VALMONT INDUSTRIES INC - Quarter Report: 2014 June (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 June 28, 2014
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

26,193,724
Outstanding shares of common stock as of July 22, 2014

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 twenty-six weeks ended June 28, 2014 and June 29, 2013	3
	Condensed Consolidated Statements of Comprehensive Income for the thirteen and twenty-six weeks ended June 28, 2014 and June 29, 2013	4
	Condensed Consolidated Balance Sheets as of June 28, 2014 and December 28, 2013	5
	Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended June 28, 2014 and June 29, 2013	6
	Condensed Consolidated Statements of Shareholders' Equity for the twenty-six weeks ended June 28, 2014 and June 29, 2013	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44
PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 6.	Exhibits	45
Signatures		46

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(Unaudited)

	Thirteen Weeks Ended						Twenty-six Weeks Ended

	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013
Product sales	$	766,844		$	794,341		$	1,447,887		$	1,534,788
Services sales		75,755			84,318			146,452			163,501


Net sales		842,599			878,659			1,594,339			1,698,289
Product cost of sales		573,067			563,306			1,070,910			1,092,467
Services cost of sales		49,055			53,882			95,970			108,982


Total cost of sales		622,122			617,188			1,166,880			1,201,449


Gross profit		220,477			261,471			427,459			496,840
Selling, general and administrative expenses		115,701			117,206			223,835			234,385


Operating income		104,776			144,265			203,624			262,455


Other income (expenses):
Interest expense		(8,304	)		(8,025	)		(16,501	)		(16,215	)
Interest income		1,577			1,852			3,316			3,205
Other		1,903			123			(3,909	)		1,679


		(4,824	)		(6,050	)		(17,094	)		(11,331	)


Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		99,952			138,215			186,530			251,124


Income tax expense (benefit):
Current		26,117			48,210			59,055			86,870
Deferred		7,953			(1,042	)		5,030			(4,729	)


		34,070			47,168			64,085			82,141


Earnings before equity in earnings of nonconsolidated subsidiaries		65,882			91,047			122,445			168,983
Equity in earnings of nonconsolidated subsidiaries		(30	)		269			(30	)		473


Net earnings		65,852			91,316			122,415			169,456
Less: Earnings attributable to noncontrolling interests		(1,876	)		(1,753	)		(2,459	)		(2,324	)


Net earnings attributable to Valmont Industries, Inc.	$	63,976		$	89,563		$	119,956		$	167,132




Earnings per share:
Basic	$	2.40		$	3.36		$	4.50		$	6.28




Diluted	$	2.38		$	3.33		$	4.46		$	6.22




Cash dividends declared per share	$	0.375		$	0.250		$	0.625		$	0.475




Weighted average number of shares of common stock outstanding—Basic (000 omitted)		26,623			26,648			26,669			26,615




Weighted average number of shares of common stock outstanding—Diluted (000 omitted)		26,856			26,910			26,903			26,884

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

	Thirteen Weeks Ended						Twenty-six Weeks Ended

	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013
Net earnings	$	65,852		$	91,316		$	122,415		$	169,456


Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss)		13,869			(52,962	)		25,506			(62,582	)
Realized loss included in net earnings during the period		—			—			—			(5,194	)
Unrealized loss on cash flow hedge:
Amortization cost included in interest expense		(33	)		100			67			200
Actuarial gain (loss) in defined benefit pension plan		(614	)		42			(847	)		(894	)


Other comprehensive income (loss)		13,222			(52,820	)		24,726			(68,470	)


Comprehensive income		79,074			38,496			147,141			100,986
Comprehensive loss (income) attributable to noncontrolling interests		(1,792	)		1,549			(1,704	)		3,189


Comprehensive income attributable to Valmont Industries, Inc.	$	77,282		$	40,045		$	145,437		$	104,175

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)

	June 28, 2014			December 28, 2013

ASSETS
Current assets:
Cash and cash equivalents	$	455,927		$	613,706
Receivables, net		543,608			515,440
Inventories		381,943			380,000
Prepaid expenses		66,916			22,997
Refundable and deferred income taxes		71,334			65,697


Total current assets		1,519,728			1,597,840


Property, plant and equipment, at cost		1,160,142			1,017,126
Less accumulated depreciation and amortization		521,288			482,916


Net property, plant and equipment		638,854			534,210


Goodwill		368,405			349,632
Other intangible assets, net		195,359			170,917
Other assets		136,258			123,895


Total assets	$	2,858,604		$	2,776,494




LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	188		$	202
Notes payable to banks		17,485			19,024
Accounts payable		208,834			216,121
Accrued employee compensation and benefits		95,365			122,967
Accrued expenses		91,631			71,560
Dividends payable		9,930			6,706


Total current liabilities		423,433			436,580


Deferred income taxes		95,674			78,924
Long-term debt, excluding current installments		478,498			470,907
Defined benefit pension liability		143,114			154,397
Deferred compensation		48,292			39,109
Other noncurrent liabilities		54,503			51,731
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		1,672,287			1,562,670
Accumulated other comprehensive income (loss)		(22,204	)		(47,685	)
Treasury stock		(95,714	)		(20,860	)


Total Valmont Industries, Inc. shareholders' equity		1,582,269			1,522,025


Noncontrolling interest in consolidated subsidiaries		32,821			22,821


Total shareholders' equity		1,615,090			1,544,846


Total liabilities and shareholders' equity	$	2,858,604		$	2,776,494

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Twenty-six Weeks Ended

	June 28, 2014			June 29, 2013
Cash flows from operating activities:
Net earnings	$	122,415		$	169,456
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		43,368			38,186
Loss on investment		3,501			—
Stock-based compensation		3,686			3,342
Defined benefit pension plan expense		1,334			3,245
Contribution to defined benefit pension plan		(17,484	)		(10,346	)
Gain on sale of property, plant and equipment		(102	)		(5,071	)
Equity in earnings in nonconsolidated subsidiaries		30			(473	)
Deferred income taxes		5,030			(4,729	)
Changes in assets and liabilities (net of acquisitions):
Receivables		21,083			(3,331	)
Inventories		6,624			(2,491	)
Prepaid expenses		(18,289	)		(5,910	)
Accounts payable		(28,633	)		736
Accrued expenses		(30,415	)		2,916
Other noncurrent liabilities		1,766			1,873
Income taxes refundable		(22,063	)		(11,810	)


Net cash flows from operating activities		91,851			175,593


Cash flows from investing activities:
Purchase of property, plant and equipment		(46,991	)		(54,258	)
Proceeds from sale of assets		1,151			39,054
Acquisitions, net of cash acquired		(120,483	)		(53,152	)
Other, net		(2,940	)		(133	)


Net cash flows from investing activities		(169,263	)		(68,489	)


Cash flows from financing activities:
Net borrowings under short-term agreements		(1,861	)		2,620
Proceeds from long-term borrowings		—			68
Principal payments on long-term borrowings		(259	)		(303	)
Dividends paid		(13,427	)		(12,021	)
Dividends to noncontrolling interest		(1,340	)		(1,767	)
Proceeds from exercises under stock plans		11,996			14,098
Excess tax benefits from stock option exercises		3,576			305
Purchase of treasury shares		(77,084	)		—
Purchase of common treasury shares—stock plan exercises		(11,984	)		(13,602	)


Net cash flows from financing activities		(90,383	)		(10,602	)


Effect of exchange rate changes on cash and cash equivalents		10,016			(20,154	)


Net change in cash and cash equivalents		(157,779	)		76,348
Cash and cash equivalents—beginning of year		613,706			414,129


Cash and cash equivalents—end of period	$	455,927		$	490,477

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 29, 2012	$	27,900	$	—		$	1,300,529		$	43,938		$	(22,455	)	$	57,098		$	1,407,010
Net earnings		—		—			167,132			—			—			2,324			169,456
Other comprehensive income (loss)		—		—			—			(62,957	)		—			(5,513	)		(68,470	)
Cash dividends declared		—		—			(12,713	)		—			—			—			(12,713	)
Dividends to noncontrolling interests		—		—			—			—			—			(1,767	)		(1,767	)
Acquisition of Locker		—		—			—			—			—			325			325
Stock plan exercises; 85,874 shares acquired		—		—			—			—			(13,602	)		—			(13,602	)
Stock options exercised; 177,902 shares issued		—		(3,647	)		3,378			—			14,367			—			14,098
Tax benefit from stock option exercises		—		305			—			—			—			—			305
Stock option expense		—		2,627			—			—			—			—			2,627
Stock awards; 2,667 shares issued		—		715			—			—			373			—			1,088


Balance at June 29, 2013	$	27,900	$	—		$	1,458,326		$	(19,019	)	$	(21,317	)	$	52,467		$	1,498,357




Balance at December 28, 2013	$	27,900	$	—		$	1,562,670		$	(47,685	)	$	(20,860	)	$	22,821		$	1,544,846
Net earnings		—		—			119,956			—			—			2,459			122,415
Other comprehensive income (loss)		—		—			—			25,481			—			(755	)		24,726
Cash dividends declared		—		—			(16,651	)		—			—			—			(16,651	)
Dividends to noncontrolling interests		—		—			—			—			—			(1,340	)		(1,340	)
Acquisition of DS SM		—		—			—			—			—			9,232			9,232
Addition of noncontrolling interest		—		—			—			—			—			404			404
Purchase of treasury shares; 490,172 shares acquired		—		—			—			—			(77,084	)		—			(77,084	)
Stock plan exercises; 78,217 shares acquired		—		—			—			—			(11,984	)		—			(11,984	)
Stock options exercised; 158,317 shares issued		—		(7,262	)		6,312			—			12,946			—			11,996
Tax benefit from stock option exercises		—		3,576			—			—			—			—			3,576
Stock option expense		—		2,525			—			—			—			—			2,525
Stock awards; 8,822 shares issued		—		1,161			—			—			1,268			—			2,429


Balance at June 28, 2014	$	27,900	$	—		$	1,672,287		$	(22,204	)	$	(95,714	)	$	32,821		$	1,615,090

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Condensed Consolidated Financial Statements

The Condensed Consolidated Balance Sheet as of June 28, 2014, the Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen and twenty-six weeks ended June 28, 2014 and June 29, 2013, and the Condensed Consolidated Statements of Cash Flows and Shareholders' Equity for the twenty-six week periods then ended have been prepared by the Company, without audit. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial statements as of June 28, 2014 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 28, 2013. 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 28, 2013. The results of operations for the period ended June 28, 2014 are not necessarily indicative of the operating results for the full year.

Inventories

Approximately 41% and 43% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of June 28, 2014 and December 28, 2013, 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 $47,141 and $45,204 at June 28, 2014 and December 28, 2013, respectively.

Inventories consisted of the following:

	June 28, 2014		December 28, 2013

Raw materials and purchased parts	$	178,366	$	179,576
Work-in-process		27,242		27,294
Finished goods and manufactured goods		223,476		218,334


Subtotal		429,084		425,204
Less: LIFO reserve		47,141		45,204


	$	381,943	$	380,000

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries for the thirteen and twenty-six weeks ended June 28, 2014 and June 29, 2013, were as follows:

	Thirteen Weeks Ended				Twenty-six Weeks Ended

	2014		2013		2014		2013
United States	$	65,096	$	98,684	$	136,790	$	187,421
Foreign		34,856		39,531		49,740		63,703


	$	99,952	$	138,215	$	186,530	$	251,124

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 thirteen and twenty-six weeks ended June 28, 2014 and June 29, 2013 were as follows:

	Thirteen Weeks Ended						Twenty-six Weeks Ended

	2014			2013			2014			2013
Net periodic benefit expense:
Interest cost	$	7,312		$	6,487		$	14,509		$	13,058
Expected return on plan assets		(6,640	)		(4,875	)		(13,175	)		(9,813	)


Net periodic benefit expense	$	672		$	1,612		$	1,334		$	3,245

Stock Plans

The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, non-vested stock awards and bonuses of common stock. At June 28, 2014, 1,463,096 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.

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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)

Expiration of grants is from six to ten years from the date of grant. The Company's compensation expense (included in selling, general and administrative expenses) and associated income tax benefits related to stock options for the thirteen and twenty-six weeks ended June 28, 2014 and June 29, 2013, respectively, were as follows:

	Thirteen Weeks Ended				Twenty-six Weeks Ended

	2014		2013		2014		2013
Compensation expense	$	1,262	$	1,314	$	2,525	$	2,627
Income tax benefits		486		505		972		1,011

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 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.

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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)

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 of $35,852 ($27,133 at December 2013) 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. The Company's ownership in Delta EMD Pty. Ltd. (JSE:DTA) of $10,114 and $13,910 is recorded at fair value at June 28, 2014 and December 28, 2013, respectively. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.

			Fair Value Measurement Using:

	Carrying Value June 28, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading Securities	$	45,966	$	45,966	$	—	$	—

			Fair Value Measurement Using:

	Carrying Value December 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	$	41,043	$	41,043	$	—	$	—

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 liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) consisted of the following at June 28, 2014 and December 28, 2013:

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

Balance at December 28, 2013	$	(20,165	)	$	(2,535	)	$	(24,985	)	$	(47,685	)
Current-period comprehensive income (loss)		26,261			67			(847	)		25,481


Balance at June 28, 2014	$	6,096		$	(2,468	)	$	(25,832	)	$	(22,204	)

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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)

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") 605, Revenue Recognition. The new revenue recognition standard requires entities to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2016 and is to be applied retrospectively. Early application is not permitted. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated results of operations and financial position.

(2) ACQUISITIONS

On March 3, 2014, the Company purchased 90% of the outstanding shares of DS SM A/S, which was renamed Valmont SM. Valmont SM is a manufacturer of heavy complex steel structures for a diverse range of industries including wind energy, offshore oil and gas, and electricity transmission. Valmont SM's operations are reported in the Engineered Infrastructure Products Segment. Valmont SM's annual sales are approximately $190,000 and it operates two manufacturing locations in Denmark. The purchase price paid for the business at closing (net of $56 cash acquired) was $120,483, including the payoff of an intercompany note payable by Valmont SM to its prior affiliates. The purchase is subject to an earn-out clause that is contingent on meeting future operational metrics for which no liability has been established based on current expectations. Additionally, the fair value measurements are subject to a trade working capital adjustment that has not yet been finalized. The acquisition, which was funded by cash held by the Company, was completed to participate in markets for wind energy, oil and gas exploration, power transmission and other related infrastructure projects and to increase the Company's geographic footprint in Europe. The Company also funded a portion of the acquisition with an intercompany note payable. The excess purchase price over the fair value of assets resulted in goodwill, which is not deductible for tax purposes.

The preliminary fair value measurement disclosed below is subject to management reviews and completion of the fair value measurements of the assets acquired and liabilities assumed. The Company expects the fair value measurement process and purchase price allocation to be completed in the third quarter of 2014 in conjunction with the finalization of the trade working capital settlement.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITIONS (Continued)

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

	At March 3, 2014

Current assets	$	73,421
Property, plant and equipment		88,917
Intangible assets		30,340
Goodwill		11,846


Total fair value of assets acquired	$	204,524


Current liabilities		50,953
Deferred income taxes		14,915
Intercompany note payable		37,448
Long-term debt		8,941


Total fair value of liabilities assumed		112,257
Non-controlling interests		9,232


Net assets acquired	$	83,035

The Company's Condensed Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended June 28, 2014 included net sales of $47,217 and $64,521 and net earnings of $2,925 and $4,102, respectively, resulting from Valmont SM's operations from March 3, 2014 to June 28, 2014. No proforma information for 2014 has been provided as it does not have a material effect on the financial statements.

Based on the preliminary fair value assessments, the Company allocated $30,340 of the purchase price to acquired intangible assets. The following table summarizes the major classes of Valmont SM's acquired intangible assets and the respective weighted average amortization periods:

	Amount

Trade Names	$	12,210	Indefinite
Backlog		3,145	1.5
Customer Relationships		14,985	15.0


Total Intangible Assets	$	30,340

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 operations are reported in the Engineered Infrastructure Products Segment. The purchase price paid for the

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITIONS (Continued)

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 $7,178. 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.

In December 2013, the Company purchased 100% of the outstanding shares of Armorflex International Ltd. ("Armorflex") for $10,000. Armorflex is a company holding proprietary intellectual property for products serving the highway safety market. In the measurement of fair values of assets acquired and liabilities assumed, we recorded goodwill of $6,823 and an aggregate of $3,792 for customer relationships, patented technology and other intangible assets. The goodwill is not deductible for tax purposes. Armorflex is included in the Engineered Infrastructure Products segment and was acquired to expand the Company's highway safety product offerings in the Asia Pacific region. This acquisition did not have a significant effect on the Company's fiscal 2013 financial results.

The Company's Condensed Consolidated Statement of Earnings for the thirteen and twenty-six weeks ended June 28, 2014 included net sales of $69,473 and $104,054 and net earnings of $3,888 and $5,574 resulting from the Valmont SM, Locker, and Armorflex acquisitions. The pro forma effect of these acquisitions on the second quarter and first half of 2013 Statement of Earnings was as follows:

	Thirteen weeks Ended June 29, 2013		Twenty-six weeks Ended June 29, 2013

Net sales	$	929,722	$	1,797,577
Net earnings	$	92,791	$	172,224
Earnings per share—diluted	$	3.44	$	6.41

(3) GOODWILL AND INTANGIBLE ASSETS

Amortized Intangible Assets

The components of amortized intangible assets at June 28, 2014 and December 28, 2013 were as follows:

	June 28, 2014

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	194,824	$	84,034	13 years
Proprietary Software & Database		3,977		2,985	5 years
Patents & Proprietary Technology		11,397		8,148	8 years
Other		4,731		2,153	3 years


	$	214,929	$	97,320

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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)

	December 28, 2013

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	177,495	$	76,024	13 years
Proprietary Software & Database		3,896		2,896	6 years
Patents & Proprietary Technology		11,334		7,239	8 years
Other		1,620		1,438	6 years


	$	194,345	$	87,597

Amortization expense for intangible assets for the thirteen and twenty-six weeks ended June 28, 2014 and June 29, 2013, respectively was as follows:

Thirteen Weeks Ended				Twenty-six Weeks Ended

2014		2013		2014		2013
$	4,634	$	3,458	$	8,737	$	7,696

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

	Estimated Amortization Expense

2014	$	18,243
2015		17,436
2016		15,470
2017		15,421
2018		13,738

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.

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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)

Non-amortized intangible assets

Intangible assets with indefinite lives are not amortized. The carrying values of trade names at June 28, 2014 and December 28, 2013 were as follows:

	June 28, 2014		December 28, 2013

Webforge	$	18,389	$	17,787	2010
Valmont SM		12,059		—	2014
Newmark		11,111		11,111	2004
Ingal EPS/Ingal Civil Products		9,705		9,387	2010
Donhad		7,322		7,082	2010
Industrial Galvanizers		4,257		4,117	2010
Other		14,907		14,685


	$	77,750	$	64,169

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

The Company's trade names were tested for impairment in the third quarter of 2013 (exclusive of Valmont SM acquired in the first quarter of 2014). 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 June 28, 2014 and December 28, 2013 was as follows:

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

Balance at December 28, 2013	$	175,442	$	75,404	$	77,062	$	2,420	$	19,304	$	349,632
Acquisitions		11,846		—		—		—		—		11,846
Foreign currency translation		5,548		—		679		46		654		6,927


Balance at June 28, 2014	$	192,836	$	75,404	$	77,741	$	2,466	$	19,958	$	368,405

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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)

The goodwill from acquisitions arose from the acquisition of Valmont SM in the first quarter of 2014. 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 twenty-six weeks ended June 28, 2014 and June 29, 2013 were as follows:

	2014		2013

Interest	$	16,564	$	16,329
Income taxes		77,691		103,604

On May 13, 2014, the Company announced a new capital allocation philosophy which increased the dividend by 50% and covered a share repurchase program of up to $500 million of the Company's outstanding common stock to be acquired from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. As of June 28, 2014, the Company has acquired 490,172 shares for approximately $77.1 million.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(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 June 28, 2014:
Net earnings attributable to Valmont Industries, Inc.	$	63,976	$	—		$	63,976
Shares outstanding		26,623		233			26,856
Per share amount	$	2.40	$	(0.02	)	$	2.38
Thirteen weeks ended June 29, 2013:
Net earnings attributable to Valmont Industries, Inc.	$	89,563	$	—		$	89,563
Shares outstanding		26,648		262			26,910
Per share amount	$	3.36	$	(0.03	)	$	3.33
Twenty-six weeks ended June 28, 2014:
Net earnings attributable to Valmont Industries, Inc.	$	119,956	$	—		$	119,956
Shares outstanding		26,669		234			26,903
Per share amount	$	4.50	$	(0.04	)	$	4.46
Twenty-six weeks ended June 29, 2013:
Net earnings attributable to Valmont Industries, Inc.	$	167,132	$	—		$	167,132
Shares outstanding		26,615		269			26,884
Per share amount	$	6.28	$	(0.06	)	$	6.22

(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, wind energy, offshore oil and gas, roadway safety and access systems applications;

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

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

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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)

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						Twenty-six Weeks Ended

	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013
SALES:
Engineered Infrastructure Products segment:
Lighting, Traffic, and Roadway Products	$	164,753		$	161,487		$	303,730		$	308,657
Communication Products		43,618			34,771			73,504			63,393
Offshore Structures		47,217			—			64,521			—
Access Systems		48,764			54,378			91,059			102,256


Engineered Infrastructure Products segment		304,352			250,636			532,814			474,306
Utility Support Structures segment:
Steel		179,574			200,650			371,011			411,661
Concrete		33,456			27,593			56,746			56,220


Utility Support Structures segment		213,030			228,243			427,757			467,881
Coatings segment		85,157			93,798			167,328			183,043
Irrigation segment		219,917			270,175			432,650			514,882
Other		61,786			83,679			120,388			161,548


Total		884,242			926,531			1,680,937			1,801,660
INTERSEGMENT SALES:
Engineered Infrastructure Products segment		18,166			22,169			37,731			51,621
Utility Support Structures segment		1,025			299			1,520			710
Coatings segment		14,770			14,448			29,723			28,778
Irrigation segment		4			1			13			1
Other		7,678			10,955			17,611			22,261


Total		41,643			47,872			86,598			103,371
NET SALES:
Engineered Infrastructure Products segment		286,186			228,467			495,083			422,685
Utility Support Structures segment		212,005			227,944			426,237			467,171
Coatings segment		70,387			79,350			137,605			154,265
Irrigation segment		219,913			270,174			432,637			514,881
Other		54,108			72,724			102,777			139,287


Total	$	842,599		$	878,659		$	1,594,339		$	1,698,289




OPERATING INCOME:
Engineered Infrastructure Products segment	$	28,625		$	22,603		$	42,334		$	35,337
Utility Support Structures segment		26,375			42,121			59,132			88,276
Coatings segment		15,820			23,552			29,706			36,972
Irrigation segment		41,473			64,174			84,619			118,733
Other		8,343			13,025			16,893			23,812
Corporate		(15,860	)		(21,210	)		(29,060	)		(40,675	)


Total	$	104,776		$	144,265		$	203,624		$	262,455

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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.

In 2014, the Company classified "Equity in earnings of nonconsolidated subsidiaries" as an adjustment to reconcile net earnings to operating cash flows, as part of "Net cash flows from operating activities" in the Condensed Consolidating Statement of Cash Flows. In the 2013 Condensed Consolidating Statement of Cash Flows, these amounts were classified within "Other, net", as part of "Net cash flows from investing activities". The Company revised its presentation for 2013 with respect to the supplemental information included in this footnote in order to achieve comparability in the Condensed Consolidating Statements of Cash Flows.

The revisions consisted of recording the amounts previously reported in "Other, net" in cash flows from investing activities that were related to earnings from subsidiaries to "Equity in earnings of nonconsolidated subsidiaries" in cash flows from operating activities. Accordingly, the eliminations to reconcile consolidated net earnings are contained in the "Net cash flows from operating activities".

The "Non-Guarantor" and "Total" columns were not affected by any of these revisions. There was also no effect on the consolidated (total) net cash flows or any other statements in this footnote. The following is a reconciliation of the columns affected for 2013.

	Parent			Parent			Guarantor			Guarantor			Eliminations			Eliminations

	As previously reported			As revised			As previously reported			As revised			As previously reported			As revised
2013
Cash flows from operating activities:
Equity in earnings of nonconsolidated subsidiaries	$	(266	)	$	(85,146	)	$	—		$	(42,385	)	$	—		$	127,265
Net cash flows from operating activities		180,493			95,613			68,144			25,759			(124,172	)		3,093
Cash flows from investing activities:
Other, net		(53,317	)		31,563			(99,472	)		(57,087	)		124,172			(3,093	)
Net cash flows from investing activities		(74,677	)		10,203			(118,009	)		(75,624	)		124,172			(3,093	)

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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)

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 June 28, 2014

	Parent			Guarantors			Non- Guarantors			Eliminations			Total

Net sales	$	378,642		$	124,414		$	387,715		$	(48,172	)	$	842,599
Cost of sales		280,054			91,536			298,764			(48,232	)		622,122


Gross profit		98,588			32,878			88,951			60			220,477
Selling, general and administrative expenses		50,164			12,670			52,867			—			115,701


Operating income		48,424			20,208			36,084			60			104,776


Other income (expense):
Interest expense		(7,691	)		(11,337	)		(613	)		11,337			(8,304	)
Interest income		6			152			12,756			(11,337	)		1,577
Other		1,754			140			9			—			1,903


		(5,931	)		(11,045	)		12,152			—			(4,824	)


Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		42,493			9,163			48,236			60			99,952


Income tax expense (benefit):
Current		9,315			2,626			14,148			28			26,117
Deferred		7,672			2,079			(1,798	)		—			7,953


		16,987			4,705			12,350			28			34,070


Earnings before equity in earnings of nonconsolidated subsidiaries		25,506			4,458			35,886			32			65,882
Equity in earnings of nonconsolidated subsidiaries		38,470			16,964			—			(55,464	)		(30	)


Net earnings		63,976			21,422			35,886			(55,432	)		65,852
Less: Earnings attributable to noncontrolling interests		—			—			(1,876	)		—			(1,876	)


Net earnings attributable to Valmont Industries, Inc	$	63,976		$	21,422		$	34,010		$	(55,432	)	$	63,976

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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 Twenty-six weeks ended June 28, 2014

	Parent			Guarantors			Non- Guarantors			Eliminations			Total

Net sales	$	755,284		$	260,311		$	687,996		$	(109,252	)	$	1,594,339
Cost of sales		551,813			191,352			533,398			(109,683	)		1,166,880


Gross profit		203,471			68,959			154,598			431			427,459
Selling, general and administrative expenses		97,954			25,661			100,220			—			223,835


Operating income		105,517			43,298			54,378			431			203,624


Other income (expense):
Interest expense		(15,366	)		(22,217	)		(1,135	)		22,217			(16,501	)
Interest income		26			335			25,172			(22,217	)		3,316
Other		1,821			(352	)		(5,378	)		—			(3,909	)


		(13,519	)		(22,234	)		18,659			—			(17,094	)


Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		91,998			21,064			73,037			431			186,530


Income tax expense (benefit):
Current		29,193			8,213			21,517			132			59,055
Deferred		5,829			1,667			(2,466	)		—			5,030


		35,022			9,880			19,051			132			64,085


Earnings before equity in earnings of nonconsolidated subsidiaries		56,976			11,184			53,986			299			122,445
Equity in earnings of nonconsolidated subsidiaries		62,980			25,903			—			(88,913	)		(30	)


Net earnings		119,956			37,087			53,986			(88,614	)		122,415
Less: Earnings attributable to noncontrolling interests		—			—			(2,459	)		—			(2,459	)


Net earnings attributable to Valmont Industries, Inc	$	119,956		$	37,087		$	51,527		$	(88,614	)	$	119,956

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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 June 29, 2013

	Parent			Guarantors			Non- Guarantors			Eliminations			Total

Net sales	$	426,817		$	169,027		$	360,802		$	(77,987	)	$	878,659
Cost of sales		297,949			126,290			273,482			(80,533	)		617,188


Gross profit		128,868			42,737			87,320			2,546			261,471
Selling, general and administrative expenses		55,720			14,347			47,139			—			117,206


Operating income		73,148			28,390			40,181			2,546			144,265


Other income (expense):
Interest expense		(7,636	)		(11,944	)		(390	)		11,945			(8,025	)
Interest income		8			237			13,552			(11,945	)		1,852
Other		394			31			(302	)		—			123


		(7,234	)		(11,676	)		12,860			—			(6,050	)


Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		65,914			16,714			53,041			2,546			138,215


Income tax expense (benefit):
Current		24,824			6,546			16,182			658			48,210
Deferred		(750	)		1,399			(1,691	)		—			(1,042	)


		24,074			7,945			14,491			658			47,168


Earnings before equity in earnings of nonconsolidated subsidiaries		41,840			8,769			38,550			1,888			91,047
Equity in earnings of nonconsolidated subsidiaries		47,723			23,234			—			(70,688	)		269


Net earnings		89,563			32,003			38,550			(68,800	)		91,316
Less: Earnings attributable to noncontrolling interests		—			—			(1,753	)		—			(1,753	)


Net earnings attributable to Valmont Industries, Inc	$	89,563		$	32,003		$	36,797		$	(68,800	)	$	89,563

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 EARNINGS
For the Twenty-six weeks ended June 29, 2013

	Parent			Guarantors			Non- Guarantors			Eliminations			Total

Net sales	$	843,430		$	339,876		$	686,211		$	(171,228	)	$	1,698,289
Cost of sales		598,629			255,288			521,865			(174,333	)		1,201,449


Gross profit		244,801			84,588			164,346			3,105			496,840
Selling, general and administrative expenses		105,746			28,341			100,298			—			234,385


Operating income		139,055			56,247			64,048			3,105			262,455


Other income (expense):
Interest expense		(15,391	)		(24,574	)		(824	)		24,574			(16,215	)
Interest income		15			490			27,274			(24,574	)		3,205
Other		1,802			46			(169	)		—			1,679


		(13,574	)		(24,038	)		26,281			—			(11,331	)


Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		125,481			32,209			90,329			3,105			251,124


Income tax expense (benefit):
Current		45,999			13,382			26,652			837			86,870
Deferred		(2,504	)		1,702			(3,927	)		—			(4,729	)


		43,495			15,084			22,725			837			82,141


Earnings before equity in earnings of nonconsolidated subsidiaries		81,986			17,125			67,604			2,268			168,983
Equity in earnings of nonconsolidated subsidiaries		85,146			42,385			207			(127,265	)		473


Net earnings		167,132			59,510			67,811			(124,997	)		169,456
Less: Earnings attributable to noncontrolling interests		—			—			(2,324	)		—			(2,324	)


Net earnings attributable to Valmont Industries, Inc	$	167,132		$	59,510		$	65,487		$	(124,997	)	$	167,132

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 June 28, 2014

	Parent		Guarantors			Non- Guarantors			Eliminations			Total

Net earnings	$	63,976	$	21,422		$	35,886		$	(55,432	)	$	65,852


Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period		—		(8,954	)		22,823			—			13,869


		—		(8,954	)		22,823			—			13,869


Unrealized loss on cash flow hedge:
Amortization cost included in interest expense		100		—			(133	)		—			(33	)


		100		—			(133	)		—			(33	)


Actuarial gain (loss) in defined benefit pension plan liability		—		—			(614	)		—			(614	)
Equity in other comprehensive income		13,206		—			—			(13,206	)		—


Other comprehensive income (loss)		13,306		(8,954	)		22,076			(13,206	)		13,222


Comprehensive income		77,282		12,468			57,962			(68,638	)		79,074
Comprehensive income attributable to noncontrolling interests		—		—			(1,792	)		—			(1,792	)


Comprehensive income attributable to Valmont Industries, Inc.	$	77,282	$	12,468		$	56,170		$	(68,638	)	$	77,282

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 Twenty-six weeks ended June 28, 2014

	Parent		Guarantors			Non- Guarantors			Eliminations			Total

Net earnings	$	119,956	$	37,087		$	53,986		$	(88,614	)	$	122,415


Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period		—		(29,315	)		54,821			—			25,506


		—		(29,315	)		54,821			—			25,506


Unrealized loss on cash flow hedge:
Amortization cost included in interest expense		200		—			(133	)		—			67


		200		—			(133	)		—			67


Actuarial gain (loss) in defined benefit pension plan liability		—		—			(847	)		—			(847	)
Equity in other comprehensive income		25,281		—			—			(25,281	)		—


Other comprehensive income (loss)		25,481		(29,315	)		53,841			(25,281	)		24,726


Comprehensive income		145,437		7,772			107,827			(113,895	)		147,141
Comprehensive income attributable to noncontrolling interests		—		—			(1,704	)		—			(1,704	)


Comprehensive income attributable to Valmont Industries, Inc.	$	145,437	$	7,772		$	106,123		$	(113,895	)	$	145,437

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 June 29, 2013

	Parent			Guarantors		Non- Guarantors			Eliminations			Total

Net earnings	$	89,563		$	32,003	$	38,550		$	(68,800	)	$	91,316


Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period		—			65,807		(118,769	)		—			(52,962	)


		—			65,807		(118,769	)		—			(52,962	)


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		—			—		42			—			42
Equity in other comprehensive income		(49,618	)		—		—			49,618			—


Other comprehensive income (loss)		(49,518	)		65,807		(118,727	)		49,618			(52,820	)


Comprehensive income		40,045			97,810		(80,177	)		(19,182	)		38,496
Comprehensive income attributable to noncontrolling interests		—			—		1,549			—			1,549


Comprehensive income attributable to Valmont Industries, Inc.	$	40,045		$	97,810	$	(78,628	)	$	(19,182	)	$	40,045

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 Twenty-six weeks ended June 29, 2013

	Parent			Guarantors		Non- Guarantors			Eliminations			Total

Net earnings	$	167,132		$	59,510	$	67,811		$	(124,997	)	$	169,456


Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized gains (losses) arising during the period		—			27,486		(90,068	)		—			(62,582	)
Realized loss included in net earnings during the period		—			—		(5,194	)		—			(5,194	)


		—			27,486		(95,262	)		—			(67,776	)


Unrealized loss on cash flow hedge:
Amortization cost included in interest expense		200			—		—			—			200


		200			—		—			—			200


Actuarial gain (loss) in defined benefit pension plan liability		—			—		(894	)		—			(894	)
Equity in other comprehensive income		(63,157	)		—		—			63,157			—


Other comprehensive income (loss)		(62,957	)		27,486		(96,156	)		63,157			(68,470	)


Comprehensive income		104,175			86,996		(28,345	)		(61,840	)		100,986
Comprehensive income attributable to noncontrolling interests		—			—		3,189			—			3,189


Comprehensive income attributable to Valmont Industries, Inc.	$	104,175		$	86,996	$	(25,156	)	$	(61,840	)	$	104,175

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
June 28, 2014

	Parent			Guarantors		Non-Guarantors			Eliminations			Total

ASSETS
Current assets:
Cash and cash equivalents	$	63,127		$	49,455	$	343,345		$	—		$	455,927
Receivables, net		148,649			73,846		321,113			—			543,608
Inventories		123,369			59,580		198,994			—			381,943
Prepaid expenses		6,606			690		59,620			—			66,916
Refundable and deferred income taxes		51,058			6,285		13,991			—			71,334


Total current assets		392,809			189,856		937,063			—			1,519,728


Property, plant and equipment, at cost		548,424			126,706		485,012			—			1,160,142
Less accumulated depreciation and amortization		311,358			65,166		144,764			—			521,288


Net property, plant and equipment		237,066			61,540		340,248			—			638,854


Goodwill		20,108			107,542		240,755			—			368,405
Other intangible assets		319			46,052		148,988			—			195,359
Investment in subsidiaries and intercompany accounts		1,578,856			1,445,118		509,824			(3,533,798	)		—
Other assets		40,228			—		96,030			—			136,258


Total assets	$	2,269,386		$	1,850,108	$	2,272,908		$	(3,533,798	)	$	2,858,604




LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	188		$	—	$	—		$	—		$	188
Notes payable to banks		—			—		17,485			—			17,485
Accounts payable		63,503			16,471		128,860			—			208,834
Accrued employee compensation and benefits		46,513			6,332		42,520			—			95,365
Accrued expenses		33,746			6,284		51,601			—			91,631
Dividends payable		9,930			—		—			—			9,930


Total current liabilities		153,880			29,087		240,466			—			423,433


Deferred income taxes		13,406			28,879		53,389			—			95,674
Long-term debt, excluding current installments		469,216			544,497		9,282			(544,497	)		478,498
Defined benefit pension liability		—			—		143,114			—			143,114
Deferred compensation		41,134			—		7,158			—			48,292
Other noncurrent liabilities		9,481			—		45,022			—			54,503
Shareholders' equity:
Common stock of $1 par value		27,900			457,950		254,982			(712,932	)		27,900
Additional paid-in capital		—			150,286		1,034,236			(1,184,522	)		—
Retained earnings		1,672,287			602,280		522,868			(1,125,148	)		1,672,287
Accumulated other comprehensive income (loss)		(22,204	)		37,129		(70,430	)		33,301			(22,204	)
Treasury stock		(95,714	)		—		—			—			(95,714	)


Total Valmont Industries, Inc. shareholders' equity		1,582,269			1,247,645		1,741,656			(2,989,301	)		1,582,269


Noncontrolling interest in consolidated subsidiaries		—			—		32,821			—			32,821


Total shareholders' equity		1,582,269			1,247,645		1,774,477			(2,989,301	)		1,615,090


Total liabilities and shareholders' equity	$	2,269,386		$	1,850,108	$	2,272,908		$	(3,533,798	)	$	2,858,604

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 28, 2013

	Parent			Guarantors		Non-Guarantors			Eliminations			Total

ASSETS
Current assets:
Cash and cash equivalents	$	215,576		$	49,053	$	349,077		$	—		$	613,706
Receivables, net		139,179			108,646		267,615			—			515,440
Inventories		132,953			70,231		176,816			—			380,000
Prepaid expenses		4,735			932		17,330			—			22,997
Refundable and deferred income taxes		41,167			8,351		16,179			—			65,697


Total current assets		533,610			237,213		827,017			—			1,597,840


Property, plant and equipment, at cost		522,734			125,764		368,628			—			1,017,126
Less accumulated depreciation and amortization		300,066			61,520		121,330			—			482,916


Net property, plant and equipment		222,668			64,244		247,298			—			534,210


Goodwill		20,108			107,542		221,982			—			349,632
Other intangible assets		346			48,461		122,110			—			170,917
Investment in subsidiaries and intercompany accounts		1,417,425			1,367,308		518,059			(3,302,792	)		—
Other assets		30,759			—		93,136			—			123,895


Total assets	$	2,224,916		$	1,824,768	$	2,029,602		$	(3,302,792	)	$	2,776,494




LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	188		$	—	$	14		$	—		$	202
Notes payable to banks		—			—		19,024			—			19,024
Accounts payable		62,153			20,365		133,603			—			216,121
Accrued employee compensation and benefits		76,370			13,713		32,884			—			122,967
Accrued expenses		28,362			7,315		35,883			—			71,560
Dividends payable		6,706			—		—			—			6,706


Total current liabilities		173,779			41,393		221,408			—			436,580


Deferred income taxes		18,983			29,279		30,662			—			78,924
Long-term debt, excluding current installments		470,175			514,223		732			(514,223	)		470,907
Defined benefit pension liability		—			—		154,397			—			154,397
Deferred compensation		32,339			—		6,770			—			39,109
Other noncurrent liabilities		7,615			—		44,116			—			51,731
Shareholders' equity:
Common stock of $1 par value		27,900			457,950		254,982			(712,932	)		27,900
Additional paid-in capital		—			150,286		891,236			(1,041,522	)		—
Retained earnings		1,562,670			565,193		517,703			(1,082,896	)		1,562,670
Accumulated other comprehensive income		(47,685	)		66,444		(115,225	)		48,781			(47,685	)
Treasury stock		(20,860	)		—		—			—			(20,860	)


Total Valmont Industries, Inc. shareholders' equity		1,522,025			1,239,873		1,548,696			(2,788,569	)		1,522,025


Noncontrolling interest in consolidated subsidiaries		—			—		22,821			—			22,821


Total shareholders' equity		1,522,025			1,239,873		1,571,517			(2,788,569	)		1,544,846


Total liabilities and shareholders' equity	$	2,224,916		$	1,824,768	$	2,029,602		$	(3,302,792	)	$	2,776,494

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 Twenty-six Weeks Ended June 28, 2014

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operating activities:
Net earnings	$	119,956		$	37,087		$	53,986		$	(88,614	)	$	122,415
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		12,539			6,584			24,245			—			43,368
Loss on investment								3,501			—			3,501
Stock-based compensation		3,686			—			—			—			3,686
Defined benefit pension plan expense		—			—			1,334			—			1,334
Contribution to defined benefit pension plan		—			—			(17,484	)		—			(17,484	)
Gain on sale of property, plant and equipment		7			(74	)		(35	)		—			(102	)
Equity in earnings in nonconsolidated subsidiaries		(62,980	)		(25,903	)		—			88,913			30
Deferred income taxes		5,829			1,667			(2,466	)		—			5,030
Changes in assets and liabilities (net of acquisitions):
Receivables		(9,471	)		34,803			(4,249	)		—			21,083
Inventories		9,584			10,651			(13,611	)		—			6,624
Prepaid expenses		(1,870	)		241			(16,660	)		—			(18,289	)
Accounts payable		1,352			(3,892	)		(26,093	)		—			(28,633	)
Accrued expenses		(23,205	)		(8,411	)		1,201			—			(30,415	)
Other noncurrent liabilities		1,941			—			(175	)		—			1,766
Income taxes payable (refundable)		(22,572	)		1,071			(562	)		—			(22,063	)


Net cash flows from operating activities		34,796			53,824			2,932			299			91,851


Cash flows from investing activities:
Purchase of property, plant and equipment		(27,046	)		(1,486	)		(18,459	)		—			(46,991	)
Proceeds from sale of assets		21			88			1,042			—			1,151
Acquisitions, net of cash acquired		—			—			(120,483	)		—			(120,483	)
Other, net		49,004			(25,784	)		(25,861	)		(299	)		(2,940	)


Net cash flows from investing activities		21,979			(27,182	)		(163,761	)		(299	)		(169,263	)


Cash flows from financing activities:
Net borrowings under short-term agreements		—			—			(1,861	)		—			(1,861	)
Principal payments on long-term borrowings		(196	)		—			(63	)		—			(259	)
Dividends paid		(13,427	)		—			—			—			(13,427	)
Intercompany dividends		20,895			25,467			(46,362	)		—			—
Dividends to noncontrolling interest		—			—			(1,340	)		—			(1,340	)
Intercompany interest on long-term note		—			(54,398	)		54,398			—			—
Intercompany capital contribution		(143,000	)					143,000						—
Proceeds from exercises under stock plans		11,996			—			—			—			11,996
Excess tax benefits from stock option exercises		3,576			—			—			—			3,576
Purchase of treasury shares		(77,084	)		—			—			—			(77,084	)
Purchase of common treasury shares—stock plan exercises:		(11,984	)		—			—			—			(11,984	)


Net cash flows from financing activities		(209,224	)		(28,931	)		147,772			—			(90,383	)


Effect of exchange rate changes on cash and cash equivalents		—			2,691			7,325			—			10,016


Net change in cash and cash equivalents		(152,449	)		402			(5,732	)		—			(157,779	)
Cash and cash equivalents—beginning of year		215,576			49,053			349,077			—			613,706


Cash and cash equivalents—end of period	$	63,127		$	49,455		$	343,345		$	—		$	455,927

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 Twenty-six Weeks Ended June 29, 2013

	Parent			Guarantors			Non-Guarantors			Eliminations			Total

Cash flows from operations:
Net earnings	$	167,132		$	59,510		$	67,811		$	(124,997	)	$	169,456
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		9,834			6,452			21,900			—			38,186
Stock-based compensation		3,342			—			—			—			3,342
Defined benefit pension plan expense		—			—			3,245			—			3,245
Contribution to defined benefit pension plan		—			—			(10,346	)		—			(10,346	)
Gain on sale of property, plant and equipment		337			36			(5,444	)		—			(5,071	)
Equity in earnings of nonconsolidated subsidiaries		(85,146	)		(42,385	)		(207	)		127,265			(473	)
Deferred income taxes		(2,504	)		1,702			(3,927	)		—			(4,729	)
Changes in assets and liabilities:
Receivables		453			5,235			(9,019	)		—			(3,331	)
Inventories		10,524			1,643			(14,658	)		—			(2,491	)
Prepaid expenses		579			318			(6,807	)		—			(5,910	)
Accounts payable		(6,052	)		(2,877	)		9,665			—			736
Accrued expenses		4,471			(1,932	)		377			—			2,916
Other noncurrent liabilities		3,058			—			(1,185	)		—			1,873
Income taxes payable (refundable)		(10,415	)		(1,943	)		(277	)		825			(11,810	)


Net cash flows from operations		95,613			25,759			51,128			3,093			175,593


Cash flows from investing activities:
Purchase of property, plant and equipment		(22,826	)		(18,569	)		(12,863	)		—			(54,258	)
Proceeds from sale of assets		1,466			32			37,556			—			39,054
Acquisitions, net of cash acquired		—			—			(53,152	)		—			(53,152	)
Other, net		31,563			(57,087	)		28,484			(3,093	)		(133	)


Net cash flows from investing activities		10,203			(75,624	)		25			(3,093	)		(68,489	)


Cash flows from financing activities:
Net borrowings under short-term agreements		—			—			2,620			—			2,620
Proceeds from long-term borrowings		—			—			68			—			68
Principal payments on long-term borrowings		(186	)		—			(117	)		—			(303	)
Dividends paid		(12,021	)		—			—			—			(12,021	)
Dividend to noncontrolling interests		—			—			(1,767	)		—			(1,767	)
Proceeds from exercises under stock plans		14,098			—			—			—			14,098
Excess tax benefits from stock option exercises		305			—			—			—			305
Purchase of common treasury shares—stock plan exercises		(13,602	)		—			—			—			(13,602	)


Net cash flows from financing activities		(11,406	)		—			804			—			(10,602	)


Effect of exchange rate changes on cash and cash equivalents		—			(3,600	)		(16,554	)		—			(20,154	)


Net change in cash and cash equivalents		94,410			(53,465	)		35,403			—			76,348
Cash and cash equivalents—beginning of year		40,926			83,203			290,000			—			414,129


Cash and cash equivalents—end of period	$	135,336		$	29,738		$	325,403		$	—		$	490,477

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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 28, 2013. Segment sales in the table below are presented net of intersegment sales.

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Results of Operations

Dollars in millions, except per share amounts

	Thirteen Weeks Ended									Twenty-six Weeks Ended

	June 28, 2014			June 29, 2013			% Incr. (Decr.)			June 28, 2014			June 29, 2013			% Incr. (Decr.)
Consolidated
Net sales	$	842.6		$	878.7			(4.1	)%	$	1,594.3		$	1,698.3			(6.1	)%
Gross profit		220.5			261.5			(15.7	)%		427.5			496.8			(13.9	)%
as a percent of sales		26.2	%		29.8	%					26.8	%		29.3	%
SG&A expense		115.7			117.2			(1.3	)%		223.9			234.4			(4.5	)%
as a percent of sales		13.7	%		13.3	%					14.0	%		13.8	%
Operating income		104.8			144.3			(27.4	)%		203.6			262.5			(22.4	)%
as a percent of sales		12.4	%		16.4	%					12.8	%		15.5	%
Net interest expense		6.7			6.2			8.1	%		13.2			13.0			1.5	%
Effective tax rate		34.1	%		34.1	%					34.4	%		32.7	%
Net earnings	$	64.0		$	89.6			(28.6	)%	$	120.0		$	167.1			(28.2	)%
Diluted earnings per share	$	2.38		$	3.33			(28.5	)%	$	4.46		$	6.22			(28.3	)%
Engineered Infrastructure Products
Net sales	$	286.2		$	228.5			25.3	%	$	495.1		$	422.7			17.1	%
Gross profit		73.9			64.8			14.0	%		128.4			118.4			8.4	%
SG&A expense		45.3			42.2			7.3	%		86.1			83.1			3.6	%
Operating income		28.6			22.6			26.5	%		42.3			35.3			19.8	%
Utility Support Structures
Net sales	$	212.0		$	227.9			(7.0	)%	$	426.2		$	467.2			(8.8	)%
Gross profit		45.9			62.1			(26.1	)%		98.0			128.0			(23.4	)%
SG&A expense		19.6			20.0			(2.0	)%		38.9			39.7			(2.0	)%
Operating income		26.3			42.1			(37.5	)%		59.1			88.3			(33.1	)%
Coatings
Net sales	$	70.4		$	79.4			(11.3	)%	$	137.6		$	154.3			(10.8	)%
Gross profit		25.3			29.1			(13.1	)%		48.6			52.2			(6.9	)%
SG&A expense		9.5			5.5			72.7	%		18.9			15.2			24.3	%
Operating income		15.8			23.6			(33.1	)%		29.7			37.0			(19.7	)%
Irrigation
Net sales	$	219.9		$	270.2			(18.6	)%	$	432.6		$	514.9			(16.0	)%
Gross profit		62.9			87.0			(27.7	)%		127.6			163.5			(22.0	)%
SG&A expense		21.3			22.9			(7.0	)%		42.9			44.8			(4.2	)%
Operating income		41.6			64.1			(35.1	)%		84.7			118.7			(28.6	)%
Other
Net sales	$	54.1		$	72.7			(25.6	)%	$	102.8		$	139.2			(26.1	)%
Gross profit		12.4			18.3			(32.2	)%		24.7			34.4			(28.2	)%
SG&A expense		4.1			5.3			(22.6	)%		7.8			10.6			(26.4	)%
Operating income		8.3			13.0			(36.2	)%		16.9			23.8			(29.0	)%
Net corporate expense
Gross profit	$	0.1		$	0.1			NM		$	0.2		$	0.3			NM
SG&A expense		16.0			21.3			(24.9	)%		29.3			41.0			(28.5	)%
Operating loss		(15.9	)		(21.2	)		25.0	%		(29.1	)		(40.7	)		28.5	%

NM=Not meaningful

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Overview

On a consolidated basis, the decrease in net sales in the second quarter and first half of fiscal 2014, as compared with 2013, reflected lower sales in all reportable segments except for the Engineered Infrastructure Products (EIP) segment. The changes in net sales in the second quarter and first half of fiscal 2014, as compared with fiscal 2013, were as follows:

	Second quarter

	Total			EIP			Utility			Coatings			Irrigation			Other
Sales—2013	$	878.7		$	228.5		$	227.9		$	79.4		$	270.2		$	72.7
Volume		(44.1	)		11.0			2.0			(8.3	)		(46.5	)		(2.3	)
Pricing/mix		(20.6	)		(0.6	)		(17.8	)		1.6			(0.9	)		(2.9	)
Acquisitions/Divestiture		38.9			50.1			—			—			—			(11.2	)
Currency translation		(10.3	)		(2.8	)		(0.1	)		(2.3	)		(2.9	)		(2.2	)


Sales—2014	$	842.6		$	286.2		$	212.0		$	70.4		$	219.9		$	54.1

	Year-to-date

	Total			EIP			Utility			Coatings			Irrigation			Other
Sales—2013	$	1,698.3		$	422.7		$	467.2		$	154.3		$	514.9		$	139.2
Volume		(109.5	)		9.3			(25.6	)		(10.3	)		(75.8	)		(7.1	)
Pricing/mix		(16.9	)		(0.1	)		(13.9	)		0.3			0.6			(3.8	)
Acquisitions/Divestiture		54.9			73.1			—			—			—			(18.2	)
Currency translation		(32.5	)		(9.9	)		(1.5	)		(6.7	)		(7.1	)		(7.3	)


Sales—2014	$	1,594.3		$	495.1		$	426.2		$	137.6		$	432.6		$	102.8

Volume effects are estimated based on a physical production or sales measure, products we sell are not uniform in nature, pricing and mix relate to a combination of changes in sales prices and the attributes of the product sold. Accordingly, pricing and mix changes do not necessarily directly result in operating income changes.

Acquisitions included Locker Group Holdings ("Locker"), Armorflex International Ltd. ("Armorflex"), and DS SM A/S, which was renamed Valmont SM. We acquired Locker in February 2013, Armorflex in December 2013, and Valmont SM in March 2014. All of these acquisitions are reported in the Engineered Infrastructure Products segment. In the "Other" category, the sales reduction of $18.2 million in the first half of 2014 reflects the deconsolidation of Delta EMD Pty. Ltd. ("EMD") in December 2013, following the reduction of our ownership in the operation to below 50%.

In the second quarter and first half of fiscal 2014, we realized a decrease in operating profit, as compared with fiscal 2013, 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			Utility			Coatings			Irrigation			Other			Corporate

Second quarter	$	(1.7	)	$	(0.4	)	$	—		$	(0.6	)	$	(0.5	)	$	(0.3	)	$	0.1
Year-to-date	$	(3.8	)	$	(0.9	)	$	(0.4	)	$	(0.8	)	$	(1.3	)	$	(0.9	)	$	0.5

The decrease in gross margin (gross profit as a percent of sales) in fiscal 2014, as compared with 2013, was due to a combination of lower sales prices and an unfavorable sales mix, reduced sales volumes and slightly higher raw material costs in 2014, as compared with 2013.

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Selling, general and administrative (SG&A) spending in the second quarter and first half of fiscal 2014, as compared with the same periods in 2013, decreased mainly due to the following factors:

•: decreased employee incentive accruals of $9.7 million and $15.3 million, respectively, due to lower operating results;
•: currency translation effects of $0.7 million and $3.4 million, respectively, due to the strengthening of the U.S. dollar primarily against the Australian dollar, Brazilian Real, and South Africa Rand;
•: lower expenses associated with the Delta Pension Plan of $0.9 million and $1.9 million, respectively; and
•: EMD was deconsolidated in December 2013, which resulted in reduced expenses of $1.2 million and $2.4 million, respectively.

The above reductions in SG&A were partially offset by the following:

•: 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;
•: the acquisition of Valmont SM in March 2014 and Armorflex in December 2013 included combined expenses in the second quarter and first half of fiscal 2014 of $4.4 million and $5.9 million, respectively.

The decrease in operating income on a reportable segment basis in 2014, as compared to 2013, was due to reduced operating performance in the Utility, Irrigation, and Coatings segments. The EIP segment showed improved operating performance in 2014 compared to 2013, primarily due to the acquisition of Valmont SM. The "Other" category reported reduced operating performance in 2014 compared to 2013, mainly due to lower grinding media sales.

Net interest expense increased slightly in the second quarter of fiscal 2014, as compared with 2013, due to slightly higher interest expense and lower interest income due to less cash on hand due to the stock repurchase program and the Valmont SM acquisition. Net interest expense was consistent in the first half of 2014 and 2013.

The increase in other expense in the first half of 2014, as compared with 2013, was mainly attributable to recording the change (loss) in fair value of the Company's investment in EMD of $3.5 million. The remaining increase is related to foreign exchange transaction losses due to currency volatility. The decrease in other expense in the second quarter of 2014, as compared with 2013, was due to a larger increase in deferred compensation assets of $1.2 million and foreign exchange transaction gains due to currency volatility.

Our effective income tax rate in the second quarter of fiscal 2014 was comparable with the same period in fiscal 2013. The year-to-date effective tax rate in fiscal 2014 was higher than 2013, mainly due to approximately $3.2 million of non-cash tax benefits associated with the first quarter 2013 sale of our nonconsolidated investment in South Africa and $1.0 million of increased research and development tax credits in the U.S. The 2014 effective tax rate was also negatively affected by the unrealized loss in our investment in EMD being capital in nature and not resulting in an income tax benefit. After consideration of these factors, the effective tax rate for the first half of 2013 and 2014 were comparable at approximately 34%.

Earnings in non-consolidated subsidiaries were lower in fiscal 2014, as compared with 2013, with minimal activity in 2014. In 2013, the balance was minimal due to the sale of our 49% owned manganese materials operation in February 2013. There was no significant gain or loss on the sale.

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Our cash flows provided by operations were approximately $91.9 million in the first half of fiscal 2014, as compared with $175.6 million provided by operations in 2013. The decrease in operating cash flow in the first half of fiscal 2014 was the result of decreased net earnings and higher net working capital, as compared with 2013.

Engineered Infrastructure Products (EIP) segment

The increase in net sales in the second quarter and first half of fiscal 2014 as compared with 2013 was mainly due to the acquisition of Valmont SM in early March 2014 and Armorflex in December 2013 ($50.1 million and $73.1 million). Global lighting sales in the second quarter and first half of fiscal 2014 were slightly improved compared to the same period in fiscal 2013. In the second quarter and first half of fiscal 2014, sales volumes in the U.S. were slightly higher in both the transportation and lighting markets as construction and installation activity picked up after first quarter delays caused by harsh weather conditions as compared to 2013. The transportation market continues to be challenging, due in part to the lack of long-term U.S. federal highway funding legislation. Sales volumes in Canada were down in the second quarter and first half of 2014 as compared to 2013 due to the harsh weather conditions from the first quarter lingering into the second quarter.

Sales in Europe increased primarily due to the positive impact of currency translation. Increased volumes in the U.K. were offset by volume decreases in other regional areas. In the Asia Pacific region, sales improved in the second quarter and first half of fiscal 2014 over 2013 due in part to the India plant that is now fully operational and higher demand in the Philippines. Highway safety product sales improved in the second quarter and first half of 2014 compared to 2013, due to the acquisition of Armorflex in December 2013 (approximately $2.8 million and $4.1 million, respectively) and modestly improved market conditions in Australia and New Zealand due to more highway construction projects this year. This improvement is offset somewhat by negative currency translation effects of $1.0 million and $2.8 million, respectively.

Communication product line sales were up in the second quarter and first half of fiscal 2014, as compared with the same period in fiscal 2013. On a regional basis, North America sales in the second quarter and first half of fiscal 2014 increased over the same period in fiscal 2013. The increase in North American sales was mainly attributable to higher wireless communication structures sales due to the continued build out of wireless networks, offset by decreased communication component sales resulting from a large customer temporarily curtailing spending. In China, sales of wireless communication structures in the second quarter and first half of fiscal 2014 were higher than the same periods in fiscal 2013. Chinese wireless carriers are increasing investment in 4G upgrades, as the government began issuing licenses in late 2013.

Access systems product line sales decreased in the second quarter and first half of 2014, as compared with 2013, primarily due to the negative impact of currency translation of $2.9 million and $7.9 million and lower volumes. The volume decrease was primarily related to the slowdown in mining sector investment in Australia and was partially offset by the full 2014 effect of the Locker acquisition (approximately $4.5 million) that was acquired in February 2013.

Operating income for the segment in the second quarter and first half of fiscal 2014 increased, as compared with the same period of fiscal 2013, due primarily to operating profit generated from the acquisitions of Valmont SM and Armorflex of $5.7 million and $7.7 million, respectively, offset somewhat by unfavorable currency translation effects of $0.4 million and $0.9 million, respectively.

The increase in SG&A spending in the second quarter and first half of 2014 were due to costs related to the Armorflex and Valmont SM acquisitions totaling $4.4 million and $5.9 million, respectively. These increased costs in the second quarter and first half of 2014 were offset by currency effects of $0.3 million and $1.5 million and lower incentive costs of $0.9 million and $1.6 million, respectively.

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Utility Support Structures (Utility) segment

In the Utility segment, the sales decrease in the second quarter of 2014 as compared with 2013, was due primarily to a decline in the percentage of sales from very large transmission projects which changed the mix of utility structure sales between the reporting periods. In North America, sales volumes in tons for steel utility structures were down in both the second quarter and first half of 2014, as compared with 2013, offset by increases in sales volume for concrete structures. We believe industry supply and demand are now more aligned as compared with this time in 2013, as we and our competitors have increased production capacity to meet demand. We believe this has resulted in increased price competition for certain portions of the market where orders are awarded based on competitive bidding. For the three-months ended June 30, 2014, as compared to the same period in 2013, international utility structures sales increased due to higher sales volumes. For the first half of 2014, as compared to 2013, international utility structures sales decreased due to lower sales volumes.

Operating income in the second quarter and first half of 2014, as compared with 2013, decreased due to lower sales volumes, reduced leverage of fixed costs, and increased depreciation expense on plant capacity added in 2013. SG&A expense decreased in the second quarter and first half of 2014, as compared with 2013, due to lower incentive compensation tied to lower operating income. This SG&A decrease was partially offset by higher employee compensation due to increased headcount to support increased business levels in the second half of 2013 and capacity expansion to meet projected long-term growth.

Coatings segment

Coatings segment sales decreased in the second quarter and first half of 2014, as compared with 2013, due to:

•: lower sales volumes in the Asia Pacific region and currency translation effects related to the strengthening of the U.S. dollar against the Australian dollar. More specifically, weak demand in Australia led to decreases in volumes offset somewhat by improved sales volumes in Asia; and
•: lower sales volumes in North America for galvanizing services, attributable to unfavorable winter weather conditions that affected our customers into early second quarter.

The decrease in segment operating income in the second quarter and first half of 2014, as compared with 2013, was mainly due to the $4.6 million gain recognized on the sale of an Australian galvanizing operation in the second quarter of fiscal 2013. Operating income was also lower in the second quarter and first half of 2014, as compared with 2013, due to the lower sales volumes in both Australia and North America.

Irrigation segment

The decrease in Irrigation segment net sales in the second quarter and first half of fiscal 2014, as compared with 2013, was mainly due to sales volume decreases in the North American market. The decrease in North America was offset to an extent by increased sales volumes in international markets. In North America, lower expected net farm income in 2014, as compared with 2013, and much lower sales backlogs at the beginning of the year resulted in lower sales of irrigation equipment in 2014, as compared with 2013. In fiscal 2014, net farm income in the United States is expected to decrease 22% from the record levels of 2013, due in part to lower market prices for corn and soybeans. We believe this reduction contributed to lower demand for irrigation machines in North America in 2014, as compared with 2013.

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In international markets, sales improved in the second quarter and first half of fiscal 2014, as compared with 2013, mainly due to increased activity in Brazil, Middle East, and Australia. On balance, sales in other international regions (excluding China) in the second quarter and first half of fiscal 2014 were slightly higher or comparable to the same periods of a strong fiscal 2013.

Operating income for the segment declined in the second quarter and first half of fiscal 2014 over 2013, due to the sales volume decrease and associated operating deleverage of fixed operating costs. The primary reasons for the slight decrease in SG&A expense in the second quarter and first half of fiscal 2014, as compared with 2013, related to reduced employee incentives of $1.9 million and $2.5 million, respectively, offset partially by increased product development spending. Additionally, SG&A expense decreased in the second quarter and first half of fiscal 2014, as compared to 2013, due to lower bad debt provisions for international receivables of $1.3 million and $1.4 million, respectively, and exchange rate translation effects.

Other

This unit includes the grinding media, industrial tubing, and industrial fasteners operations. The decrease in sales in the second quarter and first half of fiscal 2014, as compared with 2013, was mainly due lower sales volumes due primarily to the deconsolidation of EMD in December 2013 (approximately $11.2 million and $18.2 million, respectively), lower sales volumes in the grinding media operations and exchange rate translation effects. Grinding media volumes were negatively affected by less favorable Australian mining industry demand. Tubing sales in 2014 were slightly lower due to lower volumes and sales mix compared to 2013. Operating income in the second quarter and first half of fiscal 2014 was lower than the same period in 2013, due to lower grinding media sales volumes and currency translation effects.

Net corporate expense

Net corporate expense in the second quarter and first half of fiscal 2014 decreased over the same period in fiscal 2013. These decreases were mainly due to:

•: lower employee incentives associated with reduced net earnings ($4.7 million and $7.6 million, respectively);
•: lower compensation and employee benefit costs ($0.6 million and $2.4 million, respectively);
•: decreased expenses associated with the Delta Pension Plan ($0.9 million and $1.9 million, respectively); and
•: partial offset by increased deferred compensation plan expense ($1.2 million and $0, respectively). The deferred compensation expense recorded within corporate expense has a corresponding offset by the same amount in other income (expense).

Liquidity and Capital Resources

Cash Flows

Working Capital and Operating Cash Flows—Net working capital was $1,096.3 million at June 28, 2014, as compared with $1,161.3 million at December 28, 2013. The decrease in net working capital in 2014 mainly resulted from decreased cash on hand due to the acquisition of Valmont SM and cash used in the share repurchase program. Cash flow provided by operations was $91.9 million in fiscal 2014, as compared with $175.6 million in fiscal 2013. The decrease in operating cash flow in 2014 was the result of lower net earnings and higher working capital in 2014, as compared with 2013.

Investing Cash Flows—Capital spending in the first half of fiscal 2014 was $47.0 million, as compared with $54.3 million for the same period in 2013. The most significant capital spending projects

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in 2014 included certain investments in machinery and equipment across all businesses. We expect our capital spending for the 2014 fiscal year to be approximately $100 million. In 2013, investing cash flows included proceed from asset sales of $39.1 million, principally consisting of $29.2 million received from the sale of our 49% owned non-consolidated subsidiary in South Africa and $8.2 million received from the sale of the Western Australia galvanizing operation. Investing cash flows also includes $120.5 million paid for the Valmont SM acquisition in the first quarter of 2014 and $53.2 million paid for the Locker acquisition in 2013.

Financing Cash Flows—Our total interest-bearing debt increased slightly to $496.2 million at June 28, 2014 from $490.1 million at December 28, 2013. Financing cash flows changed from a use of approximately $10.6 million in the first half of fiscal 2013 to a use of approximately $90.4 million in the first half of fiscal 2014. The main reason for the increase related to the purchase of treasury shares in the second quarter of 2014 resulting from the recently announced share repurchase program.

Financing and Capital

On May 13, 2014, we announced a new capital allocation philosophy which covered both the quarterly dividend rate as well as a share repurchase program. Specifically, the Board of Directors authorized the purchase of up to $500 million of the Company's outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. The purchases will be funded from available working capital and short-term borrowings and will be made subject to market and economic conditions. We are not obligated to make any repurchases and may discontinue the program at any time. As of June 28, 2014, we have acquired 490,172 shares for approximately $77.1 million under this share repurchase program. As of July 22, 2014, the date as of which we report on the cover of this Form 10-Q the number of outstanding shares of our common stock, we have acquired a total of 1,039,092 shares for $159.5 million under the share repurchase program.This philosophy also authorizes dividends on common shares in the range of 15% of the prior year's fully diluted net earnings; the most recent quarterly dividend was $0.375 per share paid on July 15, 2014.

We have historically funded our growth, capital spending and acquisitions through a combination of operating cash flows and debt financing. We have an internal long-term objective to maintain long-term debt as a percent of invested capital at or below 40%. At June 28, 2014, our long-term debt to invested capital ratio was 21.7%, as compared with 22.3% at December 28, 2013. 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 2014.

Our debt financing at June 28, 2014 consisted primarily of long-term debt. We also maintain certain short-term bank lines of credit totaling $115.1 million, $98.5 million of which was unused at June 28, 2014. Our long-term debt principally consists of:

•

$450 million face value ($460 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;

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(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 June 28, 2014 and December 28, 2013, 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 June 28, 2014, we had the ability to borrow $382.3 million under this facility, after consideration of standby letters of credit of $17.7 million associated with certain insurance obligations and international sales commitments.

Our senior unsecured notes and revolving credit agreement each contain cross-default provisions which permit the acceleration of our indebtedness to them if we default on other indebtedness that results in, or permits, the acceleration of such other indebtedness.

The 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 June 28, 2014, we were in compliance with all covenants related to the debt agreements. The key covenant calculations at June 28, 2014 were as follows:


Interest-bearing debt	$	496,171
EBITDA—last four quarters		505,269
Leverage ratio		0.98
EBITDA—last four quarters	$	505,269
Interest expense—last four quarters		32,788
Interest earned ratio		15.41

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The calculation of EBITDA—last four quarters (June 29, 2013 through June 28, 2014) is as follows:


Net cash flows from operations	$	312,701
Interest expense		32,788
Income tax expense		139,724
Deconsolidation of subsidiary		(12,011	)
Impairment of property, plant and equipment		(12,161	)
Loss on investment		(3,501	)
Deferred income tax benefit		383
Noncontrolling interest		(2,107	)
Equity in earnings of nonconsolidated subsidiaries		332
Stock-based compensation		(6,857	)
Pension plan expense		(4,658	)
Contribution to pension plan		24,757
Valmont SM EBITDA—June 30, 2013—March 3, 2014		18,826
Changes in assets and liabilities		17,704
Other		(651	)


EBITDA	$	505,269




Net earnings attributable to Valmont Industries, Inc.	$	231,313
Interest expense		32,788
Income tax expense		139,724
Depreciation and amortization expense		82,618
Valmont SM EBITDA—June 30, 2013—March 3, 2014		18,826


EBITDA	$	505,269

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 $675.5 million of undistributed earnings of our foreign subsidiaries, as we intend to reinvest those earnings. Of our cash balances at June 28, 2014, approximately $387.2 million is held in entities outside the United States with approximately $100.7 million specifically held within consolidated Delta Ltd., a wholly-owned subsidiary of the Company. Delta Ltd. sponsors a defined benefit pension plan and therefore, the Company is allowed to dividend out Delta Ltd.'s available cash only as long as that dividend does not negatively impact Delta Ltd.'s ability to meet its annual contribution requirements of the pension plan. We believe that the cash payments Delta Ltd. receives from its intercompany notes will provide sufficient funds to meet the pension funding requirements but additional analysis on pension funding requirements would have to be performed prior to the repatriation of the $100.7 million of Delta Ltd.'s cash balances.

If we need to repatriate foreign cash balances to the United States to meet our cash needs, income taxes would be paid to the extent that those cash repatriations were undistributed earnings of our foreign subsidiaries. The income taxes that we would pay if cash were repatriated depends on the amounts to be repatriated and from which country. If all of our cash outside the United States were to

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be repatriated to the United States, we estimate that we would pay approximately $52.7 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 38 in our Form 10-K for the fiscal year ended December 28, 2013.

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 28, 2013.

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 28, 2013 during the quarter ended June 28, 2014.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes in the company's market risk during the quarter ended June 28, 2014. For additional information, refer to the section "Risk Management" in our Form 10-K for the fiscal year ended December 28, 2013.

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

Period		Average Price paid per share

March 30, 2014 to April 26, 2014	—		—	—
April 27, 2014 to May 31, 2014	319,300		158.11	319,300	449,515,000
June 1, 2014 to June 28, 2014	170,872		155.67	170,872	422,915,000


Total	490,172	$	157.26	490,172	422,915,000

(1): On May 13, 2014, we announced a new capital allocation philosophy which covered both the quarterly dividend rate as well as a share repurchase program. Specifically, the Board of Directors authorized the purchase of up to $500 million of the Company's outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. As of June 28, 2014, we have acquired 490,172 shares for approximately $77.1 million under this share repurchase program.

Item 6. Exhibits

(a): Exhibits

		Exhibit No.			Description

			31.1		Section 302 Certificate of Chief Executive Officer
			31.2		Section 302 Certificate of Chief Financial Officer
			32.1		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
			101		The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended June 28, 2014, 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/ MARK C. JAKSICH Mark C. Jaksich Executive Vice President and Chief Financial Officer

Dated this 29th day of July, 2014.

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Index of Exhibits

		Exhibit No.			Description

			31.1		Section 302 Certificate of Chief Executive Officer
			31.2		Section 302 Certificate of Chief Financial Officer
			32.1		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
			101		The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended June 28, 2014, 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.