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 June 25, 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 August 1, 1994 there were outstanding 11,571,892 common shares
of the registrant.
Page 1
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands except per share amounts)
(Unaudited)
June 25, December 25,
ASSETS 1994 1993
- - ----------------------------------------- ------- -------
Current assets:
Cash and cash equivalents $ 25,784 14,018
Receivables, net 67,178 70,159
Deferred income taxes 7,620 9,740
Inventories 59,305 69,913
Prepaid expenses 1,634 1,942
------- -------
Total current assets 161,521 165,772
------- -------
Other assets:
Investments in nonconsolidated affiliates 3,288 261
Other 4,456 7,785
------- -------
Total other assets 7,744 8,046
------- -------
Net property, plant and equipment 77,612 72,831
------- -------
Total assets $ 246,877 246,649
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- - -----------------------------------------
Current liabilities:
Accounts and notes payable $ 41,052 42,404
Other current liabilities 36,075 41,063
------- -------
Total current liabilities 77,127 83,467
------- -------
Deferred income taxes 7,631 8,593
Long-term debt, excl. current installments 38,681 38,419
Minority interest in consolidated
subsidiaries 450 536
Other noncurrent liabilities 2,442 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 1,828 1,101
Retained earnings 105,480 99,880
Currency translation adjustment 1,355 557
------- -------
Less: 120,663 113,538
Cost of common shares in treasury--
414,708 in 1994 (463,602 in 1993) 26 29
Unearned restricted stock 91 117
------- -------
Total shareholders' equity 120,546 113,392
------- -------
Total liabilities and shareholders'
equity $ 246,877 246,649
======= =======
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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 Twenty-six Weeks Ended
-------------------- ----------------------
June 25, June 26, June 25, June 26,
1994 1993 1994 1993
------- ------- ------- -------
Net sales $121,967 115,979 233,152 222,888
Cost of sales 94,393 89,469 181,221 171,036
------- ------- ------- -------
Gross profit 27,574 26,510 51,931 51,852
Selling, general and administrative
expenses 19,580 19,567 38,249 39,191
------- ------- ------- -------
Operating income 7,994 6,943 13,682 12,661
------- ------- ------- -------
Other income (deductions):
Interest expense (1,263) (1,467) (2,575) (3,141)
Interest income 142 168 250 331
Miscellaneous 3 249 334 302
------- ------- ------- -------
(1,118) (1,050) (1,991) (2,508)
------- ------- ------- -------
Earnings before income taxes,
discontinued operations and
cumulative effect of accounting change 6,876 5,893 11,691 10,153
------- ------- ------- -------
Income tax expense:
Current 2,371 976 2,792 2,481
Deferred 182 1,087 1,563 1,041
------- ------- ------- -------
2,553 2,063 4,355 3,522
------- ------- ------- -------
Earnings from continuing operations 4,323 3,830 7,336 6,631
Earnings from discontinued operations,
net of tax -- 4,283 -- 4,970
Cumulative effect of accounting change -- -- -- (4,910)
------- ------- ------- -------
Net earnings $ 4,323 8,113 7,336 6,691
======= ======= ======= =======
Earnings (loss) per share:
Continuing operations $ 0.37 0.33 0.63 0.57
Discontinued operations -- 0.36 -- 0.42
Cumulative effect of accounting change -- -- -- (0.42)
------- ------- ------- -------
Net earnings $ 0.37 0.69 0.63 0.57
======= ======= ======= =======
Cash dividends per share $ 0.075 0.075 0.150 0.140
======= ======= ======= =======
Weighted average number of shares of
common stock outstanding (000 omitted) 11,673 11,716 11,678 11,733
======= ======= ======= =======
Page 3
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Twenty-six Weeks Ended
--------------------
June 25, June 26,
1994 1993
------- -------
Net cash provided (used) by operations $ 22,146 (6,763)
------- -------
Cash flows from investment activities:
Purchase of property, plant & equipment (10,824) (5,887)
Proceeds from sale of Inacom -- 47,557
Additions to other assets (379) (801)
Proceeds from sale, net of gain,
of property and equipment 2,501 1,893
Other, net 177 604
------- -------
Net cash provided by (used in)
investment activities (8,525) 43,366
------- -------
Cash flows from financing activities:
Net borrowings under short-term agreements (141) (1,419)
Principal payments and retirement of
long-term obligations (389) (21,247)
Dividends paid (1,732) (1,489)
Proceeds from exercise of employee
stock plans 451 740
Purchase of common treasury shares (44) (356)
------- -------
Net cash used in financing activities (1,855) (23,771)
------- -------
Net increase in cash and cash equivalents 11,766 12,832
Cash and cash equivalents--beginning of
period 14,018 12,747
------- -------
Cash and cash equivalents--end of period $25,784 25,579
======= =======
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 June 25, 1994 and
the Condensed Consolidated Statements of Operations for the
thirteen week and twenty-six week periods ended June 25, 1994 and
June 26, 1993 and the Condensed Consolidated Statements of Cash
Flows for the twenty-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 position at June 25, 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
June 25, 1994 are not necessarily indicative of the operating
results for the full year.
2. 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 $2,025 and $2,698 for the twenty-
six week periods ended June 25, 1994 and June 26, 1993,
respectively. Income taxes paid, net of refunds, were $129 and
$1,792 for the twenty-six week periods ended June 25, 1994 and
June 26, 1993, respectively.
3. 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 second quarter of 1994 net sales were $122.0 million, an
increase of 5% over the $116.0 million for the same period last year.
Net sales for this year's first half were $233.2 million versus $222.9
million in the same period last year. Sales of Irrigation products
increased in the second quarter and first half of 1994 versus the same
periods in 1993 as a result of strong demand in the North American
market. This demand was driven by water conservation, good commodity
prices and relatively low interest rates. Sales to international
markets for the second quarter and first half of 1994 were about the
same as a year ago as declining shipments to Saudi Arabia were offset
by orders from other parts of the world.
The Industrial Products segment recorded lower overall sales,
primarily from the ballast business and as a result of the 1993 sale
and closing of the steel reinforcing bar operations and divestiture of
the cathodic protection operation. For the second quarter and first
half, net sales in the North American pole and tubing operations
increased in 1994 versus the same periods in 1993. European pole
sales declined due to slow economic conditions in that region. The
ballast business reflected lower sales in the second quarter and first
half of 1994 compared to the same periods in 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 22.6% and 22.9% for the second
quarter of 1994 and 1993, respectively. Year-to-date gross profit was
22.3% compared to 23.3% for 1994 and 1993, respectively. The decrease
in 1994's gross profit percentages 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 $19.6 million
for second quarter of 1994 and 1993; and, as a percent of sales, SG&A
expenses for both respective quarters was 16.1% and 16.9%. SG&A
expenses for the first half of 1994 and 1993 were $38.2 million and
$39.2 million, respectively. Year-to-date SG&A expenses, as a percent
of sales, were 16.4% for 1994 and 17.6% for 1993. SG&A expenses
through the first half of 1994 declined because of the 1993 sale and
closing of the steel reinforcing bar operations and divestiture of the
cathodic protection operation.
For the second quarter of 1994 and 1993, interest expense was $1.3
million and $1.5 million, respectively. For the first half of 1994
and 1993, interest expense was $2.6 million and $3.1 million,
respectively. The decrease in 1994 results primarily from lower debt
levels.
The effective income tax rates for the first half of 1994 and 1993
were 37.3% and 34.7%, respectively, which do not vary significantly
from the expected statutory rate for the periods.
Page 6
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis
of
Financial Condition and Results of Operations (Continued)
As a result of the aforementioned operating factors and general
business conditions, earnings from continuing operations increased to
$7.3 million in the first half of 1994 from $6.6 million in the same
period in 1993. For the second quarter, earnings from continuing
operations were $4.3 million in 1994 versus $3.8 million in 1993.
Earnings per share from continuing operations were $0.63 and $0.57 for
the first half of 1994 and 1993, respectively and $0.37 and $0.33 for
the second quarter of 1994 and 1993, respectively.
During the second quarter of 1993 Valmont sold its investment in
Inacom Corp. in an underwritten public offering. As a result of this
transaction a net gain from discontinued operation of $4.3 million or
$0.36 per share was realized in the second quarter of 1993. Valmont's
share of Inacom's 1993 net earnings of $0.7 million or $0.08 per
share, when combined with the gain from sale of this investment,
amounted to $5.0 million or $0.42 per share for the six month period
of 1993.
Effective with the beginning of Valmont's 1993 fiscal year, the
Company adopted SFAS Statement No. 109, "Accounting for Income Taxes."
The cumulative effect of this accounting change decreased 1993 net
earnings by $4.9 million or $0.42 per share.
For the reasons described in the two preceding paragraphs, Valmont's
net earnings differed from its earnings from continuing operations for
the periods presented. Valmont's net earnings were $7.3 million or
$0.63 per share in the first half of 1994 versus $6.7 million or $0.57
in the first half of 1993. For the second quarter of 1994, net
earnings were $4.3 million or $0.37 per share compared to $8.1 million
or $0.69 per share.
Liquidity and Capital Resources
- - -------------------------------
Net working capital at June 25, 1994 amounted to $84.4 million
compared to $82.3 million at December 25, 1993. The ratio of current
assets to current liabilities was 2.1:1 at June 25, 1994 compared to
2.0:1 at December 25, 1993.
Expenditures for property, plant and equipment for the twenty-six week
period ended June 25, 1994 were approximately $10.8 million, while
depreciation of property, plant & equipment was $4.7 million.
Available lines of credit total $56 million of which approximately $53
million was unused at June 25, 1994. Long-term debt was 25.7% of
total capitalization at June 25, 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. In 1993, the proceeds from
the sale of Valmont's investment in Inacom Corp. were used to reduce
debt and invest in cash equivalents and working capital.
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. Information concerning matters voted on at the
meeting was included in Valmont's 10-Q Report for the
quarter ended March 26, 1994.
Item 5. OTHER INFORMATION
-----------------
On June 28, 1994, the Company issued a press release
announcing that the Board of Directors has authorized the
Company to repurchase up to 575,000 shares of its
outstanding common stock to be added to treasury stock and
used for stock options, incentive plans and other corporate
purposes.
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.
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 __5th__ day of August, 1994.
Page 8