VALMONT INDUSTRIES INC - Quarter Report: 2011 September (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 September 24, 2011
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

26,443,449
Outstanding shares of common stock as of October 18, 2011

Table of Contents

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 24, 2011 and September 25, 2010	3
	Condensed Consolidated Balance Sheets as of September 24, 2011 and December 25, 2010	4
	Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 24, 2011 and September 25, 2010	5
	Condensed Consolidated Statements of Shareholders' Equity for the thirty-nine weeks ended September 24, 2011 and September 25, 2010	6
	Notes to Condensed Consolidated Financial Statements	7-26
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27-36
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	36
Item 4.	Controls and Procedures	37
PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 6.	Exhibits	38
Signatures		39

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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						Thirty-nine Weeks Ended

		September 24, 2011			September 25, 2010			September 24, 2011			September 25, 2010
Product sales		$	595,064		$	492,997		$	1,685,440		$	1,280,824
Services sales			77,128			34,834			223,310			95,968

	Net sales		672,192			527,831			1,908,750			1,376,792
Product cost of sales			453,462			374,678			1,285,629			955,611
Services cost of sales			51,340			20,632			151,256			59,284

	Cost of sales		504,802			395,310			1,436,885			1,014,895

	Gross profit		167,390			132,521			471,865			361,897
Selling, general and administrative expenses			95,357			85,378			285,912			245,803

	Operating income		72,033			47,143			185,953			116,094

Other income (expenses):
	Interest expense		(7,671	)		(8,487	)		(26,715	)		(22,878	)
	Interest income		3,141			1,733			6,919			3,181
	Other		(1,670	)		58			(776	)		28

			(6,200	)		(6,696	)		(20,572	)		(19,669	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries			65,833			40,447			165,381			96,425

Income tax expense (benefit):
	Current		25,119			15,694			62,156			39,652
	Deferred		(1,346	)		(1,914	)		(11,544	)		(4,744	)

			23,773			13,780			50,612			34,908

Earnings before equity in earnings of nonconsolidated subsidiaries			42,060			26,667			114,769			61,517
Equity in earnings of nonconsolidated subsidiaries			2,354			1,068			4,509			1,987

	Net earnings		44,414			27,735			119,278			63,504

Less: Earnings attributable to noncontrolling interests			(2,273	)		(1,800	)		(5,701	)		(3,991	)

	Net earnings attributable to Valmont Industries, Inc.	$	42,141		$	25,935		$	113,577		$	59,513

Earnings per share attributable to Valmont Industries, Inc.—Basic		$	1.60		$	0.99		$	4.32		$	2.28

Earnings per share attributable to Valmont Industries, Inc.—Diluted		$	1.59		$	0.98		$	4.28		$	2.25

Cash dividends per share		$	0.180		$	0.165		$	0.525		$	0.480

Weighted average number of shares of common stock outstanding—Basic (000 omitted)			26,351			26,133			26,318			26,084

Weighted average number of shares of common stock outstanding—Diluted (000 omitted)			26,579			26,404			26,567			26,420

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)

			September 24, 2011			December 25, 2010

ASSETS
Current assets:
	Cash and cash equivalents		$	336,908		$	346,904
	Receivables, net			449,431			410,566
	Inventories			377,525			280,223
	Prepaid expenses and other current assets			28,832			23,806
	Refundable and deferred income taxes			35,216			32,727

		Total current assets		1,227,912			1,094,226

Property, plant and equipment, at cost				889,857			865,287
	Less accumulated depreciation and amortization			452,718			425,678

		Net property, plant and equipment		437,139			439,609

Goodwill				315,140			314,847
Other intangible assets, net				174,946			185,535
Other assets				54,040			56,526

		Total assets	$	2,209,177		$	2,090,743

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt		$	236		$	238
	Notes payable to banks			11,022			8,824
	Accounts payable			221,909			179,814
	Accrued employee compensation and benefits			75,392			75,981
	Accrued expenses			82,844			77,705
	Dividends payable			4,760			4,352

		Total current liabilities		396,163			346,914

Deferred income taxes				85,531			89,922
Long-term debt, excluding current installments				494,775			468,596
Defined benefit pension liability				96,990			104,171
Deferred compensation				29,401			23,300
Other noncurrent liabilities				43,068			47,713
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			966,872			850,269
	Accumulated other comprehensive income			41,768			63,645
	Treasury stock			(25,117	)		(25,922	)

		Total Valmont Industries, Inc. shareholders' equity		1,011,423			915,892

	Noncontrolling interest in consolidated subsidiaries			51,826			94,235

		Total shareholders' equity		1,063,249			1,010,127

		Total liabilities and shareholders' equity	$	2,209,177		$	2,090,743

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)

					Thirty-nine Weeks Ended

					September 24, 2011			September 25, 2010
Cash flows from operating activities:
	Net earnings				$	119,278		$	63,504
	Adjustments to reconcile net earnings to net cash flow from operations:
		Depreciation and amortization				53,193			41,829
		Stock-based compensation				3,962			4,712
		Defined benefit pension plan expense				4,544			—
		Contribution to defined benefit pension plan				(11,754	)		—
		Loss (gain) on sale of assets				(295	)		1,513
		Equity in earnings of nonconsolidated subsidiaries				(4,509	)		(1,987	)
		Deferred income taxes				(11,544	)		(4,744	)
		Changes in assets and liabilities, net of the effects of acquisitions:
			Receivables			(41,606	)		(44,046	)
			Inventories			(99,559	)		4,390
			Prepaid expenses			(5,378	)		1,063
			Accounts payable			33,782			(22,674	)
			Accrued expenses			11,484			19,230
			Other noncurrent liabilities			(4,492	)		10,254
			Income taxes payable/refundable			17,009			12,295

				Net cash flows from operating activities		64,115			85,339

Cash flows from investing activities:
	Purchase of property, plant and equipment					(46,366	)		(20,283	)
	Proceeds from sale of assets					2,903			11,090
	Acquisitions, net of cash acquired					(1,539	)		(249,057	)
	Dividends from nonconsolidated subsidiaries					590			9,606
	Other, net					793			2,062

				Net cash flows from investing activities		(43,619	)		(246,582	)

Cash flows from financing activities:
	Net borrowings (payments) under short-term agreements					2,152			2,549
	Proceeds from long-term borrowings					213,832			491,000
	Principal payments on long-term obligations					(187,234	)		(168,271	)
	Purchase of noncontrolling interest					(25,253	)		—
	Settlement of financial derivative					(3,568	)		—
	Dividends paid					(13,467	)		(12,240	)
	Dividends to noncontrolling interests					(4,958	)		(12,265	)
	Debt issuance costs					(1,284	)		(3,858	)
	Proceeds from exercises under stock plans					18,659			3,390
	Excess tax benefits from stock option exercises					2,799			1,479
	Purchase of treasury shares					(4,802	)		(878	)
	Purchase of common treasury shares—stock plan exercises					(19,829	)		(2,144	)

				Net cash flows from financing activities		(22,953	)		298,762

Effect of exchange rate changes on cash and cash equivalents						(7,539	)		4,845

Net change in cash and cash equivalents						(9,996	)		142,364
Cash and cash equivalents—beginning of year						346,904			180,786

Cash and cash equivalents—end of period					$	336,908		$	323,150

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 26, 2009			$	27,900	$	—		$	767,398		$	16,953		$	(25,990	)	$	22,046		$	808,307
Comprehensive income:
	Net earnings			—		—			59,513			—			—			3,991			63,504
	Currency translation adjustment			—		—			—			7,503			—			2,503			10,006

		Total comprehensive income		—		—			—			—			—			—			73,510
Cash dividends ($0.480 per share)				—		—			(12,641	)		—			—			—			(12,641	)
Dividends to noncontrolling interests				—		—			—			—			—			(12,265	)		(12,265	)
Purchase of noncontrolling interest				—		(3,754	)		—			—			—			(3,311	)		(7,065	)
Acquisition of Delta plc				—		—			—			—			—			79,529			79,529
Purchase of 12,351 treasury shares				—		—			—			—			(878	)		—			(878	)
Stock options exercised; 84,900 shares issued				—		(2,437	)		2,847			—			2,980			—			3,390
Stock plan exercises; 29,095 shares purchased				—		—			—			—			(2,144	)		—			(2,144	)
Tax benefit from exercise of stock options				—		1,479			—			—			—			—			1,479
Stock option expense				—		3,675			—			—			—			—			3,675
Stock awards; 9,088 shares issued				—		1,037			—			—			650			—			1,687

Balance at September 25, 2010			$	27,900	$	—		$	817,117		$	24,456		$	(25,382	)	$	92,493		$	936,584

Balance at December 25, 2010			$	27,900	$	—		$	850,269		$	63,645		$	(25,922	)	$	94,235		$	1,010,127
Comprehensive income:
	Net earnings			—		—			113,577			—			—			5,701			119,278
	Currency translation adjustment			—		—			—			(18,442	)		—			(1,831	)		(20,273	)
	Loss on cash flow hedge			—		—			—			(3,568	)		—			—			(3,568	)
	Amortization of loss			—		—			—			133			—			—			133

		Total comprehensive income		—		—			—			—			—			—			95,570
Cash dividends ($0.525 per share)				—		—			(13,875	)		—			—			—			(13,875	)
Dividends to noncontrolling interests				—		—			—			—			—			(4,958	)		(4,958	)
Purchase of noncontrolling interest				—		16,592			—			—			—			(41,845	)		(25,253	)
Acquisitions				—		—			—			—			—			524			524
Purchase of 53,847 treasury shares				—		—			—			—			(4,802	)		—			(4,802	)
Stock options exercised; 291,208 shares issued				—		(23,353	)		16,901			—			25,111			—			18,659
Stock plan exercises; 181,603 shares purchased				—		—			—			—			(19,829	)		—			(19,829	)
Tax benefit from exercise of stock options				—		2,799			—			—			—			—			2,799
Stock option expense				—		3,732			—			—			—			—			3,732
Stock awards; 2,992 shares issued				—		230			—			—			325			—			555

Balance at September 24, 2011			$	27,900	$	—		$	966,872		$	41,768		$	(25,117	)	$	51,826		$	1,063,249

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 September 24, 2011, the Condensed Consolidated Statements of Operations for the thirteen and thirty-nine week periods ended September 24, 2011 and September 25, 2010, the Condensed Consolidated Statements of Cash Flows and Shareholders' Equity 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 24, 2011 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 25, 2010. 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 25, 2010. The results of operations for the periods ended September 24, 2011 are not necessarily indicative of the operating results for the full year.

Inventories

At September 24, 2011, approximately 36% 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 $50,775 and $42,559 at September 24, 2011 and December 25, 2010, respectively.

Inventories consisted of the following:

	September 24, 2011		December 25, 2010

Raw materials and purchased parts	$	193,469	$	133,380
Work-in-process		28,939		25,891
Finished goods and manufactured goods		205,892		163,511

Subtotal		428,300		322,782
LIFO reserve		50,775		42,559

Net inventory	$	377,525	$	280,223

Stock Plans

The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock

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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)

options, nonqualified stock options, stock appreciation rights, non-vested stock awards and bonuses of common stock. At September 24, 2011, 861,939 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 thirty-nine weeks ended September 24, 2011 and September 25, 2010, respectively, were as follows:

	Thirteen Weeks Ended September 24, 2011		Thirteen Weeks Ended September 25, 2010		Thirty-nine Weeks Ended September 24, 2011		Thirty-nine Weeks Ended September 25, 2010

Compensation expense	$	1,265	$	1,218	$	3,732	$	3,675
Income tax benefits		487		469		1,437		1,415

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.

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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)

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 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 24, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Trading Securities	$	18,051	$	18,051	$	—	$	—

				Fair Value Measurement Using:

		Carrying Value December 25, 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	$	18,433	$	18,433	$	—	$	—

Accumulated Other Comprehensive Income (Loss)

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. "Accumulated other comprehensive income (loss)" consisted of the following at September 24, 2011 and December 25, 2010:

	September 24, 2011			December 25, 2010

Foreign currency translation adjustment	$	16,278		$	34,693
Actuarial gain in defined benefit pension plan		28,925			28,952
Loss on cash flow hedge		(3,435	)		—

	$	41,768		$	63,645

Derivative Instrument

During the second quarter of 2011, the Company executed a contract to lock in the treasury rate related to the issuance of the $150,000 of principal amount of senior notes due in 2020. The contract, for a notional amount of $130,000, was executed to hedge the risk of potential fluctuations in the treasury rates which would change the amount of net proceeds received from the debt offering. As the benchmark rate component of the fixed rate debt issuance and the cash flow hedged risk is based on

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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)

that same benchmark, this was deemed an effective hedge at inception. On June 8, 2011, this contract was settled with the Company paying approximately $3,568 to the counterparty. The Company recorded the $3,568 in accumulated other comprehensive income and is amortizing this loss to interest expense over the term of the debt.

Recently Issued Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220), requiring entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. Reclassification adjustments between net income and other comprehensive income must be shown on the face of the statement(s), with no resulting change in net earnings. ASU 2011-05 is effective for statements issued by the Company after January 1, 2012. The Company will provide the required financial reporting presentation upon the effective date.

In September 2011, the FASB issued ASU No. 2011-08, Testing Goodwill for Impairment, permitting an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Accounting Standards Codification Topic 350. This guidance will become effective for annual or interim goodwill impairment tests for fiscal years beginning after December 15, 2011. The Company will adopt this starting in fiscal 2012 and it is not expected to have a significant effect on its financial position, results of operations or cash flows.

2. Acquisitions

On May 12, 2010, the Company acquired Delta, plc. ("Delta") a public limited company incorporated in Great Britain, and listed on the London Stock Exchange (LSE: DLTA). 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's pro forma results of operations for the thirty-nine weeks ended September 25, 2010, assuming that the acquisition occurred at the beginning of fiscal 2010 was as follows:

	Thirty-nine Weeks Ended September 25, 2010

Net sales	$	1,569,210
Net earnings		64,512
Earnings per share—diluted	$	2.49

On June 24, 2011, the Company acquired the remaining 40% of Donhad Pty. Ltd. ("Donhad") that it did not own for $25,253. As this transaction was the acquisition of the remaining shares of a

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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. Acquisitions (Continued)

consolidated subsidiary with no change in control, it was recorded within shareholders' equity. On June 1, 2011, the Company acquired 60% of an irrigation monitoring services company for $1,539. This acquisition did not have and is not expected to have a significant effect on the Company's fiscal 2011 financial results.

3. Goodwill and Intangible Assets

The Company's annual impairment testing of goodwill was performed and completed during the third quarter of 2011. As a result of that testing, it was determined that the goodwill on the Company's Condensed Consolidated Balance Sheet was not impaired. The Company continues to monitor changes in the global economy and its reporting units that could impact future operating results of its reporting units and related components.

Amortized Intangible Assets

The components of amortized intangible assets at September 24, 2011 and December 25, 2010 were as follows:

	As of September 24, 2011

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	155,651	$	47,083	13 years
Proprietary Software & Database		2,609		2,609	6 years
Patents & Proprietary Technology		9,524		3,486	8 years
Non-compete Agreements		1,683		1,236	6 years

	$	169,467	$	54,414

	As of December 25, 2010

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	155,664	$	37,932	13 years
Proprietary Software & Database		2,609		2,568	6 years
Patents & Proprietary Technology		9,486		2,336	8 years
Non-compete Agreements		1,674		1,054	6 years

	$	169,433	$	43,890

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)

	Estimated Amortization Expense

2011	$	14,373
2012		13,886
2013		12,992
2014		12,569
2015		11,730

	September 24, 2011		December 25, 2010

Webforge	$	16,563	$	16,478
Newmark		11,111		11,111
Ingal EPS/Ingal Civil Products		8,794		8,795
Donhad		6,634		6,635
PiRod		4,750		4,750
Industrial Galvanizers		4,628		4,632
Other		7,413		7,591

	$	59,893	$	59,992

	Engineered Infrastructure Products Segment			Utility Support Structures Segment		Coatings Segment		Irrigation Segment			Other			Total

Balance December 25, 2010	$	152,062		$	77,141	$	64,868	$	2,064		$	18,712		$	314,847
Acquisition		—			—		—		939			—			939
Foreign currency translation		(478	)		—		129		(155	)		(142	)		(646	)

Balance September 24, 2011	$	151,584		$	77,141	$	64,997	$	2,848		$	18,570		$	315,140

		September 24, 2011		December 25, 2010

6.625% Senior Unsecured Notes(a)		$	450,000	$	300,000
Unamortized premium on senior unsecured notes(a)			14,437		—
6.875% Senior Subordinated Notes(b)			—		150,000
Revolving credit agreement(c)			20,000		8,000
IDR Bonds(d)			8,500		8,500
1.75% to 3.485% notes			2,074		2,334

	Total long-term debt		495,011		468,834
Less current installments of long-term debt			236		238

	Long-term debt, excluding current installments	$	494,775	$	468,596

				Thirteen Weeks Ended						Thirty-nine Weeks Ended

				September 24, 2011			September 25, 2010			September 24, 2011			September 25, 2010
Sales:
	Engineered Infrastructure Products segment:
		Lighting & Traffic		$	157,273		$	139,387		$	420,122		$	344,873
		Communication Structures			28,612			26,803			77,332			73,946
		Access Systems			36,358			31,411			100,136			49,140

			Engineered Infrastructure Products segment		222,243			197,601			597,590			467,959
	Utility Support Structures segment
		Steel			140,926			106,943			374,045			307,850
		Concrete			18,889			15,298			47,977			42,457

			Utility Support Structures segment		159,815			122,241			422,022			350,307
	Coatings segment				80,806			75,665			238,417			158,036
	Irrigation segment				150,618			88,255			485,367			309,053
	Other				88,870			61,328			246,977			131,613

		Total			702,352			545,090			1,990,373			1,416,968
Intersegment Sales:
	Engineered Infrastructure Products segment				6,611			2,936			18,035			4,712
	Utility Support Structures segment				4,480			1,465			6,739			2,100
	Coatings segment				11,852			9,204			34,283			21,721
	Irrigation segment				—			1			8			7
	Other				7,217			3,653			22,558			11,636

		Total			30,160			17,259			81,623			40,176
Net Sales:
	Engineered Infrastructure Products segment				215,632			194,665			579,555			463,247
	Utility Support Structures segment				155,335			120,776			415,283			348,207
	Coatings segment				68,954			66,161			204,134			136,315
	Irrigation segment				150,618			88,254			485,359			309,046
	Other				81,653			57,975			224,419			119,977

		Total		$	672,192		$	527,831		$	1,908,750		$	1,376,792

Operating Income:
	Engineered Infrastructure Products segment			$	17,189		$	17,169		$	30,907		$	31,862
	Utility Support Structures segment				14,731			9,740			41,214			36,988
	Coatings segment				14,238			13,577			39,600			27,993
	Irrigation segment				23,765			10,590			80,623			42,584
	Other				12,607			7,124			32,901			20,096
	Net corporate expense				(10,497	)		(11,057	)		(39,292	)		(43,429	)

		Total		$	72,033		$	47,143		$	185,953		$	116,094

		Basic EPS				Diluted EPS

Thirteen weeks ended September 24, 2011:
	Net earnings attributable to Valmont Industries, Inc.	$	42,141	—		$	42,141
	Shares outstanding		26,351	228			26,579
	Per share amount	$	1.60	(.01	)	$	1.59
Thirteen weeks ended September 25, 2010:
	Net earnings attributable to Valmont Industries, Inc.	$	25,935	—		$	25,935
	Shares outstanding		26,133	271			26,404
	Per share amount	$	0.99	(.01	)	$	0.98
Thirty-nine weeks ended September 24, 2011:
	Net earnings attributable to Valmont Industries, Inc.	$	113,577	—		$	113,577
	Shares outstanding		26,318	249			26,567
	Per share amount	$	4.32	(.04	)	$	4.28
Thirty-nine weeks ended September 25, 2010:
	Net earnings attributable to Valmont Industries, Inc.	$	59,513	—		$	59,513
	Shares outstanding		26,084	336			26,420
	Per share amount	$	2.28	(.03	)	$	2.25

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales		$	277,350		$	98,619		$	352,928		$	(56,705	)	$	672,192
Cost of sales			205,787			83,008			272,671			(56,664	)		504,802

	Gross profit		71,563			15,611			80,257			(41	)		167,390
Selling, general and administrative expenses			37,169			11,212			46,976			—			95,357

	Operating income		34,394			4,399			33,281			(41	)		72,033

Other income (expense):
	Interest expense		(7,562	)		—			(109	)		—			(7,671	)
	Interest income		9			204			2,928			—			3,141
	Other		(1,297	)		12			(385	)		—			(1,670	)

			(8,850	)		216			2,434			—			(6,200	)

Earnings before income taxes and equity in earnings/(losses) of nonconsolidated subsidiaries			25,544			4,615			35,715			(41	)		65,833

Income tax expense (benefit):
	Current		12,153			(724	)		13,690			—			25,119
	Deferred		(1,397	)		2,710			(2,659	)		—			(1,346	)

			10,756			1,986			11,031			—			23,773

Earnings before equity in earnings/(losses) of nonconsolidated subsidiaries			14,788			2,629			24,684			(41	)		42,060
Equity in earnings/(losses) of nonconsolidated subsidiaries			27,353			14,705			2,127			(41,831	)		2,354

Net Earnings			42,141			17,334			26,811			(41,872	)		44,414
Less: Earnings attributable to noncontrolling interests			—			—			(2,273	)		—			(2,273	)

	Net Earnings attributable to Valmont Industries, Inc.	$	42,141		$	17,334		$	24,538		$	(41,872	)	$	42,141

		Parent			Guarantors		Non-Guarantors			Eliminations			Total

Net sales		$	842,493		$	259,733	$	947,843		$	(141,319	)	$	1,908,750
Cost of sales			627,802			209,827		740,621			(141,365	)		1,436,885

	Gross profit		214,691			49,906		207,222			46			471,865
Selling, general and administrative expenses			115,422			33,473		137,017			—			285,912

	Operating income		99,269			16,433		70,205			46			185,953

Other income (expense):
	Interest expense		(26,417	)		—		(298	)		—			(26,715	)
	Interest income		43			204		6,672			—			6,919
	Other		(1,105	)		42		287			—			(776	)

			(27,479	)		246		6,661			—			(20,572	)

Earnings before income taxes and equity in earnings/(losses) of nonconsolidated subsidiaries			71,790			16,679		76,866			46			165,381

Income tax expense (benefit):
	Current		31,505			4,552		26,099			—			62,156
	Deferred		(5,307	)		1,742		(7,979	)		—			(11,544	)

			26,198			6,294		18,120			—			50,612

Earnings before equity in earnings/(losses) of nonconsolidated subsidiaries			45,592			10,385		58,746			46			114,769
Equity in earnings/(losses) of nonconsolidated subsidiaries			67,985			35,042		4,247			(102,765	)		4,509

Net Earnings			113,577			45,427		62,993			(102,719	)		119,278
Less: Earnings attributable to noncontrolling interests			—			—		(5,701	)		—			(5,701	)

	Net Earnings attributable to Valmont Industries, Inc.	$	113,577		$	45,427	$	57,292		$	(102,719	)	$	113,577

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales		$	200,302		$	84,440		$	280,704		$	(37,615	)	$	527,831
Cost of sales			147,511			64,990			220,474			(37,665	)		395,310

	Gross profit		52,791			19,450			60,230			50			132,521
Selling, general and administrative expenses			31,801			11,126			42,451			—			85,378

	Operating income		20,990			8,324			17,779			50			47,143

Other income (expense):
	Interest expense		(8,515	)		187			(159	)		—			(8,487	)
	Interest income		4			4			1,725			—			1,733
	Other		254			428			(624	)		—			58

			(8,257	)		619			942			—			(6,696	)

Earnings before income taxes and equity in earnings/(losses) of nonconsolidated subsidiaries			12,733			8,943			18,721			50			40,447

Income tax expense (benefit):
	Current		4,594			3,081			8,019			—			15,694
	Deferred		(183	)		(91	)		(1,640	)		—			(1,914	)

			4,411			2,990			6,379			—			13,780

Earnings before equity in earnings/(losses) of nonconsolidated subsidiaries			8,322			5,953			12,342			50			26,667
Equity in earnings/(losses) of nonconsolidated subsidiaries			17,613			5,751			1,021			(23,317	)		1,068

Net Earnings			25,935			11,704			13,363			(23,267	)		27,735
Less: Earnings attributable to noncontrolling interests			—			—			(1,800	)		—			(1,800	)

	Net Earnings attributable to Valmont Industries, Inc.	$	25,935		$	11,704		$	11,563		$	(23,267	)	$	25,935

		Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales		$	616,823		$	217,203		$	640,764		$	(97,998	)	$	1,376,792
Cost of sales			456,108			165,722			491,763			(98,698	)		1,014,895

	Gross profit		160,715			51,481			149,001			700			361,897
Selling, general and administrative expenses			113,581			33,765			98,457			—			245,803

	Operating income		47,134			17,716			50,544			700			116,094

Other income (expense):
	Interest expense		(22,198	)		—			(680	)		—			(22,878	)
	Interest income		116			31			3,034			—			3,181
	Other		476			(72	)		(376	)		—			28

			(21,606	)		(41	)		1,978			—			(19,669	)

Earnings before income taxes and equity in earnings/(losses) of nonconsolidated subsidiaries			25,528			17,675			52,522			700			96,425

Income tax expense (benefit):
	Current		15,637			6,441			17,574			—			39,652
	Deferred		(3,101	)		(376	)		(1,267	)		—			(4,744	)

			12,536			6,065			16,307			—			34,908

Earnings before equity in earnings/(losses) of nonconsolidated subsidiaries			12,992			11,610			36,215			700			61,517
Equity in earnings/(losses) of nonconsolidated subsidiaries			46,521			10,077			1,383			(55,994	)		1,987

Net Earnings			59,513			21,687			37,598			(55,294	)		63,504
Less: Earnings attributable to noncontrolling interests			—			—			(3,991	)		—			(3,991	)

	Net Earnings attributable to Valmont Industries, Inc.	$	59,513		$	21,687		$	33,607		$	(55,294	)	$	59,513

						Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operations:
	Net earnings					$	113,577		$	45,427		$	62,993		$	(102,719	)	$	119,278
		Adjustments to reconcile net earnings to net cash flow from operations:
			Depreciation				15,758			9,416			28,019			—			53,193
			Stock-based compensation				3,962			—			—			—			3,962
			Defined benefit pension plan expense				—			—			4,544			—			4,544
			Contribution to defined benefit pension plan				—			—			(11,754	)		—			(11,754	)
			Loss (gain) on sale of assets				3			(56	)		(242	)		—			(295	)
			Equity in earnings of nonconsolidated subsidiaries				(261	)		—			(4,248	)		—			(4,509	)
			Deferred income taxes				(5,307	)		1,742			(7,979	)		—			(11,544	)
			Changes in assets and liabilities:
				Receivables			(10,659	)		(320	)		(30,627	)		—			(41,606	)
				Inventories			(44,029	)		(31,983	)		(23,547	)		—			(99,559	)
				Prepaid expenses			(1,753	)		(325	)		(3,300	)		—			(5,378	)
				Accounts payable			9,850			6,450			17,482			—			33,782
				Accrued expenses			17,225			3,805			(9,546	)		—			11,484
				Other noncurrent liabilities			1,202			—			(5,694	)		—			(4,492	)
				Income taxes payable/refundable			14,814			—			2,195			—			17,009

					Net cash flows from operations		114,382			34,156			18,296			(102,719	)		64,115

Cash flows from investing activities:
	Purchase of property, plant and equipment						(10,133	)		(9,358	)		(26,875	)		—			(46,366	)
	Proceeds from sale of assets						34			73			2,796			—			2,903
	Acquisitions, net of cash acquired						—			—			(1,539	)		—			(1,539	)
	Dividends from nonconsolidated subsidiaries						590			—			—			—			590
	Other, net						(92,449	)		(24,700	)		15,223			102,719			793

					Net cash flows from investing activities		(101,958	)		(33,985	)		(10,395	)		102,719			(43,619	)

Cash flows from financing activities:
	Net borrowings (repayments) under short-term agreements						—			—			2,152			—			2,152
	Proceeds from long-term borrowings						213,832			—			—			—			213,832
	Principal payments on long-term obligations						(187,186	)		—			(48	)		—			(187,234	)
	Purchase of noncontrolling interest						—			—			(25,253	)		—			(25,253	)
	Settlement of financial derivative						(3,568	)		—			—			—			(3,568	)
	Dividends paid						(13,467	)		—			—			—			(13,467	)
	Intercompany dividends						—			17,730			(17,730	)		—			—
	Dividends to noncontrolling interests						—			—			(4,958	)		—			(4,958	)
	Debt issue fees						(1,284	)		—			—			—			(1,284	)
	Proceeds from exercises under stock plans						18,659			—			—			—			18,659
	Excess tax benefits from stock option exercises						2,799			—			—			—			2,799
	Purchase of treasury shares						(4,802	)		—			—			—			(4,802	)
	Purchase of common treasury shares—stock plan exercises						(19,829	)		—			—			—			(19,829	)

					Net cash flows from financing activities		5,154			17,730			(45,837	)		—			(22,953	)

Effect of exchange rate changes on cash and cash equivalents							—			—			(7,539	)		—			(7,539	)

Net change in cash and cash equivalents							17,578			17,901			(45,475	)		—			(9,996	)
Cash and cash equivalents—beginning of year							8,015			619			338,270			—			346,904

Cash and cash equivalents—end of period						$	25,593		$	18,520		$	292,795		$	—		$	336,908

			Thirteen Weeks Ended									Thirty-nine Weeks Ended

			September 24, 2011			September 25, 2010			% Incr. (Decr.)			September 24, 2011			September 25, 2010			% Incr. (Decr.)
Consolidated
	Net sales		$	672.2		$	527.8			27.4	%	$	1,908.8		$	1,376.8			38.6	%
	Gross profit			167.4			132.5			26.3	%		471.9			361.9			30.4	%
		as a percent of sales		24.9	%		25.1	%					24.7	%		26.3	%
	SG&A expense			95.4			85.4			11.7	%		285.9			245.8			16.3	%
		as a percent of sales		14.2	%		16.2	%					15.0	%		17.9	%
	Operating income			72.0			47.1			52.9	%		186.0			116.1			60.2	%
		as a percent of sales		10.7	%		8.9	%					9.7	%		8.4	%
	Net interest expense			4.5			6.8			(33.8	)%		19.8			19.7			0.5	%
	Effective tax rate			36.1	%		34.1	%					30.6	%		36.2	%
	Net earnings attributable to Valmont Industries, Inc.		$	42.1		$	25.9			62.5	%	$	113.6		$	59.5			90.9	%
	Earnings per share attributable to Valmont Industries, Inc.—diluted		$	1.59		$	0.98			62.2	%	$	4.28		$	2.25			90.2	%
Engineered Infrastructure Products segment
	Net sales		$	215.6		$	194.7			10.8	%	$	579.6		$	463.3			25.1	%
	Gross profit			53.3			51.7			3.1	%		135.9			122.9			10.6	%
	SG&A expense			36.1			34.5			4.6	%		105.0			91.0			15.4	%
	Operating income			17.2			17.2			0.1	%		30.9			31.9			(3.1	)%
Utility Support Structures segment
	Net sales		$	155.3		$	120.8			28.6	%	$	415.3		$	348.2			19.3	%
	Gross profit			31.7			24.8			27.8	%		91.5			83.4			9.7	%
	SG&A expense			17.0			15.0			13.3	%		50.3			46.4			8.4	%
	Operating income			14.7			9.8			50.0	%		41.2			37.0			11.4	%
Coatings segment
	Net sales		$	69.0		$	66.1			4.2	%	$	204.1		$	136.3			49.7	%
	Gross profit			22.7			21.5			5.6	%		65.1			44.7			45.6	%
	SG&A expense			8.4			7.9			6.3	%		25.5			16.7			52.7	%
	Operating income			14.3			13.6			5.1	%		39.6			28.0			41.4	%
Irrigation segment
	Net sales		$	150.6		$	88.2			70.7	%	$	485.4		$	309.0			57.1	%
	Gross profit			42.4			23.7			78.9	%		131.1			82.8			58.3	%
	SG&A expense			18.7			13.2			41.7	%		50.5			40.3			25.3	%
	Operating income			23.7			10.5			125.7	%		80.6			42.5			89.6	%
Other
	Net sales		$	81.7		$	58.0			40.7	%	$	224.4		$	120.0			87.0	%
	Gross profit			17.3			12.5			38.4	%		48.2			31.1			55.0	%
	SG&A expense			4.7			5.4			(13.0	)%		15.3			11.0			39.1	%
	Operating income			12.6			7.1			77.5	%		32.9			20.1			63.7	%
Net Corporate expense
	Gross profit			—			(1.7	)		NM			0.1			(3.0	)		NM
	SG&A expense			10.4			9.4			10.6	%		39.3			40.4			(2.7	)%
	Operating loss			(10.4	)		(11.1	)		(6.3	)%		(39.2	)		(43.4	)		(9.7	)%

	Thirty-nine weeks ended September 24, 2011

	Net Sales		Operating Income
Engineered Infrastructure Products	$	79.0	$	4.8
Utility Support Structures		2.1		0.3
Coatings		61.9		8.2
Other		75.0		3.6
Net corporate expense		—		(4.4	)

Total	$	218.0	$	12.5


Interest-bearing debt			506,033
EBITDA—last 12 months			324,966
Leverage ratio			1.56
EBITDA—last 12 months			324,966
Interest expense—last 12 months			34,784
Interest earned ratio			9.34


Net cash flows from operating activities	$	130,996
Interest expense		34,784
Income tax expense		70,712
Deferred income tax benefit		1,783
Noncontrolling interest		(7,744	)
Equity in earnings/(losses) in nonconsolidated subsidiaries		4,961
Stock-based compensation		(6,404	)
Pension plan expense		(10,418	)
Contribution to pension plan		11,754
Payment of deferred compensation		393
Changes in assets and liabilities, net of acquisitions		95,544
Other		(1,395	)

EBITDA	$	324,966

Net earnings attributable to Valmont Industries, Inc.	$	148,443
Interest expense		34,784
Income tax expense		70,712
Depreciation and amortization expense		71,027

EBITDA	$	324,966

Contractual Obligations	Total		2011		2012–2013		2014–2015		After 2015

Long-term debt	$	495.0	$	—	$	20.5	$	0.5	$	474.0
Interest		270.0		15.1		60.2		59.8		134.9
Delta pension plan contributions		78.8		—		22.5		22.5		33.8
Operating leases		115.7		12.1		32.4		22.7		48.5
Unconditional purchase commitments		35.4		35.4		—		—		—

Total contractual cash obligations	$	994.9	$	62.6	$	135.6	$	105.5	$	691.2

		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 September 24, 2011, 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)

		(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 26, 2011 to July 23, 2011			13,030	$	106.38		—		—
July 24, 2011 to August 27, 2011			—		—		—		—
August 28, 2011 to September 24, 2011			—		—		—		—

	Total		13,030	$	106.38		—		—