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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the Fiscal Year Ended December 27, 1997
Commission File No. 0-3701
Valmont Industries, Inc.
------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 47-0351813
-------- ----------
(State or Other Jurisdiction (I.R.S. Employer Identification
of Incorporation or Organization) Number)
Valley, Nebraska 68064
----------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Phone Number, Including Area Code: (402) 359-2201
Securities Registered Pursuant to Section 12(g) of the Act:
Valmont Industries, Inc. Common Stock
------------------------------------
- -
$1.00 Par Value - Traded NASDAQ Stock Market (Symbol VALM)
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(Title of Class)
----------------
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 twelve 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 ninety days.
Yes X No
--- ---
At March 6, 1998 there were outstanding 27,670,846 common shares of the
Company. The aggregate market value of the voting stock held by non-
affiliates of the Company on March 6, 1998 was $419,698,000.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
Documents Incorporated by Reference
-----------------------------------
Portions of the Company's annual report to shareholders for the fiscal
year ended December 27, 1997 (the "Annual Report") are incorporated by
reference in Parts I and II, and portions of the Company's proxy
statement for its annual meeting of shareholders to be held on April 27,
1998 (the "Proxy Statement") are incorporated by reference in Part III.
Page 1 of 85
-----
Index to Exhibits, Page 15
----
PART I
Item 1. Business.
(a) General Description of Business
Valmont Industries, Inc., a Delaware Corporation, (together
with its subsidiaries the "Company") is engaged in industrial products
and irrigation products businesses. The Industrial Products segment
involves the manufacture and distribution of engineered metal structures
and other fabricated products for industrial and commercial
applications. The Irrigation Products segment involves the manufacture
and distribution of agricultural irrigation equipment and related
products. Early in 1997 the Company expanded one of its core
competencies to create a new coatings division for quality protective
coatings using the galvanizing process within the Irrigation Products
segment. The description of Valmont's businesses set forth on pages 6
through 13 of the Company's Annual Report is incorporated herein by
reference.
The Company entered the Irrigation Products market in 1953 from
its manufacturing location in Valley, Nebraska. The Industrial Products
segment began producing and marketing engineered metal structures as a
result of manufacturing support efforts for the irrigation business.
Valmont has grown internally and by acquisition. Valmont has
also divested certain businesses. Valmont's business expansions include
(i) an expansion into the French steel and aluminum structures market in
1989 with the acquisition of Sermeto, (ii) the acquisition in 1991 of
Valmont Nederland B.V. (formerly Nolte Mastenfabriek B.V.), a Dutch
manufacturer of steel poles structures, (iii) the acquisition in 1991 of
an 80% interest and the 1997 acquisition of the remaining 20% in
Lampadaires Feralux, Inc., a Canadian producer of aluminum pole
structures, (iv) the acquisition in 1994 of the assets of Energy Steel
Corporation of Tulsa, Oklahoma, a manufacturer of utility products, (v)
the acquisition of Microflect Company, Inc. in 1995, a manufacturer and
installer of microwave communication structures, (vi) the 1996
acquisitions of TelecCentre, S.A., a French manufacturer of communication
towers, and of Gibo-Conimast Verwaltung, GmbH a German manufacturer and
distributor of pole structures for the lighting market, (vii) completion
of the construction in 1997 of a new galvanizing plant in West Point,
Nebraska, (viii) the acquisition in 1997 of a 70% interest in Valmont
Services Irrigacao, Ltd., a Brazilian manufacturer of mechanized irrigation
equipment, (ix) the acquisition of two galvanizing facilities in Tualatin,
Oregon and in Lindon, Utah in January of 1998 and (x) the expansion of
facilities in Siedlce, Poland during 1997. Divestitures include (i) the
2
1989 divestiture of the Gate City Steel service center business, (ii) the
1993 exit of the Gate City Steel steel reinforcing bar business,(iii) the
1993 sale of its investment in Inacom Corp., a national microcomputer
reseller business initially established as a division of the Company,
(iv) the sale in 1994 of the assets of Good-All Electric, Inc., a
Colorado producer of cathodic protection rectifiers, and (v) the
January 1997 cash sale of the stock of Valmont Electric, Inc., a lighting
ballast manufacturing business.
(b) Industry Segments
-----------------
The Company's business activities are currently classified into
the Following industry segments:
Industrial Products - The manufacture and distribution of engineered
metal structures and fabricated products.
Irrigation Products - The manufacture and distribution of
agricultural irrigation equipment and related products.
The amounts of revenues, operating income and identifiable
assets attributable to each segment for each of the last three years are
set forth on page 35 of the Annual Report and incorporated herein by
reference.
(c) Narrative Description of Business
Principal Products Produced and Services Rendered.
--------------------------------------------------
The information called for by this item is hereby incorporated
by reference to pages 6 through 13 in the Company's Annual Report.
Suppliers and Availability of Raw Materials.
--------------------------------------------
Hot rolled steel coil and other carbon steel products are the
primary raw materials utilized in the manufacture of finished products
for the Industrial Products and Irrigation Products segments. These
essential items are purchased from steel mills and steel service centers
and are readily available. It is not likely that key raw materials
would be unavailable for extended periods.
Patents, Licenses, Franchises and Concessions.
----------------------------------------------
Valmont has a number of patents for its irrigation designs.
The Company also has a number of registered trademarks. Management
believes the loss of any individual patent would not have a material
adverse effect on the financial condition of the Company.
3
Seasonal Factors in Business.
-----------------------------
Sales in the Company's irrigation segment can be somewhat
seasonal based upon the agricultural growing season.
Customers.
----------
The Company is not dependent for a material part of its
business upon a single customer, or upon very few customers, the loss of
any one of which would have a material adverse effect on the financial
condition of the Company.
Backlog.
--------
The backlog of orders for the principal products manufactured
and marketed was approximately $125.6 million at the end of the 1997
fiscal year and $133.6 million at the close of 1996. It is anticipated
that most of the backlog of orders will be filled during fiscal year
1998. At year end, the backlog by segment was as follows (dollar
amounts in millions):
Dec. 27, Dec. 28,
1997 1996
--------- ---------
Industrial Products $94.9 98.7
Irrigation Products 30.7 34.9
--------- ---------
$125.6 133.6
====== ======
Competitive Conditions.
-----------------------
In the Industrial Products segment, Valmont is a major
manufacturer and supplier of engineered metal structures to the lighting
and traffic, utility and wireless communication industries; the Company
delivers a broad line of custom engineered tubular steel products and
manufactures and distributes fasteners and grating. The Irrigation
Products segment involves the development, manufacture and distribution
of mechanized irrigation equipment and related products for both the
U.S. and international markets; in addition, the Irrigation Products
segment supplies galvanizing services. The Company believes it is the
world's leading manufacturer of mechanized irrigation systems. The key
competitive strategy used by the Company in each segment is one of high
quality and service.
4
Research Activities.
--------------------
The information called for by this item is hereby incorporated by
reference to the "Research and Development" on page 33 in the Company's
Annual Report.
Environmental Disclosure.
-------------------------
The Company is subject to various federal, state and local laws
and regulations pertaining to environmental protection and the discharge
of materials into the environment. Although the Company continues to
incur expenses and to make capital expenditures related to environmental
protection, it does not anticipate that future expenditures will
materially impact the financial condition of the Company.
Number of Employees.
--------------------
At December 27, 1997, the number of employees was 3,751.
Financial Information about Foreign Operations and Export Sales.
----------------------------------------------------------------
Valmont's international sales activity encompasses approximately
ninety foreign countries. The information called for by this item is hereby
incorporated by reference to "Summary by Geographical Area" on page 35 in
the Annual Report.
Item 2. Properties.
-----------
The Company's primary plant and offices are located on a 352
acre site near Valley, Nebraska, which is approximately twenty miles
west of Omaha, Nebraska. 336 of the acres are owned in fee. The other
16 acres are leased on a yearly basis from the Union Pacific Railroad
Company, which serves the Company's primary plant, and which is entitled
to terminate the lease on a one-year notice in the event that the land
is required for railroad operations. The Valley, Nebraska location is
used in common as the primary facilities by Irrigation Products and
certain Industrial Products administrative and operating personnel. The
Industrial Products segment's other significant properties are
administrative, manufacturing and distribution facilities at Tulsa,
Oklahoma and Brehnam, Texas. The Oklahoma facility has 350,000 square
feet under roof on 24 acres of land whereas the Texas facility is
5
located on 109 acres and has eight buildings, with 318,000 square feet
under roof. The Company's Microflect subsidiary leases office and plant
facilities in Salem, Oregon under long-term leases. Overseas the
Industrial Products division has four locations in France, and one plant
in each of the following countries: the Netherlands; Germany; Poland;
and China. The Irrigation Products segment in addition to its
operations at Valley, Nebraska, operates a mechanized irrigation
facility in Uberaba, Brazil consisting of 135,000 square feet
and a manufacturing facility for irrigation systems in Madrid, Spain.
The protective coatings division operates a new 50,000 square foot
facility in West Point, Nebraska and rents galvanizing facilities in
Tualatin, Oregon, and Lindon, Utah; these two sites are 68,000 square
feet and 36,000 square feet, respectively. The Company operates other
facilities as set forth on the inside of the back cover of the Company's
Annual Report, which information is incorporated herein by reference.
Item 3. Pending Legal Proceedings.
--------------------------
The Company is involved in a limited number of legal actions.
Management believes that the ultimate resolution of all pending
litigation will not have a material adverse effect on the Company's
financial condition.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
Not applicable.
Executive Officers of the Company
- ---------------------------------
The executive officers of the Company at December 27, 1997, their ages,
positions held, and the business experience of each during the past five
years are, as follows:
Mogens C. Bay, Age 49, Chairman and Chief Executive Officer of the
Company since January 1997. President and Chief Executive Officer of
the Company from August 1993 to December 1996 and Director of the
Company since October 1993. From 1991 to August 1993 served as
President and Chief Operating Officer of the Irrigation Division of
the Company.
Gary L. Cavey, Age 49, President and Chief Operating Officer,
Industrial Products Group since June 1995. President, North
American Operations - Industrial and Construction Products of
the Company from July 1994 to June 1995. From 1985 to July
1994 served as Vice President Marketing of Industrial and
Construction Products of the Company.
6
Vincent T. Corso, Age 50, Group President and Chief Operating Officer-
Irrigation & Coatings Group. Previously Vice President - Operations
from June 1994 until December 1996. Previously served as Vice
President - Corporate Manufacturing, Emerson Electric from 1992
to June 1994.
Thomas P. Egan, Jr., Age 49, Vice President, Corporate Counsel and
Secretary of the Company since 1984.
Joseph M. Goecke, Age 60, President - North American Irrigation
Division since August 1993. Vice President -Operations of the
Company's Irrigation Division from 1991 to August 1993.
Terry J. McClain, Age 50, Senior Vice President and Chief Financial
Officer. Previously Vice President and Chief Financial Officer of
the Company from January 1994 until December 1996. Vice President
-Finance and Accounting of the Irrigation Division of the Company
from 1990 to January 1994.
E. Robert Meaney, Age 50, President and Chief Operating Officer
- Valmont International since February 1994. Previously served as
President Directeur General, Continental Can France, S.A. from
1989 to February 1994.
Brian C. Stanley, Age 55, Vice President - Investor Relations and
Controller of the Company since January 1994. Vice President and
Treasurer of the Company from 1990 to January 1994.
Mark E. Treinen Age 42, Vice President - Business Development since
January 1994. Director of Business Development of the Company from
1991 until January 1994.
7
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
----------------------------------------------------------------
Matters.
--------
Item 6. Selected Financial Data.
------------------------
Item 7. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations.
----------------------
The information called for by items 5, 6 and 7 is hereby incorporated
by reference to the following captioned paragraphs (at the pages indicated)
in the Company's Annual Report:
Page(s) In
Annual
Item Caption in Annual Report Report
---- ------------------------ ------
5 Stock Trading Inside back cover
5 Stock Market Price and Dividends Declared 36
5 Approximate Number of Shareholders 22 - 23
5&6 Selected Eleven Year Financial Data 22 - 23
7 Management's Discussion and Analysis 16 - 21
Item 8. Financial Statements and Supplementary Data.
--------------------------------------------
The financial statements called for by this item are hereby
incorporated by reference to the Company's Annual Report as set forth on pages
24 through 35, together with the independent auditors' report on page 37. The
supplemental quarterly financial information is incorporated herein by
reference to page 36 of the Company's Annual Report. The independent
auditors' report for the year ended December 30, 1995 is incorporated
herein by reference to exhibit 99 of this Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
---------------------
None.
8
PART III
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Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
Item 11. Executive Compensation.
-----------------------
Item 12. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
Item 13. Certain Relationships and Related Transactions.
-----------------------------------------------
Except for the information relating to the executive officers of the
Company set forth in Part I of this 10-K Report, the information called for
by items 10, 11, 12 and 13 is hereby incorporated by reference to the sections
entitled "Certain Shareholders", "Stock Option Grants in Fiscal Year 1997",
"Options Exercised in Fiscal Year 1997 and Fiscal Year End Values", "Long-Term
Incentive Plans", and "Section 16(a) Beneficial Reporting Compliance" in the
Company's Proxy Statement.
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
----------------------------------------------------------------
(a)(1)(2) Financial Statements. See index to financial statement schedules
---------------------
on page F-1.
(a)(3) Exhibits. See exhibit index, incorporated herein by reference.
---------
(b) Reports on Form 8-K. The Company filed no reports on Form 8-K
--------------------
during the past fiscal quarter.
9
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements and Consolidated Financial Statement
Schedules
Consolidated Financial Statements
The following consolidated financial statements of Valmont
Industries, Inc. and subsidiaries have been incorporated by reference
to pages 24 to 35 of the Company's Annual Report to Shareholders for
the year ended December 27, 1997:
Independent Auditors' Reports - 1997 and 1996 are
on page 37 of the annual report. See Exhibit 99
for the Independent Auditors' Report for 1995.
Consolidated Balance Sheets - December 27, 1997 and
December 28, 1996
Consolidated Statements of Operations - Three-Year
Period Ended December 27, 1997
Consolidated Statements of Shareholders' Equity -
Three-Year Period Ended December 27, 1997
Consolidated Statements of Cash Flows - Three-Year
Period Ended December 27, 1997
Notes to Consolidated Financial Statements - Three-
Year Period Ended December 27, 1997
Page
----
Consolidated Financial Statement Schedule
Supporting Consolidated Financial Statement
SCHEDULE II - Valuation and Qualifying Accounts F-4
All other schedules have been omitted as the required information is
inapplicable or the information is included in the consolidated financial
statements or related notes.
Separate financial statements of the Registrant have been omitted because
the Registrant meets the requirements which permit omission.
F-1
10
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
------------------------------------------------------------
To the Board of Directors and Shareholders of
Valmont Industries, Inc.
Valley, Nebraska
We have audited the consolidated financial statements of Valmont Industries,
Inc. and Subsidiaries (the Company) as of December 27, 1997 and December 28,
1996, and for the years then ended, and have issued our report thereon dated
February 6, 1998; such financial statements and report are included in the
1997 Annual Report to Shareholders of the Company and are incorporated herein
by reference. Our audits also included the 1997 and 1996 financial statement
schedule of the Company listed in Item 14 of this Form 10-K. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such 1997 and 1996 financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
/S/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
February 6, 1998
F-2
11
INDEPENDENT AUDITORS' REPORT
-----------------------------
The Board of Directors and Shareholders
Valmont Industries, Inc.:
Under date of February 16, 1996, we reported on the consolidated financial
statements of Valmont Industries, Inc. and subsidiaries as of December 30,
1995, and for the year then ended, as contained in the 1997 Annual Report to
Shareholders and are incorporated herein by reference. Our audit also
included the financial statement schedule of Valmont Industries, Inc. listed
in the accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audit. In our opinion, such financial statement
schedule, when considered in relation to the consolidated financial statements
taken as a whole, present fairly, in all material respects, the information
set forth therein.
/S/KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Omaha, Nebraska
February 16, 1996
F-3
12
Schedule II
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
(Dollars in thousands)
Balance at Charged to Deductions Balance at
beginning profit and from close
of period loss reserves* of period
--------- ---- ------ ----------
Fifty-two weeks ended December 27, 1997 -
Reserve deducted in balance sheet from
the asset to which it applies -
Allowance for doubtful receivables $ 2,299 194 361 2,132
======= ===== ==== =====
Fifty-three weeks ended December 28, 1996 -
Reserve deducted in balance sheet from
the asset to which it applies -
Allowance for doubtful receivables $ 2,941 796 1,438 2,299
======= ===== ===== =====
Fifty-two weeks ended December 30, 1995 -
Reserve deducted in balance sheet from
the asset to which it applies -
Allowance for doubtful receivables $ 2,798 684 541 2,941
======= ===== ===== =====
*The deductions from reserves are net of recoveries.
F-4
13
SIGNATURES
The Registrant. Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Omaha, State of Nebraska, on the 24th day of March,
1998.
Valmont Industries, Inc.
/S/Mogens C. Bay
By___________________________
Mogens C. Bay
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of Valmont
Industries, Inc. and in the capacities indicated on the dates indicated.
/S/ Mogens C. Bay 3/24/98
- -------------------------- Director, President and -----------
Mogens C. Bay Chief Executive Officer Date
(Principal Executive
Officer)
/S/ Terry J. McClain 3/24/98
- -------------------------- Vice President and -----------
Terry J. McClain Chief Financial Officer Date
(Principal Financial
Officer)
/S/ Brian C. Stanley 3/24/98
- -------------------------- Vice President - Investor ----------
Brian C. Stanley Relations & Controller Date
(Principal Accounting
Officer)
Robert B. Daugherty* John E. Jones *
Charles M. Harper* Thomas F. Madison*
Allen F. Jacobson* Walter Scott, Jr.*
Lloyd P. Johnson * Kenneth E. Stinson*
Robert G. Wallace *
*Mogens C. Bay, by signing his name hereto, signs the Annual Report on behalf
of each of the directors indicated on this 24th day of March, 1998. A Power
of Attorney authorizing Mogens C. Bay to sign the Annual Report of Form 10-K
on behalf of each of the indicated directors of Valmont Industries, Inc. has
been filed herein as Exhibit 24.
/S/ Mogens C. Bay
By -------------------------
Mogens C. Bay
Attorney-in-Fact
14
INDEX TO EXHIBITS
This Exhibit Index relates to exhibits filed as a part of this
Report. Numbers are assigned to exhibits in accordance with Item 601 of
Regulation S-K. Page numbers relate to the pages in the sequential
numbering system where the exhibits can be found (for those exhibits
which are not incorporated by reference).
Exhibit 2(a) - Stock Purchase Agreement dated January 3, 1997 between
Valmont Industries, Inc. and Chicago Miniature Lamp, Inc.
This document was filed with the Company's Current Report
on Form 8-K dated January 29, 1997 and is incorporated
herein by reference.
Exhibit 3(a) - The Company's Certificate of Incorporation, as amended.
This document was filed with the Company's Quarterly
Report on Form 10-Q for the quarter ended March 30, 1996
and is incorporated herein by reference.
Exhibit 3(b) - The Company's By-Laws, as amended. This document was
filed with the Company's Quarterly Report on Form 10-Q
for the quarter ended September 28, 1996 and is
incorporated herein by reference.
Exhibit 4(a) - Rights Agreement dated as of December 19, 1995 between
the Company and First National Bank of Omaha as Rights
Agent. This document was filed with the Company's
Current Report on Form 8-K dated December 19, 1995 and
is incorporated herein by reference.
Exhibit 4(b) - Certificate of Adjustment dated May 30, 1997 to Rights
Agreement dated as of December 19, 1995...................Page 17
Exhibit 10(a) - The Company's 1983 Stock Option Plan.....................Page 18
Exhibit 10(b) - The Company's 1988 Stock Plan and certain amendments.....Page 23
Exhibit 10(c) - The Company's 1996 Stock Plan. This document was filed
as Exhibit 10(e) to the Company's Annual Report on Form
10-K for the fiscal year ended December 30, 1995 and is
incorporated herein by reference.
Exhibit 10(d) - The Valmont Executive Incentive Plan. This document
was Filed as Exhibit 10(c) to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 30, 1995 and is incorporated herein by
reference.
Exhibit 11 - Statement Regarding Computation of Per Share Earnings....Page 33
Exhibit 13 - The Company's Annual Report to Shareholders
for its fiscal year ended December 27, 1997..............Page 34
Exhibit 21 - Subsidiaries of the Company..............................Page 78
Exhibit 23(a) - Consent of Deloitte and Touche LLP.......................Page 79
15
Exhibit 23(b) - Consent of KPMG Peat Marwick LLP.........................Page 80
Exhibit 24 - Power of Attorney........................................Page 81
Exhibit 27 - Financial Data Schedule..................................Page 82
Exhibit 99 - Independent Auditors' Report of KPMG Peat Marwick LLP....Page 84
Pursuant to Item 601(b)(4) of Regulation S-K, certain instruments with respect
to Valmont Industries' long-term debt are not filed with this Form 10-K.
Valmont will furnish a copy of such long-term debt agreements to the Securities
and Exchange Commission upon request.
Management contracts and compensatory plans are set forth as exhibits 10(a)
through 10(d).
16