VALMONT INDUSTRIES INC - Quarter Report: 2012 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 30, 2012 or
o		TRANSITION REPORT PURSUANT TO 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		47-0351813
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
One Valmont Plaza, Omaha, Nebraska		68154-5215
(Address of Principal Executive Offices)		(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 Sections 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 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	Smaller reporting company o
		(Do not check if a smaller reporting company)

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

26,599,305
Outstanding shares of common stock as of July 24, 2012

Table of Contents

VALMONT INDUSTRIES, INC.
INDEX TO FORM 10-Q




PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended June 30, 2012 and June 25, 2011	3
	Condensed Consolidated Statements of Comprehensive Income for the thirteen and twenty-six weeks ended June 30, 2012 and June 25, 2011	4
	Condensed Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011	5
	Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended June 30, 2012 and June 25, 2011	6
	Condensed Consolidated Statements of Shareholders' Equity for the twenty-six weeks ended June 30, 2012 and June 25, 2011	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operation	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 6.	Exhibits	35
Signatures		36

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(Unaudited)

	Thirteen Weeks Ended						Twenty-six Weeks Ended

	June 30, 2012			June 25, 2011			June 30, 2012			June 25, 2011
Product sales	$	688,693		$	589,208		$	1,330,680		$	1,090,376
Services sales		78,622			79,401			153,985			146,182

Net sales		767,315			668,609			1,484,665			1,236,558
Product cost of sales		519,438			447,167			1,002,146			832,167
Services cost of sales		48,482			53,460			96,810			99,916

Total cost of sales		567,920			500,627			1,098,956			932,083

Gross profit		199,395			167,982			385,709			304,475
Selling, general and administrative expenses		102,043			99,363			205,539			190,555

Operating income		97,352			68,619			180,170			113,920

Other income (expenses):
Interest expense		(7,421	)		(10,783	)		(15,228	)		(19,044	)
Interest income		1,910			2,001			3,988			3,778
Other		(1,977	)		504			(400	)		894

		(7,488	)		(8,278	)		(11,640	)		(14,372	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		89,864			60,341			168,530			99,548

Income tax expense (benefit):
Current		35,985			24,533			63,014			37,037
Deferred		(5,193	)		(10,982	)		(4,456	)		(10,198	)

		30,792			13,551			58,558			26,839

Earnings before equity in earnings of nonconsolidated subsidiaries		59,072			46,790			109,972			72,709
Equity in earnings of nonconsolidated subsidiaries		2,087			1,201			3,775			2,155

Net earnings		61,159			47,991			113,747			74,864
Less: Earnings attributable to noncontrolling interests		(1,179	)		(2,164	)		(1,442	)		(3,428	)

Net earnings attributable to Valmont Industries, Inc.	$	59,980		$	45,827		$	112,305		$	71,436

Earnings per share:
Basic	$	2.27		$	1.74		$	4.25		$	2.72

Diluted	$	2.24		$	1.72		$	4.20		$	2.69

Cash dividends declared per share	$	0.225		$	0.180		$	0.405		$	0.345

Weighted average number of shares of common stock outstanding—Basic (000 omitted)		26,467			26,333			26,432			26,302

Weighted average number of shares of common stock outstanding—Diluted (000 omitted)		26,758			26,585			26,718			26,561

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

	Thirteen Weeks Ended						Twenty-six Weeks Ended

	June 30, 2012			June 25, 2011			June 30, 2012			June 25, 2011
Net earnings	$	61,159		$	47,991		$	113,747		$	74,864

Other comprehensive income, net of tax:
Foreign currency translation adjustments:
Unrealized translation gains (losses)		(30,821	)		10,906			(1,259	)		32,977
Actuarial gain (loss) in defined benefit pension plan		(1,238	)		(346	)		633			1,065
(Loss) and amortization of loss on cash flow hedge		100			(3,568	)		200			(3,568	)

Other comprehensive income (loss)		(31,959	)		6,992			(426	)		30,474

Comprehensive income		29,200			54,983			113,321			105,338
Comprehensive loss (income) attributable to noncontrolling interests		2,533			(3,046	)		(2,481	)		(6,288	)

Comprehensive income attributable to Valmont Industries, Inc.	$	31,733		$	51,937		$	110,840		$	99,050

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except shares and per share amounts)

(Unaudited)

	June 30, 2012			December 31, 2011

ASSETS
Current assets:
Cash and cash equivalents	$	328,381		$	362,894
Receivables, net		489,371			426,683
Inventories		441,296			393,782
Prepaid expenses		29,772			25,765
Refundable and deferred income taxes		43,999			43,819

Total current assets		1,332,819			1,252,943

Property, plant and equipment, at cost		941,725			911,642
Less accumulated depreciation and amortization		476,033			456,765

Net property, plant and equipment		465,692			454,877

Goodwill		312,777			314,662
Other intangible assets		161,965			168,083
Other assets		123,496			115,511

Total assets	$	2,396,749		$	2,306,076

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	248		$	235
Notes payable to banks		17,374			11,403
Accounts payable		222,216			234,537
Accrued employee compensation and benefits		78,796			83,613
Accrued expenses		77,155			73,515
Dividends payable		5,985			4,767

Total current liabilities		401,774			408,070

Deferred income taxes		79,217			85,497
Long-term debt, excluding current installments		473,592			474,415
Defined benefit pension liability		60,182			68,024
Deferred compensation		32,817			30,741
Other noncurrent liabilities		41,328			41,418
Shareholders' equity:
Preferred stock of $1 par value—
Authorized 500,000 shares; none issued		—			—
Common stock of $1 par value—
Authorized 75,000,000 shares; 27,900,000 issued		27,900			27,900
Retained earnings		1,186,603			1,079,698
Accumulated other comprehensive income		62,587			64,052
Treasury stock		(23,316	)		(24,688	)

Total Valmont Industries, Inc. shareholders' equity		1,253,774			1,146,962

Noncontrolling interest in consolidated subsidiaries		54,065			50,949

Total shareholders' equity		1,307,839			1,197,911

Total liabilities and shareholders' equity	$	2,396,749		$	2,306,076

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 30, 2012			June 25, 2011
Cash flows from operating activities:
Net earnings	$	113,747		$	74,864
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		34,367			35,870
Stock-based compensation		3,067			2,618
Defined benefit pension plan expense		2,050			2,962
Contribution to defined benefit pension plan		(10,750	)		(10,086	)
Gain on sale of property, plant and equipment		(164	)		(239	)
Equity in earnings in nonconsolidated subsidiaries		(3,775	)		(2,155	)
Deferred income taxes		(4,456	)		(10,198	)
Changes in assets and liabilities:
Receivables		(69,922	)		(31,063	)
Inventories		(48,498	)		(78,956	)
Prepaid expenses		(4,060	)		(5,628	)
Accounts payable		1,976			38,894
Accrued expenses		(621	)		(9,474	)
Other noncurrent liabilities		(408	)		(4,402	)
Income taxes payable		(16,090	)		16,908

Net cash flows from operating activities		(3,537	)		19,915

Cash flows from investing activities:
Purchase of property, plant and equipment		(39,221	)		(27,911	)
Proceeds from sale of assets		4,867			2,455
Acquisitions, net of cash acquired		—			(1,539	)
Other, net		1,837			1,948

Net cash flows from investing activities		(32,517	)		(25,047	)

Cash flows from financing activities:
Net borrowings under short-term agreements		5,931			2,160
Proceeds from long-term borrowings		39,126			187,770
Principal payments on long-term borrowings		(39,232	)		(167,230	)
Purchase of noncontrolling interest		—			(25,253	)
Proceeds from sale of partial ownership interest		1,404			—
Settlement of financial derivative		—			(3,568	)
Dividends paid		(9,545	)		(8,710	)
Dividends to noncontrolling interest		(1,379	)		(4,958	)
Debt issuance costs		—			(1,284	)
Proceeds from exercises under stock plans		15,153			16,933
Excess tax benefits from stock option exercises		3,211			2,533
Purchase of treasury shares		—			(4,802	)
Purchase of common treasury shares—stock plan exercises		(14,086	)		(18,443	)

Net cash flows from financing activities		583			(24,852	)

Effect of exchange rate changes on cash and cash equivalents		958			9,870

Net change in cash and cash equivalents		(34,513	)		(20,114	)
Cash and cash equivalents—beginning of year		362,894			346,904

Cash and cash equivalents—end of period	$	328,381		$	326,790

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 25, 2010	$	27,900	$	—		$	850,269		$	63,645		$	(25,922	)	$	94,235		$	1,010,127
Net earnings		—		—			71,436			—			—			3,428			74,864
Other comprehensive income		—		—			—			27,614			—			2,860			30,474
Cash dividends declared		—		—			(9,115	)		—			—			—			(9,115	)
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 plan exercises; 168,573 shares acquired		—		—			—			—			(18,443	)		—			(18,443	)
Stock options exercised; 263,407 shares issued		—		(21,743	)		15,122			—			23,554			—			16,933
Tax benefit from stock option exercises		—		2,533			—			—						—			2,533
Stock option expense		—		2,467			—			—						—			2,467
Stock awards; 2,992 shares issued		—		151			—			—			325			—			476

Balance at June 25, 2011	$	27,900	$	—		$	927,712		$	91,259		$	(25,288	)	$	54,244		$	1,075,827

Balance at December 31, 2011	$	27,900	$	—		$	1,079,698		$	64,052		$	(24,688	)	$	50,949		$	1,197,911
Net earnings		—		—			112,305			—			—			1,442			113,747
Other comprehensive income (loss)		—		—			—			(1,465	)		—			1,039			(426	)
Cash dividends declared		—		—			(10,763	)		—			—			—			(10,763	)
Dividends to noncontrolling interests		—		—			—			—			—			(1,379	)		(1,379	)
Sale of partial ownership interest		—		(610	)		—			—			—			2,014			1,404
Stock plan exercises; 119,928 shares acquired		—		—			—			—			(14,086	)		—			(14,086	)
Stock options exercised; 230,141 shares issued		—		(5,576	)		5,363			—			15,366			—			15,153
Tax benefit from stock option exercises		—		3,211			—			—			—			—			3,211
Stock option expense		—		2,490			—			—			—			—			2,490
Stock awards; 402 shares issued		—		485			—			—			92			—			577

Balance at June 30, 2012	$	27,900	$	—		$	1,186,603		$	62,587		$	(23,316	)	$	54,065		$	1,307,839

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 30, 2012, the Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen and twenty-six week periods ended June 30, 2012 and June 25, 2011, and 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 30, 2012 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 31, 2011. 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 31, 2011. The results of operations for the period ended June 30, 2012 are not necessarily indicative of the operating results for the full year.

Inventories

Approximately 39% and 40% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of June 30, 2012 and December 31, 2011, respectively. 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 is approximately $48,562 and $49,536 at June 30, 2012 and December 31, 2011, respectively.

Inventories consisted of the following:

	June 30, 2012		December 31, 2011

Raw materials and purchased parts	$	220,974	$	202,953
Work-in-process		39,356		28,053
Finished goods and manufactured goods		229,528		212,312

Subtotal		489,858		443,318
Less: LIFO reserve		48,562		49,536

	$	441,296	$	393,782

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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)

Income Taxes

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries for the thirteen and twenty-six weeks ended June 30, 2012 and June 25, 2011, were as follows:

	Thirteen Weeks Ended				Twenty-six Weeks Ended

	2012		2011		2012		2011
United States	$	68,132	$	36,203	$	130,827	$	62,320
Foreign		21,732		24,138		37,703		37,228

	$	89,864	$	60,341	$	168,530	$	99,548

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 options, nonqualified stock options, stock appreciation rights, non-vested stock awards and bonuses of common stock. At June 30, 2012, 623,496 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 closing 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 options for the thirteen and twenty-six weeks ended June 30, 2012 and June 25, 2011, respectively, were as follows:

	Thirteen Weeks Ended June 30, 2012		Thirteen Weeks Ended June 25, 2011		Twenty-six Weeks Ended June 30, 2012		Twenty-six Weeks Ended June 25, 2011

Compensation expense	$	1,245	$	1,215	$	2,490	$	2,467
Income tax benefits		479		468		959		950

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.

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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)

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 refer 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 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 30, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading Securities	$	21,342	$	21,342	$	—	$	—

			Fair Value Measurement Using:

	Carrying Value December 31, 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	$	19,152	$	19,152	$	—	$	—

Comprehensive Income

Comprehensive income includes net income, currency translation adjustments, certain derivative-related activity and changes in net actuarial gains/losses from a pension plan. Results of operations for foreign subsidiaries are translated using the average exchange rates during the period. Assets and

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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)

liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) consisted of the following at June 30, 2012 and December 31, 2011:

	June 30, 2012			December 31, 2011

Foreign currency translation adjustment	$	13,772		$	16,070
Actuarial gain in defined benefit pension plan		51,950			51,317
Loss on cash flow hedge, net of amortization		(3,135	)		(3,335	)

	$	62,587		$	64,052

2. Goodwill and Intangible Assets

Amortized Intangible Assets

The components of amortized intangible assets at June 30, 2012 and December 31, 2011 were as follows:

	June 30, 2012

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	156,310	$	56,317	13 years
Proprietary Software & Database		3,066		2,746	6 years
Patents & Proprietary Technology		9,556		4,650	8 years
Non-compete Agreements		1,788		1,428	6 years

	$	170,720	$	65,141

	December 31, 2011

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	155,629	$	50,107	13 years
Proprietary Software & Database		3,116		2,711	6 years
Patents & Proprietary Technology		9,489		3,863	8 years
Non-compete Agreements		1,812		1,307	6 years

	$	170,046	$	57,988

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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. Goodwill and Intangible Assets (Continued)

Amortization expense for intangible assets for the thirteen and twenty-six weeks ended June 30, 2012 and June 25, 2011, respectively was as follows:

		Thirteen Weeks Ended June 30, 2012			Thirteen Weeks Ended June 25, 2011			Twenty-six Weeks Ended June 30, 2012			Twenty-six Weeks Ended June 25, 2011

		$	3,624		$	3,664		$	7,169		$	7,196

Estimated annual amortization expense related to finite-lived intangible assets is as follows:

	Estimated Amortization Expense

2012	$	14,185
2013		13,170
2014		12,748
2015		11,865
2016		11,310

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

Non-amortized intangible assets

Intangible assets with indefinite lives are not amortized. The carrying values of trade names at June 30, 2012 and December 31, 2011 were as follows:

	June 30, 2012		December 31, 2011

Webforge	$	16,864	$	16,659	2010
Newmark		11,111		11,111	2004
Ingal EPS/Ingal Civil Products		8,901		8,792	2010
Donhad		6,715		6,633	2010
PiRod		1,750		1,750	2001
Industrial Galvanizers		3,904		3,856	2010
Other		7,141		7,224

	$	56,386	$	56,025

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

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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. Goodwill and Intangible Assets (Continued)

The Company's trade names were tested for impairment in the third quarter of 2011. The values of the trade names were determined using the relief-from-royalty method. The Company determined that the value of its trade names were not impaired, except for the PiRod and Industrial Galvanizers of America trade names. The evaluations of these trade names were completed in the fourth quarter of 2011, which resulted in a write down of $3,779.

Goodwill

The carrying amount of goodwill by segment as of June 30, 2012 and December 31, 2011 was as follows:

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

Balance December 31, 2011	$	151,558		$	77,141	$	64,820		$	2,576		$	18,567		$	314,662
Foreign currency translation		(618	)		—		(932	)		(71	)		(264	)		(1,885	)

Balance June 30, 2012	$	150,940		$	77,141	$	63,888		$	2,505		$	18,303		$	312,777

The Company's goodwill was tested for impairment during the third quarter of 2011. As a result of that testing, the Company determined that its goodwill was not impaired. The valuation of reporting units exceeded their respective carrying values by a substantial margin, except the Webforge reporting unit in the Engineered Infrastructures Products segment, which has goodwill of $64,500 and an excess of fair value over carrying value of $3.1 million. The Company continues to monitor changes in the global economy that could impact future operating results of its reporting units. If such conditions arise, the Company will test a given reporting unit for impairment prior to the annual test.

3. Cash Flow Supplementary Information

The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the twenty-six weeks ended June 30, 2012 and June 25, 2011 were as follows:

	2012		2011

Interest	$	15,494	$	17,409
Income taxes		73,105		18,639

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

4. Earnings Per Share

The following table provides a reconciliation between Basic and Diluted earnings per share (EPS):

	Basic EPS		Dilutive Effect of Stock Options			Diluted EPS

Thirteen weeks ended June 30, 2012:
Net earnings attributable to Valmont Industries, Inc.	$	59,980	$	—		$	59,980
Shares outstanding		26,467		291			26,758
Per share amount	$	2.27	$	(0.03	)	$	2.24
Thirteen weeks ended June 25, 2011:
Net earnings attributable to Valmont Industries, Inc.	$	45,827	$	—		$	45,827
Shares outstanding		26,333		252			26,585
Per share amount	$	1.74	$	(0.02	)	$	1.72
Twenty-six weeks ended June 30, 2012:
Net earnings attributable to Valmont Industries, Inc.	$	112,305	$	—		$	112,305
Shares outstanding		26,432		286			26,718
Per share amount	$	4.25	$	(0.05	)	$	4.20
Twenty-six weeks ended June 25, 2011:
Net earnings attributable to Valmont Industries, Inc.	$	71,436	$	—		$	71,436
Shares outstanding		26,302		259			26,561
Per share amount	$	2.72	$	(0.03	)	$	2.69

At June 30, 2012, there were no outstanding stock options with exercise prices exceeding the market price of common stock. At June 25, 2011 there were 16,828 of outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share for the thirteen weeks and twenty-six weeks ended June 25, 2011.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

5. Business Segments

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

Reportable segments are as follows:

ENGINEERED INFRASTRUCTURE PRODUCTS: This segment consists of the manufacture of engineered metal structures and components for the global lighting and traffic, wireless communication, roadway safety and access systems applications;

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

COATINGS: This segment consists of galvanizing, anodizing and powder coating services on a global basis; and

IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment and related parts and services for the global agricultural industry.

In addition to these four reportable segments, the Company has other businesses and activities that individually are not more than 10% of consolidated sales. These include the manufacture of forged steel grinding media for the mining industry, tubular products for industrial customers, electrolytic manganese dioxide for disposable batteries and the distribution of industrial fasteners and are reported in the "Other" category.

The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its business segments based upon operating income and invested capital. The Company does not allocate interest expense, non-operating income and deductions, or income taxes to its business segments.

Summary by Business

	Thirteen Weeks Ended				Twenty-six Weeks Ended

	June 30, 2012		June 25, 2011		June 30, 2012		June 25, 2011
Sales:
Engineered Infrastructure Products segment:
Lighting, Traffic, and Roadway Products	$	148,541	$	145,538	$	281,838	$	262,849
Communication Products		36,488		28,297		63,183		48,720
Access Systems		40,753		32,582		78,660		63,778

Engineered Infrastructure Products segment		225,782		206,417		423,681		375,347
Utility Support Structures segment:
Steel		185,079		123,221		352,043		233,119
Concrete		27,158		13,339		51,426		29,088

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

5. Business Segments (Continued)

	Thirteen Weeks Ended						Twenty-six Weeks Ended

	June 30, 2012			June 25, 2011			June 30, 2012			June 25, 2011
Utility Support Structures segment		212,237			136,560			403,469			262,207
Coatings segment		84,837			84,161			167,684			157,611
Irrigation segment		194,496			183,701			390,762			334,749
Other		87,194			84,121			173,257			158,107

Total		804,546			694,960			1,558,853			1,288,021
Intersegment Sales:
Engineered Infrastructure Products		14,692			5,480			27,084			11,424
Utility Support Structures		467			1,951			2,447			2,259
Coatings		13,252			10,926			25,949			22,431
Irrigation		6			5			431			8
Other		8,814			7,989			18,277			15,341

Total		37,231			26,351			74,188			51,463
Net Sales:
Engineered Infrastructure Products segment		211,090			200,937			396,597			363,923
Utility Support Structures segment		211,770			134,609			401,022			259,948
Coatings segment		71,585			73,235			141,735			135,180
Irrigation segment		194,490			183,696			390,331			334,741
Other		78,380			76,132			154,980			142,766

Total	$	767,315		$	668,609		$	1,484,665		$	1,236,558

Operating Income:
Engineered Infrastructure Products	$	14,168		$	11,515		$	22,192		$	13,718
Utility Support Structures		26,574			12,984			51,678			26,483
Coatings		19,517			15,070			36,029			25,362
Irrigation		37,607			32,964			76,015			56,858
Other		12,259			11,380			23,670			20,294
Corporate		(12,773	)		(15,294	)		(29,414	)		(28,795	)

Total	$	97,352		$	68,619		$	180,170		$	113,920

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

6. Guarantor/Non-Guarantor Financial Information

The Company has $450,000 principal amount of senior unsecured notes outstanding at a coupon interest rate of 6.625% per annum. The notes are guaranteed, jointly, severally, fully and unconditionally by certain of the Company's current and future direct and indirect domestic and foreign subsidiaries (collectively the "Guarantors"), excluding its other current domestic and foreign subsidiaries which do not guarantee the debt (collectively referred to as the "Non-Guarantors"). All Guarantors are 100% owned by the parent company.

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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
For the Thirteen Weeks ended June 30, 2012

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales	$	347,643		$	152,159		$	333,171		$	(65,658	)	$	767,315
Cost of sales		249,557			121,658			261,374			(64,669	)		567,920

Gross profit		98,086			30,501			71,797			(989	)		199,395
Selling, general and administrative expenses		43,762			13,177			45,104			—			102,043

Operating income		54,324			17,324			26,693			(989	)		97,352

Other income (expense):
Interest expense		(7,573	)		(12,244	)		152			12,244			(7,421	)
Interest income		5			129			14,020			(12,244	)		1,910
Other		(454	)		11			(1,534	)		—			(1,977	)

		(8,022	)		(12,104	)		12,638			—			(7,488	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		46,302			5,220			39,331			(989	)		89,864

Income tax expense (benefit):
Current		19,363			6,197			10,425			—			35,985
Deferred		(2,963	)		(1,031	)		(1,199	)		—			(5,193	)

		16,400			5,166			9,226			—			30,792

Earnings before equity in earnings of nonconsolidated subsidiaries		29,902			54			30,105			(989	)		59,072
Equity in earnings of nonconsolidated subsidiaries		30,078			23,253			2,276			(53,520	)		2,087

Net earnings		59,980			23,307			32,381			(54,509	)		61,159
Other comprehensive income (loss)		(28,247	)		14,123			(39,671	)		21,836			(31,959	)

Comprehensive income (loss)		31,733			37,430			(7,290	)		(32,673	)		29,200
Less: Comprehensive loss attributable to noncontrolling interests		—			—			2,533			—			2,533

Comprehensive income (loss) attributable to Valmont Industries, Inc	$	31,733		$	37,430		$	(4,757	)	$	(32,673	)	$	31,733

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
For the Twenty-six Weeks ended June 30, 2012

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales	$	712,483		$	280,871		$	627,113		$	(135,802	)	$	1,484,665
Cost of sales		517,069			225,300			491,297			(134,710	)		1,098,956

Gross profit		195,414			55,571			135,816			(1,092	)		385,709
Selling, general and administrative expenses		87,034			26,965			91,540			—			205,539

Operating income		108,380			28,606			44,276			(1,092	)		180,170

Other income (expense):
Interest expense		(15,255	)		(24,501	)		27			24,501			(15,228	)
Interest income		14			323			28,152			(24,501	)		3,988
Other		1,005			25			(1,430	)		—			(400	)

		(14,236	)		(24,153	)		26,749			—			(11,640	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		94,144			4,453			71,025			(1,092	)		168,530

Income tax expense (benefit):
Current		36,548			5,296			21,170			—			63,014
Deferred		(2,769	)		139			(1,826	)		—			(4,456	)

		33,779			5,435			19,344			—			58,558

Earnings (loss) before equity in earnings of nonconsolidated subsidiaries		60,365			(982	)		51,681			(1,092	)		109,972
Equity in earnings of nonconsolidated subsidiaries		51,940			46,361			3,932			(98,458	)		3,775

Net earnings		112,305			45,379			55,613			(99,550	)		113,747
Other comprehensive income (loss)		(1,465	)		(2,244	)		8,129			(4,846	)		(426	)

Comprehensive income		110,840			43,135			63,742			(104,396	)		113,321
Less: Comprehensive income attributable to noncontrolling interests		—			—			(2,481	)		—			(2,481	)

Comprehensive income attributable to Valmont Industries, Inc	$	110,840		$	43,135		$	61,261		$	(104,396	)	$	110,840

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
For the Thirteen Weeks Ended June 25, 2011

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales	$	302,497		$	87,273		$	324,846		$	(46,007	)	$	668,609
Cost of sales		223,712			68,513			254,565			(46,163	)		500,627

Gross profit		78,785			18,760			70,281			156			167,982
Selling, general and administrative expenses		41,144			11,510			46,709			—			99,363

Operating income		37,641			7,250			23,572			156			68,619

Other income (expense):
Interest expense		(10,676	)		—			(107	)		—			(10,783	)
Interest income		39			—			1,962			—			2,001
Other		(179	)		19			664			—			504

		(10,816	)		19			2,519			—			(8,278	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		26,825			7,269			26,091			156			60,341

Income tax expense (benefit):
Current		12,863			3,172			8,498			—			24,533
Deferred		(3,970	)		(707	)		(6,305	)		—			(10,982	)

		8,893			2,465			2,193			—			13,551

Earnings before equity in earnings of nonconsolidated subsidiaries		17,932			4,804			23,898			156			46,790
Equity in earnings of nonconsolidated subsidiaries		27,895			13,970			1,234			(41,898	)		1,201

Net earnings		45,827			18,774			25,132			(41,742	)		47,991
Other comprehensive income		6,110			—			10,274			(9,392	)		6,992

Comprehensive income		51,937			18,774			35,406			(51,134	)		54,983
Less: Comprehensive income attributable to noncontrolling interests		—			—			(3,046	)		—			(3,046	)

Comprehensive income attributable to Valmont Industries, Inc	$	51,937		$	18,774		$	32,360		$	(51,134	)	$	51,937

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
For the Twenty-six Weeks Ended June 25, 2011

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales	$	565,143		$	161,114		$	594,915		$	(84,614	)	$	1,236,558
Cost of sales		422,015			126,819			467,950			(84,701	)		932,083

Gross profit		143,128			34,295			126,965			87			304,475
Selling, general and administrative expenses		78,253			22,261			90,041			—			190,555

Operating income		64,875			12,034			36,924			87			113,920

Other income (expense):
Interest expense		(18,855	)		—			(189	)		—			(19,044	)
Interest income		34			—			3,744			—			3,778
Other		192			30			672			—			894

		(18,629	)		30			4,227			—			(14,372	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		46,246			12,064			41,151			87			99,548

Income tax expense (benefit):
Current		19,352			5,276			12,409			—			37,037
Deferred		(3,910	)		(968	)		(5,320	)		—			(10,198	)

		15,442			4,308			7,089			—			26,839

Earnings before equity in earnings of nonconsolidated subsidiaries		30,804			7,756			34,062			87			72,709
Equity in earnings of nonconsolidated subsidiaries		40,632			20,337			2,120			(60,934	)		2,155

Net earnings		71,436			28,093			36,182			(60,847	)		74,864
Other comprehensive income		27,614			—			33,756			(30,896	)		30,474

Comprehensive income		99,050			28,093			69,938			(91,743	)		105,338
Less: Comprehensive income attributable to noncontrolling interests		—			—			(6,288	)		—			(6,288	)

Comprehensive income attributable to Valmont Industries, Inc	$	99,050		$	28,093		$	63,650		$	(91,743	)	$	99,050

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

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

CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2012

	Parent			Guarantors			Non-Guarantors		Eliminations			Total

ASSETS
Current assets:
Cash and cash equivalents	$	23,542		$	40,473		$	264,366	$	—		$	328,381
Receivables, net		133,821			81,412			274,138		—			489,371
Inventories		135,926			84,968			220,402		—			441,296
Prepaid expenses		4,780			743			24,249		—			29,772
Refundable and deferred income taxes		21,862			5,890			16,247		—			43,999

Total current assets		319,931			213,486			799,402		—			1,332,819

Property, plant and equipment, at cost		440,285			112,489			388,951		—			941,725
Less accumulated depreciation and amortization		290,752			57,311			127,970		—			476,033

Net property, plant and equipment		149,533			55,178			260,981		—			465,692

Goodwill		20,108			107,542			185,127		—			312,777
Other intangible assets		580			56,454			104,931		—			161,965
Investment in subsidiaries and intercompany accounts		1,395,199			1,242,596			630,540		(3,268,335	)		—
Other assets		31,787			—			91,709		—			123,496

Total assets	$	1,917,138		$	1,675,256		$	2,072,690	$	(3,268,335	)	$	2,396,749

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	179		$	—		$	69	$	—		$	248
Notes payable to banks		—			—			17,374		—			17,374
Accounts payable		58,810			26,823			136,583		—			222,216
Accrued expenses		75,352			13,032			67,567		—			155,951
Dividends payable		5,985			—			—		—			5,985

Total current liabilities		140,326			39,855			221,593		—			401,774

Deferred income taxes		18,932			27,472			32,813		—			79,217
Long-term debt, excluding current installments		472,548			587,258			1,044		(587,258	)		473,592
Other noncurrent liabilities		31,558			—			102,769		—			134,327
Commitments and contingencies
Shareholders' equity:
Common stock of $1 par value		27,900			457,950			254,982		(712,932	)		27,900
Additional paid-in capital		—			150,286			893,274		(1,043,560	)		—
Retained earnings		1,186,603			415,637			439,011		(854,648	)		1,186,603
Accumulated other comprehensive income		62,587			(3,202	)		73,139		(69,937	)		62,587
Treasury stock		(23,316	)		—			—		—			(23,316	)

Total Valmont Industries, Inc. shareholders' equity		1,253,774			1,020,671			1,660,406		(2,681,077	)		1,253,774

Noncontrolling interest in consolidated subsidiaries		—			—			54,065		—			54,065

Total shareholders' equity		1,253,774			1,020,671			1,714,471		(2,681,077	)		1,307,839

Total liabilities and shareholders' equity	$	1,917,138		$	1,675,256		$	2,072,690	$	(3,268,335	)	$	2,396,749

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

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

CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2011

	Parent			Guarantors			Non-Guarantors		Eliminations			Total

ASSETS
Current assets:
Cash and cash equivalents	$	27,545		$	18,257		$	317,092	$	—		$	362,894
Receivables, net		122,409			53,567			250,707		—			426,683
Inventories		125,862			77,838			190,082		—			393,782
Prepaid expenses		3,448			1,009			21,308		—			25,765
Refundable and deferred income taxes		22,053			6,218			15,548		—			43,819

Total current assets		301,317			156,889			794,737		—			1,252,943

Property, plant and equipment, at cost		427,398			107,315			376,929		—			911,642
Less accumulated depreciation and amortization		283,786			54,740			118,239		—			456,765

Net property, plant and equipment		143,612			52,575			258,690		—			454,877

Goodwill		20,108			107,542			187,012		—			314,662
Other intangible assets		661			59,389			108,033		—			168,083
Investment in subsidiaries and intercompany accounts		1,338,299			695,745			596,301		(2,630,345	)		—
Other assets		30,192			—			85,319		—			115,511

Total assets	$	1,834,189		$	1,072,140		$	2,030,092	$	(2,630,345	)	$	2,306,076

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	187		$	—		$	48	$	—		$	235
Notes payable to banks		—			—			11,403		—			11,403
Accounts payable		85,974			21,428			127,135		—			234,537
Accrued expenses		72,341			14,259			70,528		—			157,128
Dividends payable		4,767			—			—		—			4,767

Total current liabilities		163,269			35,687			209,114		—			408,070

Deferred income taxes		21,891			27,661			35,945		—			85,497
Long-term debt, excluding current installments		473,419			—			996		—			474,415
Other noncurrent liabilities		28,648			—			111,535		—			140,183
Commitments and contingencies
Shareholders' equity:
Common stock of $1 par value		27,900			457,950			254,982		(712,932	)		27,900
Additional paid-in capital		—			181,542			893,884		(1,075,426	)		—
Retained earnings		1,079,698			370,258			407,677		(777,935	)		1,079,698
Accumulated other comprehensive income		64,052			(958	)		65,010		(64,052	)		64,052
Treasury stock		(24,688	)		—			—		—			(24,688	)

Total Valmont Industries, Inc. shareholders' equity		1,146,962			1,008,792			1,621,553		(2,630,345	)		1,146,962

Noncontrolling interest in consolidated subsidiaries		—			—			50,949		—			50,949

Total shareholders' equity		1,146,962			1,008,792			1,672,502		(2,630,345	)		1,197,911

Total liabilities and shareholders' equity	$	1,834,189		$	1,072,140		$	2,030,092	$	(2,630,345	)	$	2,306,076

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twenty-six Weeks Ended June 30, 2012

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operating activities:
Net earnings	$	112,305		$	45,379		$	55,613		$	(99,550	)	$	113,747
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		9,121			6,341			18,905			—			34,367
Stock-based compensation		3,067			—			—			—			3,067
Defined benefit pension plan expense		—			—			2,050			—			2,050
Contribution to defined benefit pension plan		—			—			(10,750	)		—			(10,750	)
Gain on sale of property, plant and equipment		(65	)		(44	)		(55	)		—			(164	)
Equity in earnings of nonconsolidated subsidiaries		157			—			(3,933	)		—			(3,776	)
Deferred income taxes		(2,769	)		139			(1,826	)		—			(4,456	)
Changes in assets and liabilities:
Receivables		(11,412	)		(27,844	)		(30,666	)		—			(69,922	)
Inventories		(10,063	)		(7,131	)		(31,471	)		167			(48,498	)
Prepaid expenses		(1,332	)		266			(2,994	)		—			(4,060	)
Accounts payable		(13,913	)		5,395			10,494			—			1,976
Accrued expenses		3,009			(1,227	)		(2,403	)		—			(621	)
Other noncurrent liabilities		719			—			(1,127	)		—			(408	)
Income taxes payable (refundable)		(13,249	)		38			(2,878	)					(16,089	)

Net cash flows from operating activities		75,575			21,312			(1,041	)		(99,383	)		(3,537	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(15,037	)		(6,017	)		(18,167	)		—			(39,221	)
Proceeds from sale of assets		98			52			4,717			—			4,867
Other, net		(59,181	)		6,599			(44,964	)		99,383			1,837

Net cash flows from investing activities		(74,120	)		634			(58,414	)		99,383			(32,517	)

Cash flows from financing activities:
Net borrowings under short-term agreements		—			—			5,931			—			5,931
Proceeds from long-term borrowings		39,000			—			126			—			39,126
Principal payments on long-term borrowings		(39,191	)		—			(41	)		—			(39,232	)
Proceeds from sale of partial ownership interest		—			—			1,404			—			1,404
Dividends paid		(9,545	)		—			—			—			(9,545	)
Dividends to noncontrolling interest		—			—			(1,379	)		—			(1,379	)
Proceeds from exercises under stock plans		15,153			—			—			—			15,153
Excess tax benefits from stock option exercises		3,211			—			—			—			3,211
Purchase of common treasury shares—stock plan exercises:		(14,086	)		—			—			—			(14,086	)

Net cash flows from financing activities		(5,458	)		—			6,041			—			583

Effect of exchange rate changes on cash and cash equivalents		—			270			688			—			958

Net change in cash and cash equivalents		(4,003	)		22,216			(52,726	)		—			(34,513	)
Cash and cash equivalents—beginning of year		27,545			18,257			317,092			—			362,894

Cash and cash equivalents—end of period	$	23,542		$	40,473		$	264,366		$	—		$	328,381

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twenty-six Weeks Ended June 25, 2011

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operations:
Net earnings	$	71,436		$	28,093		$	36,182		$	(60,847	)	$	74,864
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		9,982			6,147			19,741			—			35,870
Stock-based compensation		2,618			—			—			—			2,618
Defined benefit pension plan expense		—			—			2,962			—			2,962
Contribution to defined benefit pension plan		—			—			(10,086	)		—			(10,086	)
Gain on sale of property, plant and equipment		(216	)		—			(23	)		—			(239	)
Equity in earnings of nonconsolidated subsidiaries		(34	)		—			(2,121	)		—			(2,155	)
Deferred income taxes		(3,910	)		(968	)		(5,320	)		—			(10,198	)
Changes in assets and liabilities:
Receivables		(16,627	)		2,791			(17,227	)		—			(31,063	)
Inventories		(41,343	)		(15,317	)		(22,296	)		—			(78,956	)
Prepaid expenses		(1,270	)		(57	)		(4,301	)		—			(5,628	)
Accounts payable		14,104			3,050			21,740			—			38,894
Accrued expenses		2,860			836			(13,170	)		—			(9,474	)
Other noncurrent liabilities		(5,438	)		—			1,036			—			(4,402	)
Income taxes payable (refundable)		27,822			—			(10,914	)		—			16,908

Net cash flows from operations		59,984			24,575			(3,797	)		(60,847	)		19,915

Cash flows from investing activities:
Purchase of property, plant and equipment		(4,644	)		(7,604	)		(15,663	)		—			(27,911	)
Proceeds from sale of assets		14			13			2,428			—			2,455
Acquisitions, net of cash acquired		—			—			(1,539	)		—			(1,539	)
Other, net		(58,343	)		(17,122	)		16,566			60,847			1,948

Net cash flows from investing activities		(62,973	)		(24,713	)		1,792			60,847			(25,047	)

Cash flows from financing activities:
Net borrowings under short-term agreements		—			—			2,160			—			2,160
Proceeds from long-term borrowings		187,770			—			—			—			187,770
Principal payments on long-term borrowings		(167,186	)		—			(44	)		—			(167,230	)
Purchase of noncontrolling interest		—			—			(25,253	)		—			(25,253	)
Dividends paid		(8,710	)		—			—			—			(8,710	)
Dividends to noncontrolling interest		—			—			(4,958	)		—			(4,958	)
Settlement of financial derivative		(3,568	)		—			—			—			(3,568	)
Debt issues fees		(1,284	)		—			—			—			(1,284	)
Proceeds from exercises under stock plans		16,933			—			—			—			16,933
Excess tax benefits from stock option exercises		2,533			—			—			—			2,533
Purchase of treasury shares		(4,802	)		—			—			—			(4,802	)
Purchase of common treasury shares—stock plan exercises		(18,443	)		—			—			—			(18,443	)

Net cash flows from financing activities		3,243			—			(28,095	)		—			(24,852	)

Effect of exchange rate changes on cash and cash equivalents		—			—			9,870			—			9,870

Net change in cash and cash equivalents		254			(138	)		(20,230	)		—			(20,114	)
Cash and cash equivalents—beginning of year		8,015			619			338,270			—			346,904

Cash and cash equivalents—end of period	$	8,269		$	481		$	318,040		$	—		$	326,790

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION

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

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

This discussion should be read in conjunction with the financial statements and notes thereto, and the management's discussion and analysis included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

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Results of Operations

Dollars in millions, except per share amounts

	Thirteen Weeks Ended									Twenty-six Weeks Ended

	June 30, 2012			June 25, 2011			% Incr. (Decr.)			June 30, 2012			June 25, 2011			% Incr. (Decr.)
Consolidated
Net sales	$	767.3		$	668.6			14.8	%	$	1,484.7		$	1,236.6			20.1	%
Gross profit		199.4			168.0			18.7	%		385.7			304.5			26.7	%
as a percent of sales		26.0	%		25.1	%					26.0	%		24.6	%
SG&A expense		102.0			99.4			2.6	%		205.5			190.6			7.8	%
as a percent of sales		13.3	%		14.9	%					13.8	%		15.4	%
Operating income		97.4			68.6			42.0	%		180.2			113.9			58.2	%
as a percent of sales		12.7	%		10.3	%					12.1	%		9.2	%
Net interest expense		5.5			8.8			(37.5	)%		11.2			15.3			(26.8	)%
Effective tax rate		34.3	%		22.5	%					34.7	%		27.0	%
Net earnings	$	60.0		$	45.8			31.0	%	$	112.3		$	71.4			57.3	%
Diluted earnings per share	$	2.24		$	1.72			30.2	%	$	4.20		$	2.69			56.1	%
Engineered Infrastructure Products Segment
Net sales	$	211.1		$	200.9			5.1	%	$	396.6		$	363.8			9.0	%
Gross profit		53.1			46.4			14.4	%		98.7			82.6			19.5	%
SG&A expense		38.9			34.9			11.5	%		76.5			68.9			11.0	%
Operating income		14.2			11.5			23.5	%		22.2			13.7			62.0	%
Utility Support Structures Segment
Net sales	$	211.7		$	134.7			57.2	%	$	401.0		$	260.0			54.2	%
Gross profit		45.7			30.5			49.8	%		89.0			59.8			48.8	%
SG&A expense		19.1			17.5			9.1	%		37.3			33.3			12.0	%
Operating income		26.6			13.0			104.6	%		51.7			26.5			95.1	%
Coatings Segment
Net sales	$	71.6		$	73.2			(2.2	)%	$	141.8		$	135.2			4.9	%
Gross profit		27.4			23.8			15.1	%		52.7			42.4			24.3	%
SG&A expense		7.9			8.8			(10.2	)%		16.7			17.1			(2.3	)%
Operating income		19.5			15.0			30.0	%		36.0			25.3			42.3	%
Irrigation Segment
Net sales	$	194.5		$	183.7			5.9	%	$	390.3		$	334.8			16.6	%
Gross profit		55.9			50.3			11.1	%		111.9			88.7			26.2	%
SG&A expense		18.3			17.3			5.8	%		35.9			31.8			12.9	%
Operating income		37.6			33.0			13.9	%		76.0			56.9			33.6	%
Other
Net sales	$	78.4		$	76.1			3.0	%	$	155.0		$	142.8			8.5	%
Gross profit		17.1			17.0			0.6	%		33.4			30.9			8.1	%
SG&A expense		4.8			5.6			(14.3	)%		9.7			10.6			(8.5	)%
Operating income		12.3			11.4			7.9	%		23.7			20.3			16.7	%
Net corporate expense
Gross profit	$	0.2		$	—			NM		$	—		$	0.1			NM
SG&A expense		13.0			15.3			(15.0	)%		29.4			28.9			1.7	%
Operating loss		(12.8	)		(15.3	)		(16.3	)%		(29.4	)		(28.8	)		2.1	%

NM=Not meaningful

Table of Contents

Overview

On a consolidated basis, the increases in net sales in the second quarter and first half of 2012, as compared with 2011, were due to the following factors:

•: Unit sales volumes increased approximately $118 million and $259 million in the second quarter and first half of fiscal 2012, respectively, as compared with 2011. In the second quarter of 2012, all reportable segments except Coatings reported higher sales, as compared with the same period in 2011. All reportable segments experienced improved net sales in the first half of 2012, as compared with 2011. The most significant sales increases were in the Irrigation and Utility Support Structures segments.
•: Sales prices in the aggregate for the second quarter of 2012 were comparable with 2011. On a year-to-date basis, sales prices and mix in 2012 were higher than 2011 by approximately $7 million.

Foreign currency translation, in the aggregate, resulted in lower net sales and operating income in the second quarter and first half of 2012, as compared with 2011, of approximately $18.0 million and $1.7 million, respectively. On average, the U.S. dollar strengthened against most currencies in the second quarter of 2012, as compared to 2011. The most significant currencies that contributed to this movement were the euro, Australian dollar and the South African Rand. On a segment basis, the currency effects on net sales and operating income in the second quarter and first half of 2012, as compared with 2011, were as follows:

	Net Sales			Operating Income

Engineered Infrastructure Products (EIP)	$	(7.4	)	$	(0.3	)
Coatings		(1.7	)		(0.2	)
Irrigation		(5.3	)		(0.8	)
Other		(3.6	)		(0.4	)

Total	$	(18.0	)	$	(1.7	)

Foreign currency translation factors did not have a significant effect on first quarter 2012 sales and operating profit, as compared with the same period in 2011.

The increase in gross profit margin (gross profit as a percent of sales) in fiscal 2012, as compared with 2011, was primarily due to improved sales pricing and mix and moderating raw material costs in 2012 as compared with 2011. In general, steel prices in the first half of 2012 were comparable with the same period in 2011. Average zinc costs were somewhat lower in 2012, as compared with 2011. LIFO expense in the second quarter and first half of 2012 was $4.9 million and $12.8 million, respectively, lower than the same period in 2011, contributing to comparatively the higher gross profit margin in 2012, as compared with 2011.

Selling, general and administrative (SG&A) spending in the second quarter and first half of 2012, as compared with 2011, increased mainly due to the following factors:

•: Increased employee incentive accruals of $0.9 million and $4.6 million, respectively, due to improved operating results;
•: Increased compensation expenses of $4.2 million and $8.3 million, respectively, associated with increased employment levels and salary increases;
•: Increased commissions of $1.1 million and $1.4 million, respectively, related to higher sales;

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•: Deferred compensation expense of $1.0 million incurred in the first half of 2012 associated with the increase in deferred compensation plan liabilities. The corresponding increase in deferred compensation plan assets was recorded as a decrease in "Other" expense; and,
•: Australia stamp duty expense of $1.2 million incurred in the first quarter of 2012 related to the legal restructuring that was completed in fiscal 2011. This expense was non-recurring in nature.

These increases were offset to a degree by settlements related to a property insurance claim and a settlement related to a vendor dispute aggregating $2.3 million in the second quarter of 2012. These expense decreases were considered non-recurring in nature. SG&A expense also decreased in the second quarter and first half of 2012, as compared with 2011, due to foreign exchange translation effects of $2.5 million and $2.2 million, respectively.

The increase in operating income on a reportable segment basis in the second quarter and first half of 2012, as compared with 2011, was due to improved operating performance in all reportable segments. The "Other" category also reported improved operating profit in the second quarter and first half of 2012, as compared with 2011.

The decrease in net interest expense in the second quarter and first half of fiscal 2012, as compared with 2011, was attributable to interest savings realized from the refinancing of our $150 million of senior subordinated debt in June 2011 and approximately $2.8 million of expense incurred in the second quarter of 2011 related to the refinancing of our $150 million of senior subordinated notes. We did not have any refinancing of debt during 2012. Average borrowing levels in 2012 were comparable with 2011.

The increase in "Other" expenses in the second quarter of fiscal 2012, as compared with 2011, was mainly due to foreign exchange transaction losses associated with the strengthening of the U.S. dollar. On a year-to-date basis, increased investment gains in the assets held in our deferred compensation plan of $1.0 million were recorded as other income. The increase in the value of these assets was offset by a corresponding increase in our deferred compensation liabilities, which was reflected as an increase in SG&A expense. Accordingly, there was no effect on net earnings from these investment gains.

Our effective income tax rate in fiscal 2012 was higher than 2011, mainly due to a higher percentage of our total pre-tax earnings realized from U.S. operations, a $4.1 million tax benefit in 2011 related to the acquisition of the 40% of our grinding media operation that we did not own and $1.4 million of income tax contingencies that we reversed in 2011 due to the expiring of statutes of limitation. Income tax rates in the U.S. are higher than in other countries where we operate. As our share of earnings before income taxes from U.S. operations increases, the effective income tax rate normally increases as well. Going forward, depending on our geographic mix of earnings and currently enacted income tax rates in the countries in which we operate, we expect our tax rate to approximate 34%.

Earnings attributable to noncontrolling interests was lower in 2012, as compared with 2011, mainly due to our purchase of the noncontrolling interest in our grinding media operation in June 2011. This operation was previously 40% owned by noncontrolling interests. Earnings in non-consolidated subsidiaries improved in 2012, as compared with 2011, as our 49% owned manganese materials operation experienced improved profitability.

Our cash flows used by operations were approximately $3.5 million in 2012, as compared with $19.9 million provided by operations in 2011. The decrease in operating cash flow, despite increased net income in 2012, resulted from increased working capital associated with higher sales levels and timing of income tax payments, as compared with 2011.

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Engineered Infrastructure Products (EIP) segment

The increase in net sales in the second quarter and first half of fiscal 2012 as compared with 2011 was due to improved sales volumes of approximately $10 million and $31 million, respectively, and $8 million and $11 million, respectively, of favorable pricing and sales mix changes. These increases were offset to a degree in the second quarter and first half of 2012, as compared with 2011, by unfavorable foreign exchange translation effects of approximately $8 million. Global lighting sales were slightly lower in the second quarter fiscal 2012, as compared with 2011, mainly due to lower sales in Europe. North America lighting sales in the second quarter of 2012 were modestly higher than 2011, while sales in the first half of 2012 were approximately 10% higher than last year. The increase in sales mainly resulted from higher sales prices and favorable sales mix. The transportation market for lighting and traffic structures continues to be challenging, as the lack of long-term highway funding legislation and state budget challenges we believe are limiting roadway project activity. Sales in other market channels such as sales to lighting fixture manufacturers and commercial construction projects were stronger in 2012, as compared with 2011. In Europe, sales in the second quarter and first half of fiscal 2012 were lower than the comparable periods in 2011. We divested of our Turkish and Italian operations in late 2011, resulting in lower sales in the second quarter and first half of 2012, as compared with 2011, of $3.9 million and $8.4 million, respectively. Despite current economic conditions in Europe, sales in other markets (in local currency) were up modestly in the second quarter and approximately $6.7 million in the first half of 2012, as compared with 2011. Stronger sales in France, Scandinavia and the U.K. were offset somewhat by weaker sales volumes in northern Europe.

Communication product line sales in the second quarter and first half of fiscal 2012 were improved over 2011. North America sales in the second quarter and first half of 2012 were $5.0 million and $11.9 million, respectively, higher in 2012, as compared with 2011. The increase in sales was attributable to improved market conditions, favorable weather conditions in 2012 and the resolution of the proposed AT&T/T-Mobile merger, which we believe slowed sales activity for structures and components in 2011. In China, sales of wireless communication structures in 2012 were comparable with 2011.

Sales in the access systems product line in 2012 were improved as compared with 2011, as industrial production investments in the mining and energy economic sectors are increasing in the Asia Pacific region.

Sales of highway safety products in the second quarter and first half of 2012 were higher as compared with 2011. Floods in parts of Australia affected infrastructure spending in the first half of 2011, as public spending priorities shifted from roadway development to supporting recovery from the floods. The improvement in 2012 reflects a more normal demand pattern for this product line.

Operating income for the segment in the second quarter and first half of fiscal 2012 was higher than 2011. Improved operating income resulted from higher sales volumes, improved sales prices and moderating raw material costs (including $1.9 million and $3.0 million, respectively, of lower LIFO expense), offset somewhat by factory operational inefficiencies of $3.9 million and $7.1 million, respectively. The factory operational inefficiencies related mainly to start-up costs related to capacity expansion in the U.S. and volume-related inefficiencies in Europe. The increase in SG&A spending in the second quarter and first half of 2012, as compared with 2011, mainly was attributable to higher compensation costs of $2.7 million and $4.1 million, respectively, and increased employee incentives of $1.0 million and $1.7 million, respectively. These increases were offset to a degree by currency translation effects of $1.4 million in the second quarter and $1.2 million in the first half of fiscal 2012, as compared with the same periods in 2011.

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Utility Support Structures (Utility) segment

In the Utility segment, the sales increase in the second quarter and first half of 2012, as compared with 2011, was due to improved unit sales volumes in the U.S., offset to a degree by an unfavorable sales mix in the U.S. (approximately $15 million and $20 million, respectively) resulting from shipments on certain large orders that were taken in 2010, when market pricing was particularly low. Sales volumes in international markets in the second quarter and first half of 2012 was slightly lower than the same periods in 2011. In U.S. markets, electrical utility companies are increasing their investment in the electrical grid, as evidenced by a very high order rate throughout 2011 and record backlogs at December 31, 2011. Sales pricing on new orders is slowly improving but continues to be very competitive. In international markets, the sales decrease was mainly due to lower sales through our European operations, offset to a degree by higher sales in the Asia Pacific region.

Operating income in fiscal 2012, as compared with 2011, increased due to the substantial increase in North America sales volume, moderating raw material costs and operational leverage. These positive effects were offset to a degree in the second quarter and first half of 2012 by $5.8 million and $7.1 million, respectively, of additional costs associated with production inefficiencies and unanticipated costs related to one large order. The increase in SG&A expense for the segment in fiscal 2012 as compared with 2011, was mainly due to increased employee compensation ($0.6 million and $1.5 million, respectively) and sales commissions on higher sales volumes ($0.6 million and $1.0 million, respectively) associated with the increase in business levels and operating income.

Coatings segment

Net sales in the Coatings segment decreased slightly in the second quarter of fiscal 2012, as compared with 2011, mainly due to currency translation effects. Year-to-date sales for the segment increased modestly as compared with 2011. On a regional basis, stronger sales in the United States of $6.9 million and $10.1 million in the second quarter and first half of 2012, respectively, were offset by lower sales volumes in Asia Pacific. In the United States, we experienced broad-based improved demand from customers, especially in the agriculture, petrochemical and energy economic sectors. Asia Pacific volumes in the second quarter of 2012 were down from 2011, due to reduced demand from some of our larger customers, due to weather-related factors and some slowness in the Australian industrial economy not related to mining. Average selling prices in the second quarter and first half of 2012 were comparable with 2011.

The increase in segment operating income in the second quarter and first half of 2012, as compared with 2011, was mainly due to improved productivity and operating leverage through volume increases and lower zinc costs. The effect of lower zinc costs on operating income for the segment was approximately $1.2 million and $3.6 million, respectively. SG&A expenses for the segment in the second quarter and first half of 2012, as compared with 2011, were slightly lower, due to a $0.9 million favorable dispute settlement with a vendor.

Irrigation segment

The increase in Irrigation segment net sales in the second quarter and first half of 2012, as compared with 2011, was mainly due to improved sales volumes of approximately $6 million and $45 million, respectively, and favorable pricing and sales mix of approximately $8 million and $17 million respectively. These increases were offset by unfavorable currency translation effects of $5 million and $7 million in the second quarter and first half of 2012, respectively, as compared with 2011. The pricing and sales mix effect was generally due to sales price increases that took effect after the first half of 2011 to recover higher material costs in early 2011. In global markets, the sales growth was due to very strong agricultural economies around the world. Farm commodity prices continue to be favorable, with a positive outlook for net farm income in most markets around the world. We believe

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that farm commodity prices have been favorable due to strong demand, including consumption in the production of ethanol and other fuels, and traditionally low inventories of major farm commodities. In addition, weather conditions in North America in the first half of 2012 were generally favorable, further enhancing delivery schedules for irrigation machines and demand for related service parts. In international markets, the sales improvement in fiscal 2012, as compared with 2011, was realized in most markets, also due to generally favorable economic conditions in the global farm economy.

Operating income for the segment improved in the second quarter and first half of 2012, as compared with 2011, due to improved sales unit volumes and improved sales prices in light of stable material costs. The higher average selling prices resulted from rising material costs in 2011, when sales price increases lagged material cost inflation. The stability in raw material purchase costs also resulted in $0.3 million and $5.2 million in lower LIFO expenses in the second quarter and first half of 2012, respectively, as compared with 2011. The most significant reasons for the increase in SG&A expense in the second quarter and first half 2012, as compared with 2011, was related to employee compensation costs to support the increase in sales activity ($0.3 million and $1.8 million, respectively), offset to a degree by currency translation effects of approximately $0.5 million and $0.7 million, respectively.

Other

This category includes the grinding media, industrial tubing, electrolytic manganese and industrial fasteners operations. The increase in sales and operating income in the second quarter and first half of fiscal 2012, as compared with 2011, was mainly due improved sales volumes in the tubing and electrolytic manganese dioxide operations. Sales in the first half of fiscal 2012 were due to improved sales in all operations.

Net corporate expense

Net corporate expense in the second quarter of 2012 was lower than 2011, mainly due insurance settlements related to a fire and storm damage to one of our galvanizing facilities in Australia of $1.4 million and lower expenses in the Delta Pension Plan of $0.5 million. On a year-to-date basis, expenses are slightly higher due to higher employee incentives associated with improved net earnings and share price, which affected long-term incentive plans (approximately $2.1 million), higher deferred compensation expenses of $1.0 million and stamp duties incurred in Australia related to the 2011 Delta legal restructuring of $1.2 million. These increases were offset somewhat by lower expenses related to the Delta Pension Plan of $1.0 million and the insurance settlement that occurred in the second quarter.

Liquidity and Capital Resources

Cash Flows

Working Capital and Operating Cash Flows—Net working capital was $931.0 million at June 30, 2012, as compared with $844.9 million at December 31, 2011. The increase in net working capital in 2012 mainly resulted from increased receivables and inventories to support the increase in sales. Cash flow used by operations was $3.5 million in fiscal 2012, as compared with $19.9 million provided by operations in fiscal 2011. The decrease in operating cash flow in 2012 was the result of increased net working capital associated with higher sales and higher levels of business activity, especially in the Utility Support Structures and Irrigation businesses, and and timing of income tax payments, offset to an extent by higher net earnings in fiscal 2012, as compared with 2011. Accounts receivable turns in 2012 were improved over 2011. The increase in inventory at the end of the second quarter compared with December 31, 2011 is associated mainly with the Utility Support Structures and EIP segments and is related to general business levels and seasonal factors.

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Investing Cash Flows—Capital spending in the fiscal 2012 was $39.2 million, as compared with $27.9 million in 2011. The most significant capital spending projects in 2012 included capacity expansions in the Utility segment. We expect our capital spending for the 2012 fiscal year to be approximately $100 million, compared to $83 million for the 2011 fiscal year. The increase in expected capital spending over 2011 is mainly due to capacity increases to meet the growing need for utility structures in the U.S. and additional manufacturing investment in the Irrigation segment.

Financing Cash Flows—Our total interest-bearing debt increased slightly to $491.2 million at June 30, 2012 from $486.1 million at December 31, 2011. Financing cash flows in 2011 included the purchase of the 40% noncontrolling interest in our grinding operation for $25.3 million, debt issuance costs of $1.3 million and settlement of a financial derivative of $3.6 million associated with the senior unsecured notes issued in the second quarter of 2011.

Financing and Capital

We have historically funded our growth, capital spending and acquisitions through a combination of operating cash flows and debt financing. We have an internal long-term objective to maintain long-term debt as a percent of invested capital at or below 40%. At June 30, 2012, our long-term debt to invested capital ratio was 25.2%, as compared with 26.8% at December 31, 2011. Subject to our level of acquisition activity and steel industry operating conditions (which could affect the levels of inventory we need to fulfill customer commitments), we plan to maintain this ratio below 40% in 2012.

Our debt financing at June 30, 2012 consisted primarily of long-term debt. We also maintain certain short-term bank lines of credit totaling $60.2 million, $47.9 million of which was unused at June 30, 2012. Our long-term debt principally consists of:

•

$450 million face value ($463 million carrying value) of senior unsecured notes that bear interest at 6.625% per annum and are due in April 2020. We are allowed to repurchase the notes at specified prepayment premiums. These notes are guaranteed by certain of our subsidiaries.

•

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

(a)

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

(b)

the higher of

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

At June 30, 2012 and December 31, 2011, we had no outstanding borrowings under the revolving credit agreement. The revolving credit agreement has a termination date of October 16, 2013, and contains certain financial covenants that may limit our additional borrowing capability under the agreement. At June 30, 2012, we had the ability to borrow an additional $264.9 million under this facility. We are negotiating a new revolving credit agreement and expect to have the new agreement in place during the third quarter of 2012. We anticipate the agreement will be five years in length, with similar covenants as our current agreement.

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These debt agreements contain covenants that require us to maintain certain coverage ratios and may limit us with respect to certain business activities, including capital expenditures. Our key debt covenants are as follows:

•: Interest-bearing debt is not to exceed 3.75x EBITDA of the prior four quarters;
•: Senior interest-bearing debt is not to exceed 2.50x EBITDA over the prior four quarters; and,
•: Our EBITDA over our prior four quarters must be at least 2.50x our interest expense over the same period.

At June 30, 2012, we were in compliance with all covenants related to these debt agreements. The key covenant calculations at June 30, 2012 were as follows:


Interest-bearing debt	$	491,214
EBITDA—last 12 months		410,902
Leverage ratio		1.20
Senior Interest-bearing debt	$	491,214
EBITDA—last 12 months		410,902
Senior debt ratio		1.20
EBITDA—last 12 months	$	410,902
Interest expense—last 12 months		32,359
Interest earned ratio		12.70

The calculation of EBITDA—last 12 months (June 25, 2011—June 30, 2012) is as follows:


Net cash flows from operations	$	126,219
Interest expense		32,359
Income tax expense		36,309
Deferred income tax benefit		79,221
Noncontrolling interest		(6,931	)
Equity in earnings of nonconsolidated subsidiaries		9,680
Stock-based compensation		(6,380	)
Pension plan expense		(4,537	)
Contribution to pension plan		12,524
Changes in assets and liabilities		133,206
Other		(768	)

EBITDA	$	410,902

Net earnings attributable to Valmont Industries, Inc.	$	269,177
Interest expense		32,359
Income tax expense		36,309
Depreciation and amortization expense		73,057

EBITDA	$	410,902

Our businesses are cyclical, but we have diversity in our markets, from a product, customer and a geographical standpoint. We have demonstrated the ability to effectively manage through business cycles and maintain liquidity. We have consistently generated operating cash flows in excess of our capital expenditures. Based on our available credit facilities, recent issuance of senior unsecured notes and our history of positive operational cash flows, we believe that we have adequate liquidity to meet our needs.

We have not made any provision for U.S. income taxes in our financial statements on approximately $547 million of undistributed earnings of our foreign subsidiaries, as we intend to

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reinvest those earnings. Of our cash balances at June 30, 2012, approximately $299 million is held in entities outside the United States. If we need to repatriate foreign cash balances to the United States to meet our cash needs, income taxes would be paid to the extent that those cash repatriations were undistributed earnings of our foreign subsidiaries. The income taxes that we would pay if cash were repatriated depends on the amounts to be repatriated and from which country. If all of our cash outside the United States were to be repatriated to the United States, we estimate that we would pay approximately $27.0 million in income taxes to repatriate that cash.

Financial Obligations and Financial Commitments

There have been no material changes to our financial obligations and financial commitments as described on page 39 in our Form 10-K for the fiscal year ended December 31, 2011.

Off Balance Sheet Arrangements

There have been no changes in our off balance sheet arrangements as described on page 39 in our Form 10-K for the fiscal year ended December 31, 2011.

Critical Accounting Policies

There have been no changes in our critical accounting policies as described on pages 41-44 in our Form 10-K for the fiscal year ended December 31, 2011 during the quarter ended June 30, 2012.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

There were no material changes in the company's market risk during the quarter ended June 30. 2012. For additional information, refer to the section "Risk Management" on page 40 in our Form 10-K for the fiscal year ended December 31, 2011.

Item 4. Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934 is (1) accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.

No changes in the Company's internal control over financial reporting occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

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

Issuer Purchases of Equity Securities

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

Period	Total Number of Shares Purchased		Average Price paid per share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2012 to April 28, 2012		50,132	$	124.94		—		—
April 29, 2012 to June 2, 2012		420		120.40		—		—
June 3, 2012 to June 30, 2012		—		—		—		—

Total		50,552	$	124.90		—		—

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

Item 6. Exhibits

(a): Exhibits

		Exhibit No.			Description

			31.1		Section 302 Certificate of Chief Executive Officer
			31.2		Section 302 Certificate of Chief Financial Officer
			32.1		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
			101		The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.

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SIGNATURES

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


		VALMONT INDUSTRIES, INC. (Registrant)
		/s/ TERRY J. MCCLAIN Terry J. McClain Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Dated this 27th day of July, 2012.

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Index of Exhibits

		Exhibit No.			Description

			31.1		Section 302 Certificate of Chief Executive Officer
			31.2		Section 302 Certificate of Chief Financial Officer
			32.1		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
			101		The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.