VALMONT INDUSTRIES INC - Quarter Report: 2013 September (Form 10-Q)

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

Form 10-Q


(Mark One)
ý		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2013
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 (State or Other Jurisdiction of Incorporation or Organization)		47-0351813 (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 (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

26,786,989
Outstanding shares of common stock as of October 17, 2013

Table of Contents

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 and thirty-nine weeks ended September 28, 2013 and September 29, 2012	3
	Condensed Consolidated Statements of Comprehensive Income for the thirteen and thirty-nine weeks ended September 28, 2013 and September 29, 2012	4
	Condensed Consolidated Balance Sheets as of September 28, 2013 and December 29, 2012	5
	Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 28, 2013 and September 29, 2012	6
	Condensed Consolidated Statements of Shareholders' Equity for the thirty-nine weeks ended September 28, 2013 and September 29, 2012	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 6.	Exhibits	41
Signatures		42

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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						Thirty-nine Weeks Ended

	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Product sales	$	693,480		$	652,822		$	2,228,268		$	1,983,502
Services sales		84,552			77,017			248,053			231,002

Net sales		778,032			729,839			2,476,321			2,214,504
Product cost of sales		499,190			488,739			1,591,657			1,490,885
Services cost of sales		53,278			48,698			162,260			145,508

Total cost of sales		552,468			537,437			1,753,917			1,636,393

Gross profit		225,564			192,402			722,404			578,111
Selling, general and administrative expenses		115,663			102,020			350,048			307,559

Operating income		109,901			90,382			372,356			270,552

Other income (expenses):
Interest expense		(8,149	)		(8,429	)		(24,364	)		(23,657	)
Interest income		1,560			2,093			4,765			6,081
Other		(584	)		1,307			1,095			907

		(7,173	)		(5,029	)		(18,504	)		(16,669	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		102,728			85,353			353,852			253,883

Income tax expense (benefit):
Current		40,458			27,928			127,328			90,942
Deferred		3,454			519			(1,275	)		(3,937	)

		43,912			28,447			126,053			87,005

Earnings before equity in earnings of nonconsolidated subsidiaries		58,816			56,906			227,799			166,878
Equity in earnings of nonconsolidated subsidiaries		75			1,536			548			5,311

Net earnings		58,891			58,442			228,347			172,189
Less: Earnings attributable to noncontrolling interests		(2,402	)		(1,711	)		(4,726	)		(3,153	)

Net earnings attributable to Valmont Industries, Inc.	$	56,489		$	56,731		$	223,621			169,036

Earnings per share:
Basic	$	2.12		$	2.14		$	8.40		$	6.39

Diluted	$	2.10		$	2.12		$	8.31		$	6.32

Cash dividends declared per share	$	0.250		$	0.225		$	0.725		$	0.630

Weighted average number of shares of common stock outstanding—Basic (000 omitted)		26,665			26,502			26,632			26,455

Weighted average number of shares of common stock outstanding—Diluted (000 omitted)		26,919			26,806			26,896			26,748

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						Thirty-nine Weeks Ended

	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
Net earnings	$	58,891		$	58,442		$	228,347		$	172,189

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss)		18,124			23,747			(44,458	)		22,488
Realized loss included in net earnings during the period		—			—			(5,194	)		—
Unrealized loss on cash flow hedge:
Amortization cost included in interest expense		100			100			300			300
Actuarial gain (loss) in defined benefit pension plan		857			1,962			(37	)		2,595

Other comprehensive income (loss)		19,081			25,809			(49,389	)		25,383

Comprehensive income		77,972			84,251			178,958			197,572
Comprehensive loss (income) attributable to noncontrolling interests		(2,156	)		(2,958	)		1,033			(5,439	)

Comprehensive income attributable to Valmont Industries, Inc.	$	75,816		$	81,293		$	179,991		$	192,133

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)

	September 28, 2013			December 29, 2012

ASSETS
Current assets:
Cash and cash equivalents	$	543,369		$	414,129
Receivables, net		513,832			515,902
Inventories		427,215			412,384
Prepaid expenses		35,071			25,144
Refundable and deferred income taxes		81,766			58,381

Total current assets		1,601,253			1,425,940

Property, plant and equipment, at cost		1,045,110			994,774
Less accumulated depreciation and amortization		504,080			482,162

Net property, plant and equipment		541,030			512,612

Goodwill		340,495			330,791
Other intangible assets, net		169,904			172,270
Other assets		95,838			126,938

Total assets	$	2,748,520		$	2,568,551

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	265		$	224
Notes payable to banks		17,129			13,375
Accounts payable		214,188			212,424
Accrued employee compensation and benefits		108,774			101,905
Accrued expenses		87,614			78,503
Dividends payable		6,697			6,002

Total current liabilities		434,667			412,433

Deferred income taxes		79,305			88,300
Long-term debt, excluding current installments		471,294			472,593
Defined benefit pension liability		99,135			112,043
Deferred compensation		38,917			31,920
Other noncurrent liabilities		49,417			44,252
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		1,514,099			1,300,529
Accumulated other comprehensive income (loss)		308			43,938
Treasury stock		(21,145	)		(22,455	)

Total Valmont Industries, Inc. shareholders' equity		1,521,162			1,349,912

Noncontrolling interest in consolidated subsidiaries		54,623			57,098

Total shareholders' equity		1,575,785			1,407,010

Total liabilities and shareholders' equity	$	2,748,520		$	2,568,551

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Thirty-nine Weeks Ended

	September 28, 2013			September 29, 2012
Cash flows from operating activities:
Net earnings	$	228,347		$	172,189
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		57,417			52,262
Stock-based compensation		4,999			4,517
Defined benefit pension plan expense		4,870			3,076
Contribution to defined benefit pension plan		(16,755	)		(11,591	)
Gain on sale of property, plant and equipment		(5,060	)		(187	)
Equity in earnings in nonconsolidated subsidiaries		(548	)		(5,311	)
Deferred income taxes		(1,275	)		(3,937	)
Changes in assets and liabilities (net of acquisitions):
Receivables		(757	)		(46,663	)
Inventories		(14,574	)		(36,507	)
Prepaid expenses		(7,041	)		(3,657	)
Accounts payable		1,161			(35	)
Accrued expenses		16,931			15,989
Other noncurrent liabilities		2,510			(723	)
Income taxes payable		(21,120	)		(21,740	)

Net cash flows from operating activities		249,105			117,682

Cash flows from investing activities:
Purchase of property, plant and equipment		(75,072	)		(58,700	)
Proceeds from sale of assets		39,564			5,597
Acquisitions, net of cash acquired		(53,152	)		—
Other, net		1,231			80

Net cash flows from investing activities		(87,429	)		(53,023	)

Cash flows from financing activities:
Net borrowings under short-term agreements		3,439			4,096
Proceeds from long-term borrowings		274			39,126
Principal payments on long-term borrowings		(508	)		(39,280	)
Proceeds from sale of partial ownership interest		—			1,404
Dividends paid		(18,717	)		(15,530	)
Dividends to noncontrolling interest		(1,767	)		(1,379	)
Debt issuance costs		—			(1,703	)
Proceeds from exercises under stock plans		15,064			19,527
Excess tax benefits from stock option exercises		4,630			4,212
Purchase of common treasury shares—stock plan exercises		(14,644	)		(19,116	)

Net cash flows from financing activities		(12,229	)		(8,643	)

Effect of exchange rate changes on cash and cash equivalents		(20,207	)		8,170

Net change in cash and cash equivalents		129,240			64,186
Cash and cash equivalents—beginning of year		414,129			362,894

Cash and cash equivalents—end of period	$	543,369		$	427,080

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 31, 2011	$	27,900	$	—		$	1,079,698		$	64,052		$	(24,688	)	$	50,949		$	1,197,911
Net earnings		—		—			169,036			—			—			3,153			172,189
Other comprehensive income (loss)		—		—			—			23,097			—			2,286			25,383
Cash dividends declared		—		—			(16,754	)		—			—			—			(16,754	)
Dividends to noncontrolling interests		—		—			—			—			—			(1,379	)		(1,379	)
Sale of partial ownership interest		—		(610	)		—			—			—			2,014			1,404
Stock plan exercises; 159,555 shares acquired		—		—			—			—			(19,116	)		—			(19,116	)
Stock options exercised; 295,570 shares issued		—		(8,027	)		6,860			—			20,694			—			19,527
Tax benefit from stock option exercises		—		4,212			—			—						—			4,212
Stock option expense		—		3,735			—			—						—			3,735
Stock awards; 402 shares issued		—		690			—			—			92			—			782

Balance at September 29, 2012	$	27,900	$	—		$	1,238,840		$	87,149		$	(23,018	)	$	57,023		$	1,387,894

Balance at December 29, 2012	$	27,900	$	—		$	1,300,529		$	43,938		$	(22,455	)	$	57,098		$	1,407,010
Net earnings		—		—			223,621			—			—			4,726			228,347
Other comprehensive loss		—		—			—			(43,630	)		—			(5,759	)		(49,389	)
Cash dividends declared		—		—			(19,412	)		—			—			—			(19,412	)
Dividends to noncontrolling interests		—		—			—			—			—			(1,767	)		(1,767	)
Acquisition of Locker		—		—			—			—			—			325			325
Stock plan exercises; 93,059 shares acquired		—		—			—			—			(14,644	)		—			(14,644	)
Stock options exercised; 192,377 shares issued		—		(9,629	)		9,361			—			15,332			—			15,064
Tax benefit from stock option exercises		—		4,630			—			—			—			—			4,630
Stock option expense		—		3,935			—			—			—			—			3,935
Stock awards; 9,801 shares issued		—		1,064			—			—			622			—			1,686

Balance at September 28, 2013	$	27,900	$	—		$	1,514,099		$	308		$	(21,145	)	$	54,623		$	1,575,785

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Condensed Consolidated Financial Statements

The Condensed Consolidated Balance Sheet as of September 28, 2013, the Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen and thirty-nine weeks ended September 28, 2013 and September 29, 2012, and the Condensed Consolidated Statements of Cash Flows and Shareholders' Equity for the thirty-nine week periods then ended have been prepared by the Company, without audit. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial statements as of September 28, 2013 and for all periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012. The accounting policies and methods of computation followed in these interim financial statements are the same as those followed in the financial statements for the year ended December 29, 2012. In 2013, the Company changed its presentation of certain intercompany utility structure sales to align with management's current reporting structure. Fiscal 2012 reporting was reclassified to conform with the 2013 presentation. Accordingly, fiscal 2012 EIP segment sales (and the associated intersegment sales elimination) for the thirteen and thirty-nine weeks ended September 29, 2012 increased by $15,374 and $31,436, respectively. Fiscal 2012 segment sales (after intersegment sales eliminations) and operating income were unchanged from amounts previously reported. The results of operations for the period ended September 28, 2013 are not necessarily indicative of the operating results for the full year.

Inventories

Approximately 40% and 43% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of September 28, 2013 and December 29, 2012, 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 $43,242 and $45,822 at September 28, 2013 and December 29, 2012, respectively.

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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)

Inventories consisted of the following:

	September 28, 2013		December 29, 2012

Raw materials and purchased parts	$	200,316	$	199,808
Work-in-process		33,261		36,114
Finished goods and manufactured goods		236,880		222,284

Subtotal		470,457		458,206
Less: LIFO reserve		43,242		45,822

	$	427,215	$	412,384

Income Taxes

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries for the thirteen and thirty-nine weeks ended September 28, 2013 and September 29, 2012, were as follows:

	Thirteen Weeks Ended				Thirty-nine Weeks Ended

	2013		2012		2013		2012
United States	$	66,143	$	48,524	$	253,564	$	179,351
Foreign		36,585		36,829		100,288		74,532

	$	102,728	$	85,353	$	353,852	$	253,883

Pension Benefits

The Company incurs expenses in connection with the Delta Pension Plan ("DPP"). The DPP was acquired as part of the Delta plc acquisition in fiscal 2010 and has no members that are active employees. In order to measure expense and the related benefit obligation, various assumptions are made including discount rates used to value the obligation, expected return on plan assets used to fund these expenses and estimated future inflation rates. These assumptions are based on historical experience as well as current facts and circumstances. An actuarial analysis is used to measure the expense and liability associated with pension benefits.

The components of the net periodic pension expense for the thirty-nine weeks ended September 28, 2013 and September 29, 2012 were as follows:

	2013			2012

Net periodic benefit expense:
Interest cost	$	19,593		$	17,399
Expected return on plan assets		(14,723	)		(14,323	)

Net periodic benefit expense	$	4,870		$	3,076

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock 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 September 28, 2013, 1,687,864 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 thirty-nine weeks ended September 28, 2013 and September 29, 2012, respectively, were as follows:

	Thirteen Weeks Ended				Thirty-nine Weeks Ended

	2013		2012		2013		2012
Compensation expense	$	1,308	$	1,245	$	3,935	$	3,735
Income tax benefits		504		479		1,515		1,438

Equity Method Investments

The Company has equity method investments in non-consolidated subsidiaries, which are recorded within "Other assets" on the Condensed Consolidated Balance Sheet. In February 2013, the Company sold its nonconsolidated investment in Manganese Materials Company Pty. Ltd. to the majority owner of the business for approximately $29,250. The profit on the sale was not significant, which included the recognition of $5,194 in currency translation adjustments previously recorded as part of "Accumulated other comprehensive income" on the Condensed Consolidated Balance Sheet. The Company also recognized certain deferred tax benefits of approximately $3,200 associated with the sale in the first quarter of fiscal 2013.

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 refer

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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)

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 September 28, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading Securities	$	26,291	$	26,291	$	—	$	—

			Fair Value Measurement Using:

	Carrying Value December 29, 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	$	20,087	$	20,087	$	—	$	—

Comprehensive Income

Comprehensive income includes net earnings, 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 September 28, 2013 and December 29, 2012:

	Foreign Currency Translation Adjustments			Unrealized Loss on Cash Flow Hedge			Defined Benefit Pension Plan			Accumulated Other Comprehensive Income

Balance at December 29, 2012	$	30,576		$	(2,935	)	$	16,297		$	43,938
Current-period comprehensive income (loss)		(43,893	)		300			(37	)		(43,630	)

Balance at September 28, 2013	$	(13,317	)	$	(2,635	)	$	16,260		$	308

(2) ACQUISITION OF LOCKER GROUP HOLDINGS PTY. LTD.

On February 5, 2013, the Company purchased 100% of the outstanding shares of Locker Group Holdings Pty. Ltd. (Locker). Locker is a manufacturer of perforated and expanded metal for the non-residential market, industrial flooring and handrails for the access systems market, and screening media for applications in the industrial and mining sectors in Australia and Asia. Locker's annual sales for the twelve months prior to the acquisition date were approximately $80,000 and its operations are reported in the Engineered Infrastructure Products Segment. The purchase price paid for the business at closing (net of $116 cash acquired) was $53,152. In addition, a maximum of $7,911 additional purchase price may be paid to the sellers upon the achievement of certain gross profit and inventory targets over the next two years. The Company determined the present value of the potential additional purchase price at February 5, 2013 to be $6,175. The acquisition, which was funded by cash held by the Company, was completed to expand our product offering and sales coverage for access systems and related products in Asia Pacific.

The fair value measurement was completed at September 28, 2013. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the date of acquisition.

	At February 5, 2013

Current assets	$	25,584
Property, plant and equipment		20,412
Intangible assets		11,205
Goodwill		13,322

Total fair value of assets acquired	$	70,523

Current liabilities		9,595
Deferred income taxes		483
Other non-current liabilities		677
Non-controlling interests		325

Total fair value of liabilities assumed and non-controlling interests		11,080

Net assets acquired	$	59,443

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITION OF LOCKER GROUP HOLDINGS PTY. LTD. (Continued)

The Company's Condensed Consolidated Statements of Earnings for the thirteen and thirty-nine weeks ended September 28, 2013 included net sales of $16,755 and $46,692, respectively, and net earnings of $836 and $1,375, respectively, resulting from Locker's operations from February 5, 2013 to September 28, 2013.

Based on the fair value assessments, the Company allocated $11,205 of the purchase price to acquired intangible assets. The following table summarizes the major classes of Locker acquired intangible assets and the respective weighted-average amortization periods:

	Amount

Trade Names	$	4,116	Indefinite
Customer Relationships		6,042	10.0
Software and Technology		1,047	5.0

	$	11,205

(3) GOODWILL AND INTANGIBLE ASSETS

Amortized Intangible Assets

The components of amortized intangible assets at September 28, 2013 and December 29, 2012 were as follows:

	September 28, 2013

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	175,273	$	73,081	13 years
Proprietary Software & Database		3,958		2,875	6 years
Patents & Proprietary Technology		9,961		6,691	8 years
Non-compete Agreements		1,802		1,607	6 years

	$	190,994	$	84,254

	December 29, 2012

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	170,556	$	62,957	13 years
Proprietary Software & Database		3,073		2,795	6 years
Patents & Proprietary Technology		9,953		5,517	8 years
Non-compete Agreements		1,807		1,542	6 years

	$	185,389	$	72,811

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(3) GOODWILL AND INTANGIBLE ASSETS (Continued)

Amortization expense for intangible assets for the thirteen and thirty-nine weeks ended September 28, 2013 and September 29, 2012, respectively was as follows:

Thirteen Weeks Ended				Thirty-nine Weeks Ended

2013		2012		2013		2012
$	3,750	$	3,582	$	11,446	$	10,751

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

	Estimated Amortization Expense

2013	$	15,322
2014		15,328
2015		14,442
2016		13,884
2017		13,845

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 September 28, 2013 and December 29, 2012 were as follows:

	September 28, 2013		December 29, 2012

Webforge	$	17,372	$	17,411	2010
Newmark		11,111		11,111	2004
Ingal EPS/Ingal Civil Products		9,168		9,189	2010
Donhad		6,917		6,932	2010
Industrial Galvanizers		4,021		4,030	2010
Other		14,575		11,019

	$	63,164	$	59,692

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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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(3) GOODWILL AND INTANGIBLE ASSETS (Continued)

The Company's trade names were tested for impairment in the third quarter of 2013. The values of the trade names were determined using the relief-from-royalty method. Based on this evaluation, the Company determined that its trade names were not impaired.

Goodwill

The carrying amount of goodwill by segment as of September 28, 2013 and December 29, 2012 was as follows:

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

Balance at December 29, 2012	$	155,185		$	77,141		$	77,053	$	2,517		$	18,895		$	330,791
Acquisitions		13,322			—			—		—			—			13,322
Foreign currency translation		(3,630	)		—			120		(67	)		(41	)		(3,618	)
Other		1,737			(1,737	)		—		—			—			—

Balance at September 28, 2013	$	166,614		$	75,404		$	77,173	$	2,450		$	18,854		$	340,495

The goodwill from acquisitions arose from the acquisition of Locker. The Company's goodwill was tested for impairment during the third quarter of 2013. As a result of that testing, the Company determined that its goodwill was not impaired, as the valuation of the reporting units exceeded their respective carrying values. 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.

(4) 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 thirty-nine weeks ended September 28, 2013 and September 29, 2012 were as follows:

	2013		2012

Interest	$	17,010	$	15,797
Income taxes		149,529		106,887

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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) 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 September 28, 2013:
Net earnings attributable to Valmont Industries, Inc.	$	56,489	$	—		$	56,489
Shares outstanding		26,665		254			26,919
Per share amount	$	2.12	$	(0.02	)	$	2.10
Thirteen weeks ended September 29, 2012:
Net earnings attributable to Valmont Industries, Inc.	$	56,731	$	—		$	56,731
Shares outstanding		26,502		304			26,806
Per share amount	$	2.14	$	(0.02	)	$	2.12
Thirty-nine weeks ended September 28, 2013:
Net earnings attributable to Valmont Industries, Inc.	$	223,621	$	—		$	223,621
Shares outstanding		26,632		264			26,896
Per share amount	$	8.40	$	(0.09	)	$	8.31
Thirty-nine weeks ended September 29, 2012:
Net earnings attributable to Valmont Industries, Inc.	$	169,036	$	—		$	169,036
Shares outstanding		26,455		293			26,748
Per share amount	$	6.39	$	(0.07	)	$	6.32

At September 28, 2013 there were 1,172 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 thirty-nine weeks ending September 28, 2013. At September 29, 2012, there were no outstanding stock options with exercise prices exceeding the market price of common stock.

(6) BUSINESS SEGMENTS

The Company has four reportable segments based on its management structure. Each segment is global in nature with a manager responsible for segment operational performance and the allocation of capital within the segment. 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;

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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) BUSINESS SEGMENTS (Continued)

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.

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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) BUSINESS SEGMENTS (Continued)

Summary by Business

	Thirteen Weeks Ended						Thirty-nine Weeks Ended

	September 28, 2013			September 29, 2012			September 28, 2013			September 29, 2012
SALES:
Engineered Infrastructure Products segment:
Lighting, Traffic, and Roadway Products	$	171,991		$	168,046		$	480,648		$	465,946
Communication Products		38,674			36,446			102,067			99,629
Access Systems		49,618			40,192			151,874			118,852

Engineered Infrastructure Products segment		260,283			244,684			734,589			684,427
Utility Support Structures segment:
Steel		199,912			184,030			611,573			536,073
Concrete		29,508			33,465			85,728			84,891

Utility Support Structures segment		229,420			217,495			697,301			620,964
Coatings segment		89,009			83,713			272,052			251,397
Irrigation segment		175,120			156,452			690,002			547,214
Other		71,836			72,500			233,384			245,757

Total		825,668			774,844			2,627,328			2,349,759
INTERSEGMENT SALES:
Engineered Infrastructure Products segment		24,970			25,352			76,591			68,498
Utility Support Structures segment		489			625			1,199			3,072
Coatings segment		13,697			12,313			42,475			38,262
Irrigation segment		4			67			5			498
Other		8,476			6,648			30,737			24,925

Total		47,636			45,005			151,007			135,255
NET SALES:
Engineered Infrastructure Products segment		235,313			219,332			657,998			615,929
Utility Support Structures segment		228,931			216,870			696,102			617,892
Coatings segment		75,312			71,400			229,577			213,135
Irrigation segment		175,116			156,385			689,997			546,716
Other		63,360			65,852			202,647			220,832

Total	$	778,032		$	729,839		$	2,476,321		$	2,214,504

OPERATING INCOME:
Engineered Infrastructure Products segment	$	25,689		$	18,715		$	61,026		$	40,907
Utility Support Structures segment		41,491			30,223			129,767			81,901
Coatings segment		19,833			18,542			56,805			54,571
Irrigation segment		31,145			27,140			149,878			103,155
Other		9,978			9,743			33,790			33,413
Corporate		(18,235	)		(13,981	)		(58,910	)		(43,395	)

Total	$	109,901		$	90,382		$	372,356		$	270,552

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) 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
For the Thirteen weeks ended September 28, 2013

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales	$	331,525		$	161,432		$	366,522		$	(81,447	)	$	778,032
Cost of sales		238,692			121,870			273,317			(81,411	)		552,468

Gross profit		92,833			39,562			93,205			(36	)		225,564
Selling, general and administrative expenses		51,621			14,530			49,512			—			115,663

Operating income		41,212			25,032			43,693			(36	)		109,901

Other income (expense):
Interest expense		(7,724	)		(11,122	)		(425	)		11,122			(8,149	)
Interest income		18			242			12,422			(11,122	)		1,560
Other		1,422			9			(2,015	)		—			(584	)

		(6,284	)		(10,871	)		9,982			—			(7,173	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		34,928			14,161			53,675			(36	)		102,728

Income tax expense (benefit):
Current		19,473			7,419			13,631			(65	)		40,458
Deferred		(4,969	)		(360	)		8,783			—			3,454

		14,504			7,059			22,414			(65	)		43,912

Earnings before equity in earnings of nonconsolidated subsidiaries		20,424			7,102			31,261			29			58,816
Equity in earnings of nonconsolidated subsidiaries		36,065			6,542			—			(42,532	)		75

Net earnings		56,489			13,644			31,261			(42,503	)		58,891
Less: Earnings attributable to noncontrolling interests		—			—			(2,402	)		—			(2,402	)

Net earnings attributable to Valmont Industries, Inc	$	56,489		$	13,644		$	28,859		$	(42,503	)	$	56,489

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Thirty-nine Weeks Ended September 28, 2013

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales	$	1,174,955		$	501,308		$	1,052,733		$	(252,675	)	$	2,476,321
Cost of sales		837,321			377,158			795,182			(255,744	)		1,753,917

Gross profit		337,634			124,150			257,551			3,069			722,404
Selling, general and administrative expenses		157,367			42,871			149,810			—			350,048

Operating income		180,267			81,279			107,741			3,069			372,356

Other income (expense):
Interest expense		(23,115	)		(35,696	)		(1,249	)		35,696			(24,364	)
Interest income		33			732			39,696			(35,696	)		4,765
Other		3,224			55			(2,184	)		—			1,095

		(19,858	)		(34,909	)		36,263			—			(18,504	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		160,409			46,370			144,004			3,069			353,852

Income tax expense (benefit):
Current		65,472			20,801			40,283			772			127,328
Deferred		(7,473	)		1,342			4,856			—			(1,275	)

		57,999			22,143			45,139			772			126,053

Earnings before equity in earnings of nonconsolidated subsidiaries		102,410			24,227			98,865			2,297			227,799
Equity in earnings of nonconsolidated subsidiaries		121,211			48,927			207			(169,797	)		548

Net earnings		223,621			73,154			99,072			(167,500	)		228,347
Less: Earnings attributable to noncontrolling interests		—			—			(4,726	)		—			(4,726	)

Net earnings attributable to Valmont Industries, Inc	$	223,621		$	73,154		$	94,346		$	(167,500	)	$	223,621

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Thirteen weeks ended September 29, 2012

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales	$	301,667		$	160,318		$	350,837		$	(82,983	)	$	729,839
Cost of sales		226,539			127,116			266,532			(82,750	)		537,437

Gross profit		75,128			33,202			84,305			(233	)		192,402
Selling, general and administrative expenses		41,747			13,449			46,824			—			102,020

Operating income		33,381			19,753			37,481			(233	)		90,382

Other income (expense):
Interest expense		(8,215	)		(12,635	)		(213	)		12,634			(8,429	)
Interest income		15			398			14,314			(12,634	)		2,093
Other		883			15			409			—			1,307

		(7,317	)		(12,222	)		14,510			—			(5,029	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		26,064			7,531			51,991			(233	)		85,353

Income tax expense (benefit):
Current		8,096			4,786			15,701			(655	)		27,928
Deferred		(1,063	)		(558	)		2,140			—			519

		7,033			4,228			17,841			(655	)		28,447

Earnings before equity in earnings of nonconsolidated subsidiaries		19,031			3,303			34,150			422			56,906
Equity in earnings of nonconsolidated subsidiaries		37,700			18,557			918			(55,639	)		1,536

Net earnings		56,731			21,860			35,068			(55,217	)		58,442
Less: Earnings attributable to noncontrolling interests		—			—			(1,711	)		—			(1,711	)

Net earnings attributable to Valmont Industries, Inc	$	56,731		$	21,860		$	33,357		$	(55,217	)	$	56,731

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Thirty-nine Weeks Ended September 29, 2012

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Net sales	$	1,014,150		$	441,189		$	977,950		$	(218,785	)	$	2,214,504
Cost of sales		743,608			352,416			757,829			(217,460	)		1,636,393

Gross profit		270,542			88,773			220,121			(1,325	)		578,111
Selling, general and administrative expenses		128,781			40,414			138,364			—			307,559

Operating income		141,761			48,359			81,757			(1,325	)		270,552
Other income (expense):
Interest expense		(23,470	)		(37,136	)		(186	)		37,135			(23,657	)
Interest income		29			721			42,466			(37,135	)		6,081
Other		1,888			40			(1,021	)		—			907

		(21,553	)		(36,375	)		41,259			—			(16,669	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		120,208			11,984			123,016			(1,325	)		253,883

Income tax expense (benefit):
Current		44,644			10,082			36,871			(655	)		90,942
Deferred		(3,832	)		(419	)		314			—			(3,937	)

		40,812			9,663			37,185			(655	)		87,005

Earnings before equity in earnings of nonconsolidated subsidiaries		79,396			2,321			85,831			(670	)		166,878
Equity in earnings of nonconsolidated subsidiaries		89,640			64,918			4,850			(154,097	)		5,311

Net earnings		169,036			67,239			90,681			(154,767	)		172,189
Less: Earnings attributable to noncontrolling interests		—			—			(3,153	)		—			(3,153	)

Net earnings attributable to Valmont Industries, Inc	$	169,036		$	67,239		$	87,528		$	(154,767	)	$	169,036

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirteen weeks ended September 28, 2013

	Parent		Guarantors		Non-Guarantors			Eliminations			Total

Net earnings	$	56,489	$	13,644	$	31,261		$	(42,503	)	$	58,891

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period		—		30,221		(12,097	)		—			18,124

		—		30,221		(12,097	)		—			18,124

Unrealized loss on cash flow hedge:
Amortization cost included in interest expense		100		—		—			—			100

		100		—		—			—			100

Actuarial gain (loss) in defined benefit pension plan liability		—		—		857			—			857
Equity in other comprehensive income		19,227		—		—			(19,227	)		—

Other comprehensive income (loss)		19,327		30,221		(11,240	)		(19,227	)		19,081

Comprehensive income		75,816		43,865		20,021			(61,730	)		77,972
Comprehensive income attributable to noncontrolling interests		—		—		(2,156	)		—			(2,156	)

Comprehensive income attributable to Valmont Industries, Inc.	$	75,816	$	43,865	$	17,865		$	(61,730	)	$	75,816

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirty-nine Weeks Ended September 28, 2013

	Parent			Guarantors		Non-Guarantors			Eliminations			Total

Net earnings	$	223,621		$	73,154	$	99,072		$	(167,500	)	$	228,347

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period		—			57,707		(102,165	)		—			(44,458	)
Realized (loss) included in net earnings during the period		—			—		(5,194	)		—			(5,194	)

		—			57,707		(107,359	)		—			(49,652	)

Unrealized loss on cash flow hedge:
Amortization cost included in interest expense		300			—		—			—			300

		300			—		—			—			300

Actuarial gain (loss) in defined benefit pension plan liability		—			—		(37	)		—			(37	)
Equity in other comprehensive income		(43,930	)		—					43,930			—

Other comprehensive income (loss)		(43,630	)		57,707		(107,396	)		43,930			(49,389	)

Comprehensive income		179,991			130,861		(8,324	)		(123,570	)		178,958
Comprehensive income attributable to noncontrolling interests		—			—		1,033			—			1,033

Comprehensive income attributable to Valmont Industries, Inc.	$	179,991		$	130,861	$	(7,291	)	$	(123,570	)	$	179,991

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirteen weeks ended September 29, 2012

	Parent		Guarantors			Non-Guarantors			Eliminations			Total

Net earnings	$	56,731	$	21,860		$	35,068		$	(55,217	)	$	58,442

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period		—		(14,977	)		39,084			(360	)		23,747

		—		(14,977	)		39,084			(360	)		23,747

Unrealized loss on cash flow hedge:
Amortization cost included in interest expense		100		—			—			—			100

		100		—			—			—			100

Actuarial gain (loss) in defined benefit pension plan liability		—		—			1,962			—			1,962
Equity in other comprehensive income		24,462		—			—			(24,462	)		—

Other comprehensive income (loss)		24,562		(14,977	)		41,046			(24,822	)		25,809

Comprehensive income		81,293		6,883			76,114			(80,039	)		84,251
Comprehensive income attributable to noncontrolling interests		—		—			(2,958	)		—			(2,958	)

Comprehensive income attributable to Valmont Industries, Inc.	$	81,293	$	6,883		$	73,156		$	(80,039	)	$	81,293

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirty-nine Weeks Ended September 29, 2012

	Parent		Guarantors			Non-Guarantors			Eliminations			Total

Net earnings	$	169,036	$	67,239		$	90,681		$	(154,767	)	$	172,189

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period		—		(17,221	)		46,580			(6,871	)		22,488

		—		(17,221	)		46,580			(6,871	)		22,488

Unrealized loss on cash flow hedge:
Amortization cost included in interest expense		300		—			—			—			300

		300		—			—			—			300

Actuarial gain in defined benefit pension plan liability		—		—			2,595			—			2,595
Equity in other comprehensive income		22,797		—			—			(22,797	)		—

Other comprehensive income (loss)		23,097		(17,221	)		49,175			(29,668	)		25,383

Comprehensive income		192,133		50,018			139,856			(184,435	)		197,572
Comprehensive income attributable to noncontrolling interests		—		—			(5,439	)		—			(5,439	)

Comprehensive income attributable to Valmont Industries, Inc.	$	192,133	$	50,018		$	134,417		$	(184,435	)	$	192,133

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
September 28, 2013

	Parent			Guarantors		Non-Guarantors		Eliminations			Total

ASSETS
Current assets:
Cash and cash equivalents	$	158,360		$	51,186	$	333,823	$	—		$	543,369
Receivables, net		135,423			82,840		295,569		—			513,832
Inventories		142,773			77,545		206,897		—			427,215
Prepaid expenses		8,301			740		26,030		—			35,071
Refundable and deferred income taxes		50,796			6,174		24,796		—			81,766

Total current assets		495,653			218,485		887,115		—			1,601,253

Property, plant and equipment, at cost		492,814			140,823		411,473		—			1,045,110
Less accumulated depreciation and amortization		299,858			60,595		143,627		—			504,080

Net property, plant and equipment		192,956			80,228		267,846		—			541,030

Goodwill		20,108			107,542		212,845		—			340,495
Other intangible assets		382			49,665		119,857		—			169,904
Investment in subsidiaries and intercompany accounts		1,477,628			1,337,088		585,304		(3,400,020	)		—
Other assets		38,147			—		57,691		—			95,838

Total assets	$	2,224,874		$	1,793,008	$	2,130,658	$	(3,400,020	)	$	2,748,520

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	188		$	—	$	77	$	—		$	265
Notes payable to banks		—			—		17,129		—			17,129
Accounts payable		60,642			19,014		134,532		—			214,188
Accrued employee compensation and benefits		65,924			10,542		32,308		—			108,774
Accrued expenses		43,610			4,514		39,490		—			87,614
Dividends payable		6,697			—		—		—			6,697

Total current liabilities		177,061			34,070		223,536		—			434,667

Deferred income taxes		17,437			28,464		33,404		—			79,305
Long-term debt, excluding current installments		470,549			539,517		745		(539,517	)		471,294
Defined benefit pension liability		—			—		99,135		—			99,135
Deferred compensation		31,456			—		7,461		—			38,917
Other noncurrent liabilities		7,209			—		42,208		—			49,417
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		1,514,099			540,393		514,611		(1,055,004	)		1,514,099
Accumulated other comprehensive income (loss)		308			42,328		6,679		(49,007	)		308
Treasury stock		(21,145	)		—		—		—			(21,145	)

Total Valmont Industries, Inc. shareholders' equity		1,521,162			1,190,957		1,669,546		(2,860,503	)		1,521,162

Noncontrolling interest in consolidated subsidiaries		—			—		54,623		—			54,623

Total shareholders' equity		1,521,162			1,190,957		1,724,169		(2,860,503	)		1,575,785

Total liabilities and shareholders' equity	$	2,224,874		$	1,793,008	$	2,130,658	$	(3,400,020	)	$	2,748,520

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
December 29, 2012

	Parent			Guarantors			Non-Guarantors		Eliminations			Total

ASSETS
Current assets:
Cash and cash equivalents	$	40,926		$	83,203		$	290,000	$	—		$	414,129
Receivables, net		144,161			86,403			285,338		—			515,902
Inventories		146,619			71,988			193,777		—			412,384
Prepaid expenses		7,153			1,029			16,962		—			25,144
Refundable and deferred income taxes		29,359			6,904			22,118		—			58,381

Total current assets		368,218			249,527			808,195		—			1,425,940

Property, plant and equipment, at cost		456,497			122,937			415,340		—			994,774
Less accumulated depreciation and amortization		288,226			55,239			138,697		—			482,162

Net property, plant and equipment		168,271			67,698			276,643		—			512,612

Goodwill		20,108			107,542			203,141		—			330,791
Other intangible assets		499			53,517			118,254		—			172,270
Investment in subsidiaries and intercompany accounts		1,456,159			1,246,777			615,152		(3,318,088	)		—
Other assets		32,511			—			94,427		—			126,938

Total assets	$	2,045,766		$	1,725,061		$	2,115,812	$	(3,318,088	)	$	2,568,551

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	189		$	—		$	35	$	—		$	224
Notes payable to banks		—			—			13,375		—			13,375
Accounts payable		72,610			22,006			117,808		—			212,424
Accrued employee compensation and benefits		61,572			10,530			29,803					101,905
Accrued expenses		30,641			4,674			43,188		—			78,503
Income taxes payable		—			31			669		(700	)		—
Dividends payable		6,002			—			—		—			6,002

Total current liabilities		171,014			37,241			204,878		(700	)		412,433

Deferred income taxes		23,305			27,851			37,144		—			88,300
Long-term debt, excluding current installments		471,828			599,873			765		(599,873	)		472,593
Defined benefit pension liability		—			—			112,043		—			112,043
Deferred compensation		25,200			—			6,720		—			31,920
Other noncurrent liabilities		4,507			—			39,745		—			44,252
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		1,300,529			467,240			443,337		(910,577	)		1,300,529
Accumulated other comprehensive income		43,938			(15,380	)		65,826		(50,446	)		43,938
Treasury stock		(22,455	)		—			—		—			(22,455	)

Total Valmont Industries, Inc. shareholders' equity		1,349,912			1,060,096			1,657,419		(2,717,515	)		1,349,912

Noncontrolling interest in consolidated subsidiaries		—			—			57,098		—			57,098

Total shareholders' equity		1,349,912			1,060,096			1,714,517		(2,717,515	)		1,407,010

Total liabilities and shareholders' equity	$	2,045,766		$	1,725,061		$	2,115,812	$	(3,318,088	)	$	2,568,551

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Thirty-nine Weeks Ended September 28, 2013

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operating activities:
Net earnings	$	223,621		$	73,154		$	99,072		$	(167,500	)	$	228,347
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		15,252			9,620			32,545			—			57,417
Stock-based compensation		4,999			—			—			—			4,999
Defined benefit pension plan expense		—			—			4,870			—			4,870
Contribution to defined benefit pension plan		—			—			(16,755	)		—			(16,755	)
Gain on sale of property, plant and equipment		354			37			(5,451	)		—			(5,060	)
Equity in earnings in nonconsolidated subsidiaries		(341	)		—			(207	)		—			(548	)
Deferred income taxes		(7,473	)		1,342			4,856			—			(1,275	)
Changes in assets and liabilities (net of acquisitions):
Receivables		8,737			3,552			(13,046	)		—			(757	)
Inventories		3,146			(5,556	)		(12,164	)		—			(14,574	)
Prepaid expenses		(1,148	)		290			(6,183	)		—			(7,041	)
Accounts payable		(11,968	)		(2,992	)		16,121			—			1,161
Accrued expenses		17,944			(148	)		(865	)		—			16,931
Other noncurrent liabilities		5,987			—			(3,477	)					2,510
Income taxes payable (refundable)		(19,833	)		(2,035	)		(77	)		825			(21,120	)

Net cash flows from operating activities		239,277			77,264			99,239			(166,675	)		249,105

Cash flows from investing activities:
Purchase of property, plant and equipment		(41,034	)		(18,381	)		(15,657	)		—			(75,072	)
Proceeds from sale of assets		1,492			35			38,037			—			39,564
Acquisitions, net of cash acquired		—			—			(53,152	)		—			(53,152	)
Other, net		(68,447	)		(105,512	)		8,515			166,675			1,231

Net cash flows from investing activities		(107,989	)		(123,858	)		(22,257	)		166,675			(87,429	)

Cash flows from financing activities:
Net borrowings under short-term agreements		—			—			3,439			—			3,439
Proceeds from long-term borrowings		—			—			274			—			274
Principal payments on long-term borrowings		(187	)		—			(321	)		—			(508	)
Dividends paid		(18,717	)		—			—			—			(18,717	)
Intercompany dividends		—			20,133			(20,133	)		—			—
Dividends to noncontrolling interest		—			—			(1,767	)		—			(1,767	)
Proceeds from exercises under stock plans		15,064			—			—			—			15,064
Excess tax benefits from stock option exercises		4,630			—			—			—			4,630
Purchase of common treasury shares—stock plan exercises:		(14,644	)		—			—			—			(14,644	)

Net cash flows from financing activities		(13,854	)		20,133			(18,508	)		—			(12,229	)

Effect of exchange rate changes on cash and cash equivalents		—			(5,556	)		(14,651	)		—			(20,207	)

Net change in cash and cash equivalents		117,434			(32,017	)		43,823			—			129,240
Cash and cash equivalents—beginning of year		40,926			83,203			290,000			—			414,129

Cash and cash equivalents—end of period	$	158,360		$	51,186		$	333,823		$	—		$	543,369

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Thirty-nine Weeks Ended September 29, 2012

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operations:
Net earnings	$	169,036		$	67,239		$	90,681		$	(154,767	)	$	172,189
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		14,183			9,602			28,477			—			52,262
Stock-based compensation		4,517			—			—			—			4,517
Defined benefit pension plan expense		—			—			3,076			—			3,076
Contribution to defined benefit pension plan		—			—			(11,591	)		—			(11,591	)
Gain on sale of property, plant and equipment		(66	)		(58	)		(63	)		—			(187	)
Equity in earnings of nonconsolidated subsidiaries		(461	)		—			(4,850	)		—			(5,311	)
Deferred income taxes		(3,832	)		(419	)		314			—			(3,937	)
Changes in assets and liabilities:
Receivables		(5,806	)		(18,798	)		(22,059	)		—			(46,663	)
Inventories		1,705			(11,409	)		(26,803	)		—			(36,507	)
Prepaid expenses		(741	)		(43	)		(2,873	)		—			(3,657	)
Accounts payable		(14,260	)		3,280			10,945			—			(35	)
Accrued expenses		16,577			(607	)		19			—			15,989
Other noncurrent liabilities		532			—			(1,255	)		—			(723	)
Income taxes payable (refundable)		(19,897	)		273			(1,461	)		(655	)		(21,740	)

Net cash flows from operations		161,487			49,060			62,557			(155,422	)		117,682

Cash flows from investing activities:
Purchase of property, plant and equipment		(23,270	)		(10,885	)		(24,545	)		—			(58,700	)
Proceeds from sale of assets		112			71			5,414			—			5,597
Other, net		(77,917	)		(15,657	)		(61,768	)		155,422			80

Net cash flows from investing activities		(101,075	)		(26,471	)		(80,899	)		155,422			(53,023	)

Cash flows from financing activities:
Net borrowings under short-term agreements		—			—			4,096			—			4,096
Proceeds from long-term borrowings		39,000			—			126			—			39,126
Principal payments on long-term borrowings		(39,197	)		—			(83	)		—			(39,280	)
Proceeds from sale of partial ownership interest		—			—			1,404			—			1,404
Dividends paid		(15,530	)		—			—			—			(15,530	)
Dividend to noncontrolling interests		—			—			(1,379	)		—			(1,379	)
Debt issuance costs		(1,703	)		—			—			—			(1,703	)
Proceeds from exercises under stock plans		19,527			—			—			—			19,527
Excess tax benefits from stock option exercises		4,212			—			—			—			4,212
Purchase of common treasury shares—stock plan exercises		(19,116	)		—			—			—			(19,116	)

Net cash flows from financing activities		(12,807	)		—			4,164			—			(8,643	)

Effect of exchange rate changes on cash and cash equivalents		—			1,318			6,852			—			8,170

Net change in cash and cash equivalents		47,605			23,907			(7,326	)		—			64,186
Cash and cash equivalents—beginning of year		27,545			18,257			317,092			—			362,894

Cash and cash equivalents—end of period	$	75,150		$	42,164		$	309,766		$	—		$	427,080

Table of Contents

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 29, 2012. Segment sales in the table below are presented net of intersegment sales.

Table of Contents

Results of Operations

Dollars in millions, except per share amounts

	Thirteen Weeks Ended									Thirty-nine Weeks Ended

	September 28, 2013			September 29, 2012			% Incr. (Decr.)			September 28, 2013			September 29, 2012			% Incr. (Decr.)
Consolidated
Net sales	$	778.0		$	729.8			6.6	%	$	2,476.3		$	2,214.5			11.8	%
Gross profit		225.6			192.4			17.3	%		722.4			578.1			25.0	%
as a percent of sales		29.0	%		26.4	%					29.2	%		26.1	%
SG&A expense		115.7			102.0			13.4	%		350.0			307.6			13.8	%
as a percent of sales		14.9	%		14.0	%					14.1	%		13.9	%
Operating income		109.9			90.4			21.6	%		372.4			270.6			37.6	%
as a percent of sales		14.1	%		12.4	%					15.0	%		12.2	%
Net interest expense		6.6			6.3			4.8	%		19.6			17.6			11.4	%
Effective tax rate		42.8	%		34.1	%					35.6	%		36.2	%
Net earnings	$	56.5		$	56.7			(0.4	)%	$	223.6		$	169.0			32.3	%
Diluted earnings per share	$	2.10		$	2.12			(0.9	)%	$	8.31		$	6.32			31.5	%
Engineered Infrastructure Products
Net sales	$	235.3		$	219.3			7.3	%	$	658.0		$	616.0			6.8	%
Gross profit		67.6			59.0			14.6	%		186.0			160.1			16.2	%
SG&A expense		41.9			40.3			4.0	%		125.0			119.2			4.9	%
Operating income		25.7			18.7			37.4	%		61.0			40.9			49.1	%
Utility Support Structures
Net sales	$	228.9		$	216.9			5.5	%	$	696.1		$	617.9			12.7	%
Gross profit		61.8			47.9			29.0	%		189.8			134.5			41.1	%
SG&A expense		20.3			17.7			14.7	%		60.0			52.6			14.1	%
Operating income		41.5			30.2			37.4	%		129.8			81.9			58.5	%
Coatings
Net sales	$	75.3		$	71.4			5.5	%	$	229.6		$	213.1			7.7	%
Gross profit		28.7			26.3			9.1	%		80.9			79.0			2.4	%
SG&A expense		8.9			7.7			15.6	%		24.1			24.4			(1.2	)%
Operating income		19.8			18.6			6.5	%		56.8			54.6			4.0	%
Irrigation
Net sales	$	175.1		$	156.4			12.0	%	$	690.0		$	546.7			26.2	%
Gross profit		52.8			44.5			18.7	%		216.3			156.4			38.3	%
SG&A expense		21.7			17.3			25.4	%		66.4			53.2			24.8	%
Operating income		31.1			27.2			14.3	%		149.9			103.2			45.3	%
Other
Net sales	$	63.4		$	65.8			(3.6	)%	$	202.6		$	220.8			(8.2	)%
Gross profit		14.8			14.5			2.1	%		49.2			47.9			2.7	%
SG&A expense		4.8			4.8			—	%		15.4			14.5			6.2	%
Operating income		10.0			9.7			3.1	%		33.8			33.4			1.2	%
Net corporate expense
Gross profit	$	(0.1	)	$	0.2			NM		$	0.2		$	0.2			NM
SG&A expense		18.1			14.2			27.5	%		59.1			43.6			35.6	%
Operating loss		(18.2	)		(14.0	)		(30.0	)%		(58.9	)		(43.4	)		(35.7	)%

NM=Not meaningful

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Overview

On a consolidated basis, the increase in net sales in the third quarter and first three quarters of fiscal 2013, as compared with 2012, reflected improved sales in all reportable segments while sales were down in the "Other" category. Fiscal 2013 refers to the thirteen and thirty-nine week periods ended September 28, 2013 and fiscal 2012 refers to the thirteen and thirty-nine week periods ended September 29, 2012. The increase in net sales in fiscal 2013, as compared with fiscal 2012, was due to the following factors:

	Third quarter

	Total			EIP			Utility			Coatings			Irrigation			Other
Sales—2012	$	729.8		$	219.3		$	216.9		$	71.4		$	156.4		$	65.8
Volume		17.9			5.1			(8.4	)		(2.2	)		17.8			5.6
Pricing/mix		21.5			(1.7	)		19.9			0.5			4.7			(1.9	)
Acquisitions		25.9			16.8			—			9.1			—			—
Currency translation		(17.1	)		(4.2	)		0.5			(3.5	)		(3.8	)		(6.1	)

Sales—2013	$	778.0		$	235.3		$	228.9		$	75.3		$	175.1		$	63.4

	Year-to-date

	Total			EIP			Utility		Coatings			Irrigation			Other
Sales—2012	$	2,214.5		$	616.0		$	617.9	$	213.1		$	546.7		$	220.8
Volume		136.9			1.0			14.4		(7.0	)		128.0			0.5
Pricing/mix		78.2			(1.2	)		63.2		1.9			23.6			(9.3	)
Acquisitions		72.8			46.7			—		26.1			—			—
Currency translation		(26.1	)		(4.5	)		0.6		(4.5	)		(8.3	)		(9.4	)

Sales—2013	$	2,476.3		$	658.0		$	696.1	$	229.6		$	690.0		$	202.6

Acquisitions included Locker Group Holdings ("Locker") and Pure Metal Galvanizing ("PMG"). We acquired PMG in December 2012 and Locker in February 2013. We report Locker in the Engineered Infrastructure Products segment and PMG in the Coatings segment.

In the third quarter and first three quarters of fiscal 2013, we realized a decrease in operating profit, as compared with fiscal 2012, due to currency translation effects. On average, the U.S. dollar strengthened in particular against the Australian dollar, Brazilian Real and South Africa Rand, resulting in less operating profit in U.S. dollar terms. The breakdown of this effect by segment was as follows:

	Total			EIP			Coatings			Irrigation			Other			Corporate

Third quarter	$	(2.2	)	$	(0.6	)	$	(0.6	)	$	(0.5	)	$	(0.5	)	$	—
Year-to-date	$	(3.1	)	$	(0.5	)	$	(0.7	)	$	(1.3	)	$	(0.7	)	$	0.1

The increase in gross margin (gross profit as a percent of sales) in fiscal 2013, as compared with 2012, was due to a combination of improved sales prices and sales mix, improved factory operations and moderating raw material costs in 2013, as compared with 2012. In general, our cost of steel and other raw materials were slightly lower in the third quarter and first three quarters of 2013, as compared with the same periods in 2012.

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Selling, general and administrative (SG&A) spending in the third quarter and first three quarters of fiscal 2013, as compared with the same period in 2012, increased mainly due to the following factors:

•: Expenses recorded by Locker and PMG, which were acquired after the third quarter of 2012, of $4.9 million and $14.4 million, respectively;
•: Increased compensation expenses of $2.1 million and $7.1 million, respectively, mainly associated with increased employment levels and salary increases, and;
•: Increased employee incentive accruals of $1.2 million and $9.9 million, respectively, due to improved operating results and increased share price in valuing long-term incentive plans.

In addition, certain non-recurring items affecting the comparisons of SG&A expenses included:

•: The sale of one of our galvanizing facilities in Australia resulted in a gain of $4.6 million in the second quarter of 2013, which was reported as a reduction of SG&A expense, and;
•: Insurance proceeds received in fiscal 2012 related to a fire in one of our galvanizing facilities in Australia resulted in a non-recurring reduction in SG&A in the third quarter and first three quarters of fiscal 2012 of $0.6 million and $2.0 million, respectively.

On a reportable segment basis, all segments realized improved operating income in the third quarter and first three quarters of 2013, as compared with 2012.

Net interest expense increased in the the third quarter and first three quarters of fiscal 2013, as compared with 2012, due to a combination of lower interest income, as we used invested cash to fund the Locker acquisition, and slightly higher interest expense. The increase in interest expense principally was due to higher bank fees and interest incurred due to international working capital borrowings.

The increase in other expense in the third quarter of 2013, as compared with 2012, mainly was attributable to foreign exchange transaction losses due to currency volatility.

Our effective income tax rate in the third quarter of fiscal 2013 was higher than the same period in fiscal 2012, principally due to a lowering of U.K. income tax rates and reconciliation of our annual income tax filings. In fiscal 2012 and 2013, U.K. tax rates were collectively reduced from 25% to 20%. Accordingly, we reduced the value of our deferred tax assets associated with net operating loss carryforwards and certain timing differences by $8.3 million in the third quarter of fiscal 2013 ($4.7 million in fiscal 2012), with a corresponding increase in income tax expense. On a year-to-date basis, the effects of the U.K. tax rate decrease were offset somewhat by approximately $1.5 million of tax benefits associated with the first quarter 2013 sale of our nonconsolidated investment in South Africa and $1.4 million of increased research and development tax credits in the U.S.

Earnings in non-consolidated subsidiaries were lower in fiscal 2013, as compared with 2012, due to the sale of our 49% owned manganese materials operation in February 2013. There was no significant gain or loss on the sale.

Our cash flows generated by operations were approximately $249.1 million in the first three quarters of fiscal 2013, as compared with $117.7 million in 2012. The increase in operating cash flow in the first three quarters of fiscal 2013 was the result of improved net earnings and less additional working capital to support the improved sales in 2013, as compared with 2012.

Engineered Infrastructure Products (EIP) segment

The increase in net sales in the third quarter and first three quarters of fiscal 2013 as compared with 2012 was mainly due to the acquisition of Locker in February 2013. Global lighting sales in the third quarter and first three quarters of fiscal 2013 were comparable with the same periods in fiscal 2012. In the third quarter of fiscal 2013, sales in North America and Europe were comparable with

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2012. On a year-to-date basis, North American sales were comparable with 2012 while Europe was down slightly from 2012. The transportation market for lighting and traffic structures in the U.S., while stable, continues to be challenging, due in part to the lack of long-term U.S. federal highway funding legislation. Sales in other market channels such as sales to lighting fixture manufacturers and commercial construction projects in the third quarter and first three quarters of fiscal 2013 improved somewhat as compared with the same periods in 2012. In Europe, year-to-date sales in fiscal 2013 were lower than 2012, as weak economic conditions and restricted government roadway spending activity hampered demand for lighting structures.

Communication product line sales improved in the third quarter and first three quarters of fiscal 2013, as compared with the same periods of fiscal 2012. On a regional basis, North American sales in the third quarter and first three quarters of fiscal 2013 improved over the same periods in fiscal 2012 by $8.4 and $16.9 million, respectively. The increase in North America sales was mainly attributable to stronger sales demand for components due to 4G wireless communication development. In China, sales of wireless communication structures in the third quarter and first three quarters of fiscal 2013 were lower than the same periods in fiscal 2012.

Access systems product line sales improved in fiscal 2013, as compared with 2012, mainly due to the Locker acquisition in February 2013. Otherwise, access systems sales in the third quarter and first three quarters of fiscal 2013 were lower than 2012, due a combination of slowness in mining sector investment in Australia and exchange rate effects due to a weaker Australian dollar in 2013 and related competitive pricing effects. Highway safety product sales in fiscal 2013 were comparable with fiscal 2012, as spending for roads and highways in Australia continues to be relatively weak due to budgetary restrictions.

Operating income for the segment in the third quarter and first three quarters of fiscal 2013 increased, as compared with the same periods of fiscal 2012, due primarily to:

•: improved operating performance of our lighting operations as a result of better factory operating performance (approximately $7.2 million and $9.8 million, respectively);
•: improved North American communication product sales (approximately $1.0 million and $6.8 million), and;
•: operating profit generated from Locker (approximately $1.4 million and $2.7 million, respectively).

The increase in SG&A spending was attributable to Locker (approximately $3.8 million and $10.4 million, respectively). SG&A spending otherwise was lower in fiscal 2013, as compared with 2012, mainly associated with cost cutting measures taken in Europe in the third and fourth quarters of 2012.

Utility Support Structures (Utility) segment

In the Utility segment, the sales increase in the third quarter and first three quarters of fiscal 2013, as compared with 2012, was due mainly to improved sales in the U.S. market. While international sales were lower in the third quarter of 2013, as compared with the same period of 2012, year-to-date international sales in 2013 were comparable with fiscal 2012. International utility sales are more dependent on bid projects than North America.

In the U.S., electrical utility companies continue to invest in the electrical grid at a high rate, as evidenced by record backlogs at December 29, 2012 and continued strong order flow in 2013. Certain low margin orders that shipped and were completed in fiscal 2012 contributed to improved sales prices and mix in 2013, as compared with 2012.

Operating income in fiscal 2013, as compared with 2012, increased due to the increase in sales volumes, improved sales pricing and mix and favorable leverage of fixed costs. In addition, the third

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quarter and first three quarters of fiscal 2012 included approximately $1.3 million and $8.4 million, respectively, of unanticipated production and rework costs associated with one large order. These costs did not recur in fiscal 2013, which contributed to the gross profit improvements in fiscal 2013, as compared with 2012. The increases in SG&A expense in the third quarter and first three quarters of fiscal 2013, as compared with fiscal 2012, were mainly due to increased employee compensation ($1.0 million and $2.3 million, respectively) and incentives ($0.5 million and $1.3 million, respectively) associated with the increase in business levels and operating income.

Coatings segment

Coatings segment sales increased in the third quarter and first three quarters of fiscal 2013, as compared with 2012, due mainly to the December 2012 PMG acquisition. North America experienced stable external demand for galvanizing services, although internal demand from our other segments was higher in the third quarter and first three quarters of 2013, as compared with 2012. Asia Pacific volumes in 2013 were lower than 2012 due to weak demand in Australia. Unit pricing in 2013 was comparable with 2012.

The increase in segment operating income in the third quarter and first three quarters of fiscal 2013, as compared with 2012, was mainly due to the gain on the sale of an Australian galvanizing operation in the second quarter of fiscal 2013 of $4.6 million, and operating income provided by PMG ($1.6 million and $3.1 million, respectively). These two positive effects on fiscal 2013 operating income were offset to an extent by the effect of lower external demand for coatings services in Australia and the following non-recurring favorable events that occurred in fiscal 2012:

•: Insurance recoveries in the third quarter of fiscal 2012 related to fire and storm damages at one of our Australian galvanizing facilities of approximately $0.8 million, and;
•: Settlement of a dispute with a vendor of approximately $0.9 million in the second quarter of 2012.

Irrigation segment

The increase in Irrigation segment net sales in the third quarter and first three quarters of fiscal 2013, as compared with 2012, was mainly due to sales volume increases in both North American and International markets. The pricing and sales mix effect was generally due to sales price increases that took effect in 2012 to recover higher material costs in early 2012. In global markets, the sales growth was due to very strong agricultural economies around the world. Farm commodity prices continue to be favorable. We believe that farm commodity prices have been generally 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, in North America, we believe widespread drought throughout much of the country in 2012 further highlighted the benefits of center pivot irrigation and contributed to enhanced demand for our products. In international markets, sales improved in the third quarter and first three quarters of fiscal 2013, as compared with 2012, mainly due to increased activity in Brazil, Eastern Europe and Australia. On balance, sales in other international regions in the third quarter and first three quarters of fiscal 2013 were comparable to the same periods of a strong fiscal 2012.

Operating income for the segment improved in fiscal 2013 over 2012, due to improved global sales unit volumes and related price increases. Moderating raw material prices in light of higher selling prices also contributed to improved operating income in 2013, as compared with 2012. The most significant reasons for the increase in SG&A expense in 2013, as compared with 2012, related to employee compensation costs and incentives (approximately $1.1 million and $4.2 million, respectively), $0.8 million and $2.0 million in provisions for international receivables recorded in the third quarter and first three quarters of 2013 and other expenses to support the business activity levels and product development.

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Other

This unit includes the grinding media, industrial tubing, electrolytic manganese and industrial fasteners operations. The decrease in sales in the third quarter and first three quarters of fiscal 2013, as compared with 2012, was mainly due lower sales prices and exchange rate translation effects. Operating income in the third quarter and first three quarters of fiscal 2013 was comparable with the same periods in 2012, as lower raw material prices helped to dampen the effects of lower selling prices.

Net corporate expense

Net corporate expense in the third quarter and first three quarters of fiscal 2013 increased over the same periods in fiscal 2012. These increases were mainly due to:

•: higher employee incentives associated with improved net earnings and share price, which affected long-term incentive plans. Third quarter incentive expense in fiscal 2013 was comparable with 2012. On a year-to-date basis, incentive expenses in fiscal 2013 were $5.3 million higher than 2012;
•: insurance settlements realized in the third quarter and first three quarters of 2012 related to a fire and storm damage to one of our galvanizing facilities in Australia of $0.6 million and $2.0 million, respectively, that did not recur in fiscal 2013;
•: higher compensation and employee benefit costs (approximately $1.5 million and $4.2 million, respectively), and;
•: increased expenses associated with the Delta Pension Plan (approximately $0.6 million and $1.9 million, respectively).

These increases were partially offset by 2012 stamp duties incurred in the first quarter of fiscal 2012 related to the 2011 Delta legal restructuring of $1.2 million that did not recur in 2013.

Liquidity and Capital Resources

Cash Flows

Working Capital and Operating Cash Flows—Net working capital was $1,166.6 million at September 28, 2013, as compared with $1,013.5 million at December 29, 2012. The increase in net working capital in 2013 mainly resulted from increased cash on hand. Cash flow provided by operations was $249.1 million in the first three quarters of fiscal 2013, as compared with $117.7 million provided by operations in the first three quarters of fiscal 2012. The increase in operating cash flow in 2013 was the result of the improvement in net earnings and working capital management in 2013, as compared with 2012. Despite higher sales levels in the first three quarters of fiscal 2013, receivable levels were comparable and inventory slightly increased as compared to December 29, 2012. Receivable turnover was slightly better in 2013, as compared with 2012, in part due to strong sales in North America, where collections generally are faster than at international locations. Inventory levels at September 28, 2013 were slightly higher than December 29, 2012, due to seasonal trends and the addition of Locker in 2013.

Investing Cash Flows—Capital spending in the first three quarters of fiscal 2013 was $75.1 million, as compared with $58.7 million for the same period in 2012. The most significant capital spending projects in 2013 included certain capacity expansions in the Utility and Irrigation segments. We expect our capital spending for the 2013 fiscal year to be approximately $110 million. The increase in expected capital spending over 2012 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. In 2013, investing cash flows included proceeds from asset sales of $39.6 million, principally consisting of $29.2 million received from the sale of our 49% owned non-consolidated subsidiary in South Africa and

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$8.2 million received from the sale of the Western Australia galvanizing operation. Investing cash flows also included $53.2 million paid for the Locker acquisition.

Financing Cash Flows—Our total interest-bearing debt increased slightly to $488.7 million at September 28, 2013 from $486.2 million at December 29, 2012. Financing cash flows overall were lower in the first three quarters of fiscal 2013, as compared with the same period in 2012. The main reason for the decrease related to higher dividend payments associated with an increase in per share dividends in fiscal 2013.

Financing and Capital

We have historically funded our growth, capital spending and acquisitions through a combination of operating cash flows and debt financing. We have an internal long-term objective to maintain long-term debt as a percent of invested capital at or below 40%. At September 28, 2013, our long-term debt to invested capital ratio was 22.0%, as compared with 23.9% at December 29, 2012. 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 2013.

Our debt financing at September 28, 2013 consisted primarily of long-term debt. We also maintain certain short-term bank lines of credit totaling $102.5 million, $85.3 million of which was unused at September 28, 2013. Our long-term debt principally consists of:

•

$450 million face value ($462 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.

•

$400 million revolving credit agreement with a group of banks. We may increase the credit facility by up to an additional $200 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 225 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 225 basis points (inclusive of facility fees), depending on our ratio of debt to EBITDA.

At September 28, 2013 and December 29, 2012, we had no outstanding borrowings under the revolving credit agreement. The revolving credit agreement has a termination date of August 15, 2017, and contains certain financial covenants that may limit our additional borrowing capability under the agreement. At September 28, 2013, we had the ability to borrow $384.3 million under this facility, after consideration of standby letters of credit of $15.7 million associated with certain insurance obligations and international sales commitments.

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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 3.5X EBITDA of the prior four quarters; and
•: EBITDA over the prior four quarters must be at least 2.5X our interest expense over the same period.

At September 28, 2013, we were in compliance with all covenants related to these debt agreements. The key covenant calculations at September 28, 2013 were as follows:


Interest-bearing debt	$	488,688
EBITDA—last four quarters		561,912
Leverage ratio		0.87
EBITDA—last four quarters	$	561,912
Interest expense—last four quarters		32,332
Interest earned ratio		17.38

The calculation of EBITDA—last four quarters (September 29, 2012 through September 28, 2013) is as follows:


Net cash flows from operations	$	328,520
Interest expense		32,332
Income tax expense		165,550
Deferred income tax benefit		(6,383	)
Noncontrolling interest		(6,418	)
Equity in earnings of nonconsolidated subsidiaries		1,366
Stock-based compensation		(6,311	)
Pension plan expense		(6,075	)
Contribution to pension plan		16,755
Changes in assets and liabilities		38,023
Other		4,553

EBITDA	$	561,912

Net earnings attributable to Valmont Industries, Inc.	$	288,657
Interest expense		32,332
Income tax expense		165,550
Depreciation and amortization expense		75,373

EBITDA	$	561,912

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 $644.3 million of undistributed earnings of our foreign subsidiaries, as we intend to reinvest those earnings. Of our cash balances at September 28, 2013, approximately $381.8 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

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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 $38.6 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 37 in our Form 10-K for the fiscal year ended December 29, 2012.

Off Balance Sheet Arrangements

There have been no changes in our off balance sheet arrangements as described on page 38 in our Form 10-K for the fiscal year ended December 29, 2012.

Critical Accounting Policies

There have been no changes in our critical accounting policies as described on pages 39-43 in our Form 10-K for the fiscal year ended December 29, 2012 during the quarter ended September 28, 2013.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes in the company's market risk during the quarter ended September 28, 2013. For additional information, refer to the section "Risk Management" in our Form 10-K for the fiscal year ended December 29, 2012.

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
June 30, 2013 to July 27, 2013		6,004	$	146.09		—		—
July 28, 2013 to August 31, 2013		1,181		139.91		—		—
September 1, 2013 to September 28, 2013		—		—		—		—

Total		7,185	$	145.07		—		—

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

Item 6. Exhibits

(a): Exhibits

		Exhibit No.			Description

			10.1		Separation Agreement and Release dated August 13, 2013 between Richard P. Heyse and Valmont Industries, Inc. This document was filed as Exhibit 10.1 to Valmont's Current Report on Form 8-K dated August 13, 2013 and is incorporated herein by this reference.
			31.1		Section 302 Certificate of Chief Executive Officer
			31.2		Section 302 Certificate of Chief Financial Officer
			32.1		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
			101		The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended September 28, 2013, 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 Chief Financial Officer (Principal Financial Officer)

Dated this 23rd day of October, 2013.

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Index of Exhibits

		Exhibit No.			Description

			10.1		Separation Agreement and Release dated August 13, 2013 between Richard P. Heyse and Valmont Industries, Inc. This document was filed as Exhibit 10.1 to Valmont's Current Report on Form 8-K dated August 13, 2013 and is incorporated herein by this reference.
			31.1		Section 302 Certificate of Chief Executive Officer
			31.2		Section 302 Certificate of Chief Financial Officer
			32.1		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
			101		The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended September 28, 2013, 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.