VALMONT INDUSTRIES INC - Quarter Report: 2008 September (Form 10-Q)

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

Form 10-Q


(Mark One)
ý		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 2008
Or
o		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 1-31429

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


Delaware (State or other jurisdiction of incorporation or organization)		47-0351813 (I.R.S. Employer Identification No.)
One Valmont Plaza, Omaha, Nebraska (Address of principal executive offices)		68154-5215 (Zip Code)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


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

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

26,151,080
Outstanding shares of common stock as of October 20, 2008

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q

		Page No.

	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Statements of Operations for the thirteen and thirty-nine weeks ended September 27, 2008 and September 29, 2007	3
	Condensed Consolidated Balance Sheets as of September 27, 2008 and December 29, 2007	4
	Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 27, 2008 and September 29, 2007	5
	Notes to Condensed Consolidated Financial Statements	6-24
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25-33
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	34
Item 4.	Controls and Procedures	34
	PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
Signatures		36

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

		Thirteen Weeks Ended						Thirty-nine Weeks Ended

		Sept. 27, 2008			Sept. 29, 2007			Sept. 27, 2008			Sept. 29, 2007
Net sales		$	494,801		$	372,033		$	1,414,216		$	1,114,972
Cost of sales			359,802			274,461			1,026,206			819,719

	Gross profit		134,999			97,572			388,010			295,253
Selling, general and administrative expenses			73,103			59,858			212,278			179,573

	Operating income		61,896			37,714			175,732			115,680

Other income (expense):
	Interest expense		(4,264	)		(4,470	)		(13,446	)		(13,159	)
	Interest income		382			666			1,880			1,796
	Miscellaneous		(376	)		(319	)		(2,234	)		(342	)

			(4,258	)		(4,123	)		(13,800	)		(11,705	)

Earnings before income taxes, minority interest and equity in earnings of nonconsolidated subsidiaries			57,638			33,591			161,932			103,975

Income tax expense (benefit):
	Current		24,089			8,506			65,625			30,857
	Deferred		(4,501	)		(1,070	)		(10,435	)		553

			19,588			7,436			55,190			31,410

Earnings before minority interest and equity in earnings of nonconsolidated subsidiaries			38,050			26,155			106,742			72,565
Minority interest			(1,478	)		(700	)		(3,164	)		(1,355	)
Equity in earnings of nonconsolidated subsidiaries			412			438			369			372

Net earnings		$	36,984		$	25,893		$	103,947		$	71,582

Earnings per share—Basic		$	1.43		$	1.01		$	4.03		$	2.81

Earnings per share—Diluted		$	1.40		$	0.99		$	3.95		$	2.74

Cash dividends per share		$	0.130		$	0.105		$	0.365		$	0.305

Weighted average number of shares of common stock outstanding (000 omitted)			25,864			25,570			25,793			25,500

Weighted average number of shares of common stock outstanding plus dilutive potential common shares (000 omitted)			26,362			26,207			26,321			26,096

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

				September 27, 2008			December 29, 2007

ASSETS
Current assets:
	Cash and cash equivalents			$	68,095		$	106,532
	Receivables, net				318,723			254,472
	Inventories				313,600			219,993
	Prepaid expenses				19,612			17,734
	Refundable and deferred income taxes				32,223			22,866

		Total current assets			752,253			621,597

Property, plant and equipment, at cost					631,730			582,015
	Less accumulated depreciation and amortization				366,520			349,331

		Net property, plant and equipment			265,210			232,684

Goodwill					168,587			116,132
Other intangible assets, net					94,325			58,343
Other assets					22,518			23,857

		Total assets		$	1,302,893		$	1,052,613

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt			$	2,341		$	22,510
	Notes payable to banks				28,234			15,005
	Accounts payable				177,102			128,599
	Accrued expenses				60,299			37,957
	Accrued employee compensation and benefits				70,200			64,241
	Dividends payable				3,399			2,724

		Total current liabilities			341,575			271,036

Deferred income taxes					37,879			35,547
Long-term debt, excluding current installments					265,086			200,738
Other noncurrent liabilities					24,147			24,306
Minority interest in consolidated subsidiaries					19,710			10,373
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
	Retained earnings				597,674			496,388
	Accumulated other comprehensive income				16,340			16,996
	Treasury stock				(27,418	)		(30,671	)

			Total shareholders' equity		614,496			510,613

			Total liabilities and shareholders' equity	$	1,302,893		$	1,052,613

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

				Thirty-nine Weeks Ended

				Sept. 27, 2008			Sept. 29, 2007
Cash flows from operating activities:
	Net earnings			$	103,947		$	71,582
	Adjustments to reconcile net earnings to net cash flows from operating activities:
		Depreciation and amortization			29,081			25,736
		Stock-based compensation			3,869			2,694
		Loss/(gain) on sale of assets			(377	)		819
		Equity in earnings of nonconsolidated subsidiaries			(369	)		(372	)
		Minority interest			3,164			1,355
		Deferred income taxes			(10,435	)		553
		Other adjustments			(840	)		694
		Payment of deferred compensation			(589	)		(9,186	)
		Changes in assets and liabilities, net of business acquisitions:
			Receivables		(49,109	)		(44,662	)
			Inventories		(78,663	)		(11,147	)
			Prepaid expenses		(28	)		(1,650	)
			Accounts payable		34,510			7,582
			Accrued expenses		24,152			16,715
			Other noncurrent liabilities		(1,430	)		(879	)
			Income taxes payable/refundable		10,111			(4,600	)

			Net cash flows from operating activities		66,994			55,234

Cash flows from investing activities:
	Purchase of property, plant & equipment				(38,924	)		(42,901	)
	Proceeds from sale of assets				3,133			9,371
	Acquisitions, net of cash acquired				(119,044	)		(16,163	)
	Dividends to minority interests				(184	)		(715	)
	Other, net				(598	)		(1,417	)

			Net cash flows from investing activities		(155,617	)		(51,825	)

Cash flows from financing activities:
	Net borrowings under short-term agreements				10,395			1,624
	Proceeds from long-term borrowings				80,895			12,463
	Principal payments on long-term obligations				(38,787	)		(12,147	)
	Dividends paid				(8,852	)		(7,588	)
	Proceeds from exercises under stock plans				6,689			6,287
	Excess tax benefits from stock option exercises				7,117			5,541
	Purchase of common treasury shares—stock plan exercises				(7,895	)		(6,244	)

			Net cash flows from financing activities		49,562			(64	)

Effect of exchange rate changes on cash and cash equivalents					625			2,488

Net change in cash and cash equivalents					(38,437	)		5,833
Cash and cash equivalents—beginning of year					106,532			63,504

Cash and cash equivalents—end of period				$	68,095		$	69,337

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

1. Summary of Significant Accounting Policies

Condensed Consolidated Financial Statements

The Condensed Consolidated Balance Sheet as of September 27, 2008 and the Condensed Consolidated Statements of Operations for the thirteen and thirty-nine week periods ended September 27, 2008 and September 29, 2007 and the Condensed Consolidated Statements of Cash Flows for the thirty-nine week periods then ended have been prepared by the Company, without audit. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial statements as of September 27, 2008 and for all periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2007. The accounting policies and methods of computation followed in these interim financial statements are the same as those followed in the financial statements for the year ended December 29, 2007. The results of operations for the periods ended September 27, 2008 are not necessarily indicative of the operating results for the full year.

Inventories

At September 27, 2008, approximately 50.1% 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. Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured finished goods. The excess of replacement cost of inventories over the LIFO value was approximately $66,500 and $35,800 at September 27, 2008 and December 29, 2007, respectively.

Inventories consisted of the following:

		September 27, 2008		December 29, 2007

Raw materials and purchased parts		$	217,715	$	139,557
Work-in-process			26,707		21,481
Finished goods and manufactured goods			135,718		94,747

	Subtotal		380,140		255,785
LIFO reserve			66,540		35,792

Inventory		$	313,600	$	219,993

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, non-vested stock awards and bonuses of common

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

1. Summary of Significant Accounting Policies (Continued)

stock. At September 27, 2008, 1,698,000 shares of common stock remained available for issuance under the plans. Shares and options issued and available for issuance 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. The Company's compensation expense related to stock options (included in selling, general and administrative expenses) and associated tax benefits in fiscal 2008 and 2007 were as follows:

	Thirteen Weeks Ended				Thirty-nine Weeks Ended

	Sept. 27, 2008		Sept. 29, 2007		Sept. 27, 2008		Sept. 29, 2007
Compensation expense	$	760	$	367	$	2,248	$	1,264
Related tax benefits		289		141		854		487

Fair Value

On December 30, 2007, the Company adopted SFAS No. 157, Fair Value Measurements ("SFAS 157") which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of SFAS 157 apply to other accounting pronouncements that require or permit fair value measurements. As defined in SFAS 157, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In February 2008, the FASB issued FASB Staff Position No. 157-2 (FSP 157-2), "Effective Date of FASB Statement 157." FSP 157-2 delayed for one year the applicability of SFAS 157's fair-value measurements to certain nonfinancial assets and liabilities. The Company adopted SFAS 157 in 2008, except as it applies to those nonfinancial assets and liabilities affected by the one-year delay.

SFAS 157 establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refers broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

•: Level 1: Quoted market prices in active markets for identical assets or liabilities.
•: Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
•: Level 3: Unobservable inputs that are not corroborated by market data.

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

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

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

1. Summary of Significant Accounting Policies (Continued)

Trading Securities: The assets and liabilities recorded for the investments held in the Valmont Deferred Compensation Plan represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with Financial Accounting Standard No. 115, Accounting for Certain Investments in Debt and Equity Securities, considering the employee's ability to change investment allocation of their deferred compensation at any time. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.

				Fair Value Measurement Using:

		Carrying Value September 27, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Trading Securities	$	12,399	$	12,399	$	—	$	—
Liabilities:
	Trading Securities	$	12,399	$	12,399	$	—	$	—

Recently Issued Accounting Pronouncements

In December 2007, the FASB issued Statement 141R ("SFAS No. 141R"), Business Combinations. This Statement amends accounting and reporting standards associated with business combinations. This Statement requires the acquiring entity to recognize the assets acquired, liabilities assumed and noncontrolling interests in the acquired entity at the date of acquisition at their fair values, including noncontrolling interests. In addition, SFAS No. 141R requires that direct costs associated with an acquisition be expensed as incurred and sets forth various other changes in accounting and reporting related to business combinations. This Statement is effective for business combinations completed by the Company after December 27, 2008. The effect of this Statement on the Company's consolidated financial statements is expected to result in lower net income in years when it has acquisitions, since acquisition costs are expensed as incurred and higher values of intangible assets will be recorded in cases where the Company acquires less than 100% of a company.

In December 2007, the FASB issued Statement 160 ("SFAS No. 160"), Noncontrolling Interests in Consolidated Financial Statements. This Statement amended the accounting and reporting for noncontrolling interests in a consolidated subsidiary and for the deconsolidation of a subsidiary. Included in this statement is the requirement that noncontrolling interests be reported in the equity section of the balance sheet. This Statement is effective at the beginning of the Company's 2009 fiscal year. The Company expects that the effect of this Statement on its consolidated financial statements will increase shareholders' equity in that minority interest will be classified as part of shareholders' equity under this Statement.

Subsequent Event

In October 2008, the Company replaced its revolving credit agreement and the term loan with a new five-year $280 million revolving credit agreement described below. The Company repaid the

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

1. Summary of Significant Accounting Policies (Continued)

outstanding balances of its revolving credit agreement and the term loan with borrowings from the new revolving credit agreement.

On October 16, 2008, the Company entered into a new five-year $280 million revolving credit agreement with a group of banks. The Company may increase the credit agreement by up to an additional $100 million at any time, subject to the participating banks increasing the amount of their lending commitments. The interest rate on outstanding borrowings will be, at the Company's option, either:

(i)

LIBOR (based on a 1, 2, 3 or 6 month interest period, as selected by the Company) plus 125 to 200 basis points (inclusive of facility fees), depending on the Company's ratio of debt to earnings before taxes, interest, depreciation and amortization (EBITDA), or;

(ii)

the higher of

•: The higher of (a) the prime lending rate and (b) the Federal Funds rate plus 50 basis points plus, in each case, 25 to 100 basis points (inclusive of facility fees), depending on the Company's ratio of debt to EBITDA, or
•: LIBOR (based on a 1 week interest period) plus 125 to 200 basis points (inclusive of facility fees), depending on the Company's ratio of debt to EBITDA

The new revolving credit agreement has maintenance covenants that may limit the Company's additional borrowing capability under the agreement, similar to the covenants in the prior revolving credit agreement.

2. Acquisitions

In January 2008, the Company acquired substantially all of the assets of Penn Summit LLC (Penn Summit), a manufacturer of steel utility and wireless communication poles located in Hazelton, Pennsylvania, for approximately $57,904, including transaction costs. In addition, the Company assumed $96 of interest-bearing debt as part of the acquisition. The Company recorded $31,440 of goodwill as part of the purchase price allocation and assigned the goodwill to the Utility Support Structures segment. The Company financed the acquisition with cash balances and approximately $7,500 of borrowings through its revolving credit agreement. The Company acquired Penn Summit to expand its geographic presence in the United States for steel utility support structures.

In February 2008, the Company acquired 70% of the outstanding shares of West Coast Engineering Group, Ltd. (West Coast), a Canadian and U.S. manufacturer of steel and aluminum structures for the lighting, transportation and wireless communication industries headquartered in Delta, British Columbia, for $31,431 Canadian dollars ($31,472 U.S. dollars). In addition, $6,304 of interest-bearing debt was assumed as part of the acquisition. The purchase price was financed through the Company's revolving credit agreement. The Company recorded $19,438 of goodwill as part of the preliminary purchase price allocation and assigned the goodwill to the Engineered Support Structures (ESS) segment. The Company acquired West Coast to expand its geographic presence in Canada and the United States for lighting and transportation structures.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

2. Acquisitions (Continued)

In July 2008, the Company acquired the assets of Site Pro 1, Inc. (Site Pro), a company that distributes wireless communication components for the U.S. market for $22,460 in cash. Site Pro is reported as part of the ESS segment. The acquisition was financed through the Company's revolving credit agreement. The Company recorded $703 of goodwill as part of the purchase price allocation and assigned the goodwill to the ESS segment. The Site Pro acquisition was completed to expand the Company's geographic distribution and service levels in wireless communication components.

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

		Penn Summit		West Coast		Site Pro

Current Assets		$	12,167	$	12,794	$	6,119
Property, plant and equipment and other long-term assets			5,177		10,112		172
Intangible assets			13,322		9,786		16,931
Goodwill			31,440		19,438		703

	Total assets acquired	$	62,106	$	52,130	$	23,925

Current liabilities			4,106		7,765		1,465
Deferred income taxes			—		3,364		—
Long-term debt			96		6,304		—
Minority Interest			—		3,225		—

	Total liabilities assumed		4,202		20,658		1,465

	Net assets acquired	$	57,904	$	31,472	$	22,460

The purchase price allocation on the West Coast acquisition was not finalized in the third quarter of 2008, as the fair value determinations on the real estate and other intangible assets acquired was not complete. The Company expects to finalize the purchase price allocations in the fourth quarter of 2008.

In the third quarter of 2008, the Company acquired the assets of Matco, Inc. (Matco), a company that provides consulting services related to corrosion protection, for $3,700 in cash. Matco is reported as part of the Utility Support Structures segment. The fair values of the assets and liabilities recorded as part of the Matco acquisition included: current assets, $693; current liabilities, $154; property, plant and equipment, $914; intangible assets, $914; and goodwill, $1,333. In addition, the Company formed a 51% owned joint venture in Turkey with a Turkish company to manufacture and sell pole structures. The Company's contribution for its 50% ownership was $4,472 in cash. This joint venture is reported as part of the ESS segment. The Company acquired Matco to expand its expertise in corrosion protection technologies. The Turkish joint venture was established to build its manufacturing base and distribution of pole structures in the Middle East and Central Asia.

On April 26, 2007, the Company acquired 70% of the outstanding shares of Tehomet Oy (Tehomet), a Finnish manufacturer of lighting poles. Tehomet's operations are included in the Company's condensed consolidated financial statement since the acquisition date. In June 2008, the

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

2. Acquisitions (Continued)

Company acquired the remaining 30% of the outstanding shares of a North American Irrigation dealership from its minority shareholder for $848.

The Company's proforma results of operations for the thirteen and thirty-nine weeks ended September 29, 2007, assuming that the transaction occurred at the beginning of the periods presented are as follows:

	Thirteen Weeks Ended September 29, 2007		Thirty-nine Weeks Ended September 29, 2007

Net sales	$	398,935	$	1,195,027
Net income		25,588		70,843
Earnings per share—diluted	$	0.98	$	2.71

3. Goodwill and Intangible Assets

The Company's annual impairment testing of goodwill and intangible assets was performed during the third quarter of 2008. 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. The Company continues to monitor changes in the global economy that could impact future operating results of its reporting units and related components.

Amortized Intangible Assets

The components of amortized intangible assets at September 27, 2008 and December 29, 2007 were as follows:

	As of September 27, 2008

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	86,446	$	17,683	16 years
Proprietary Software & Database		2,609		2,260	6 years
Patents & Proprietary Technology		2,887		865	14 years
Non-compete Agreements		1,709		468	6 years

	$	93,651	$	21,276

	As of December 29, 2007

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	51,459	$	13,819	16 years
Proprietary Software & Database		2,609		2,158	6 years
Patents & Proprietary Technology		2,839		715	14 years
Non-compete Agreements		1,007		285	7 years

	$	57,914	$	16,977

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

3. Goodwill and Intangible Assets (Continued)

Amortization expense for intangible assets for the thirteen weeks ended September 27, 2008 and September 29, 2007 was $1,768 and $919, respectively. Amortization expense for intangible assets for the thirty-nine weeks ended September 27, 2008, and September 29, 2007 was $4,600 and $2,602, respectively. Estimated amortization expense related to amortized intangible assets is as follows:

	Estimated Amortization Expense

2008	$	6,180
2009		7,104
2010		7,104
2011		7,104
2012		7,060

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

Non-amortized intangible assets

Intangible assets with indefinite lives are not amortized. The carrying values of trade names at September 27, 2008 and December 29, 2007 were as follows:

	September 28, 2008		December 29, 2007

PiRod	$	4,750	$	4,750	2001
Newmark		11,111		11,111	2004
Tehomet		1,369		1,373	2007
Feralux		172		172	2007
West Coast		2,255		—	2008
Site Pro		2,177		—	2008
Matco		116		—	2008

	$	21,950	$	17,406

The PiRod, Newmark, Tehomet and Feralux trade names were tested for impairment separately from goodwill in the third quarter of 2008. The values of the trade names were determined using the relief-from-royalty method. Based on this evaluation, the Company determined that its trade names were not impaired as of September 27, 2008.

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

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

3. Goodwill and Intangible Assets (Continued)

Goodwill

The carrying amount of goodwill as of September 27, 2008 was as follows:

	Engineered Support Structures Segment			Utility Support Structures Segment		Coatings Segment		Irrigation Segment		Total

Balance December 29, 2007	$	28,570		$	43,517	$	42,192	$	1,853	$	116,132
Acquisitions		20,141			32,773		—		202		53,116
Foreign currency translation		(661	)		—		—		—		(661	)

Balance September 27, 2008	$	48,050		$	76,290	$	42,192	$	2,055	$	168,587

In January 2008, the Company acquired substantially all of the net operating assets of a steel utility pole manufacturer in Hazelton, Pennsylvania. This acquisition increased the goodwill in the Utility Support Structures segment by $31,440. In February 2008, the Company acquired 70% of the outstanding shares of a Canadian and U.S. manufacturer of steel and aluminum structures for the lighting, transportation and wireless communication industries headquartered in Delta, British Columbia. This acquisition increased the goodwill in the ESS segment by $19,438. In June 2008, the Company acquired the minority owner's shares in a North American irrigation dealership, resulting in a $202 increase of goodwill in the Irrigation segment. In the third quarter 2008, the Company acquired the assets of Site Pro and Matco that increased the goodwill of the ESS segment and the Utility Support Structures segment by $703 and $1,333, respectively.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

4. Cash Flows

The Company considers all highly liquid temporary cash investments purchased with a maturity of three months or less to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the thirty-nine weeks ended were as follows:

	Sept. 27, 2008		Sept. 29, 2007

Interest	$	11,216	$	10,852
Income taxes		57,076		31,985

5. Earnings Per Share

The following table reconciles Basic and Diluted earnings per share (EPS):

		Basic EPS				Diluted EPS

Thirteen weeks ended September 27, 2008:
	Net earnings	$	36,984	—		$	36,984
	Shares outstanding		25,864	498			26,362
	Per share amount	$	1.43	(.03	)	$	1.40
Thirteen weeks ended September 29, 2007:
	Net earnings	$	25,893	—		$	25,893
	Shares outstanding		25,570	637			26,207
	Per share amount	$	1.01	(.02	)	$	0.99
Thirty-nine weeks ended September 27, 2008:
	Net earnings	$	103,947	—		$	103,947
	Shares outstanding		25,793	528			26,321
	Per share amount	$	4.03	(.08	)	$	3.95
Thirty-nine weeks ended September 29, 2007:
	Net earnings	$	71,582	—		$	71,582
	Shares outstanding		25,500	596			26,096
	Per share amount	$	2.81	(.07	)	$	2.74

At September 27, 2008 and September 29, 2007 there were no outstanding options with exercise prices exceeding the market prices of common stock. Accordingly, no option shares were excluded from the computations of diluted earnings per share for the periods presented.

6. Comprehensive Income

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. Currency translation adjustment is the Company's only component of accumulated other

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

6. Comprehensive Income (Continued)

comprehensive income. The Company's total comprehensive income for the thirteen and thirty-nine weeks ended September 27, 2008 and September 29, 2007, respectively, were as follows:

	Thirteen Weeks Ended					Thirty-nine Weeks Ended

	Sept. 27, 2008			Sept. 29, 2007		Sept. 27, 2008			Sept. 29, 2007
Net earnings	$	36,984		$	25,893	$	103,947		$	71,582
Currency translation adjustment		(11,139	)		4,712		(657	)		9,369

Total comprehensive income	$	25,845		$	30,605	$	103,290		$	80,951

7. Business Segments

The Company aggregates its operating segments into four reportable segments. Aggregation is based on similarity of operating segments as to economic characteristics, products, production processes, types or classes of customer and the methods of distribution. Net corporate expense is net of certain service-related expenses that are allocated to business units generally based on employee headcounts and sales dollars.

Reportable segments are as follows:

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

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

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

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

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 the manufacture of tubular products and the distribution of industrial fasteners, are reported in the "Other" category.

In 2007, the Company determined that its Tubing business did not meet the quantitative thresholds as a reportable segment. Accordingly, the Tubing business and its financial results are included in "Other". The Company reclassified information related to the Tubing business for 2007 to conform to the 2008 presentation.

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

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

7. Business Segments (Continued)

invested capital. The Company does not allocate interest expense, non-operating income and deductions, or income taxes to its business segments.

			Thirteen Weeks Ended						Thirty-nine Weeks Ended

			Sept. 27, 2008			Sept. 29, 2007			Sept. 27, 2008			Sept. 29, 2007
Sales:
	Engineered Support Structures segment
		Lighting & Traffic	$	132,466		$	123,393		$	395,215		$	342,259
		Specialty		37,174			33,771			96,742			91,202
		Utility		17,429			7,604			35,509			17,137

				187,069			164,768			527,466			450,598
	Utility Support Structures segment
		Steel		92,888			60,780			252,580			189,314
		Concrete		20,098			18,282			62,878			59,878

				112,986			79,062			315,458			249,192
	Coatings segment			35,889			34,321			108,217			103,351
	Irrigation segment			150,445			84,822			440,890			285,301
	Other			33,564			29,359			89,815			93,312

				519,953			392,332			1,481,846			1,181,754
Intersegment Sales:
	Engineered Support Structures			7,880			7,124			20,680			24,897
	Utility Support Structures			1,973			69			4,087			705
	Coatings			6,961			7,523			21,823			23,115
	Irrigation			5			7			18			54
	Other			8,333			5,576			21,022			18,011

				25,152			20,299			67,630			66,782
Net Sales
	Engineered Support Structures			179,189			157,644			506.786			425,701
	Utility Support Structures			111,013			78,993			311,371			248,487
	Coatings			28,928			26,798			86,394			80,236
	Irrigation			150,440			84,815			440,872			285,247
	Other			25,231			23,783			68,793			75,301

Consolidated Net Sales			$	494,801		$	372,033		$	1,414,216		$	1,114,972

Operating Income
	Engineered Support Structures		$	16,247		$	16,679		$	44,402		$	42,102
	Utility Support Structures			14,620			10,045			43,025			31,640
	Coatings			9,284			6,117			24,915			17,217
	Irrigation			25,249			8,859			75,663			37,761
	Other			5,821			4,707			15,521			14,936
	Net corporate expense			(9,325	)		(8,693	)		(27,794	)		(27,976	)

Total Operating Income			$	61,896		$	37,714		$	175,732		$	115,680

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

8. 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, severally, fully and unconditionally, on a senior subordinated basis by certain of the Company's 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"). All Guarantors are 100% owned by the parent company.

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Thirteen Weeks Ended September 27, 2008

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales		$	286,461		$	93,062		$	160,629		$	(45,351	)	$	494,801
Cost of sales			216,297			71,132			118,724			(46,351	)		359,802

	Gross profit		70,164			21,930			41,905			1,000			134,999
Selling, general and administrative expenses			39,703			12,966			20,434			—			73,103

	Operating income		30,461			8,964			21,471			1,000			61,896

Other income (deductions):
	Interest expense		(3,778	)		(3	)		(483	)		—			(4,264	)
	Interest income		17			9			356			—			382
	Miscellaneous		(758	)		59			323			—			(376	)

			(4,519	)		65			196			—			(4,258	)
Earnings before income taxes, minority interest, and equity in earnings of nonconsolidated subsidiaries			25,942			9,029			21,667			1,000			57,638

Income tax expense:
	Current		13,108			3,578			7,403			—			24,089
	Deferred		(3,406	)		(77	)		(1,018	)		—			(4,501	)

			9,702			3,501			6,385			—			19,588

Earnings before minority interest, and equity in earnings of nonconsolidated subsidiaries			16,240			5,528			15,282			1,000			38,050
Minority interest			—			—			(1,478	)		—			(1,478	)
Equity in earnings of nonconsolidated subsidiaries			19,744			—			—			(19,332	)		412

	Net earnings	$	35,984		$	5,528		$	13,804		$	(18,332	)	$	36,984

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

8. Guarantor/Non-Guarantor Financial Information (Continued)

For the Thirty-nine Weeks Ended September 27, 2008

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales		$	834,881		$	255,982		$	430,455		$	(107,102	)	$	1,414,216
Cost of sales			620,442			196,743			317,372			(108,351	)		1,026,206

	Gross profit		214,439			59,239			113,083			1,249			388,010
Selling, general and administrative expenses			115,476			36,031			60,771			—			212,278

	Operating income		98,963			23,208			52,312			1,249			175,732

Other income (deductions):
	Interest expense		(11,457	)		(14	)		(1,975	)		—			(13,446	)
	Interest income		170			28			1,682			—			1,880
	Miscellaneous		(1,779	)		161			(616	)		—			(2,234	)

			(13,066	)		175			(909	)		—			(13,800	)
Earnings before income taxes, minority interest, and equity in earnings of nonconsolidated subsidiaries			85,897			23,383			51,403			1,249			161,932

Income tax expense:
	Current		40,679			8,362			16,584			—			65,625
	Deferred		(8,699	)		398			(2,134	)		—			(10,435	)

			31,980			8,760			14,450			—			55,190

Earnings before minority interest, and equity in earnings of nonconsolidated subsidiaries			53,917			14,623			36,953			1,249			106,742
Minority interest			—			—			(3,164	)		—			(3,164	)
Equity in earnings of nonconsolidated subsidiaries			48,781			—			39			(48,451	)		369

	Net earnings	$	102,698		$	14,623		$	33,828		$	(47,202	)	$	103,947

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

8. Guarantor/Non-Guarantor Financial Information (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Thirteen Weeks Ended September 29, 2007

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales		$	223,203		$	61,195		$	116,654		$	(29,019	)	$	372,033
Cost of sales			166,532			47,719			88,998			(28,788	)		274,461

	Gross profit		56,671			13,476			27,656			(231	)		97,572
Selling, general and administrative expenses			34,235			8,385			17,238			—			59,858

	Operating income		22,436			5,091			10,418			(231	)		37,714

Other income (deductions):
	Interest expense		(3,966	)		(1	)		(590	)		87			(4,470	)
	Interest income		142			155			456			(87	)		666
	Miscellaneous		11			21			(351	)		—			(319	)

			(3,813	)		175			(485	)		—			(4,123	)
Earnings before income taxes, minority interest, and equity in earnings of nonconsolidated subsidiaries			18,623			5,266			9,933			(231	)		33,591

Income tax expense:
	Current		3,740			2,034			2,732			—			8,506
	Deferred		323			(193	)		(1,200	)		—			(1,070	)

			4,063			1,841			1,532			—			7,436

Earnings before minority interest, and equity in earnings of nonconsolidated subsidiaries			14,560			3,425			8,401			(231	)		26,155
Minority interest			—			—			(700	)		—			(700	)
Equity in earnings of nonconsolidated subsidiaries			11,563			—			173			(11,298	)		438

	Net earnings	$	26,123		$	3,425		$	7,874		$	(11,529	)	$	25,893

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

8. Guarantor/Non-Guarantor Financial Information (Continued)

For the Thirty-nine Weeks Ended September 29, 2007

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales		$	692,121		$	182,173		$	323,225		$	(82,547	)	$	1,114,972
Cost of sales			511,058			145,226			245,365			(81,930	)		819,719

	Gross profit		181,063			36,947			77,860			(617	)		295,253
Selling, general and administrative expenses			103,638			25,774			50,161			—			179,573

	Operating income		77,425			11,173			27,699			(617	)		115,680

Other income (deductions):
	Interest expense		(11,975	)		(5	)		(1,602	)		423			(13,159	)
	Interest income		423			500			1,296			(423	)		1,796
	Miscellaneous		21			57			(420	)		—			(342	)

			(11,531	)		552			(726	)		—			(11,705	)
Earnings before income taxes, minority interest, and equity in earnings of nonconsolidated subsidiaries			65,894			11,725			26,973			(617	)		103,975

Income tax expense:
	Current		19,087			4,554			7,216			—			30,857
	Deferred		2,026			(542	)		(931	)		—			553

			21,113			4,012			6,285			—			31,410

Earnings before minority interest, and equity in earnings of nonconsolidated subsidiaries			44,781			7,713			20,688			(617	)		72,565
Minority interest			—			—			(1,355	)		—			(1,355	)
Equity in earnings of nonconsolidated subsidiaries			27,417			—			198			(27,243	)		372

	Net earnings	$	72,198		$	7,713		$	19,531		$	(27,860	)	$	71,582

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

8. Guarantor/Non-Guarantor Financial Information (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
September 27, 2008

			Parent			Guarantors		Non-Guarantors			Eliminations			Total

ASSETS
Current assets:
	Cash and cash equivalents		$	14,312		$	1,467	$	52,316		$	—		$	68,095
	Receivables, net			123,027			49,471		146,225			—			318,723
	Inventories			125,427			62,802		125,371			—			313,600
	Prepaid expenses			4,730			865		14,017			—			19,612
	Refundable and deferred income taxes			20,890			3,777		7,556			—			32,223

		Total current assets		288,386			118,382		345,485			—			752,253
Property, plant and equipment, at cost				382,230			86,703		162,798			—			631,731
	Less accumulated depreciation and amortization			242,241			37,617		86,663			—			366,521

	Net property, plant and equipment			139,989			49,086		76,135			—			265,210

Goodwill				20,108			105,518		42,961			—			168,587
Other intangible assets				630			77,290		16,405			—			94,325
Investment in subsidiaries and intercompany accounts				590,497			20,410		(39,648	)		(571,259	)		—
Other assets				17,840			—		4,678			—			22,518

		Total assets	$	1,057,450		$	370,686	$	446,016		$	(571,259	)	$	1,302,893

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt		$	830		$	24	$	1,487		$	—		$	2,341
	Notes payable to banks			16,000			—		12,234			—			28,234
	Accounts payable			86,205			18,217		72,680			—			177,102
	Accrued expenses			72,338			11,506		46,655			—			130,499
	Dividends payable			3,399			—		—			—			3,399

		Total current liabilities		178,772			29,747		133,056			—			341,575

Deferred income taxes				9,349			21,602		6,928			—			37,879
Long-term debt, excluding current installments				251,572			13		13,501			—			265,086
Other noncurrent liabilities				21,138			—		3,009			—			24,147
Minority interest in consolidated subsidiaries				—			—		19,710			—			19,710
Shareholders' equity:
	Common stock of $1 par value			27,900			14,249		3,492			(17,741	)		27,900
	Additional paid-in capital			—			181,542		113,739			(295,281	)		—
	Retained earnings			596,137			123,533		136,241			(258,237	)		597,674
	Accumulated other comprehensive loss			—			—		16,340			—			16,340
	Treasury stock			(27,418	)		—		—			—			(27,418	)

	Total shareholders' equity			596,619			319,324		269,812			(571,259	)		614,496

		Total liabilities and shareholders' equity	$	1,057,450		$	370,686	$	446,016		$	(571,259	)	$	1,302,893

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

8. Guarantor/Non-Guarantor Financial Information

CONDENSED CONSOLIDATED BALANCE SHEETS

December 29, 2007

			Parent			Guarantors		Non-Guarantors			Eliminations			Total

ASSETS
Current assets:
	Cash and cash equivalents		$	58,344		$	464	$	47,724		$	—		$	106,532
	Receivables, net			101,637			34,141		118,694			—			254,472
	Inventories			87,887			50,248		81,858			—			219,993
	Prepaid expenses			4,636			474		12,624			—			17,734
	Refundable and deferred income taxes			13,407			3,351		6,108			—			22,866

		Total current assets		265,911			88,678		267,008			—			621,597

Property, plant and equipment, at cost				359,003			79,631		143,381			—			582,015
	Less accumulated depreciation and amortization			231,838			34,535		82,958			—			349,331

Net property, plant and equipment				127,165			45,096		60,423			—			232,684

Goodwill				20,108			73,375		22,649			—			116,132
Other intangible assets				670			50,533		7,140			—			58,343
Investment in subsidiaries and intercompany accounts				409,892			66,674		(18,986	)		(457,580	)		—
Other assets				19,137			—		4,720			—			23,857

		Total assets	$	842,883		$	324,356	$	342,954		$	(457,580	)	$	1,052,613

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt		$	20,183		$	32	$	2,295		$	—		$	22,510
	Notes payable to banks			—			—		15,005			—			15,005
	Accounts payable			47,570			13,307		67,722			—			128,599
	Accrued expenses			60,066			7,991		34,141			—			102,198
	Dividends payable			2,724			—		—			—			2,724

		Total current liabilities		130,543			21,330		119,163			—			271,036

Deferred income taxes				10,566			20,778		4,203			—			35,547
Long-term debt, excluding current installments				185,274			6		15,458			—			200,738
Other noncurrent liabilities				20,504			—		3,802			—			24,306
Minority interest in consolidated subsidiaries				—			—		10,373			—			10,373
Shareholders' equity:
	Common stock of $1 par value			27,900			14,249		3,492			(17,741	)		27,900
	Additional paid-in capital			—			159,082		67,055			(226,137	)		—
	Retained earnings			498,767			108,911		102,412			(213,702	)		496,388
	Accumulated other comprehensive income			—			—		16,996			—			16,996
	Treasury stock			(30,671	)		—		—			—			(30,671	)

	Total shareholders' equity			495,996			282,242		189,955			(457,580	)		510,613

		Total liabilities and shareholders' equity	$	842,883		$	324,356	$	342,954		$	(457,580	)	$	1,052,613

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

8. Guarantor/Non-Guarantor Financial Information (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Thirty-nine Weeks Ended September 27, 2008

				Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operating activities:
	Net earnings			$	102,698		$	14,623		$	33,828		$	(47,202	)	$	103,947
	Adjustments to reconcile net earnings to net cash flows from operations:
		Depreciation and amortization			12,556			8,116			8,409			—			29,081
		Stock based compensation			3,869			—			—			—			3,869
		(Gain)/ Loss on sale of property, plant and equipment			29			42			(448	)		—			(377	)
		Equity in (earnings)/losses of nonconsolidated subsidiaries			(330	)		—			(39	)		—			(369	)
		Minority interest			328			—			2,836			—			3,164
		Deferred income taxes			(8,698	)		398			(2,135	)		—			(10,435	)
		Other adjustments			(4	)		—			(836	)		—			(840	)
		Payment of deferred compensation			(589	)		—			—			—			(589	)
		Changes in assets and liabilities:
			Receivables		(21,390	)		(4,568	)		(23,151	)		—			(49,109	)
			Inventories		(37,540	)		(4,631	)		(36,492	)		—			(78,663	)
			Prepaid expenses		(94	)		(96	)		162			—			(28	)
			Accounts payable		29,130			1,502			3,878			—			34,510
			Accrued expenses		12,645			1,199			10,308			—			24,152
			Other noncurrent liabilities		(1,502	)		—			72			—			(1,430	)
			Income taxes payable		11,209			—			(1,098	)		—			10,111

		Net cash flows from operating activities			102,317			16,585			(4,706	)		(47,202	)		66,994

Cash flows from investing activities:
	Purchase of property, plant and equipment				(24,910	)		(2,626	)		(11,388	)		—			(38,924	)
	Proceeds from sale of assets				726			65			2,342			—			3,133
	Acquisitions, net of cash acquired				(849	)		(84,065	)		(34,130	)		—			(119,044	)
	Dividends to minority interests				—			—			(184	)		—			(184	)
	Other, net				(181,320	)		71,141			62,378			47,202			(599	)

		Net cash flows from investing activities			(206,353	)		(15,485	)		19,018			47,202			(155,618	)

Cash flows from financing activities:
	Net borrowings under short-term agreements				16,000			—			(5,605	)		—			10,395
	Proceeds from long-term borrowings				80,000			—			895			—			80,895
	Principal payments on long-term obligations				(33,055	)		(97	)		(5,635	)		—			(38,787	)
	Dividends paid				(8,852	)		—			—			—			(8,852	)
	Proceeds from exercises under stock plans				6,689			—			—			—			6,689
	Excess tax benefits from stock option exercises				7,117			—			—			—			7,117
	Purchase of common treasury shares—stock plan exercises				(7,895	)		—			—			—			(7,895	)

		Net cash flows from financing activities			60,004			(97	)		(10,345	)		—			49,562

	Effect of exchange rate changes on cash and cash equivalents				—			—			625			—			625

	Net change in cash and cash equivalents				(44,032	)		1,003			4,592			—			(38,437	)
	Cash and cash equivalents—beginning of year				58,344			464			47,724			—			106,532

	Cash and cash equivalents—end of period			$	14,312		$	1,467		$	52,316			—		$	68,095

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

8. Guarantor/Non-Guarantor Financial Information

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Thirty-nine Weeks Ended September 29, 2007

				Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operating activities:
	Net earnings			$	72,198		$	7,713		$	19,531		$	(27,860	)	$	71,582
	Adjustments to reconcile net earnings to net cash flows from operations:
		Depreciation and amortization			13,126			6,548			6,062			—			25,736
		Stock based compensation			2,694			—			—			—			2,694
		Loss on sale of property, plant and equipment			14			674			131			—			819
		Equity in (earnings)/losses of nonconsolidated subsidiaries			(174	)		—			(198	)		—			(372	)
		Minority interest			—			—			1,356			—			1,356
		Deferred income taxes			2,026			(542	)		(931	)		—			553
		Other adjustments			—			—			693			—			693
		Payment of deferred compensation			(9,186	)		—			—			—			(9,186	)
		Changes in assets and liabilities:
			Receivables		(17,085	)		1,618			(29,147	)		(48	)		(44,662	)
			Inventories		(1,295	)		401			(10,253	)		—			(11,147	)
			Prepaid expenses		(1,006	)		(57	)		(587	)		—			(1,650	)
			Accounts payable		1,191			(1,284	)		7,675			—			7,582
			Accrued expenses		11,926			568			4,173			48			16,715
			Other noncurrent liabilities		(1,965	)		—			1,086			—			(879	)
			Income taxes payable		(2,416	)		—			(2,184	)		—			(4,600	)

		Net cash flows from operating activities			70,048			15,639			(2,593	)		(27,860	)		55,234

Cash flows from investing activities:
	Purchase of property, plant and equipment				(24,716	)		(6,940	)		(11,245	)		—			(42,901	)
	Proceeds from sale of assets				9,204			42			125			—			9,371
	Acquisitions, net of cash aquired				—			—			(16,163	)		—			(16,163	)
	Dividends to minority interests				—			—			(715	)		—			(715	)
	Other, net				(41,846	)		(9,726	)		22,295			27,860			(1,417	)

		Net cash flows from investing activities			(57,358	)		(16,624	)		(5,703	)		27,860			(51,825	)

Cash flows from financing activities:
	Net borrowings under short-term agreements				—			—			1,624			—			1,624
	Proceeds from long-term borrowings				12,087			—			376			—			12,463
	Principal payments on long-term obligations				(10,847	)		(22	)		(1,278	)		—			(12,147	)
	Dividends paid				(7,588	)		—			—			—			(7,588	)
	Proceeds from exercises under stock plans				6,287			—			—			—			6,287
	Excess tax benefits from stock option exercises				5,541			—			—			—			5,541
	Purchase of common treasury shares—stock plan exercises				(6,244	)		—			—			—			(6,244	)

		Net cash flows from financing activities			(764	)		(22	)		722			—			(64	)

	Effect of exchange rate changes on cash and cash equivalents				—			—			2,488			—			2,488

	Net change in cash and cash equivalents				11,926			(1,007	)		(5,086	)		—			5,833
	Cash and cash equivalents—beginning of year				25,438			2,962			35,104			—			63,504

	Cash and cash equivalents—end of period			$	37,364		$	1,955		$	30,018			—		$	69,337

*****

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

PART 1. FINANCIAL INFORMATION

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

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

This discussion should be read in conjunction with the financial statements and the notes thereto, and the management's discussion and analysis, included in the Company's annual report on Form 10-K for the fiscal year ended December 29, 2007. We aggregate our businesses into four reportable segments. See Note 7 to the Condensed Consolidated Financial Statements.

Results of Operations

Dollars in thousands, except per share amounts

			Thirteen Weeks Ended									Thirty-nine Weeks Ended

			September 27, 2008			September 29, 2007			% Incr. (Decr.)			September 27, 2008			September 29, 2007			% Incr. (Decr.)
Consolidated
	Net sales		$	494,801		$	372,033			33.0	%	$	1,414,216		$	1,114,972			26.8	%
	Gross profit			134,999			97,572			38.4	%		388,010			295,253			31.4	%
		as a percent of sales		27.3	%		26.2	%					27.4	%		26.5	%
	SG&A expense			73,103			59,858			22.1	%		212,278			179,573			18.2	%
		as a percent of sales		14.8	%		16.1	%					15.0	%		16.1	%
	Operating income			61,896			37,714			64.1	%		175,732			115,680			51.9	%
		as a percent of sales		12.5	%		10.1	%					12.4	%		10.4	%
	Net interest expense			3,882			3,804			2.1	%		11,566			11,363			1.8	%
	Effective tax rate			34.0	%		22.1	%					34.1	%		30.2	%
	Net earnings			36,984			25,893			42.8	%		103,947			71,582			45.2	%
	Earnings per share-diluted		$	1.40		$	0.99			41.4	%	$	3.95		$	2.74			44.2	%
Engineered Support Structures segment
		Net sales	$	179,189		$	157,644			13.7	%	$	506,786		$	425,701			19.0	%
		Gross profit		45,830			41,398			10.7	%		131,674			114,943			14.6	%
		SG&A expense		29,583			24,719			19.7	%		87,272			72,841			19.8	%
		Operating income		16,247			16,679			(2.6	)%		44,402			42,102			5.5	%
Utility Support Structures segment
		Net sales		111,013			78,993			40.5	%		311,371			248,487			25.3	%
		Gross profit		27,999			19,076			46.8	%		81,482			58,890			38.4	%
		SG&A expense		13,371			9,031			48.1	%		38,449			27,250			41.1	%
		Operating income		14,620			10,045			45.6	%		43,025			31,640			36.0	%
Coatings segment
		Net sales		28,928			26,798			7.9	%		86,394			80,236			7.7	%
		Gross profit		12,485			8,767			42.4	%		34,826			25,112			38.7	%
		SG&A expense		3,201			2,650			20.8	%		9,911			7,895			25.5	%
		Operating income		9,284			6,117			51.8	%		24,915			17,217			44.7	%
Irrigation segment
		Net sales		150,440			84,815			77.4	%		440,872			285,247			54.6	%
		Gross profit		40,141			20,635			94.5	%		117,420			71,957			63.2	%
		SG&A expense		14,891			11,776			26.5	%		41,756			34,196			22.1	%
		Operating income		25,249			8,859			185.0	%		75,663			37,761			100.4	%
Other
		Net sales		25,231			23,783			6.1	%		68,793			75,301			(8.6	)%
		Gross profit		8,284			7,406			11.9	%		22,797			23,742			(4.0	)%
		SG&A expense		2,472			2,699			(8.4	)%		7,285			8,806			(17.3	)%
		Operating income		5,821			4,707			23.7	%		15,521			14,936			3.9	%
Net corporate expense
		Gross profit		260			290			(10.3	)%		(189	)		609			(131.0	)%
		SG&A expense		9,585			8,983			6.7	%		27,605			28,585			(3.4	)%
		Operating income (loss)		(9,325	)		(8,693	)		(7.3	)%		(27,794	)		(27,976	)		0.7	%

Overview

General

The sales increases for the thirteen and thirty-nine week periods ended September 27, 2008, as compared with the same periods of 2007, were due to increased selling prices to recover higher raw material costs, acquisitions, currency translation effects and sales unit volume increases. The sales unit volume increases were mainly due to improved sales demand in the Irrigation and Coatings segments. Unit volumes in the Utility Support Structures and Engineered Support Structures (ESS) segments for the thirteen and thirty-nine week periods ended September 27, 2008 were comparable with the same periods in 2007. On a consolidated basis, sales unit volume increased approximately 10% for the thirteen weeks ended September 27, 2008, as compared with the same period in 2007. Year-to-date sales unit volumes in 2008 were approximately 9% over 2007. Our costs for hot-rolled steel products escalated rapidly throughout 2008, resulting in higher costs for the items we manufacture. Where possible, we increased sales prices to our customers to recover these increased costs.

The improvement in gross margin (gross profit as a percent of sales) for the thirteen and thirty-nine week periods ended September 27, 2008, as compared with the same periods of 2007, resulted mainly from improved factory productivity, improved sales pricing and the operational improvements in the North America specialty structures operations. On a segment basis, the most significant gross margin improvement was in the Coatings and Irrigation segments.

The increases in selling, general and administrative (SG&A) expenses for the thirteen and thirty-nine week periods ended September 27, 2008, as compared with the same periods in 2007, mainly resulted from:

•: Increased salary and benefit costs to support the increase in sales activity (approximately $4.1 million and $10.4 million, respectively);
•: Net effect of acquisitions and divestitures (approximately $3.6 million and $8.3 million, respectively);
•: Higher employee incentives related to improved operating performance (approximately $0.8 million and $3.5 million, respectively), and;
•: Currency translation effects (approximately $1.2 million and $4.6 million, respectively).

These increases were somewhat offset by lower employee benefit costs (especially group medical expenses) for the year-to-date period ended September 27, 2008, as compared with 2007 (approximately $2.0 million) and decreased deferred compensation expense related to the investment performance of the marketable securities underlying the deferred compensation plan ($0.7 and $1.7 million for the thirteen and thirty-nine week periods ended September 27, 2008, respectively). We recorded the investment losses in these securities as "Other Expense" in our condensed consolidated statement of operations for the thirteen and thirty-nine week periods ended September 27, 2008. The impact of these investments on the condensed consolidated statement of operations for the thirteen weeks and thirty-nine weeks ended September 28, 2007 was not significant.

For the thirteen-week period ended September 27, 2008, all reportable segments contributed to the improved operating income in 2008 as compared with 2007 except the ESS segment, which reported slightly lower operating income in 2008. On a year-to-date basis, all reportable segments recorded higher operating income in 2008, as compared with 2007.

Net interest expense for the thirteen and thirty-nine weeks ended September 27, 2008 were comparable with the same periods in 2007, as the effect of higher average borrowing levels in 2008 on interest expense were largely offset by lower interest rates on our variable rate debt in 2008, as compared with 2007.

Our effective tax rate for the third quarter and year-to-date periods ended September 27, 2008 was higher as compared with 2007. Our income tax rate in 2007 was lower than normal and was principally associated with the realization of certain income tax benefits on transactions that occurred in prior years. These income tax benefits mainly related to the expiration of statutes of limitation. Other factors that contributed to a higher income tax rate in 2008, as compared with 2007, included higher taxes on our profits generated in China and Mexico due to changes in their respective income tax laws in late 2007 and lower tax credits realized in the U.S. in 2008, as compared with 2007.

Our cash flows provided by operations were $67.0 million for the thirty-nine weeks ended September 27, 2008, as compared with $55.2 million of cash provided by operations for the same period in 2007. The higher operating cash flows in 2008 principally resulted from increased earnings in 2008, partially offset by higher working capital required by the increased net sales realized in 2008, as compared with 2007.

Acquisitions and Divestitures

In 2007 and 2008, we acquired the following businesses:

•: Tehomet Oy (Tehomet), a manufacturer of lighting structures located in Finland and Estonia acquired in April 2007;
•: Penn Summit Tubular LLC (Penn Summit), a manufacturer of steel utility and wireless communication structures located in Hazelton, Pennsylvania acquired in January 2008;
•: West Coast Engineering Group, Ltd. (West Coast), a manufacturer of steel lighting and wireless communication structures located in Canada and the U.S. acquired in February 2008; and
•: Site Pro 1, Inc. (Site Pro), a wireless communication components company headquartered in Long Island, New York acquired in July 2008.

In addition to these acquisitions, we acquired a small engineering services company located in Pittsburgh, Pennsylvania and formed a pole manufacturing joint venture in Turkey. We completed these acquisitions late in the third quarter of 2008 and they did not have a significant impact on our financial statements in 2008.

We report Tehomet, West Coast and Site Pro as part of the ESS segment and Penn Summit as part of the Utility Support Structures segment. In addition, we divested certain operations that were included as part of our "Other" businesses. These operations included our tubing operation in Waverly, Nebraska, which we closed in late 2007 and our French machine tool accessory operation, which we sold to a third party in January 2008.

The aggregate net increases of our net sales associated with these acquisitions and divestures for the thirteen and thirty-nine weeks ended September 27, 2008, as compared with the same periods in 2007 were approximately $21.0 million and $46.1 million, respectively. The operating income net increases for these periods over 2007 were approximately $4.9 million and $9.5 million, respectively.

Foreign Currency Translation

For the thirteen and thirty-nine week periods ended September 27, 2008, we realized approximately $9.8 million and $31.3 million, respectively, of increased sales related to the financial statement translation of our international operations into U.S. dollars. These translation effects also resulted in an increase in operating income for the thirteen and thirty-nine weeks ended September 27, 2008, as compared with the same periods in 2007 of approximately $1.6 million and $4.2 million, respectively.

Foreign currencies such as the Euro and the Brazilian Real were stronger in relation to the U.S. dollar through most of 2008, as compared with 2007. Accordingly, our sales denominated in those currencies translated to a higher amount of U.S. dollars in 2008, as compared with 2007.

Engineered Support Structures segment

The sales increases for the thirteen and thirty-nine week periods ended September 27, 2008, as compared with the same periods in 2007 were due to the increased sales prices to recover higher steel costs, currency translation impacts (approximately $7.1 million and $24.3 million, respectively) and the net effect of acquisitions and divestitures (approximately $10.6 million and $28.9 million, respectively). Unit volumes in all regions in 2008 were comparable with 2007 for the third quarter and on a year-to-date basis.

In North America, lighting and traffic structure sales in 2008 were higher than 2007, due to a combination of the West Coast acquisition, increased sales price increases and a modest increase in unit volume. In the transportation market channel, sales were higher in 2008, as compared with 2007, as highway spending funded through the U.S. and state programs was stronger than in 2007. Sales in the commercial market channel in 2008 were slightly lower than 2007, due predominantly to a weaker commercial construction market in the U.S. Sales of lighting structures to electrical utilities in 2008 lagged 2007, due to the recent weakness in the residential housing market. In Europe, sales in local currency were higher in 2008, as compared with 2007 due mainly to sales price increases to recover higher steel costs and the Tehomet acquisition, offset somewhat by weaker volumes in France. Sales of lighting structures in China in 2008 were higher than 2007, on both a quarterly and year-to-date basis, mainly due to continued market expansion and increased sales efforts.

Sales of Specialty Structures products increased in 2008, as compared with 2007, on both a quarterly and year-to-date basis. In North America, structure sales in the wireless communication market in 2008 improved over 2007. Sales of wireless communication components increased due to the Site Pro acquisition. Sales of wireless communication poles in China were down in 2008, as compared with 2007, both on a quarterly and year-to-date basis. We believe a major contributing factor to the decrease in wireless communication structures sales was reorganization of the Chinese wireless communication industry, which is causing some delays in ordering patterns for structures.

Segment operating income for the thirteen weeks ended September 27, 2008 was slightly below 2007. On a year-to-date basis, operating income in 2008 improved over 2007. The factors contributing to stronger operating earnings in 2008 included:

•: Improvement in the North American specialty structures operations (approximately $1.3 million and $5.7 million, respectively), mainly due to the impact of actions taken in late 2007 to consolidate sign structure manufacturing operations, and;
•: West Coast, Tehomet and Site Pro acquisitions (approximately $1.6 million and $3.0 million, respectively).

These improvements were largely offset by lower factory productivity in our North American lighting structures operations. Operating income from international operations was comparable to 2007, as currency translation effects (approximately $0.6 million and $2.3 million, respectively) offset increased market development expenses and lower operating income in China, which included start-up expenses related to our third plant in China. This manufacturing facility began production in the third quarter of 2008.

The increases in SG&A expense for the thirteen and thirty-nine weeks ended September 27, 2008, as compared with the same periods in 2007, were mainly due to:

•: Increased salary and employee benefit costs (approximately $1.0 million and $3.6 million, respectively);
•: West Coast, Tehomet and Site Pro acquisitions (approximately $1.6 million and $4.3 million, respectively), and;
•: Foreign currency translation (approximately $1.0 million and $4.1 million, respectively).

Utility Support Structures segment

The sales increases in the Utility Support Structures segment for the thirteen and thirty-nine weeks ended September 27, 2008, as compared with the same periods of 2007, were due to the acquisition of Penn Summit and sales price increases implemented to recover higher steel costs. Unit sales of transmission, substation and distribution pole structures to utility customers in 2008 was slightly lower than 2007, both on a quarterly and year-to-date basis, mainly due to customers delaying shipments to future dates. These delays typically relate to factors such as weather and construction delays. Order flow continues to be strong, as sales backlogs were at record levels as of September 27, 2008. The increase in demand for utility structures was the result of continued investment by utility companies to improve the electrical transmission and distribution infrastructure in the United States.

Gross profit increased in the third quarter of 2008, as compared with 2007 due to improved factory operating performance this year. The increases in SG&A spending for the thirteen and thirty-nine weeks ended September 27, 2008, as compared with the same periods in 2007, were primarily due to the Penn Summit acquisition ($2.6 million and $6.8 million, respectively) and increased salary, benefits and incentive expenses related to the higher sales activity and operating profit levels (approximately $1.1 million and $2.1 million, respectively).

Coatings segment

Coatings segment sales for the thirteen and thirty-nine week periods ended September 27, 2008 were above 2007 levels, mainly due to increased demand for galvanizing services, offset to an extent by lower selling prices. In our galvanizing operations, pounds of steel galvanized (including intersegment sales) in 2008 for the thirteen and thirty-nine weeks ended September 27, 2008 increased over the same periods in 2007 by approximately 12% and 11%, respectively. The volume increases were due to stronger industrial economic conditions in our market areas, including increased galvanizing services provided to our other operations in the U.S.

The increases in operating income for the thirteen and thirty-nine weeks ended September 27, 2008 as compared with the same periods in 2007 were principally due to lower zinc costs, the impact of higher galvanizing volumes and improvement in our utilization of zinc. The main reason for the SG&A spending increases for the third quarter and year-to-date periods ended September 27, 2008, as compared with the same periods in 2007, were higher incentive expenses associated with increased operating profit this year.

Irrigation segment

For the thirteen and thirty-nine weeks ended September 27, 2008 the sales increases in the Irrigation segment, as compared with the same periods in 2007, were mainly due to higher sales volumes, although selling prices also increased in 2008, as compared with 2007, to recover higher steel costs. In global markets, higher farm commodity prices and net farm income in 2008 and 2007 resulted in improved demand for irrigation machines. Sales demand in international markets was stronger in 2008, as compared with 2007, in most geographic regions, with the most significant sales increases

taking place in Brazil, the Middle East and the Pacific Rim. In North America, demand for irrigation machines and service parts in 2008 was also enhanced due to machines that were damaged by a pattern of severe storms in the U.S.

The increase in operating income for the thirteen and thirty-nine weeks ended September 27, 2008, as compared with the same periods in 2007, was due to improved sales volumes, sales price increases to offset steel cost increases and operating leverage realized through control of SG&A spending. The increases in SG&A spending for the thirteen and thirty-nine weeks ended September 27, 2008, as compared with the same periods in 2007 were mainly attributable to increased employee incentives associated with improved operational performance ($0.9 million and $2.2 million, respectively) and increased salary and benefit expense for additional administrative personnel ($1.2 million and $3.2 million, respectively).

Other

This mainly includes our tubing, industrial fastener and French machine tool accessories operations. The decreases in sales for the thirteen and thirty-nine weeks ended September 27, 2008, as compared with the same periods in 2007, was due to the sale of our machine tool accessory operation in early 2008 and the closure of a small tubing facility in late 2007. The impact of these actions on our operating income was not significant.

Net corporate expense

The increase in net corporate expenses for the thirteen weeks ended September 27, 2008, as compared with 2007, were due to higher compensation costs. On a year-to-date basis, net corporate expense was comparable with 2007. Items of lower expense in 2008 included:

•: decreased employee group insurance costs in 2008 (approximately $2.0 million), and;
•: lower deferred compensation liabilities related to investment losses in the assets in the deferred compensation plan of approximately $1.7 million.

Items of greater expense in the year to date period in 2008 included higher employee incentives due to improved earnings and common stock price (which is used to value certain long-term management incentives) this year (approximately $1.1 million) and increased stock-based compensation expense in 2008 (approximately $0.6 million).

Liquidity and Capital Resources

Cash Flows

Working Capital and Operating Cash Flows—Net working capital was $410.7 million at September 27, 2008, as compared with $350.6 million at December 29, 2007. The ratio of current assets to current liabilities was 2.20:1 at September 27, 2008, as compared with 2.29:1 at December 29, 2007. The increase in net working capital and the current ratio mainly relates to increases in accounts receivable and inventories associated with higher sales activity and increased backlogs in 2008, as compared with 2007. Cash flow provided by operations was $67.0 million for the thirty-nine week period ended September 27, 2008, as compared with $55.2 million provided by operations for the same period in 2007. The increase in operating cash flows in 2008, as compared with 2007, related primarily to increased net earnings offset by an increase in working capital in 2008, as compared with 2007. In 2008 and 2007, we distributed $589 and $9,186, respectively, from our non-qualified deferred compensation plan to participants under the transition rules of section 409A of the Internal Revenue Code.

Investing Cash Flows—Capital spending during the thirty-nine weeks ended September 27, 2008 was $38.9 million, as compared with $42.9 million for the same period in 2007. Our capital spending in 2008 and 2007 included additional manufacturing capacity for ESS, Utility Support Structures and Irrigation segments. We expect that our capital spending for the 2008 fiscal year will be between $55 million and $60 million.

Investing cash flows in 2008 also reflected the aggregate of $119.0 million of cash paid for the acquisitions completed in 2008. In 2007, we spent approximately $16.9 million (net of cash acquired) to acquire 70% of the outstanding stock of Tehomet Oy, a Finnish manufacturer of lighting structures and the remaining 20% of our Canadian aluminum pole manufacturing operation.

The cash used to pay the distributions from our non-qualified deferred compensation plan was generated from the liquidation of investments, which was classified as "Proceeds from sale of assets" in the statement of cash flows for the thirty-nine week periods ended September 27, 2008 and September 29, 2007, respectively.

Financing Cash Flows—Our total interest-bearing debt increased from $238.3 million as of December 29, 2007 to $295.7 million as of September 27, 2008, which was reported as an increase in financing cash flows for the thirty-nine weeks ended September 27, 2008. The main reasons for the increase in borrowings relate to the debt that we incurred to fund the 2008 acquisitions (approximately $70 million) and approximately $6.4 million of debt that we assumed as part of the West Coast and Penn Summit acquisitions. We funded the Penn Summit acquisition in part through approximately $50 million of our cash balances.

Sources of Financing and Capital

We have historically funded our growth, capital spending and acquisitions through a combination of operating cash flows and debt financing. We have an internal long-term objective to maintain long-term debt as a percent of invested capital at or below 40%. At September 27, 2008, our long-term debt to invested capital ratio was 27.0%, as compared with 27.3% at December 29, 2007. We may exceed our internal objective of 40% from time to time in order to take advantage of opportunities to grow and improve our businesses, such as the Newmark, Whatley and Sigma acquisitions that we completed in 2004. Subject to our level of acquisition activity and steel industry operating conditions (which could affect the levels of inventory we need to fulfill customer commitments), we plan to maintain this ratio below 40% in 2008.

Our debt financing at September 27, 2008 consisted primarily of long-term debt. We also maintain certain short-term bank lines of credit totaling $32.5 million, $20.5 million which was unused at September 27, 2008. Our long-term debt at September 27, 2008 principally consisted of:

•: $150 million of senior subordinated notes that bear interest at 6.875% per annum and are due in May 2014. We may repurchase the notes starting in May 2009 at specified prepayment premiums. Certain of our U.S. subsidiaries guarantee these notes.
•: $150 million revolving credit agreement with a group of banks that accrued interest at our option at:(a) the higher of the prime lending rate and the Federal Funds rate plus 50 basis points or (b) an interest rate spread over the LIBOR of 62.5 to 137.5 basis points (inclusive of facility fees), depending on our ratio of debt to earnings before taxes, interest, depreciation and amortization (EBITDA). At September 27, 2008, we had outstanding balances under the revolving credit agreement totaling $71.4 million. The revolving credit agreement has a termination date of May 4, 2009 and contained certain financial covenants that limited our additional borrowing capability under the agreement. At September 27, 2008, we had the ability to borrow an additional $69.6 million under this facility. The weighted average effective interest

rate on borrowings outstanding under this agreement at September 27, 2008 was 3.30% per annum.

•: Term loan with a group of banks that accrued interest at our option at (a) the higher of the prime lending rate and the Federal Funds rate plus 50 basis points or (b) LIBOR plus a spread of 62.5 to 137.5 basis points, depending on our debt to EBITDA ratio and had an outstanding balance of $23.8 million at September 27, 2008. This loan required quarterly principal payments through May 2009. The future principal payments due in 2008 and 2009 in millions were $11.9 and $11.9, respectively. The effective interest rate on this loan was 3.125% per annum at September 27, 2008.

These debt agreements include certain covenants that require us to maintain certain coverage ratios and may limit us with respect to certain business activities. At September 27, 2008, we were in compliance with all covenants related to our debt agreements.

Subsequent to September 27, 2008, we replaced the revolving credit agreement and the term loan with a new $280 million revolving credit facility described below. We repaid the outstanding balances of the revolving credit agreement and the term loan with borrowings from the new revolving credit facility.

On October 16, 2008, we entered into a new five-year $280 million revolving credit agreement with a group of banks. We may increase the credit facility by up to an additional $100 million at any time, subject to participating banks increasing the amount of their lending commitments. The interest rate on our borrowings will be, at our option, either:

(iii)

LIBOR (based on a 1, 2, 3 or 6 month interest period, as selected by us) plus 125 to 200 basis points (inclusive of facility fees), depending on our ratio of debt to earnings before taxes, interest, depreciation and amortization (EBITDA), or;

(iv)

the higher of

•: The higher of (a) the prime lending rate and (b) the Federal Funds rate plus 50 basis points plus, in each case, 25 to 100 basis points (inclusive of facility fees), depending on our ratio of debt to EBITDA, or
•: LIBOR (based on a 1 week interest period) plus 125 to 200 basis points (inclusive of facility fees), depending on our ratio of debt to EBITDA

The new revolving credit agreement has maintenance covenants that may limit our additional borrowing capability under the agreement, similar to the covenants in our prior revolving credit agreement.

FINANCIAL OBLIGATIONS AND FINANCIAL COMMITMENTS

Other than our new revolving credit agreement, there have been no material changes to our financial obligations and financial commitments as described on page 37 in our Form 10-K for the year ended December 29, 2007.

Off Balance Sheet Arrangements

There have been no changes in our off balance sheet arrangements as described on page 37 in our Form 10-K for the fiscal year ended December 29, 2007.

Critical Accounting Policies

There have been no changes in the Company's critical accounting policies during the quarter ended September 27, 2008. These policies are described on pages 39-42 in our Form 10-K for fiscal year ended December 29, 2007.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

There were no material changes in the company's market risk during the quarter ended September 27, 2008. For additional information, refer to the section "Risk Management" on pages 38-39 in our Form 10-K for the fiscal year ended December 29, 2007.

Item 4. Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934 is (1) accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. In the third quarter of fiscal 2008, the Company implemented various process and information systems enhancements, principally related to the implementation of enterprise resource planning software and related business improvements in its Brenham, Texas operation that is part of the ESS segment. These process and information system enhancements resulted in modifications to internal controls over sales, customer service, inventory management, accounts receivable, and accounts payable processes. Aside from such change, there have been no changes in the Company's internal controls over financial reporting during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

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

Issuer Purchases of Equity Securities

		(a)		(b)		(c)		(d)

Period		Total Number of Shares Purchased		Average Price paid per share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
June 29, 2008 to July 26, 2008			1,220	$	111.22		—		—
July 27, 2008 to Aug. 30, 2008			302	$	105.94		—		—
Aug. 31, 2008 to Sept. 27, 2008			—		—		—		—

	Total		1,522	$	110.17		—		—

During the third quarter, the only shares reflected above were those delivered to the Company by employees as part of stock option exercises, either to cover the purchase price of the option or the related taxes payable by the employee as part of the option exercise. The price paid per share was the market price at the date of exercise.

Item 5. Other Information

On July 28, 2008, the Company's Board of Directors declared a quarterly cash dividend on common stock of 13 cents per share, which was paid on October 15, 2008, to stockholders of record September 26, 2008. The indicated annual dividend rate is 52 cents per share.

Item 6. Exhibits

(a): Exhibits

		Exhibit No.			Description

			31.1		Section 302 Certificate of Chief Executive Officer
			31.2		Section 302 Certificate of Chief Financial Officer
			32.1		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer

SIGNATURES

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


		VALMONT INDUSTRIES, INC. (Registrant)
		/s/ TERRY J. MCCLAIN Terry J. McClain Senior Vice President and Chief Financial Officer (Principal Financial Officer)
Dated this 3^rd day of November, 2008.

List of Exhibits

		Exhibit No.			Description

			31.1		Section 302 Certificate of Chief Executive Officer
			31.2		Section 302 Certificate of Chief Financial Officer
			32.1		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer

QuickLinks

26,151,080 Outstanding shares of common stock as of October 20, 2008
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands) (Unaudited)
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Thirteen Weeks Ended September 27, 2008
For the Thirty-nine Weeks Ended September 27, 2008
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS December 29, 2007
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Thirty-nine Weeks Ended September 27, 2008
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share amounts) (Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Thirty-nine Weeks Ended September 29, 2007
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION
PART II. OTHER INFORMATION

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

Item 5. Other Information

Item 6. Exhibits

SIGNATURES
List of Exhibits