VALMONT INDUSTRIES INC - Quarter Report: 2010 June (Form 10-Q)

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 June 26, 2010
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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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 the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


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

26,338,222
Outstanding shares of common stock as of July 20, 2010

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q



PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Statements of Operations for the thirteen and twenty-six weeks ended June 26, 2010 and June 27, 2009	3
	Condensed Consolidated Balance Sheets as of June 26, 2010 and December 26, 2009	4
	Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended June 26, 2010 and June 27, 2009	5
	Condensed Consolidated Statements of Shareholders' Equity for the twenty-six weeks ended June 26, 2010 and June 27, 2009	6
	Notes to Condensed Consolidated Financial Statements	7-31
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32-41
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	41
Item 4.	Controls and Procedures	41
PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
Signatures		44

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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						Twenty-Six Weeks Ended

		June 26, 2010			June 27, 2009			June 26, 2010			June 27, 2009
Net sales		$	481,559		$	498,810		$	848,961		$	953,964
Cost of sales			352,913			354,129			619,585			680,967

	Gross profit		128,646			144,681			229,376			272,997
Selling, general and administrative expenses			91,345			75,265			160,425			145,262

	Operating income		37,301			69,416			68,951			127,735

Other income (expenses):
	Interest expense		(8,429	)		(3,976	)		(14,391	)		(8,260	)
	Interest income		1,092			284			1,448			616
	Other		47			1,608			(30	)		(190	)

			(7,290	)		(2,084	)		(12,973	)		(7,834	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries			30,011			67,332			55,978			119,901

Income tax expense (benefit):
	Current		17,252			19,266			23,958			31,566
	Deferred		(5,570	)		2,785			(2,830	)		7,740

			11,682			22,051			21,128			39,306

Earnings before equity in earnings (losses) of nonconsolidated subsidiaries			18,329			45,281			34,850			80,595
Equity in earnings (losses) of nonconsolidated subsidiaries			805			(71	)		919			495

	Net earnings		19,134			45,210			35,769			81,090

Less: Earnings attributable to noncontrolling interests			(2,019	)		(980	)		(2,191	)		(996	)

	Net earnings attributable to Valmont Industries, Inc.	$	17,115		$	44,230		$	33,578		$	80,094

Earnings per share attributable to Valmont Industries, Inc.—Basic		$	0.66		$	1.70		$	1.29		$	3.09

Earnings per share attributable to Valmont Industries, Inc.—Diluted		$	0.65		$	1.69		$	1.27		$	3.05

Cash dividends per share		$	0.165		$	0.150		$	0.315		$	0.280

Weighted average number of shares of common stock outstanding—Basic (000 omitted)			26,087			25,943			26,059			25,928

Weighted average number of shares of common stock outstanding—Diluted (000 omitted)			26,448			26,223			26,434			26,224

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

					June 26, 2010			December 26, 2009

				ASSETS
Current assets:
	Cash and cash equivalents				$	314,373		$	180,786
	Receivables, net					376,005			259,521
	Inventories					296,634			210,611
	Prepaid expenses and other current assets					39,943			22,143
	Refundable and deferred income taxes					35,930			42,361

		Total current assets				1,062,885			715,422

Property, plant and equipment, at cost						821,701			675,446
	Less accumulated depreciation and amortization					(396,567	)		(392,358	)

		Net property, plant and equipment				425,134			283,088

Goodwill						291,610			178,320
Other intangible assets, net						188,916			96,378
Other assets						61,012			28,961

		Total assets			$	2,029,557		$	1,302,169

			LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt				$	270		$	231
	Notes payable to banks					9,752			11,900
	Accounts payable					202,587			118,210
	Accrued employee compensation and benefits					49,254			66,611
	Accrued expenses					94,380			55,921
	Dividends payable					4,346			3,944

		Total current liabilities				360,589			256,817

Deferred income taxes						81,696			49,281
Long-term debt, excluding current installments						517,913			160,251
Defined benefit pension liability						116,816			—
Deferred compensation						22,704			19,013
Other noncurrent liabilities						50,585			8,500
Shareholders' equity:
	Preferred stock
		Authorized 500,000 shares; none issued				—			—
	Common stock of $1 par value
		Authorized 75,000,000 shares; 27,900,000 issued				27,900			27,900
	Retained earnings					795,797			767,398
	Accumulated other comprehensive income (loss)					(13,513	)		16,953
	Treasury stock					(25,510	)		(25,990	)

		Total Valmont Industries, Inc. shareholders' equity				784,674			786,261

	Noncontrolling interest in consolidated subsidiaries					94,580			22,046

		Total shareholders'equity				879,254			808,307

		Total liabilities and shareholders' equity			$	2,029,557		$	1,302,169

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

					Twenty-six Weeks Ended

					June 26, 2010			June 27, 2009
Cash flows from operating activities:
	Net earnings				$	35,769		$	81,090
	Adjustments to reconcile net earnings to net cash flow from operations:
		Depreciation and amortization				24,580			21,710
		Stock-based compensation				3,168			2,993
		Loss on sales of property, plant and equipment				123			345
		Equity in earnings of nonconsolidated subsidiaries				(919	)		(495	)
		Deferred income taxes				(2,830	)		7,740
		Other				19			(239	)
		Changes in assets and liabilities, net of the effects of acquisitions:
			Receivables			(32,071	)		(5,356	)
			Inventories			(6,110	)		65,061
			Prepaid expenses			61			(10,369	)
			Accounts payable			11,386			(6,923	)
			Accrued expenses			1,669			(13,234	)
			Other noncurrent liabilities			7,896			(993	)
			Income taxes payable/refundable			11,241			(5,732	)

				Net cash flows from operating activities		53,982			135,598

Cash flows from investing activities:
	Purchase of property, plant and equipment					(11,025	)		(24,550	)
	Proceeds from sale of assets					96			74
	Acquisitions (net of cash acquired of $198,810)					(245,310	)		—
	Dividends to noncontrolling interests					(3,477	)		(289	)
	Other, net					1,516			(68	)

				Net cash flows from investing activities		(258,200	)		(24,833	)

Cash flows from financing activities:
	Net payments under short-term agreements					(2,148	)		(1,917	)
	Proceeds from long-term borrowings					491,000			10,001
	Principal payments on long-term obligations					(133,228	)		(88,628	)
	Dividends paid					(7,892	)		(6,813	)
	Debt issuance costs					(3,858	)		—
	Proceeds from exercises under stock plans					3,197			3,126
	Excess tax benefits from stock option exercises					1,216			1,446
	Purchase of treasury shares					(877	)		—
	Purchase of common treasury shares—stock plan exercises					(1,961	)		(2,146	)

				Net cash flows from financing activities		345,449			(84,931	)

Effect of exchange rate changes on cash and cash equivalents						(7,644	)		1,861

Net change in cash and cash equivalents						133,587			27,695
Cash and cash equivalents—beginning of year						180,786			68,567

Cash and cash equivalents—end of period					$	314,373		$	96,262

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollars in thousands)

(Unaudited)

			Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock			Noncontrolling interest in consolidated subsidiaries			Total shareholders' equity

Balance at December 27, 2008			$	27,900	$	—		$	624,254		$	(533	)	$	(27,490	)	$	16,845		$	640,976
Comprehensive income:
	Net earnings			—		—			80,094			—			—			996			81,090
	Currency translation adjustment			—		—			—			10,244			—			830			11,074

		Total comprehensive income		—		—			—			—			—			—			92,164
Cash dividends ($0.28 per share)				—		—			(7,351	)		—			—			—			(7,351	)
Stock plan exercises; 33,481 shares purchased				—		—			—			—			(2,146	)		—			(2,146	)
Stock options exercised; 121,345 shares issued				—		(4,439	)		4,717			—			2,848			—			3,126
Tax benefit from exercise of stock options						1,446			—			—			—			—			1,446
Stock option expense				—		2,040			—			—			—			—			2,040
Stock awards; 9,746 shares issued				—		953			—			—			436			—			1,389

Balance at June 27, 2009			$	27,900	$	—		$	701,714		$	9,711		$	(26,352	)	$	18,671		$	731,644

Balance at December 26, 2009			$	27,900	$	—		$	767,398		$	16,953		$	(25,990	)	$	22,046		$	808,307
Comprehensive income:				—
	Net earnings			—		—			33,578			—			—			2,191			35,769
	Currency translation adjustment			—		—			—			(30,466	)		—			(4,189	)		(34,655	)

		Total comprehensive income		—		—			—			—			—			—			1,114
Cash dividends ($0.315 per share)				—		—			(8,293	)		—			—			—			(8,293	)
Dividends to noncontrolling interests				—		—			—			—			—			(3,477	)		(3,477	)
Purchase of noncontrolling interest				—		(1,875	)		—			—			—			(1,520	)		(3,395	)
Acquisition of Delta plc				—		—			—			—			—			79,529			79,529
Purchase of 12,351 treasury shares				—		—			—			—			(877	)		—			(877	)
Stock options exercised; 72,075 shares issued				—		(2,509	)		3,114			—			2,668			—			3,273
Stock plan exercises; 27,230 shares purchased				—		—			—			—			(1,961	)		—			(1,961	)
Tax benefit from exercise of stock options				—		1,216			—			—			—			—			1,216
Stock option expense				—		2,457			—			—			—			—			2,457
Stock awards; 9,088 shares issued				—		711			—			—			650			—			1,361

Balance at June 26, 2010			$	27,900	$	—		$	795,797		$	(13,513	)	$	(25,510	)	$	94,580		$	879,254

See accompanying notes to condensed consolidated financial statements.

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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 June 26, 2010, the Condensed Consolidated Statements of Operations for the thirteen and twenty-six week periods ended June 26, 2010 and June 27, 2009, the Condensed Consolidated Statements of Cash Flows and Shareholders' Equity for the twenty-six week periods then ended have been prepared by the Company, without audit. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial statements as of June 26, 2010 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 26, 2009. 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 26, 2009. The results of operations for the period ended June 26, 2010 are not necessarily indicative of the operating results for the full year.

Inventories

At June 26, 2010, approximately 35.1% 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 and finished goods. The excess of replacement cost of inventories over the LIFO value was approximately $47,000 and $39,500 at June 26, 2010 and December 26, 2009, respectively.

Inventories consisted of the following:

	June 26, 2010		December 26, 2009

Raw materials and purchased parts	$	160,850	$	112,911
Work-in-process		23,930		20,217
Finished goods and manufactured goods		158,993		117,032

Subtotal		343,773		250,160
LIFO reserve		47,139		39,549

Net inventory	$	296,634	$	210,611

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

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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 June 26, 2010, 1,092,207 shares of common stock remained available for issuance under the plans. Shares and options issued and available are subject to changes in capitalization.

Under the plans, the exercise price of each option equals the market price at the date 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 (included in selling, general and administrative expenses) and associated income tax benefits related to stock option for the thirteen and twenty-six weeks ended June 26, 2010 and June 27, 2009, respectively, were as follows:

	Thirteen Weeks Ended June 26, 2010		Thirteen Weeks Ended June 29, 2009		Twenty-six Weeks Ended June 26, 2010		Twenty-six Weeks Ended June 29, 2009

Compensation expense	$	1,229	$	1,020	$	2,457	$	2,040
Income tax benefits		467		393		934		785

Fair Value

The Company applies the provisions of Accounting Standards Codification 820, Fair Value Measurements ("ASC 820") which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other accounting pronouncements that require or permit fair value measurements. As defined in ASC 820, 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.

ASC 820 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.

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 Accounting Standards Codification 320, Accounting for Certain

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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)

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 June 26, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Trading Securities	$	17,352	$	17,352	$	—	$	—

				Fair Value Measurement Using:

		Carrying Value December 26, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Trading Securities	$	15,653	$	15,653	$	—	$	—

Recently Issued Accounting Pronouncements

In fiscal 2010, the Company implemented the provisions of updated ASC Topic 860, Transfers and Servicing, which significantly changed the accounting for transfers of financial assets. The update to ASC 860 eliminated the qualifying special purpose entity ("QSPE") concept, established conditions for reporting a transfer of a portion of a financial asset as a sale, clarified the financial-asset derecognition criteria, revised how interests retained by the transferor in a sale of financial assets initially are measured, and removed the guaranteed mortgage securitization recharacterization provisions. The implementation of this new accounting guidance had no impact on the Company's condensed consolidated financial statements for the fiscal period ended June 26, 2010.

2. Acquisition of Delta plc

On March 10, 2010, the Company commenced a cash offer for all of the issued and to be issued ordinary share capital of Delta, plc. ("Delta") a public limited company incorporated in Great Britain, and listed on the London Stock Exchange (LSE: DLTA). The acquisition was completed on May 12, 2010 and the Company now owns 100% of the ordinary shares of Delta. The price paid per share was 185 pence in cash for each Delta share, or £284,463, or $436,736 based on the contracted average exchange rate of $1.5353 / £. Delta has manufacturing operations employing over 2,500 people in Australia, Asia, South Africa and the United States. Delta's businesses include engineered steel products, galvanizing services and manganese materials. The Company financed the acquisition with the net proceeds from an April 2010 sale of $300 million of senior notes at an interest rate of 6.625% per annum, cash balances of $83 million and borrowings under the Company's revolving credit agreement. The factors that contributed to a purchase price resulting in the recognition of goodwill, non-deductable for tax purposes, for the acquisition of Delta were to increase the Company's business

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

2. Acquisition of Delta plc (Continued)

presence in the Asia Pacific region, add to its current business activities in the galvanizing and support structures product lines and provide growth opportunities in businesses that are not directly related to the Company's current product offerings.

The Company incurred $11.9 and $14.1 million of expenses (reported as "Selling, general and administrative expenses") in the thirteen and twenty-six week periods ended June 26, 2010, respectively, related to the Delta acquisition. These expenses included amounts paid for investment banking fees, due diligence costs and other direct expenses related to the purchase of the Delta shares. From a segment reporting standpoint, these expenses were reported as part of "Net corporate expense".

The fair value measurement was preliminary at June 26, 2010, subject to the completion of the valuation of one of Delta's reporting units and further management reviews and assessments of the preliminary fair values of the assets acquired and liabilities assumed. The Company expects the fair value measurement process to be completed in the third quarter of 2010.

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

		At May 12, 2010

Current assets		$	406,544
Property, plant and equipment			162,435
Other long-term assets			28,136
Intangible assets			100,716
Goodwill			118,398

	Total fair value of assets acquired	$	816,229

Current liabilities			106,255
Defined benefit pension liability			118,725
Deferred income taxes			35,871
Other non-current liabilities			39,113
Non-controlling interests			79,529

	Total fair value of liabilities assumed and non-controlling interests		379,493

	Net assets acquired	$	436,736

Delta disposed of the shares of its subsidiary UPC Holdings, Inc. in December 2000 for approximately $100 million. The buyer caused UPC Holdings to dispose of its assets in January 2001. The IRS in 2005 established that the buyer had a tax liability on the asset sale of $47 million (exclusive of penalties and interest). During 2009-2010, the Internal Revenue Service issued summons requesting documentation related to the UPC Holdings transactions. The summons state that they were issued in connection with UPC's unsatisfied tax liability and Delta's potential transferee liability. Documents have been provided to the IRS in response to the summons. Based on an evaluation of this matter at the May 12, 2010 date of acquisition, the Company established a provision in the amount of $20 million

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

2. Acquisition of Delta plc (Continued)

to address certain legal and factual uncertainties, which amount is included in "Other non-current liabilities".

The Company's Condensed Consolidated Statements of Operations for the period ended June 26, 2010 included $74,165 and $3,633 of net sales and net earnings resulting from Delta's operations from May 12, 2010 until June 26, 2010.

The Company's pro forma results of operations for the thirteen and twenty-six weeks ended June 27, 2009 and June 26, 2010, assuming that the acquisition occurred at the beginning of 2009 was as follows:

	Thirteen Weeks Ended June 26, 2010		Thirteen Weeks Ended June 27, 2009		Twenty-six Weeks Ended June 26, 2010		Twenty-six Weeks Ended June 27, 2009

Net sales	$	545,195	$	634,837	$	1,041,379	$	1,204,130
Net earnings		29,578		51,506		37,985		77,637
Earnings per share—diluted	$	1.14	$	1.96	$	1.46	$	2.99

Based on the preliminary results of an independent valuation, the Company allocated $100,716 of the purchase price to acquired intangible assets. The following table summarizes the major classes of Delta acquired intangible assets and the respective weighted-average amortization periods:

	Amount		Weighted Average Amortization Period (Years)

Trade Names	$	36,540	Indefinite
Customer Relationships		58,188	12.0
Proprietary Technology		5,988	5.0

	$	100,716

3. Goodwill and Intangible Assets

The Company's annual impairment testing of goodwill and intangible assets was performed during the third quarter of 2009. As a result of that testing, it was determined the goodwill and other intangible assets on the Company's Condensed 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.

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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)

Amortized Intangible Assets

The components of amortized intangible assets at June 26, 2010 and December 26, 2009 were as follows:

	As of June 26, 2010

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	153,339	$	31,686	13 years
Proprietary Software & Database		2,625		2,503	6 years
Patents & Proprietary Technology		9,297		1,565	8 years
Non-compete Agreements		1,655		930	6 years

	$	166,916	$	36,684

	As of December 26, 2009

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	97,289	$	27,559	14 years
Proprietary Software & Database		2,627		2,434	6 years
Patents & Proprietary Technology		3,466		1,257	13 years
Non-compete Agreements		1,704		823	6 years

	$	105,086	$	32,073

Amortization expense for intangible assets for the thirteen and twenty-six weeks ended June 26, 2010 and June 27, 2009, respectively was as follows:

Thirteen Weeks Ended June 26, 2010		Thirteen Weeks Ended June 27, 2009			Twenty-six Weeks Ended June 26, 2010			Twenty-six Weeks Ended June 27, 2009

$2,734		$	2,070		$	4,774		$	4,115

	Estimated Amortization Expense

2010	$	11,771
2011		13,728
2012		13,680
2013		12,783
2014		12,360

Table of Contents

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)

	June 26, 2010		December 26, 2009

Webforge	$	16,156	$	—
Newmark		11,111		11,111
Ingal		8,527		—
Donhad		6,437		—
PiRod		4,750		4,750
Industrial Galvanizers		4,488		—
Other		7,215		7,504

	$	58,684	$	23,365

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

Balance December 26, 2009	$	55,338		$	77,141	$	43,777	$	2,064	$	—		$	178,320
Acquisition		—			—		—		—		118,398			118,398
Foreign currency translation		(1,693	)		—		—		—		(3,415	)		(5,108	)

Balance June 26, 2010	$	53,645		$	77,141	$	43,777	$	2,064	$	114,983		$	291,610

		June 26, 2010		December 26, 2009

6.625% Senior Unsecured Notes(a)		$	300,000	$	—
6.875% Senior Subordinated Notes(b)			150,000		150,000
Revolving credit agreement(c)			58,000		—
IDR Bonds(d)			8,500		8,500
1.75% to 3.485% notes			1,683		1,982

	Total long-term debt		518,183		160,482
Less current installments of long-term debt			270		231

	Long-term debt, excluding current installments	$	517,913	$	160,251



Until May 1, 2011	102.292	%
From May 1, 2011 until May 1, 2012	101.146	%
After May 1, 2012	100.000	%

Underfunded Accumulated Benefit Obligation Thousands of Dollars	May 12, 2010

Projected benefit obligation	$	(469,780	)
Fair value of plan assets		351,055

Underfunded accumulated benefit obligation	$	(118,725	)

		Basic EPS				Diluted EPS

Thirteen weeks ended June 26, 2010:
	Net earnings attributable to Valmont Industries, Inc.	$	17,115	—		$	17,115
	Shares outstanding		26,087	361			26,448
	Per share amount	$	0.66	(.01	)	$	0.65
Thirteen weeks ended June 27, 2009:
	Net earnings attributable to Valmont Industries, Inc.	$	44,230	—		$	44,230
	Shares outstanding		25,943	280			26,223
	Per share amount	$	1.70	(.01	)	$	1.69
Twenty-six weeks ended June 26, 2010:
	Net earnings attributable to Valmont Industries, Inc.	$	33,578	—		$	33,578
	Shares outstanding		26,059	375			26,434
	Per share amount	$	1.29	(.02	)	$	1.27
Twenty-six weeks ended June 27, 2009:
	Net earnings attributable to Valmont Industries, Inc.	$	80,094	—		$	80,094
	Shares outstanding		25,928	296			26,224
	Per share amount	$	3.09	(.04	)	$	3.05

Thousands of Dollars

Net Periodic Benefit Cost:
	Service cost	$	33
	Interest cost		3,217
	Expected return on plan assets		(2,113	)

Net periodic benefit expense		$	1,137

Percentages

Discount rate	5.60	%
Expected return on plan assets	5.51	%
Salary increase	4.70	%
Inflation	3.70	%

Thousands of Dollars

2010	$	5,589
2011		9,100
2012		9,454
2013		9,822
2014		10,207
Years 2015-2019		57,321

Thousands of Dollars		Quoted Prices in Active Markets for Identical Inputs (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total

Plan net assets:
	Temporary cash investments	$	—	$	—	$	—	$	—
	Index-linked gilts		—		39,456		—		39,456
	Corporate bonds		—		294,117		—		294,117
	Corporate stock		—		15,550		—		15,550
	Other investments		—		1,933		—		1,933

Total plan net assets at fair value		$	—	$	351,056	$	—	$	351,055

				Thirteen Weeks Ended						Twenty-Six Weeks Ended

				June 26, 2010			June 27, 2009			June 26, 2010			June 27, 2009
Sales:
	Engineered Support Structures segment:
		Lighting & Traffic		$	106,478			115,545		$	194,589			218,648
		Communication Structures			28,248			34,895			47,143			67,828

			Engineered Support Structures segment		134,726			150,440			241,732			286,476
	Utility Support Structures segment
		Steel			99,836			173,727			198,909			322,299
		Concrete			13,003			42,501			27,158			77,889

			Utility Support Structures segment		112,839			216,228			226,067			400,188
	Coatings segment				33,407			28,600			61,337			58,612
	Irrigation segment				112,160			101,047			220,799			204,109
	Delta segment				74,165			—			74,165			—
	Other				24,832			17,439			47,121			36,760

			Total		492,129			513,754			871,221			986,145
Intersegment Sales:
	Engineered Support Structures segment				674			5,088			1,776			10,765
	Utility Support Structures segment				336			528			635			1,086
	Coatings segment				6,096			6,188			11,860			12,331
	Irrigation segment				3			9			6			14
	Delta segment				—			—			—			—
	Other				3,461			3,131			7983			7,985

			Total		10,570			14,944			22,260			32,181
Net Sales:
	Engineered Support Structures segment				134,052			145,352			239,956			275,711
	Utility Support Structures segment				112,503			215,700			225,432			399,102
	Coatings segment				27,311			22,412			49,477			46,281
	Irrigation segment				112,157			101,038			220,793			204,095
	Delta segment				74,165			—			74,165			—
	Other				21,371			14,308			39,138			28,775

			Total	$	481,559		$	498,810		$	848,961		$	953,964

Operating Income (Loss):
	Engineered Support Structures segment			$	8,073		$	11,580		$	10,684		$	18,002
	Utility Support Structures segment				11,942			49,843			26,648			90,318
	Coatings segment				7,586			6,393			12,118			12,384
	Irrigation segment				16,596			9,800			31,994			21,770
	Delta segment				7,213			—			7,213			—
	Other				5,201			3,493			9,465			7,096
	Net corporate expense				(19,310	)		(11,693	)		(29,171	)		(21,835	)

			Total	$	37,301		$	69,416		$	68,951		$	127,735

		As previously reported			As corrected

Parent:
	Investment in subsidiaries and intercompany accounts	$	672,135		$	644,836
Total assets			1,131,254			1,103,955
Retained earnings			811,650			767,398
Accumulated other comprehensive income			—			16,953
Total Valmont Industries, Inc. shareholders' equity			813,560			786,281
Total liabilities and shareholders' equity			1,131,254			1,103,955
Non-Guarantors:
	Investment in subsidiaries and intercompany accounts	$	(34,722	)	$	(9,725	)
Total assets			475,882			500,879
Additional paid-in capital			139,577			131,580
Retained earnings			158,724			191,718
Total Valmont Industries, Inc. shareholders' equity			318,748			343,271
Total liabilities and shareholders' equity			475,882			500,879
Eliminations:
	Investment in subsidiaries and intercompany accounts	$	(711,318	)	$	(709,016	)
Total assets			(711,318	)		(709,016	)
Additional paid-in capital			(321,119	)		(313,122	)
Retained earnings			(372,205	)		(361,198	)
Accumulated other comprehensive income			—			(16,953	)
Total Valmont Industries, Inc. shareholders' equity			(711,318	)		(709,016	)
Total liabilities and shareholders' equity			(711,318	)		(709,016	)

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales		$	217,433		$	68,299		$	228,568		$	(32,741	)	$	481,559
Cost of sales			161,324			51,803			172,746			(32,960	)		352,913

	Gross profit		56,109			16,496			55,822			219			128,646
Selling, general and administrative expenses			46,088			11,206			34,051			—			91,345

	Operating income		10,021			5,290			21,771			219			37,301

Other income (expense):
	Interest expense		(7,929	)		(187	)		(313	)		—			(8,429	)
	Interest income		101			27			964			—			1,092
	Other		64			(525	)		508			—			47

			(7,764	)		(685	)		1,159			—			(7,290	)

Earnings before income taxes and equity in earnings/(losses) of nonconsolidated subsidiaries			2,257			4,605			22,930			219			30,011

Income tax expense (benefit):
	Current		8,240			1,766			7,246			—			17,252
	Deferred		(4,503	)		(256	)		(811	)		—			(5,570	)

			3,737			1,510			6,435			—			11,682

Earnings before equity in earnings/(losses) of nonconsolidated subsidiaries			(1,480	)		3,095			16,495			219			18,329
Equity in earnings/(losses) of nonconsolidated subsidiaries			18,595			4,326			362			(22,478	)		805

Net Earnings			17,115			7,421			16,856			(22,259	)		19,134
Less: Earnings attributable to noncontrolling interests			—			—			(2,019	)		—			(2,019	)

	Net Earnings attributable to Valmont Industries, Inc.	$	17,115		$	7,421		$	14,838		$	(22,259	)	$	17,115

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales		$	416,521		$	132,763		$	360,060		$	(60,383	)	$	848,961
Cost of sales			308,597			100,732			271,289			(61,033	)		619,585

	Gross profit		107,924			32,031			88,771			650			229,376
Selling, general and administrative expenses			81,780			22,639			56,006			—			160,425

	Operating income		26,144			9,392			32,765			650			68,951

Other income (expense):
	Interest expense		(13,683	)		(187	)		(521	)		—			(14,391	)
	Interest income		112			27			1,309			—			1,448
	Other		222			(500	)		248			—			(30	)

			(13,349	)		(660	)		1,036			—			(12,973	)

Earnings before income taxes and equity in earnings/(losses) of nonconsolidated subsidiaries			12,795			8,732			33,801			650			55,978

Income tax expense (benefit):
	Current		11,043			3,360			9,555			—			23,958
	Deferred		(2,918	)		(285	)		373			—			(2,830	)

			8,125			3,075			9,928			—			21,128

Earnings before equity in earnings/(losses) of nonconsolidated subsidiaries			4,670			5,657			23,873			650			34,850
Equity in earnings/(losses) of nonconsolidated subsidiaries			28,908			4,326			362			(32,677	)		919

Net Earnings			33,578			9,983			24,235			(32,027	)		35,769
Less: Earnings attributable to noncontrolling interests			—			—			(2,191	)		—			(2,191	)

	Net Earnings attributable to Valmont Industries, Inc.	$	33,578		$	9,983		$	22,044		$	(32,027	)	$	33,578

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net Sales		$	254,326		$	136,506		$	146,577		$	(38,599	)	$	498,810
Cost of Sales			184,621			98,858			109,411			(38,761	)		354,129

	Gross profit		69,705			37,648			37,166			162			144,681
Selling, general and administrative expenses			39,405			14,243			21,617			—			75,265

	Operating income		30,300			23,405			15,549			162			69,416

Other income (expense):
	Interest expense		(3,709	)		(6	)		(261	)		—			(3,976	)
	Interest income		22			—			262			—			284
	Other		1,248			40			320			—			1,608

			(2,439	)		34			321			—			(2,084	)

Earnings before income taxes, minority interest and equity in earnings/(losses) of nonconsolidated subsidiaries			27,861			23,439			15,870			162			67,332

Income tax expense:
	Current		7,373			8,171			3,722			—			19,266
	Deferred		2,980			452			(647	)		—			2,785

			10,353			8,623			3,075			—			22,051

Earnings before equity in earnings/(losses) of nonconsolidated subsidiaries			17,508			14,816			12,795			162			45,281
Equity in earnings/(losses) of nonconsolidated subsidiaries			26,560			—			—			(26,631	)		(71	)

	Net earnings		44,068			14,816			12,795			(26,469	)		45,210
Less: Earnings attributable to noncontrolling interests			—			—			(980	)		—			(980	)

Net Earnings attributable to Valmont Industries, Inc.		$	44,068		$	14,816		$	11,815		$	(26,469	)	$	44,230

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net Sales		$	507,885		$	257,176		$	271,326		$	(82,423	)	$	953,964
Cost of Sales			370,372			190,291			204,066			(83,762	)		680,967

	Gross profit		137,513			66,885			67,260			1,339			272,997
Selling, general and administrative expenses			77,175			28,280			39,807			—			145,262

	Operating income		60,338			38,605			27,453			1,339			127,735

Other income (expense):
	Interest expense		(7,672	)		(13	)		(575	)		—			(8,260	)
	Interest income		29			1			586			—			616
	Other		1,096			103			(1,389	)		—			(190	)

			(6,547	)		91			(1,378	)		—			(7,834	)

Earnings before income taxes, minority interest and equity in earnings/(losses) of nonconsolidated subsidiaries			53,791			38,696			26,075			1,339			119,901

Income tax expense:
	Current		12,776			13,935			4,855			—			31,566
	Deferred		6,611			331			798			—			7,740

			19,387			14,266			5,653			—			39,306

Earnings before equity in earnings/(losses) of nonconsolidated subsidiaries			34,404			24,430			20,422			1,339			80,595
Equity in earnings/(losses) of nonconsolidated subsidiaries			44,351			—			—			(43,856	)		495

	Net earnings		78,755			24,430			20,422			(42,517	)		81,090
Less: Earnings attributable to noncontrolling interests			—			—			(996	)		—			(996	)

Net Earnings attributable to Valmont Industries, Inc		$	78,755		$	24,430		$	19,426		$	(42,517	)	$	80,094

						Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operations:
	Net earnings					$	33,578		$	9,983		$	24,235		$	(32,027	)	$	35,769
		Adjustments to reconcile net earnings to net cash flow from operations:
			Depreciation				9,994			6,372			8,214			—			24,580
			Stock-based compensation				3,168			—			—			—			3,168
			Loss on sales of property, plant and equipment				7			7			109			—			123
			Equity in losses of nonconsolidated subsidiaries				(557	)		—			(362	)		—			(919	)
			Deferred income taxes				(2,918	)		(285	)		373			—			(2,830	)
			Other adjustments				—			—			19			—			19
			Changes in assets and liabilities:
				Receivables			(18,581	)		12,224			(25,714	)		—			(32,071	)
				Inventories			2,390			4,779			(12,629	)		(650	)		(6,110	)
				Prepaid expenses			(2,030	)		(281	)		2,372			—			61
				Accounts payable			6,250			(1,426	)		6,562			—			11,386
				Accrued expenses			(2,419	)		7,007			(2,919	)		—			1,669
				Other noncurrent liabilities			(341	)					8,237			—			7,896
				Income taxes payable/refundable			(4,178	)		14,923			496			—			11,241

					Net cash flows from operations		24,363			53,303			8,993			(32,677	)		53,982

Cash flows from investing activities:
	Purchase of property, plant and equipment						(5,469	)		(589	)		(4,967	)		—			(11,025	)
	Proceeds from sale of property and equipment						10			3			83			—			96
	Acquisitions, gross of cash acquired						—			(436,736	)		(7,383	)		—			(444,119	)
	Cash acquired through acquisitions						—			—			198,809			—			198,809
	Dividends to minority interests						—			—			(3,477	)		—			(3,477	)
	Other, net						14,520			(40,113	)		(5,568	)		32,677			1,516

					Net cash flows from investing activities		9,061			(477,435	)		177,497			32,677			(258,200	)

Cash flows from financing activities:
	Net repayments under short-term agreements						—			(6	)		(2,142	)		—			(2,148	)
	Proceeds from long-term borrowings						491,000			—						—			491,000
	Principal payments on long-term obligations						(133,228	)		—			—			—			(133,228	)
	Debt issue fees						(3,858	)											(3,858	)
	Activity under intercompany note						(443,702	)		443,702			—			—			—
	Dividends paid						(7,892	)		—			—			—			(7,892	)
	Proceeds from exercises under stock plans						3,197			—			—			—			3,197
	Excess tax benefits from stock option exercises						1,216			—			—			—			1,216
	Purchase of treasury shares						(2,676	)		—			1,799			—			(877	)
	Purchase of common treasury shares—stock plan exercises						(1,961	)		—			—			—			(1,961	)

					Net cash flows from financing activities		(97,904	)		443,696			343			—			345,449

Effect of exchange rate changes on cash and cash equivalents							—			—			(7,644	)		—			(7,644	)

Net change in cash and cash equivalents							(64,480	)		19,564			178,503			—			133,587
Cash and cash equivalents—beginning of year							82,017			1,666			97,103			—			180,786

Cash and cash equivalents—end of period							17,537			21,230			275,606			—			314,373

			Thirteen Weeks Ended									Twenty-six Weeks Ended

			June 26, 2010			June 27, 2009			% Incr. (Decr.)			June 26, 2010			June 27, 2009			% Incr. (Decr.)
Consolidated
	Net sales		$	481,559		$	498,810			-3.5	%	$	848,961		$	953,964			-11.0	%
	Gross profit			128,646			144,681			-11.1	%		229,376			272,997			-16.0	%
		as a percent of sales		26.7	%		29.0	%					27.0	%		28.6	%
	SG&A expense			91,345			75,265			21.4	%		160,425			145,262			10.4	%
		as a percent of sales		19.0	%		15.1	%					18.9	%		15.2	%
	Operating income			37,301			69,416			-46.3	%		68,951			127,735			-46.0	%
		as a percent of sales		7.7	%		13.9	%					8.1	%		13.4	%
	Net interest expense			7,337			3,692			98.7	%		12,943			7,644			69.3	%
	Effective tax rate			38.9	%		32.7	%					37.7	%		32.8	%
	Net earnings attributable to Valmont Industries, Inc.			17,115			44,230			-61.3	%		33,578			80,094			-58.1	%
	Earnings per share attributable to Valmont Industries, Inc.—diluted		$	0.65		$	1.69					$	1.27		$	3.05
Engineered Support Structures segment
	Net sales		$	134,052		$	145,352			-7.8	%	$	239,956		$	275,711			-13.0	%
	Gross profit			34,536			38,350			-9.9	%		62,440			70,234			-11.1	%
	SG&A expense			26,463			26,770			-1.1	%		51,756			52,232			-0.9	%
	Operating income			8,073			11,580			-30.3	%		10,684			18,002			-40.7	%
Utility Support Structures segment
	Net sales		$	112,503		$	215,700			-47.8	%	$	225,432		$	399,102			-43.5	%
	Gross profit			27,365			69,272			-60.5	%		57,839			126,265			-54.2	%
	SG&A expense			15,423			19,429			-20.6	%		31,191			35,947			-13.2	%
	Operating income			11,942			49.843			-76	%		26,648			90,318			-70.5	%
Coatings segment
	Net sales		$	27,311		$	22,412			21.9	%	$	49,477		$	46,281			6.9	%
	Gross profit			11,157			9,958			12.0	%		18,814			19,437			-3.2	%
	SG&A expense			3,571			3,565			0.2	%		6,696			7,053			-5.1	%
	Operating income			7,586			6,393			18.7	%		12,118			12,384			-2.1	%
Irrigation segment
	Net sales		$	112,157		$	101,038			11.0	%	$	220,793		$	204,095			8.2	%
	Gross profit			30,754			21,935			40.2	%		59,131			46,151			28.1	%
	SG&A expense			14,158			12,135			16.7	%		27,137			24,381			11.3	%
	Operating income			16,596			9,800			69.3	%		31,994			21,770			47.0	%
Delta
	Net sales		$	74,165		$	—			NA		$	74,165		$	—			NA
	Gross profit			18,270			—			NA			18,270			—			NA
	SG&A expense			11,057			—			NA			11,057			—			NA
	Operating income			7,213			—			NA			7,213			—			NA
Other
	Net sales		$	21,371		$	14,308			49.4	%	$	39,138		$	28,775			36.0	%
	Gross profit			7,256			5,279			37.5	%		13,442			11,006			22.1	%
	SG&A expense			2,055			1,786			15.1	%		3,977			3,910			1.7	%
	Operating income			5,201			3,493			48.9	%		9,465			7,096			33.4	%
Net Corporate expense
	Gross profit		$	(692	)	$	(113	)		512.4	%	$	(560	)	$	(96	)		483.3	%
	SG&A expense			18,618			11,580			60.8	%		28,611			21,739			31.6	%
	Operating loss			(19,310	)		(11,693	)		65.1	%		(29,171	)		(21,835	)		33.6	%


Interest-bearing debt			527,935
EBITDA—last 12 months			295,469
Leverage ratio			1.79
EBITDA—last 12 months			295,469
Interest expense—last 12 months			22,058
Interest earned ratio			13.40

Contractual Obligations	Total		2010		2011-2012		2013-2014		After 2014

Long-term debt	$	518.3	$	0.1	$	0.6	$	208.5	$	309.1
Interest		243.5		15.6		62.3		55.8		109.8
Delta pension plan contributions		98.2		—		21.8		21.8		54.6
Operating leases		84.2		8.8		24.0		15.8		35.6
Unconditional purchase commitments		6.0		6.0		—		—		—

Total contractual cash obligations	$	950.2	$	30.5	$	108.7	$	301.9	$	509.1

Assumptions In Millions of Dollars	Increase in Pension Expense

1.00% decrease in discount rate	$	0.6
1.00% decrease in expected return on plan assets	$	2.1
1.00% increase in inflation	$	1.5

		(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
March 28, 2010 to April 24, 2010			4,013	$	85.81		—		—
April 25, 2010 to May 29, 2010			900	$	79.30		—		—
May 30, 2010 to June 26, 2010			—		—		—		—

	Total		4,913	$	84.62		—		—

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
	101		The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended June 26, 2010, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Shareholders' Equity, (v) Notes to Condensed Consolidated Financial Statements (tagged as blocks of text).


		VALMONT INDUSTRIES, INC. (Registrant)
		/s/ TERRY J. MCCLAIN Terry J. McClain Senior Vice President and Chief Financial Officer (Principal Financial Officer)
Dated this 2^nd day of August, 2010.