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 April 1, 1995
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 April 30, 1995 there were outstanding 11,553,919 common
shares of the registrant.
Page 1
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands except per share amounts)
(Unaudited)
April 1, December 31,
ASSETS 1995 1994
- ----------------------------------------- ------- -------
Current assets:
Cash and cash equivalents $ 20,482 29,582
Receivables, net 77,513 73,185
Deferred income taxes 7,472 7,149
Inventories 66,383 59,221
Prepaid expenses 1,468 1,867
------- -------
Total current assets 173,318 171,004
------- -------
Other assets:
Investments in nonconsolidated affiliates 991 991
Other 7,339 7,796
------- -------
Total other assets 8,330 8,787
------- -------
Net property, plant and equipment 90,080 86,383
------- -------
Total assets $ 271,728 266,174
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------
Current liabilities:
Accounts and notes payable $ 44,864 42,519
Other current liabilities 45,731 47,570
------- -------
Total current liabilities 90,595 90,089
------- -------
Deferred income taxes 11,546 9,990
Long-term debt, excl. current installments 34,092 35,489
Minority interest in consolidated
subsidiaries 521 501
Other noncurrent liabilities 2,645 2,638
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 1,664 1,664
Retained earnings 116,428 112,532
Currency translation adjustment 2,955 2,001
------- -------
Less: 133,047 128,197
Cost of common shares in treasury--
454,281 in 1995 (427,041 in 1994) 641 648
Unearned restricted stock 77 82
------- -------
Total shareholders' equity 132,329 127,467
------- -------
Total liabilities and shareholders'
equity $ 271,728 266,174
Page 2 ======= =======
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Dollars in thousands except per share amounts)
(Unaudited)
Thirteen Weeks Ended
--------------------
April 1, March 26,
1995 1994
------- -------
Net sales $133,658 111,185
Cost of sales 102,041 86,828
------- -------
Gross profit 31,617 24,357
Selling, general and administrative
expenses 23,032 18,669
------- -------
Operating income 8,585 5,688
------- -------
Other income (deductions):
Interest expense (1,085) (1,312)
Interest income 156 108
Miscellaneous (244) 331
------- -------
(1,173) (873)
------- -------
Earnings before income taxes 7,412 4,815
------- -------
Income tax expense:
Current 1,625 421
Deferred 1,025 1,381
------- -------
2,650 1,802
------- -------
Net earnings $ 4,762 3,013
======= =======
Net earnings per share $ 0.41 0.26
======= =======
Cash dividends per share $ 0.075 0.075
======= =======
Weighted average number of shares of
common stock outstanding (000 omitted) 11,679 11,681
======= =======
Page 3
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Thirteen Weeks Ended
--------------------
April 1, March 27,
1995 1994
------- -------
Net cash used by operations $ (972) (649)
------- -------
Cash flows from investment activities:
Purchase of property, plant & equipment (5,518) (4,661)
Additions to other assets (86) (365)
Proceeds from sale of property and
equipment, net 3 2,523
Other, net 375 6
------- -------
Net cash used in investment activities (5,226) (2,497)
------- -------
Cash flows from financing activities:
Net borrowings under short-term agreements (59) (76)
Principal payments and retirement of
long-term obligations (1,982) (237)
Dividends paid (866) (865)
Proceeds from exercise of employee
stock plans 5 385
Purchase of common treasury shares - (44)
------- -------
Net cash used in financing activities (2,902) (837)
------- -------
Net decrease in cash and cash equivalents (9,100) (3,983)
Cash and cash equivalents--beginning of
period 29,582 14,018
------- -------
Cash and cash equivalents--end of period $20,482 10,035
======= =======
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 April 1, 1995
and the Condensed Consolidated Statements of Operations and
the Condensed Consolidated Statements of Cash Flows for the
thirteen week periods ended April 1, 1995 and March 26, 1994
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 April 1, 1995 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 31, 1994 Annual Report to shareholders. The
results of operations for the period ended April 1, 1995 are
not necessarily indicative of the operating results for the
full year.
2. Inventories
-----------
Approximately 49% 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 $914 and $1,067 for
the thirteen week periods ended April 1, 1995 and March 26,
1994, respectively. Income tax refunds exceeded payments by
$116 and $353 for the thirteen week periods ended April 1,
1995 and March 26, 1994, respectively.
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 1995 net sales were $133.7 million, an
increase of 20% over the $111.2 million reported for the same
period of 1994. Sales in the Irrigation Products business
increased in the first quarter of 1995 versus the same period in
1994 as a result of strong demand in the North American market.
This demand was driven by water conservation as customers
continued to convert to center pivot and linear move irrigation
from less efficient methods. Sales to international markets for
the first quarter were above sales levels for the like period a
year ago.
In the Engineered Metal Structures businesses, both the North
American and European pole and tubing operations posted higher
first quarter 1995 sales versus 1994. Sales of lighting ballasts
for the first quarter were about the same as the like period in
1994.
Gross profit as a percent of sales was 23.7% and 21.9% for the
first quarters of 1995 and 1994, respectively. The increase in
1995's gross profit percentage primarily resulted from the
ballast business reporting a substantial increase for the quarter
versus last year due to reduced costs. Irrigation Products gross
profit as a percentage of sales also increased for the first
quarter. The Engineered Metal Structures businesses gross profit
percentage decreased in the first quarter of 1995 versus 1994 due
to lower margins on certain transmission pole orders.
Selling, general and administrative (SG&A) expenses were $23.0
million in the first quarter of 1995 compared to $18.7 million in
the first quarter of 1994. As a percent of gross profit, SG&A
expenses for the respective quarters were 72.8% and 76.6%.
Increased sales commissions and incentives and investments in
future business developments, contributed to the increases during
the first quarter of 1995 versus 1994.
For the first thirteen weeks of 1995 and 1994, interest expense
was $1.1 million and $1.3 million, respectively. The decrease in
1995 results primarily from lower debt levels.
The effective income tax rates for the first quarters of 1995 and
1994 were 35.8% and 37.4%, respectively. The decrease was due
to nontaxable interest income and foreign sales corporation tax
benefits being greater in 1995.
As a result of the aforementioned operating factors and general
business conditions, net earnings increased to $4.8 million in
the first quarter of 1995 from $3.0 million in the first quarter
of 1994. Earnings per share were $0.41 and $0.26 for the first
quarters of 1995 and 1994, respectively.
Page 6
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis
of
Financial Condition and Results of Operations (Continued)
Liquidity and Capital Resources
- -------------------------------
Net working capital of $82.7 million compared to net working
capital of $80.9 million at December 31, 1994. The ratio of
current assets to current liabilities was 1.9:1 at both April 1,
1995 and December 31, 1994.
Expenditures for property, plant and equipment for the thirteen
week period ended April 1, 1995 were approximately $5.5 million,
while depreciation of property, plant and equipment was $2.9
million. The major investment in the first quarter was the new
plant facility in Utah. Expenditures were also made to expand
the Texas plant and to begin construction of a China facility due
for completion by year's end. These expenditures were made to
expand market penetration and keep equipment and facilities
modern.
Available lines of credit at April 1, 1995 totaled $48 million of
which approximately $45 million was unused. Long-term debt was
22.5% of total capitalization at April 1, 1995 versus 23.9% at
December 31, 1994. Valmont's objective is to maintain long-term
debt in the range of 32% to 40% of total capital employed.
However, occasionally business conditions or opportunities may
warrant being temporarily outside this range. The Company is
below the lower limit of the range due to the divestiture of
Inacom Corp. in 1993 and subsequent long-term debt payments.
The Company believes cash flow from operations, existing credit
facilities and capital structure now in place will be adequate to
satisfy 1995 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, 1995. The shareholders voted to elect three directors
and to ratify the appointment of KPMG Peat Marwick LLP as
independent accountants for fiscal 1995. For the annual
meeting there were 11,545,385 shares outstanding and
eligible to vote of which 10,599,524 were present at the
meeting in person or by proxy. The tabulation for each
matter voted upon at the meeting was as follows:
Election of Directors:
Broker
For Withheld Non-vote
--- --------- --------
Charles M. Harper 10,589,176 10,348 -0-
Lloyd P.Johnson 10,588,652 10,872 -0-
Thomas F. Madison 10,590,052 9,472 -0-
Proposal to ratify the appointment of KPMG Peat Marwick LLP as
independent accountants for fiscal 1995:
For 10,580,220
Against 10,027
Withheld 9,277
Broker Non-vote -0-
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 __8TH__ day of May, 1995.
Page 9