SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 26, 1994
Commission File Number 0-3701
VALMONT INDUSTRIES, INC.
Incorporated under the laws of the State of Delaware
I.R.S. Employer Identification Number 47-0351813
Valley, Nebraska 68064
Registrant's telephone number, including area code (402) 359-2201
Indicate by check mark whether the registrant (1) has filed all
reports to be filed by section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months, and (2)
has been subject to such filing requirements for the past ninety
days. Yes__X__ No_____
As of May 2, 1994 there were outstanding 11,578,292 common shares
of the registrant.
Page 1
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands except per share amounts)
(Unaudited)
March 26, December 25,
1994 1993
------- -------
ASSETS
- - -----------------------------------------
Current assets:
Cash and cash equivalents $ 10,035 14,018
Receivables, net 75,859 70,159
Deferred income taxes 8,119 9,740
Inventories 64,881 69,913
Prepaid expenses 2,034 1,942
------- -------
Total current assets 160,928 165,772
------- -------
Other assets:
Investments in nonconsolidated affiliates 3,261 261
Other 4,702 7,785
------- -------
Total other assets 7,963 8,046
------- -------
Net property, plant and equipment 72,821 72,831
------- -------
Total assets $ 241,712 246,649
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- - -----------------------------------------
Current liabilities:
Accounts and notes payable $ 43,371 42,404
Other current liabilities 32,948 41,063
------- -------
Total current liabilities 76,319 83,467
------- -------
Deferred income taxes 8,091 8,593
Long-term debt, excl. current installments 38,354 38,419
Minority interest in consolidated
subsidiaries 528 536
Other noncurrent liabilities 2,349 2,242
Shareholders' equity:
Preferred stock of $1 par value.
Authorized 500,000 shares; none issued -- --
Common stock of $1 par value.
Authorized 36,000,000 shares;
issued 12,000,000 shares 12,000 12,000
Additional paid-in capital 1,612 1,101
Retained earnings 102,027 99,880
Currency translation adjustment 556 557
------- -------
Less: 116,195 113,538
Cost of common shares in treasury--
427,041 in 1994 (463,602 in 1993) 27 29
Unearned restricted stock 97 117
------- -------
Total shareholders' equity 116,071 113,392
------- -------
Total liabilities and shareholders'
equity $ 241,712 246,649
======= =======
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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Dollars in thousands except per share amounts)
(Unaudited)
Thirteen Weeks Ended
--------------------
March 26, March 27,
1994 1993
------- -------
Net sales $111,185 106,909
Cost of sales 86,828 81,567
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Gross profit 24,357 25,342
Selling, general and administrative
expenses 18,669 19,624
------- -------
Operating income 5,688 5,718
------- -------
Other income (deductions):
Interest expense (1,312) (1,674)
Interest income 108 163
Miscellaneous 331 53
------- -------
(873) (1,458)
------- -------
Earnings before income taxes,
discontinued operations and
cumulative effect of accounting change 4,815 4,260
------- -------
Income tax expense (benefit):
Current 421 1,505
Deferred 1,381 (46)
------- -------
1,802 1,459
------- -------
Earnings from continuing operations 3,013 2,801
Earnings from discontinued operations,
net of tax -- 687
Cumulative effect of accounting change -- (4,910)
------- -------
Net earnings (loss) $ 3,013 (1,422)
======= =======
Earnings (loss) per share:
Continuing operations $ 0.26 0.24
Discontinued operations -- 0.06
Cumulative effect of accounting change -- (0.42)
------- -------
Net earnings (loss) $ 0.26 (0.12)
======= =======
Cash dividends per share $ 0.075 0.065
======= =======
Weighted average number of shares of
common stock outstanding (000 omitted) 11,681 11,751
======= =======
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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Thirteen Weeks Ended
--------------------
March 26, March 27,
1994 1993
------- -------
Net cash used by operations $ (649) (14,945)
------- -------
Cash flows from investment activities:
Purchase of property, plant & equipment (4,661) (2,372)
Additions to other assets (365) (563)
Proceeds from sale of property and
equipment, net 2,523 659
Other, net 6 154
------- -------
Net cash used in investment activities (2,497) (2,122)
------- -------
Cash flows from financing activities:
Net borrowings under short-term agreements (76) 5,719
Principal payments and retirement of
long-term obligations (237) (554)
Dividends paid (865) (743)
Proceeds from exercise of employee
stock plans 385 550
Purchase of common treasury shares (44) (211)
------- -------
Net cash provided by (used in)
financing activities (837) 4,761
------- -------
Net decrease in cash and cash equivalents (3,983) (12,306)
Cash and cash equivalents--beginning of
period 14,018 12,747
------- -------
Cash and cash equivalents--end of period $10,035 441
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Page 4
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands)
(Unaudited)
1. Condensed Consolidated Financial Statements
The Condensed Consolidated Balance Sheet as of March 26,
1994 and the Condensed Consolidated Statements of Operations
for the thirteen week period ended March 26, 1994 and March
27, 1993 and the Condensed Consolidated Statements of Cash
Flows for the thirteen 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 position at March 26, 1994 and for all periods
presented.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles 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
December 25, 1993 Annual Report to shareholders. The
results of operations for the period ended March 26, 1994
are not necessarily indicative of the operating results for
the full year.
2. Inventories
Approximately 83% of the Company's inventories are valued at
cost on the basis of the last-in first-out (LIFO) dollar
value method under the natural business unit concept, which
is not in excess of market (net realizable value). As a
result, it is not possible to segregate the inventories into
their component values of raw material, work-in-process and
finished goods. All other inventories are valued at the
lower of first-in first-out (FIFO) cost or market (net
realizable) value.
3. Cash Flows
For purposes of the Condensed Consolidated Statements of
Cash Flows, the Company considers cash and cash investments
with a maturity of three months or less when purchased, to
be cash equivalents. Interest paid was $1,067 and $1,149
for the thirteen week periods ended March 26, 1994 and March
27, 1993, respectively. Income taxes paid, net of refunds
for the thirteen week period ended March 26, 1994, were
$353; and, for the thirteen week period ended March 27, 1993
income tax refunds exceeded payments by $560.
4. Earnings Per Share
Earnings per share are based on the weighted average number
of common shares outstanding and equivalent common shares
from dilutive stock options.
Page 5
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis
of
Financial Condition and Results of Operations
Results of Operations
For the first quarter of 1994, net sales of $111.2 million were
4% higher than the $106.9 million recorded in the same period of
1993. Sales of Irrigation products increased in the first
quarter of 1994 versus the same period in 1993 as a result of
strong demand in the North American market. This demand was
driven by water conservation and environmental awareness as
customers converted to center pivot and linear move irrigation
from less efficient methods. Stable farm income, favorable
commodity prices and low interest rates have also added to
demand. Sales to international markets for the first quarter
were about the same as for the like period a year ago.
The Industrial Products segment recorded lower overall sales,
primarily as a result of the 1993 sale and closing of the steel
reinforcing bar operations and divestiture of the cathodic
protection operation. In the Industrial Products segment, the
North American pole and tubing operations posted higher first
quarter 1994 sales versus 1993. European sales declined due to
slow economic conditions in that region. The ballast business
reflected lower sales in the first quarter of 1994 compared to
the first quarter of 1993 due to lower market prices as the
result of excess inventory positions by industry manufacturers
and distributors.
Gross profit as a percent of sales was 21.9% and 23.7% for the
first thirteen weeks of 1994 and 1993, respectively. The
decrease in 1994's gross profit percentage primarily results from
the lower market prices experienced in the ballast business and
reduced prices on irrigation orders taken in the last quarter of
1993 but shipped in early 1994.
Selling, general and administrative (SG&A) expenses were $18.7
million in the first quarter of 1994 compared to $19.6 million in
the first quarter of 1993. SG&A declined because of the 1993
sale and closing of the steel reinforcing bar operations and
divestiture of the cathodic protection operation, as well as the
Company's continuing emphasis on an appropriate SG&A cost
structure for the volumes attained.
For the first thirteen weeks of 1994 and 1993, interest expense
was $1.3 million and $1.7 million, respectively. The decrease in
1994 results primarily from lower debt levels.
The effective income tax rates for the first quarters of 1994 and
1993 were 37.4% and 34.3%, respectively, which approximates the
expected statutory rate for the periods.
As a result of the aforementioned operating factors and general
business conditions, earnings from continuing operations
increased to $3.0 million in the first quarter of 1994 from $2.8
million realized in the first quarter of 1993. Earnings per
share from continuing operations were $0.26 and $0.24 for the
first quarters of 1994 and 1993, respectively.
Page 6
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis
of
Financial Condition and Results of Operations (Continued)
For the first quarter of 1993, Valmont reported earnings from
discontinued operations of $0.7 million or $0.06 per share, and a
cumulative effect of accounting change which decreased net
earnings by $4.9 million or $0.42 per share. Discontinued
operations occurred as a result of the Company's May 1993 sale
of all of its investment in Inacom Corp. The cumulative effect
of accounting change resulted from the Company's adoption of
Statement of Financial Accounting Standards No. 109.
For the reasons described above, Valmont's net earnings in the
first quarter of 1994 were $3.0 million or $0.26 per share
compared to a net loss in the first quarter of 1993 of $1.4
million or $0.12 per share.
Liquidity and Capital Resources
Net working capital at March 26, 1994 amounted to $84.6 million
compared to $82.3 million at December 25, 1993. The ratio of
current assets to current liabilities was 2.1:1 at March 26, 1994
compared to 2.0:1 at December 25, 1993.
Expenditures for property, plant and equipment for the thirteen
week period ended March 26, 1994 were approximately $4.7 million,
while depreciation of property, plant & equipment was $2.3
million.
Available lines of credit total $56 million of which
approximately $53 million was unused at March 26, 1994. Long-
term debt was 26.1% of total capitalization at March 26, 1994
versus 26.5% at December 25, 1993. Valmont's objective is to
maintain long-term debt in the range of 32% to 40% of total
capital employed.
Overall, the Company believes the cash flow from operations, the
credit facilities and capital structure now in place will be
adequate to satisfy 1994 capital expenditures, dividends and
other financial commitments.
Page 7
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Valmont's annual shareholders' meeting was held on April
18, 1994. The shareholders voted on the election of three
directors and a proposal to ratify the appointment of KPMG
Peat Marwick as independent accountants for fiscal 1994.
For the annual meeting there were 11,558,723 shares
outstanding and eligible to vote. The tabulation for each
matter voted upon at the meeting was as follows:
Election of Directors:
Broker
For Withheld Non-Vote
Robert B. Daugherty 9,696,734 10,890 36,301
Allen F. Jacobson 9,677,534 30,090 36,301
Robert G. Wallace 9,696,734 10,890 36,301
Proposal to ratify the appointment of KPMG Peat Marwick as
independent accountants for fiscal 1994:
For 9,674,804
Against 8,632
Withheld 24,204
Broker Non-vote 36,301
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
(None)
B. Reports on Form 8-K
The Company filed no reports on Form 8-K during the
past fiscal quarter.
Page 8
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
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.
By /s/Terry J. McClain
-------------------
Terry J. McClain
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated this __6TH__ day of May, 1994.
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