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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 26, 1998
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
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(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
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$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 5, 1999 there were outstanding 24,528,973 common shares of the Company.
The aggregate market value of the voting stock held by non-affiliates of the
Company on March 5, 1999 was $198,421,000.
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 26, 1998 (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 26, 1999 (the "Proxy Statement") are
incorporated by reference in Part III.
Page 1 of 203
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Index to Exhibits, Page 13
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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 infrastructure and irrigation
businesses. The Infrastructure segment involves the manufacture and distribution
of engineered metal structures for the lighting, utility and wireless
communication industries. The Irrigation segment involves the manufacture and
distribution of agricultural irrigation equipment and related products and
services. The description of Valmont's businesses set forth on pages 6 through
21 of the Company's Annual Report is incorporated herein by reference.
The Company entered the Irrigation market in 1953 from its manufacturing
location in Valley, Nebraska. The Infrastructure segment began producing and
marketing engineered metal structures in the early 1960's.
Valmont has grown internally and by acquisition. Valmont has also divested
certain businesses. Valmont's business expansions during the past five years
include (i) the acquisition of Microflect Company, Inc. in 1995, a manufacturer
and installer of microwave communication structures, (ii) the 1996 acquisitions
of TelecCentre, S.A., a French manufacturer of communication towers, and of
Valmont Mastbau, KG, a German manufacturer and distributor of pole structures
for the lighting market, (iii) completion of the construction in 1997 of a new
galvanizing plant in West Point, Nebraska, (iv) the acquisition in 1997 of a 70%
interest in Valmont Services Irrigacao, Ltd., a Brazilian manufacturer of
mechanized irrigation equipment, (v) the acquisition of two galvanizing
facilities in Tualatin, Oregon and in Lindon, Utah in January of 1998, (vi) the
expansion of facilities in Siedlce, Poland during 1997 and (vii) the acquisition
of two additional galvanizing facilities in California and Oklahoma and the
purchase of Cascade Earth Sciences, Ltd., a firm providing consulting services
for environmental and wastewater management projects during 1998. Divestitures
during the past five years include the January 1997 cash sale of the stock of
Valmont Electric, Inc., a lighting ballast manufacturing business.
(b) Operating Segments
The Company's business activities are currently classified into the
following operating segments:
Infrastructure - This segment consists of the manufacture and distribution
of engineered metal structures and related products for the lighting,
utility and wireless communications industries.
Irrigation - This segment includes the manufacture and distribution of
agricultural irrigation equipment and related products and services.
In addition to these two reportable segments, the Company has several other
businesses that do not fit within the reportable segments listed above, and are
not individually more than 10% of combined net sales. These businesses include
custom coatings, steel tubing, pressure vessels, machine tool accessories and
industrial fasteners.
The amounts of revenues, operating income and total assets attributable to
each segment for each of the last three years are set forth on page 45 of the
Annual Report and incorporated herein by reference.
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(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 11 through 21 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.
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 $106.3 million at the end of the 1998 fiscal year and $125.6
million at the close of 1997. It is anticipated that most of the backlog of
orders will be filled during fiscal year 1999. At year end, the backlog by
segment was as follows (dollar amounts in millions):
Dec. 26, Dec. 27,
1998 1997
--------- ---------
Infrastructure $ 70.3 86.2
Irrigation 21.1 30.7
Other 14.9 8.7
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$ 106.3 125.6
------ -----
------ -----
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COMPETITIVE CONDITIONS.
In the Infrastructure segment, Valmont is a major manufacturer and supplier
of engineered metal structures to the lighting and traffic, utility and wireless
communication industries. The Irrigation segment involves the development,
manufacture and distribution of mechanized irrigation equipment and related
products for both the U.S. and international markets. The Company believes it is
the world's leading manufacturer of mechanized irrigation systems. The Company
delivers a broad line of custom engineered tubular steel products and
manufactures and distributes fasteners. In addition, the Company supplies custom
coating services. The key competitive strategy used by the Company in each
segment is one of high quality and service.
RESEARCH ACTIVITIES.
The information called for by this item is hereby incorporated by reference
to the "Research and Development" on page 43 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 26, 1998, the number of employees was 3,869.
GEOGRAHPIC AREAS.
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 45 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
segment and certain Infrastructure segment administrative and operating
personnel. The Infrastructure segment's other significant properties are
administrative, manufacturing and distribution facilities at Elkhart, Indiana,
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 located on 109
acres and has eight buildings, with 318,000 square feet under
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roof. Additionally the infrastructure segment leases office and plant facilities
in Salem, Oregon under long-term leases. Overseas the Infrastructure segment has
four locations in France, and one plant in each of the following countries: the
Netherlands; Germany; Poland; and China. The Irrigation 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. Currently under construction is a
310,000 square feet manufacturing facility in McCook, Nebraska, that will
produce mechanized irrigation system components. The protective coatings
division operates a 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. During 1998
two additional coating plants were acquired that are located in Long Beach,
California and Tulsa, Oklahoma. The Company operates other facilities as set
forth on page 8 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.
There were not any matters submitted for stockholder vote during the fourth
quarter of 1998.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company at December 26, 1998, their ages,
positions held, and the business experience of each during the past five years
are, as follows:
Mogens C. Bay, Age 50, 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.
Vincent T. Corso, Age 51, Senior Vice President, Chief Operating Officer of
the Company since September of 1998. Group President and Chief Operating
Officer-Irrigation & Coatings Group from December 1996 until September of
1998. 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 50, Vice President, Corporate Counsel and
Secretary of the Company since 1984.
Terry J. McClain, Age 51, Senior Vice President and Chief Financial
Officer. Previously Vice President and Chief Financial Officer of the
Company from January 1994 until December 1996.
5
E. Robert Meaney, Age 51, Senior Vice President - Valmont International
since September 1998. President and Chief Operating Officer - Valmont
International from February 1994 to September 1998.
Brian C. Stanley, Age 56, Vice President - Controller of the Company since
January 1994.
Mark E. Treinen Age 43, Vice President - Business Development since January
1994.
6
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 48
5 Stock Market Price and Dividends Declared 46
5 Approximate Number of Shareholders 34 - 35
5&6 Selected Eleven Year Financial Data 34 - 35
7 Management's Discussion and Analysis 29 - 33
7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for by item 7A is hereby incorporated by reference
to the captioned paragraph, Risk Management, in the Company's Annual Report on
Page 32.
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 36 through 45,
together with the independent auditors' report on page 47. The supplemental
quarterly financial information is incorporated herein by reference to page 46
of the Company's Annual Report
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
7
PART III
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", "Election of Directors", "Summary Compensation
Table", "Stock Option Grants in Fiscal Year 1998", "Options Exercised in Fiscal
Year 1998 and Fiscal Year End Values", "Long-Term Incentive Plans", and "Section
16(a) Beneficial Ownership 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.
8
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 36 to 45 of the
Company's Annual Report to Shareholders for the year ended December 26, 1998:
Independent Auditors' Reports - Page 47 of the annual report.
Consolidated Balance Sheets - December 26, 1998 and December 27, 1997
Consolidated Statements of Operations - Three-Year Period Ended
December 26, 1998
Consolidated Statements of Shareholders' Equity - Three-Year Period
Ended December 26, 1998
Consolidated Statements of Cash Flows - Three-Year Period Ended
December 26, 1998
Notes to Consolidated Financial Statements - Three- Year Period Ended
December 26, 1998
Page
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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
9
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders of Valmont Industries, Inc.
We have audited the consolidated financial statements of Valmont Industries,
Inc. and Subsidiaries (the Company) as of December 26, 1998 and December 27,
1997, and for each of the three years in the period ended December 26,1998, and
have issued our report thereon dated February 5, 1999; such financial statements
and report are included in your 1998 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the 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 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.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
February 5, 1999
F-2
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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 26, 1998
Reserve deducted in balance sheet from
the asset to which it applies -
Allowance for doubtful receivables $ 2,132 1,522 233 3,421
------- ----- ----- -----
------- ----- ----- -----
Fifty-three 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-two 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
------- ----- ----- -----
------- ----- ----- -----
*The deductions from reserves are net of recoveries.
F-4
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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,1999.
Valmont Industries, Inc.
By: /S/Mogens C. Bay
----------------------------------
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 3/24/99
- -------------------------- Director, President and -----------
Mogens C. Bay Chief Executive Officer Date
(Principal Executive
Officer)
/S/ Terry J. McClain 3/24/99
- -------------------------- Vice President and -----------
Terry J. McClain Chief Financial Officer Date
(Principal Financial
Officer)
/S/ Brian C. Stanley 3/24/99
- -------------------------- 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 * Charles D. Pebbler, Jr.*
Bruce Rhode*
*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, 1999. 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.
By /S/ Mogens C. Bay
-------------------------
Mogens C. Bay
Attorney-in-Fact
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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 3(i) - 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 28, 1998 and is
incorporated herein by reference.
Exhibit 3(ii) - The Company's By-Laws, as amended. Page 15
Exhibit 4(i) - 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(ii) - Certificate of Adjustment dated May 30, 1997 to Rights
Agreement dated as of December 19, 1995. This document was
filed as Exhibit 4(b) with the Company's Annual Report on Form
10-K for fiscal year ended December 27, 1997 and is
incorporated herein by reference.
Exhibit 4(iii) - The Company's Credit Agreement with The Bank of New
York dated October 7, 1997 as amended. Page 31
Exhibit 10(i) - The Company's 1988 Stock Plan and certain amendments.
This document was filed as Exhibit 10(a) with the Company's
Annual Report on Form 10-K for fiscal year ended December 27,
1997 and is incorporated herein by reference.
Exhibit 10(ii) - 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(iii) - 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 10(iv) - The Amended Unfunded Deferred Compensation Plan for
Nonemployee Directors. This document was filed as Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 28, 1998 and is incorporated herein by
reference.
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Exhibit 13 - The Company's Annual Report to Shareholders
for its fiscal year ended December 26, 1998..............Page 148
Exhibit 21 - Subsidiaries of the Company..............................Page 201
Exhibit 23 - Consent of Deloitte and Touche LLP.......................Page 202
Exhibit 24 - Power of Attorney........................................Page 203
Exhibit 27 - Financial Data Schedule..................................Page 204
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(i)
through 10(iv).
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