Year		$	872,380	$	217,621	$	26,693	$	1.10	$	1.09	$	20.69	$	12.12	$	0.26

        Earnings per share are computed independently for each of the quarters. Therefore, the sum of the quarterly earnings per share may not equal the total for the year.

34

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EXHIBIT 99.1