VALMONT INDUSTRIES INC - Quarter Report: 2012 March (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 March 31, 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 (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 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 (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

26,547,150
Outstanding shares of common stock as of April 24, 2012

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VALMONT INDUSTRIES, INC.

INDEX TO FORM 10-Q

Page No.

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Statements of Earnings for the thirteen weeks ended March 31, 2012 and March 26, 2011	3
	Condensed Consolidated Statements of Comprehensive Income for the thirteen weeks ended March 31, 2012 and March 26, 2011	4
	Condensed Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011	5
	Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended March 31, 2012 and March 26, 2011	6
	Condensed Consolidated Statements of Shareholders' Equity for the thirteen weeks ended March 31, 2012 and March 26, 2011	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operation	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
Signatures		34

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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

	March 31, 2012			March 26, 2011
Product sales	$	641,987		$	501,168
Services sales		75,363			66,781

Net sales		717,350			567,949
Product cost of sales		482,708			385,000
Services cost of sales		48,328			46,456

Total cost of sales		531,036			431,456

Gross profit		186,314			136,493
Selling, general and administrative expenses		103,496			91,192

Operating income		82,818			45,301

Other income (expenses):
Interest expense		(7,807	)		(8,271	)
Interest income		2,078			1,787
Other		1,577			390

		(4,152	)		(6,094	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		78,666			39,207

Income tax expense:
Current		27,029			12,504
Deferred		737			784

		27,766			13,288

Earnings before equity in earnings of nonconsolidated subsidiaries		50,900			25,919
Equity in earnings of nonconsolidated subsidiaries		1,688			954

Net earnings		52,588			26,873
Less: Earnings attributable to noncontrolling interests		(263	)		(1,264	)

Net earnings attributable to Valmont Industries, Inc.	$	52,325		$	25,609

Earnings per share:
Basic	$	1.98		$	0.98
Diluted	$	1.96		$	0.97

Cash dividends declared per share	$	0.180		$	0.165

Weighted average number of shares of common stock outstanding—Basic (000 omitted)		26,396			26,271

Weighted average number of shares of common stock outstanding—Diluted (000 omitted)		26,678			26,537

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

	March 31, 2012			March 26, 2011
Net earnings	$	52,588		$	26,873

Other comprehensive income, net of tax:
Foreign currency translation adjustments:
Unrealized translation gains		29,562			22,071
Actuarial gain in defined benefit pension plan		1,871			1,411
Amortization of loss on cash flow hedge		100			—

Other comprehensive income		31,533			23,482

Comprehensive income		84,121			50,355
Comprehensive income attributable to noncontrolling interests		(5,014	)		(3,242	)

Comprehensive income attributable to Valmont Industries, Inc.	$	79,107		$	47,113

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)

	March 31, 2012			December 31, 2011

ASSETS
Current assets:
Cash and cash equivalents	$	339,568		$	362,894
Receivables, net		450,280			426,683
Inventories		440,600			393,782
Prepaid expenses		27,881			25,765
Refundable and deferred income taxes		42,263			43,819

Total current assets		1,300,592			1,252,943

Property, plant and equipment, at cost		945,457			911,642
Less accumulated depreciation and amortization		476,125			456,765

Net property, plant and equipment		469,332			454,877

Goodwill		320,617			314,662
Other intangible assets		168,259			168,083
Other assets		124,169			115,511

Total assets	$	2,382,969		$	2,306,076

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	264		$	235
Notes payable to banks		12,293			11,403
Accounts payable		235,743			234,537
Accrued employee compensation and benefits		68,907			83,613
Accrued expenses		82,479			73,515
Dividends payable		4,778			4,767

Total current liabilities		404,464			408,070

Deferred income taxes		86,798			85,497
Long-term debt, excluding current installments		474,015			474,415
Defined benefit pension liability		60,577			68,024
Deferred compensation		33,348			30,741
Other noncurrent liabilities		42,764			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		1,130,655			1,079,698
Accumulated other comprehensive income		90,834			64,052
Treasury stock		(23,918	)		(24,688	)

Total Valmont Industries, Inc. shareholders' equity		1,225,471			1,146,962

Noncontrolling interest in consolidated subsidiaries		55,532			50,949

Total shareholders' equity		1,281,003			1,197,911

Total liabilities and shareholders' equity	$	2,382,969		$	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)

	Thirteen Weeks Ended

	March 31, 2012			March 26, 2011
Cash flows from operating activities:
Net earnings	$	52,588		$	26,873
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		17,340			17,165
Stock-based compensation		1,563			1,312
Defined benefit pension plan expense		1,021			1,497
Contribution to defined benefit pension plan		(10,750	)		—
Loss (gain) on sale of property, plant and equipment		(1	)		67
Equity in earnings in nonconsolidated subsidiaries		(1,688	)		(954	)
Deferred income taxes		737			784
Changes in assets and liabilities:
Receivables		(22,702	)		(9,850	)
Inventories		(41,032	)		(40,044	)
Prepaid expenses		(1,052	)		(4,746	)
Accounts payable		(5,445	)		22,952
Accrued expenses		(7,417	)		(11,451	)
Other noncurrent liabilities		318			(1,490	)
Income taxes payable		3,648			3,572

Net cash flows from operating activities		(12,872	)		5,687

Cash flows from investing activities:
Purchase of property, plant and equipment		(20,134	)		(12,609	)
Proceeds from sale of assets		45			99
Other, net		2,673			999

Net cash flows from investing activities		(17,416	)		(11,511	)

Cash flows from financing activities:
Net borrowings under short-term agreements		725			816
Proceeds from long-term borrowings		3,000			23,000
Principal payments on long-term borrowings		(3,035	)		(7,040	)
Dividends paid		(4,767	)		(4,358	)
Dividends to noncontrolling interest		(431	)		—
Proceeds from exercises under stock plans		8,230			15,993
Excess tax benefits from stock option exercises		2,134			2,659
Purchase of treasury shares		—			(4,802	)
Purchase of common treasury shares—stock plan exercises		(7,747	)		(18,153	)

Net cash flows from financing activities		(1,891	)		8,115

Effect of exchange rate changes on cash and cash equivalents		8,853			9,076

Net change in cash and cash equivalents		(23,326	)		11,367
Cash and cash equivalents—beginning of year		362,894			346,904

Cash and cash equivalents—end of period	$	339,568		$	358,271

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		—		—			25,609			—		—			1,264			26,873
Other comprehensive income		—		—			—			21,504		—			1,978			23,482
Cash dividends declared		—		—			(4,358	)		—		—			—			(4,358	)
Purchase of 53,847 treasury shares		—		—			—			—		(4,802	)		—			(4,802	)
Stock plan exercises; 165,735 shares acquired		—		—			—			—		(18,153	)		—			(18,153	)
Stock options exercised; 253,133 shares issued		—		(3,971	)		(3,124	)		—		23,088			—			15,993
Tax benefit from stock option exercises		—		2,659			—			—					—			2,659
Stock option expense		—		1,252			—			—					—			1,252
Stock awards; 2,992 shares issued		—		60			—			—		324			—			384

Balance at March 26, 2011	$	27,900	$	—		$	868,396		$	85,149	$	(25,465	)	$	97,477		$	1,053,457

Balance at December 31, 2011	$	27,900	$	—		$	1,079,698		$	64,052	$	(24,688	)	$	50,949		$	1,197,911
Net earnings		—		—			52,325			—		—			263			52,588
Other comprehensive income		—		—			—			26,782		—			4,751			31,533
Cash dividends declared		—		—			(4,778	)		—		—			—			(4,778	)
Dividends to noncontrolling interests		—		—			—			—		—			(431	)		(431	)
Stock plan exercises; 69,376 shares acquired		—		—			—			—		(7,747	)		—			(7,747	)
Stock options exercised; 133,510 shares issued		—		(3,605	)		3,410			—		8,425			—			8,230
Tax benefit from stock option exercises		—		2,134			—			—		—			—			2,134
Stock option expense		—		1,245			—			—		—			—			1,245
Stock awards; 402 shares issued		—		226			—			—		92			—			318

Balance at March 31, 2012	$	27,900	$	—		$	1,130,655		$	90,834	$	(23,918	)	$	55,532		$	1,281,003

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 March 31, 2012, the Condensed Consolidated Statements of Earnings, Comprehensive Income, Cash Flows and Shareholders' Equity for the thirteen week periods ended March 31, 2012 and March 26, 2011 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 March 31, 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 March 31, 2012 are not necessarily indicative of the operating results for the full year.

Inventories

Approximately 37% and 40% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of March 31, 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 $52,062 and $49,536 at March 31, 2012 and December 31, 2011, respectively.

Inventories consisted of the following:

	March 31, 2012		December 31, 2011

Raw materials and purchased parts	$	216,182	$	202,953
Work-in-process		30,342		28,053
Finished goods and manufactured goods		246,138		212,312

Subtotal		492,662		443,318
Less: LIFO reserve		52,062		49,536

	$	440,600	$	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 week periods ended March 31, 2012 and March 26, 2011, were as follows:

	2012		2011

United States	$	62,695	$	26,117
Foreign		15,971		13,090

	$	78,666	$	39,207

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 March 31, 2012, 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 options for the thirteen week periods ended March 31, 2012 and March 26, 2011, were as follows:

	2012		2011

Compensation expense	$	1,245	$	1,252
Income tax benefits		479		482

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

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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)

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 March 31, 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	$	21,491	$	21,491	$	—	$	—

			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 March 31, 2012 and December 31, 2011:

	March 31, 2012			December 31, 2011

Foreign currency translation adjustment	$	40,881		$	16,070
Actuarial gain in defined benefit pension plan		53,188			51,317
Loss on cash flow hedge		(3,235	)		(3,335	)

	$	90,834		$	64,052

2. Goodwill and Intangible Assets

Amortized Intangible Assets

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

	March 31, 2012

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	158,255	$	53,668	13 years
Proprietary Software & Database		3,130		2,739	6 years
Patents & Proprietary Technology		9,707		4,323	8 years
Non-compete Agreements		1,826		1,377	6 years

	$	172,918	$	62,107

	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 week periods ended March 31, 2012 and March 26, 2011 was $3,545 and $3,532, respectively. Estimated annual amortization expense related to finite-lived intangible assets is as follows:

	Estimated Amortization Expense

2012	$	14,243
2013		13,383
2014		12,957
2015		12,060
2016		11,479

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 and were as follows:

	March 31, 2012		December 31, 2011

Webforge	$	17,266	$	16,659	2010
Newmark		11,111		11,111	2004
Ingal EPS/Ingal Civil Products		9,113		8,792	2010
Donhad		6,875		6,633	2010
PiRod		1,750		1,750	2001
Industrial Galvanizers		3,997		3,856	2010
Other		7,336		7,224

	$	57,448	$	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.

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

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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)

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 March 31, 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		5,204		—		51		23		677		5,955

Balance March 31, 2012	$	156,762	$	77,141	$	64,871	$	2,599	$	19,244	$	320,617

The Company's goodwill was tested for impairment during the third quarter of 2011. As a result of that testing, the Company determined that it's 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 thirteen week periods ended March 31, 2012 and March 26, 2011 were as follows:

	2012		2011

Interest	$	367	$	366
Income taxes		21,246		5,296

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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 March 31, 2012:
Net earnings attributable to Valmont Industries, Inc.	$	52,325	$	—		$	52,325
Shares outstanding		26,396		282			26,678
Per share amount	$	1.98	$	(0.02	)	$	1.96
Thirteen weeks ended March 26, 2011:
Net earnings attributable to Valmont Industries, Inc.	$	25,609	$	—		$	25,609
Shares outstanding		26,271		266			26,537
Per share amount	$	0.98	$	(0.01	)	$	0.97

At March 31, 2012, there were no outstanding stock options with exercise prices exceeding the market price of common stock. At March 26, 2011 there were 8,962 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 ended March 26, 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, the 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 Segment

	Thirteen Weeks Ended

	March 31, 2012		March 26, 2011
Sales:
Engineered Infrastructure Products segment:
Lighting, Traffic, and Roadway Products	$	133,297	$	117,311
Communication Products		26,695		20,423
Access Systems		37,907		31,196

Engineered Infrastructure Products segment		197,899		168,930
Utility Support Structures segment:
Steel		166,964		109,898
Concrete		24,268		15,749

Utility Support Structures segment		191,232		125,647

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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

	March 31, 2012			March 26, 2011
Coatings segment		82,847			73,450
Irrigation segment		196,266			151,048
Other		86,063			73,986

Total		754,307			593,061
Intersegment Sales:
Engineered Infrastructure Products		12,392			5,944
Utility Support Structures		1,980			308
Coatings		12,697			11,505
Irrigation		425			3
Other		9,463			7,352

Total		36,957			25,112
Net Sales:
Engineered Infrastructure Products segment		185,507			162,986
Utility Support Structures segment		189,252			125,339
Coatings segment		70,150			61,945
Irrigation segment		195,841			151,045
Other		76,600			66,634

Total	$	717,350		$	567,949

Operating Income:
Engineered Infrastructure Products	$	8,024		$	2,203
Utility Support Structures		25,104			13,499
Coatings		16,512			10,292
Irrigation		38,408			23,894
Other		11,411			8,914
Corporate		(16,641	)		(13,501	)

Total	$	82,818		$	45,301

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.

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)

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 March 31, 2012

	Parent			Guarantors			Non- Guarantors			Eliminations			Total

Net sales	$	364,840		$	128,712		$	293,942		$	(70,144	)	$	717,350
Cost of sales		267,512			103,642			229,923			(70,041	)		531,036

Gross profit		97,328			25,070			64,019			(103	)		186,314
Selling, general and administrative expenses		43,272			13,788			46,436			—			103,496

Operating income		54,056			11,282			17,583			(103	)		82,818

Other income (expense):
Interest expense		(7,682	)		(12,257	)		(125	)		12,257			(7,807	)
Interest income		9			194			14,132			(12,257	)		2,078
Other		1,459			14			104			—			1,577

		(6,214	)		(12,049	)		14,111			—			(4,152	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		47,842			(767	)		31,694			(103	)		78,666

Income tax expense (benefit):
Current		17,185			(901	)		10,745			—			27,029
Deferred		194			1,170			(627	)		—			737

		17,379			269			10,118			—			27,766

Earnings before equity in earnings of nonconsolidated subsidiaries		30,463			(1,036	)		21,576			(103	)		50,900
Equity in earnings of nonconsolidated subsidiaries		21,862			23,108			1,656			(44,938	)		1,688

Net earnings		52,325			22,072			23,232			(45,041	)		52,588
Other comprehensive income		26,782			(16,367	)		47,800			(26,682	)		31,533

Comprehensive income		79,107			5,705			71,032			(71,723	)		84,121
Less: Comprehensive income attributable to noncontrolling interests		—			—			(5,014	)		—			(5,014	)

Comprehensive income attributable to Valmont Industries, Inc	$	79,107		$	5,705		$	66,018		$	(71,723	)	$	79,107

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 EARNINGS AND COMPREHENSIVE INCOME
For the Thirteen Weeks Ended March 26, 2011

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales	$	262,646		$	73,841		$	270,069		$	(38,607	)	$	567,949
Cost of sales		198,303			58,306			213,385			(38,538	)		431,456

Gross profit		64,343			15,535			56,684			(69	)		136,493
Selling, general and administrative expenses		37,109			10,751			43,332			—			91,192

Operating income		27,234			4,784			13,352			(69	)		45,301

Other income (expense):
Interest expense		(8,189	)		—			(82	)		—			(8,271	)
Interest income		5			—			1,782			—			1,787
Other		371			11			8			—			390

		(7,813	)		11			1,708			—			(6,094	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		19,421			4,795			15,060			(69	)		39,207

Income tax expense (benefit):
Current		6,489			2,104			3,911			—			12,504
Deferred		60			(261	)		985			—			784

		6,549			1,843			4,896			—			13,288

Earnings before equity in earnings of nonconsolidated subsidiaries		12,872			2,952			10,164			(69	)		25,919
Equity in earnings of nonconsolidated subsidiaries		12,737			6,367			886			(19,036	)		954

Net earnings		25,609			9,319			11,050			(19,105	)		26,873
Other comprehensive income		21,504			—			23,482			(21,504	)		23,482

Comprehensive income		47,113			9,319			34,532			(40,609	)		50,355
Less: Comprehensive income attributable to noncontrolling interests		—			—			(3,242	)		—			(3,242	)

Comprehensive income attributable to Valmont Industries, Inc.	$	47,113		$	9,319		$	31,290		$	(40,609	)	$	47,113

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
March 31, 2012

	Parent			Guarantors			Non-Guarantors		Eliminations			Total

ASSETS
Current assets:
Cash and cash equivalents	$	24,482		$	16,405		$	298,681	$	—		$	339,568
Receivables, net		139,551			59,989			250,740		—			450,280
Inventories		128,643			83,101			228,856		—			440,600
Prepaid expenses		1,966			945			24,970		—			27,881
Refundable and deferred income taxes		20,889			5,051			16,323		—			42,263

Total current assets		315,531			165,491			819,570		—			1,300,592

Property, plant and equipment, at cost		435,785			110,066			399,606		—			945,457
Less accumulated depreciation and amortization		287,559			56,418			132,148		—			476,125

Net property, plant and equipment		148,226			53,648			267,458		—			469,332

Goodwill		20,108			107,542			192,967		—			320,617
Other intangible assets		620			57,921			109,718		—			168,259
Investment in subsidiaries and intercompany accounts		1,401,488			1,256,907			612,826		(3,271,221	)		—
Other assets		32,349			—			91,820		—			124,169

Total assets	$	1,918,322		$	1,641,509		$	2,094,359	$	(3,271,221	)	$	2,382,969

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	187		$	—		$	77	$	—		$	264
Notes payable to banks		—			—			12,293		—			12,293
Accounts payable		87,990			21,299			126,454		—			235,743
Accrued expenses		73,720			8,996			68,670		—			151,386
Dividends payable		4,778			—			—		—			4,778

Total current liabilities		166,675			30,295			207,494		—			404,464

Deferred income taxes		20,922			27,664			38,212		—			86,798
Long-term debt, excluding current installments		473,077			600,309			938		(600,309	)		474,015
Other noncurrent liabilities		32,177			—			104,512		—			136,689
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			893,884		(1,044,170	)		—
Retained earnings		1,130,655			392,330			430,646		(822,976	)		1,130,655
Accumulated other comprehensive income		90,834			(17,325	)		108,159		(90,834	)		90,834
Treasury stock		(23,918	)		—			—		—			(23,918	)

Total Valmont Industries, Inc. shareholders' equity		1,225,471			983,241			1,687,671		(2,670,912	)		1,225,471

Noncontrolling interest in consolidated subsidiaries		—			—			55,532		—			55,532

Total shareholders' equity		1,225,471			983,241			1,743,203		(2,670,912	)		1,281,003

Total liabilities and shareholders' equity	$	1,918,322		$	1,641,509		$	2,094,359	$	(3,271,221	)	$	2,382,969

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 Thirteen Weeks Ended March 31, 2012

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operating activities:
Net earnings	$	52,325		$	22,072		$	23,232		$	(45,041	)	$	52,588
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		4,595			3,171			9,574			—			17,340
Stock-based compensation		1,563			—			—			—			1,563
Defined benefit pension plan expense		—			—			1,021			—			1,021
Contribution to defined benefit pension plan		—			—			(10,750	)		—			(10,750	)
Loss (gain) on sale of property, plant and equipment		(9	)		7			1			—			(1	)
Equity in earnings of nonconsolidated subsidiaries		(32	)		—			(1,656	)		—			(1,688	)
Deferred income taxes		194			1,170			(627	)		—			737
Changes in assets and liabilities:
Receivables		(17,142	)		(6,418	)		858			—			(22,702	)
Inventories		(2,780	)		(5,263	)		(32,167	)		(822	)		(41,032	)
Prepaid expenses		1,482			64			(2,598	)		—			(1,052	)
Accounts payable		(1,667	)		(129	)		(3,649	)		—			(5,445	)
Accrued expenses		1,379			(5,264	)		(3,532	)		—			(7,417	)
Other noncurrent liabilities		1,190			—			(872	)		—			318
Income taxes payable (refundable)		3,684			10			(46	)					3,648

Net cash flows from operating activities		44,782			9,420			(21,211	)		(45,863	)		(12,872	)

Cash flows from investing activities:
Purchase of property, plant and equipment		(9,189	)		(2,784	)		(8,161	)		—			(20,134	)
Proceeds from sale of assets		11			1			33			—			45
Other, net		(36,517	)		(8,934	)		2,261			45,863			2,673

Net cash flows from investing activities		(45,695	)		(11,717	)		(5,867	)		45,863			(17,416	)

Cash flows from financing activities:
Net borrowings under short-term agreements		—			—			725			—			725
Proceeds from long-term borrowings		3,000			—			—			—			3,000
Principal payments on long-term borrowings		(3,000	)		—			(35	)		—			(3,035	)
Dividends paid		(4,767	)		—			—			—			(4,767	)
Dividends to noncontrolling interest		—			—			(431	)		—			(431	)
Proceeds from exercises under stock plans		8,230			—			—			—			8,230
Excess tax benefits from stock option exercises		2,134			—			—			—			2,134
Purchase of common treasury shares—stock plan exercises:		(7,747	)		—			—			—			(7,747	)

Net cash flows from financing activities		(2,150	)		—			259			—			(1,891	)

Effect of exchange rate changes on cash and cash equivalents		—			445			8,408			—			8,853

Net change in cash and cash equivalents		(3,063	)		(1,852	)		(18,411	)		—			(23,326	)
Cash and cash equivalents—beginning of year		27,545			18,257			317,092			—			362,894

Cash and cash equivalents—end of period	$	24,482		$	16,405		$	298,681		$	—		$	339,568

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 Thirteen Weeks Ended March 26, 2011

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operations:
Net earnings	$	25,609		$	9,319		$	11,050		$	(19,105	)	$	26,873
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		5,002			3,130			9,033			—			17,165
Stock-based compensation		1,312			—			—			—			1,312
Defined benefit pension plan expense		—			—			1,497			—			1,497
Loss (gain) on sale of property, plant and equipment		(13	)		(13	)		93			—			67
Equity in earnings of nonconsolidated subsidiaries		(67	)		—			(887	)		—			(954	)
Deferred income taxes		60			(261	)		985			—			784
Changes in assets and liabilities:
Receivables		(23,752	)		13,939			(37	)		—			(9,850	)
Inventories		(19,368	)		(5,276	)		(15,400	)		—			(40,044	)
Prepaid expenses		(602	)		(89	)		(4,055	)		—			(4,746	)
Accounts payable		11,238			216			11,498			—			22,952
Accrued expenses		4,418			229			(16,098	)		—			(11,451	)
Other noncurrent liabilities		(1,063	)		—			(427	)		—			(1,490	)
Income taxes payable (refundable)		15,143			—			(11,571	)					3,572

Net cash flows from operations		17,917			21,194			(14,319	)		(19,105	)		5,687

Cash flows from investing activities:
Purchase of property, plant and equipment		(2,024	)		(4,133	)		(6,452	)		—			(12,609	)
Proceeds from sale of assets		14			13			72			—			99
Other, net		(15,881	)		(16,512	)		14,287			19,105			999

Net cash flows from investing activities		(17,891	)		(20,632	)		7,907			19,105			(11,511	)

Cash flows from financing activities:
Net borrowings under short-term agreements		—			—			816			—			816
Proceeds from long-term borrowings		23,000			—			—			—			23,000
Principal payments on long-term borrowings		(7,000	)		—			(40	)		—			(7,040	)
Dividends paid		(4,358	)		—			—			—			(4,358	)
Proceeds from exercises under stock plans		15,993			—			—			—			15,993
Excess tax benefits from stock option exercises		2,659			—			—			—			2,659
Purchase of treasury shares		(4,802	)		—			—			—			(4,802	)
Purchase of common treasury shares—stock plan exercises		(18,153	)		—			—			—			(18,153	)

Net cash flows from financing activities		7,339			—			776			—			8,115

Effect of exchange rate changes on cash and cash equivalents		—			—			9,076			—			9,076

Net change in cash and cash equivalents		7,365			562			3,440			—			11,367
Cash and cash equivalents—beginning of year		8,015			619			338,270			—			346,904

Cash and cash equivalents—end of period	$	15,380		$	1,181		$	341,710		$	—		$	358,271

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

	March 31, 2012			March 26, 2011			% Incr. (Decr.)
Consolidated
Net sales	$	717.4		$	567.9			26.3	%
Gross profit		186.3			136.5			36.5	%
as a percent of sales		26.0	%		24.0	%
SG&A expense		103.5			91.2			13.5	%
as a percent of sales		14.4	%		16.1	%
Operating income		82.8			45.3			82.8	%
as a percent of sales		11.5	%		8.0	%
Net interest expense		(5.7	)		(6.5	)		(12.3	)%
Effective tax rate		35.3	%		33.9	%
Net earnings	$	52.3		$	25.6			104.3	%
Diluted earnings per share	$	1.96		$	0.97			102.1	%
Engineered Infrastructure Products Segment
Net sales	$	185.5		$	163.0			13.8	%
Gross profit		45.6			36.2			26.0	%
SG&A expense		37.6			34.0			10.6	%
Operating income		8.0			2.2			263.6	%
Utility Support Structures Segment
Net sales	$	189.3		$	125.3			51.1	%
Gross profit		43.3			29.3			47.8	%
SG&A expense		18.2			15.8			15.2	%
Operating income		25.1			13.5			85.9	%
Coatings Segment
Net sales	$	70.2		$	62.0			13.2	%
Gross profit		25.3			18.6			36.0	%
SG&A expense		8.8			8.3			6.0	%
Operating income		16.5			10.3			60.2	%
Irrigation Segment
Net sales	$	195.8		$	151.0			29.7	%
Gross profit		56.0			38.4			45.8	%
SG&A expense		17.6			14.5			21.4	%
Operating income		38.4			23.9			60.7	%
Other
Net sales	$	76.6		$	66.6			15.0	%
Gross profit		16.3			13.9			17.3	%
SG&A expense		4.9			5.0			(2.0	)%
Operating income		11.4			8.9			28.1	%
Net corporate expense
Gross profit		(0.2	)		0.1			(300.0	)%
SG&A expense		16.4			13.6			20.6	%
Operating loss		(16.6	)		(13.5	)		23.0	%

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Overview

On a consolidated basis, the increase in net sales in fiscal 2012, as compared with 2011, reflected improved sales in all reportable segments. For the company as a whole, the increase in net sales in 2012, as compared with 2011, was due to the following factors:

•: Unit sales volumes increased approximately $140 million. All reportable segments experienced improved net sales in fiscal 2012, as compared with 2011. The most significant sales increases were in the Irrigation and Utility Support Structures segments.
•: Sales prices overall were up modestly in fiscal 2012, as compared with 2011. In the aggregate, the sales increase in 2012, as compared with 2011, due to price increases and sales mix changes was approximately $9 million.

Foreign currency translation, in the aggregate, did not have a significant effect on 2012 sales and operating profit, as compared with 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 moderating raw material costs in 2012 as compared with 2011. In general, steel prices in the first quarter of 2012 were comparable with the same period in 2011. Average zinc costs were somewhat lower in 2012, as compared with 2011. In addition, LIFO expense in the first quarter of 2012 was $7.9 million lower than the same period in 2011, contributing to comparatively higher gross profit margin in 2012, as compared with 2011.

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

•: Increased employee incentive accruals of $3.6 million, due to improved operating results;
•: Increased compensation expenses of $3.5 million, associated with increased employment levels and salary increases;
•: Deferred compensation expense of $1.2 million 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 related to the legal restructuring that was completed in fiscal 2011. This expense was non-recurring in nature

The increase in operating income on a reportable segment basis in 2012, as compared with 2011, was due to improved operating performance in all reportable segments. The "Other" category also reported improved operating profit in 2012, as the grinding media and tubing operations were improved over 2011.

The decrease in net interest expense in 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 a slight increase in interest income from our invested cash balances. Average borrowing levels in 2012 were comparable with 2011.

The decrease in "Other" expenses in fiscal 2012, as compared with 2011, was mainly due to increased investment gains in the assets held in our deferred compensation plan of $1.2 million. 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. Income tax rates in the U.S. are

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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.

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.

The improvement in net earnings and earnings per share in 2012, as compared with 2011, were mainly attributed to the improved operating income.

Our cash flows used by operations were approximately $12.9 million in 2012, as compared with $5.7 million provided by operations in 2011. The slight decrease in operating cash flow resulted from increased working capital associated with higher sales levels and the annual contribution to the Delta Pension Plan being made in the first quarter of 2012 of $10.8 million (the 2011 contribution was made in the second quarter), offset somewhat by higher net earnings in 2012, as compared with 2011.

Engineered Infrastructure Products (EIP) segment

The increase in net sales in fiscal 2012 as compared with 2011 was due to improved sales volumes of approximately $20 million and $3 million of favorable pricing and sales mix changes. Global lighting sales were higher is fiscal 2012, as compared with 2011, mainly due to improved sales in North America. While North American order rates for lighting and traffic structures were stable as compared with 2011, sales volumes in 2012 were positively affected by generally mild weather conditions throughout much of the U.S. 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 fiscal 2012 were comparable with 2011, as stronger sales in France, Scandinavia and the U.K. were offset by a decrease of $5.5 million in sales from our Turkish and Italian operations that were discontinued late in 2011 and weaker sales volumes in northern Europe.

Communication product line sales in fiscal 2012 were improved over 2011. North America sales were $7.0 million higher in 2012, as compared with 2011. The increase in sales was attributable to improved market conditions, mild 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 2012 were higher as compared with 2011. Floods in parts of Australia affected infrastructure spending in the first quarter 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 fiscal 2012 was higher than 2011. Improved operating income resulted from higher sales volumes and moderating raw material costs (including $1.1 million of lower LIFO expense). The increase in SG&A spending mainly was attributable to higher compensation costs of $1.4 million and increased employee incentives of $0.7 million.

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Utility Support Structures (Utility) segment

In the Utility segment, the sales increase in fiscal 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 $5 million) and slightly lower sales volumes in international markets. 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 and associated operational leverage. Gross profit margins were negatively affected by the unfavorable sales mix in North America and increased outsourcing of manufactured products in light of the strong sales demand. The increase in SG&A expense for the segment in fiscal 2012 was higher than in 2011, mainly due to increased employee compensation ($0.9 million) and incentives ($0.6 million) associated with the increase in business levels and operating income.

Coatings segment

Net sales in the Coatings segment increased in fiscal 2012, as compared with 2011, and improved sales unit volumes in North America and Asia Pacific. In North America, we experienced improved demand from customers in the agriculture and energy economic sectors. Asia Pacific volumes in 2011 were negatively affected by severe weather events in Australia that hampered its economy. Unit pricing effects on sales for the segment were modestly favorable in 2012, as compared with 2011.

The increase in segment operating income in fiscal 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 $2.4 million. SG&A expenses for the segment in fiscal 2012 were higher than the comparable periods in 2011, mainly due to employee incentives associated with improved operating income.

Irrigation segment

The increase in Irrigation segment net sales in fiscal 2012, as compared with 2011, was mainly due to improved sales volumes of approximately $38 million, favorable pricing and sales mix of approximately $8 million, offset by a modest unfavorable currency translation effect. The pricing and sales mix effect was generally due to sales price increases that took effect after the first quarter 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 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 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, especially Europe.

Operating income for the segment improved in 2012 over 2011, due to improved sales unit volumes in North America and the associated operational leverage. Moderating raw material prices in light of higher selling prices (including $4.9 million in lower LIFO expenses) also contributed to improved operating income in 2012, as compared with 2011. The most significant reason for the increase in SG&A expense in 2012, as compared with 2011, was related to employee compensation

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costs to support the increase in sales activity ($1.5 million) and increased product development expenses of $0.6 million.

Other

This unit includes the grinding media, industrial tubing, electrolytic manganese and industrial fasteners operations. The increase in sales and operating income in fiscal 2012, as compared with 2011, was mainly due improved sales volumes in the tubing and grinding media operations. The tubing operation benefited from improved demand from steel service centers and agricultural equipment manufacturers and the grinding media operation realized increased demand from mining industry customers in Australia.

Net corporate expense

Net corporate expense in fiscal 2012 increased over 2011, due to higher employee incentives associated with improved net earnings and share price, which affected long-term incentive plans (approximately $2.1 million). Net corporate expense also increased due to higher deferred compensation expenses of $1.2 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 $0.5 million.

Liquidity and Capital Resources

Cash Flows

Working Capital and Operating Cash Flows—Net working capital was $896.1 million at March 31, 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 $12.9 million in fiscal 2012, as compared with $5.7 million provided by operations in fiscal 2011. The decrease in operating cash flow in 2012 was the result of increased net working capital and the annual contribution of $10.8 million to the Delta Pension Plan (the 2011 contribution was made in the second quarter), offset to an extent by higher net earnings in fiscal 2012, as compared with 2011.

Investing Cash Flows—Capital spending in the fiscal 2012 was $20.1 million, as compared with $12.6 million in 2011. The most significant capital spending projects in 2012 included certain capacity expansions in the Utility segment. We expect our capital spending for the 2012 fiscal year to be approximately $100 million. 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 $486.6 million at March 31, 2012 from $486.1 million at December 31, 2011. Financing cash flows overall were similar in 2012, as compared with 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 March 31, 2012, our long-term debt to invested capital ratio was 25.6%, 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.

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Our debt financing at March 31, 2012 consisted primarily of long-term debt. We also maintain certain short-term bank lines of credit totaling $51.9 million, $48.6 million of which was unused at March 31, 2012. Our long-term debt principally consists of:

•

$450 million face value ($464 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 March 31, 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 March 31, 2012, we had the ability to borrow an additional $264.9 million under this facility.

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 March 31, 2012, we were in compliance with all covenants related to these debt agreements. The key covenant calculations at March 31, 2012 were as follows:


Interest-bearing debt	$	486,572
EBITDA—last 12 months		384,787
Leverage ratio		1.26
Senior Interest-bearing debt	$	486,572
EBITDA—last 12 months		384,787
Senior debt ratio		1.26
EBITDA—last 12 months	$	384,787
Interest expense—last 12 months		35,959
Interest earned ratio		10.70

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The calculation of EBITDA—last 12 months (March 26, 2011—March 31, 2012) is as follows:


Net cash flows from operations	$	131,112
Interest expense		35,959
Income tax expense		19,068
Deferred income tax benefit		85,009
Noncontrolling interest		(7,915	)
Equity in earnings of nonconsolidated subsidiaries		8,793
Stock-based compensation		(6,182	)
Pension plan expense		(4,973	)
Contribution to pension plan		22,610
Changes in assets and liabilities		101,930
Other		(624	)

EBITDA	$	384,787

Net earnings attributable to Valmont Industries, Inc.	$	255,025
Interest expense		35,959
Income tax expense		19,068
Depreciation and amortization expense		74,735

EBITDA	$	384,787

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 $531 million of undistributed earnings of our foreign subsidiaries, as we intend to reinvest those earnings. Of our cash balances at March 31, 2012, approximately $310 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 $38.4 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 March 31, 2012.

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Item 3. Quantitative and Qualitative Disclosure about Market Risk

There were no material changes in the company's market risk during the quarter ended March 31. 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
January 1, 2012 to January 28, 2012		—		—		—		—
January 29, 2012 to March 3, 2012		39,065	$	110.23		—		—
March 4, 2012 to March 31, 2012		30,311		113.52		—		—

Total		69,376	$	111.67		—		—

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

Item 5. Other Information

Valmont's annual meeting of stockholders was held on April 24, 2012. The stockholders elected four directors to serve three-year terms, ratified the appointment of Deloitte & Touche LLP to audit the Company's financial statements for fiscal 2012 and approved, on an advisory basis, a resolution approving our named executive officer compensation. For the annual meeting there were 26,527,445 shares outstanding and eligible to vote of which 24,746,565 were present at the meeting in person or by proxy. The tabulation for each matter voted upon at the meeting was as follows:

Election of Directors:



Glen A. Barton	23,137,826	58,490	1,550,249
Daniel P. Neary	22,855,900	340,416	1,550,249
Kenneth E. Stinson	23,037,660	158,656	1,550,249
Catherine James Paglia	23,031,706	164,610	1,550,249

Proposal to ratify the appointment of Deloitte & Touche LLP as independent auditors for fiscal 2012:


For			24,219,742
Against			525,545
Abstain			1,278

Advisory vote on executive compensation:


For			22,798,603
Against			341,067
Abstain			56,646
Broker non-votes			1,550,249

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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 March 31, 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 April, 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 March 31, 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.