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EX-31.1 - EXHIBIT 31.1 - VALMONT INDUSTRIES INC | a2195111zex-31_1.htm |
EX-32.1 - EXHIBIT 32.1 - VALMONT INDUSTRIES INC | a2195111zex-32_1.htm |
EX-31.2 - EXHIBIT 31.2 - VALMONT INDUSTRIES INC | a2195111zex-31_2.htm |
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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One) | ||
ý |
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
For the quarterly period ended September 26, 2009 |
||
Or |
||
o |
TRANSITION REPORT UNDER 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 (Address of principal executive offices) |
68154-5215 (Zip Code) |
402-963-1000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 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 o 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. (Check one):
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
26,276,932
Outstanding shares of common stock as of October 26, 2009
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
2
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars
in thousands, except per share amounts)
(Unaudited)
|
Thirteen Weeks Ended | Thirty-nine Weeks Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Sept. 26, 2009 |
Sept. 27, 2008 |
Sept. 26, 2009 |
Sept. 27, 2008 |
||||||||||
Net sales |
$ | 434,010 | $ | 494,801 | $ | 1,387,974 | $ | 1,414,216 | ||||||
Cost of sales |
297,652 | 359,802 | 978,619 | 1,026,206 | ||||||||||
Gross profit |
136,358 | 134,999 | 409,355 | 388,010 | ||||||||||
Selling, general and administrative expenses |
73,625 | 73,103 | 218,887 | 212,278 | ||||||||||
Operating income |
62,733 | 61,896 | 190,468 | 175,732 | ||||||||||
Other income (expense): |
||||||||||||||
Interest expense |
(3,587 | ) | (4,264 | ) | (11,847 | ) | (13,446 | ) | ||||||
Interest income |
370 | 382 | 986 | 1,880 | ||||||||||
Miscellaneous |
2,106 | (376 | ) | 1,916 | (2,234 | ) | ||||||||
|
(1,111 | ) | (4,258 | ) | (8,945 | ) | (13,800 | ) | ||||||
Earnings before income taxes, minority interest and equity in earnings of nonconsolidated subsidiaries |
61,622 | 57,638 | 181,523 | 161,932 | ||||||||||
Income tax expense (benefit): |
||||||||||||||
Current |
22,779 | 24,089 | 54,345 | 65,625 | ||||||||||
Deferred |
(2,441 | ) | (4,501 | ) | 5,299 | (10,435 | ) | |||||||
|
20,338 | 19,588 | 59,644 | 55,190 | ||||||||||
Earnings before equity in earnings of nonconsolidated subsidiaries |
41,284 | 38,050 | 121,879 | 106,742 | ||||||||||
Equity in earnings of nonconsolidated subsidiaries |
84 | 412 | 579 | 369 | ||||||||||
Net earnings |
41,368 | 38,462 | 122,458 | 107,111 | ||||||||||
Less: Earnings attributable to noncontrolling interests |
(894 | ) | (1,478 | ) | (1,890 | ) | (3,164 | ) | ||||||
Net earnings attributable to Valmont Industries, Inc. |
$ | 40,474 | $ | 36,984 | $ | 120,568 | $ | 103,947 | ||||||
Earnings per shareBasic |
$ | 1.56 | $ | 1.43 | $ | 4.65 | $ | 4.03 | ||||||
Earnings per shareDiluted |
$ | 1.53 | $ | 1.40 | $ | 4.59 | $ | 3.95 | ||||||
Cash dividends per share |
$ | 0.150 | $ | 0.130 | $ | 0.430 | $ | 0.365 | ||||||
Weighted average number of shares of common stock outstanding (000 omitted) |
25,963 | 25,864 | 25,936 | 25,793 | ||||||||||
Weighted average number of shares of common stock outstanding plus dilutive potential common shares (000 omitted) |
26,402 | 26,362 | 26,257 | 26,321 | ||||||||||
See accompanying notes to condensed consolidated financial statements.
3
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
|
September 26, 2009 |
December 27, 2008 |
|||||||
---|---|---|---|---|---|---|---|---|---|
ASSETS |
|||||||||
Current assets: |
|||||||||
Cash and cash equivalents |
$ | 129,844 | $ | 68,567 | |||||
Receivables, net |
296,267 | 327,620 | |||||||
Inventories |
216,483 | 313,411 | |||||||
Prepaid expenses |
26,596 | 13,821 | |||||||
Refundable and deferred income taxes |
31,895 | 32,380 | |||||||
Total current assets |
701,085 | 755,799 | |||||||
Property, plant and equipment, at cost |
674,762 | 630,410 | |||||||
Less accumulated depreciation and amortization |
388,096 | 361,090 | |||||||
Net property, plant and equipment |
286,666 | 269,320 | |||||||
Goodwill |
174,042 | 175,291 | |||||||
Other intangible assets, net |
98,134 | 104,506 | |||||||
Other assets |
28,785 | 21,372 | |||||||
Total assets |
$ | 1,288,712 | $ | 1,326,288 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||||
Current liabilities: |
|||||||||
Current installments of long-term debt |
$ | 977 | $ | 904 | |||||
Notes payable to banks |
24,950 | 19,552 | |||||||
Accounts payable |
118,463 | 136,868 | |||||||
Accrued expenses |
57,671 | 49,700 | |||||||
Accrued employee compensation and benefits |
63,195 | 70,158 | |||||||
Dividends payable |
3,941 | 3,402 | |||||||
Total current liabilities |
269,197 | 280,584 | |||||||
Deferred income taxes |
43,393 | 45,124 | |||||||
Long-term debt, excluding current installments |
171,710 | 337,128 | |||||||
Other noncurrent liabilities |
26,490 | 22,476 | |||||||
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; issued 27,900,000 shares |
27,900 | 27,900 | |||||||
Retained earnings |
740,784 | 624,254 | |||||||
Accumulated other comprehensive income (loss) |
14,781 | (533 | ) | ||||||
Treasury stock |
(26,789 | ) | (27,490 | ) | |||||
Total Valmont Industries, Inc. shareholders' equity |
756,676 | 624,131 | |||||||
Noncontrolling interest in consolidated subsidiaries |
21,246 | 16,845 | |||||||
Total shareholders' equity |
777,922 | 640,976 | |||||||
Total liabilities and shareholders' equity |
$ | 1,288,712 | $ | 1,326,288 | |||||
See accompanying notes to condensed consolidated financial statements.
4
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
|
Thirty-nine Weeks Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
Sept. 26, 2009 |
Sept. 27, 2008 |
||||||||
Cash flows from operating activities: |
||||||||||
Net earnings |
$ | 122,458 | $ | 107,111 | ||||||
Adjustments to reconcile net earnings to net cash flows from operating activities: |
||||||||||
Depreciation and amortization |
33,639 | 29,081 | ||||||||
Stock-based compensation |
4,814 | 3,869 | ||||||||
Loss/(gain) on sale of assets |
807 | (377 | ) | |||||||
Equity in earnings of nonconsolidated subsidiaries |
(579 | ) | (369 | ) | ||||||
Deferred income taxes |
5,299 | (10,435 | ) | |||||||
Other |
(238 | ) | (840 | ) | ||||||
Payment of deferred compensation |
| (589 | ) | |||||||
Changes in assets and liabilities, net of business acquisitions: |
||||||||||
Receivables |
37,945 | (49,109 | ) | |||||||
Inventories |
102,820 | (78,663 | ) | |||||||
Prepaid expenses |
(11,556 | ) | (28 | ) | ||||||
Accounts payable |
(19,949 | ) | 34,510 | |||||||
Accrued expenses |
(1,262 | ) | 24,152 | |||||||
Other noncurrent liabilities |
(737 | ) | (1,430 | ) | ||||||
Income taxes payable/refundable |
(7,035 | ) | 10,111 | |||||||
Net cash flows from operating activities |
266,426 | 66,994 | ||||||||
Cash flows from investing activities: |
||||||||||
Purchase of property, plant & equipment |
(38,718 | ) | (38,924 | ) | ||||||
Proceeds from sale of assets |
595 | 3,133 | ||||||||
Acquisitions, net of cash acquired |
| (119,044 | ) | |||||||
Dividends to noncontrolling interests |
(289 | ) | (184 | ) | ||||||
Other, net |
(2,454 | ) | (598 | ) | ||||||
Net cash flows from investing activities |
(40,866 | ) | (155,617 | ) | ||||||
Cash flows from financing activities: |
||||||||||
Net borrowings under short-term agreements |
5,398 | 10,395 | ||||||||
Proceeds from long-term borrowings |
10,001 | 80,895 | ||||||||
Principal payments on long-term obligations |
(175,909 | ) | (38,787 | ) | ||||||
Dividends paid |
(10,753 | ) | (8,852 | ) | ||||||
Proceeds from exercises under stock plans |
4,549 | 6,689 | ||||||||
Excess tax benefits from stock option exercises |
1,954 | 7,117 | ||||||||
Purchase of common treasury sharesstock plan exercises |
(3,440 | ) | (7,895 | ) | ||||||
Net cash flows from financing activities |
(168,200 | ) | 49,562 | |||||||
Effect of exchange rate changes on cash and cash equivalents |
3,917 | 624 | ||||||||
Net change in cash and cash equivalents |
61,277 | (38,437 | ) | |||||||
Cash and cash equivalentsbeginning of year |
68,567 | 106,532 | ||||||||
Cash and cash equivalentsend of period |
$ | 129,844 | $ | 68,095 | ||||||
See accompanying notes to condensed consolidated financial statements.
5
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, 2007 |
$ | 27,900 | $ | | $ | 496,388 | $ | 16,996 | $ | (30,671 | ) | $ | 10,373 | $ | 520,986 | |||||||||
Comprehensive income: |
||||||||||||||||||||||||
Net earnings |
| | 103,947 | | | 3,164 | 107,111 | |||||||||||||||||
Currency translation adjustment |
| | | (657 | ) | | (835 | ) | (1,492 | ) | ||||||||||||||
Total comprehensive income |
| | | | | | 105,619 | |||||||||||||||||
Cash dividends ($0.365 per share) |
| | (9,527 | ) | | | | (9,527 | ) | |||||||||||||||
Dividends to noncontrolling interests |
| | | | | (184 | ) | (184 | ) | |||||||||||||||
Acquisitions |
| | | | | 7,192 | 7,192 | |||||||||||||||||
Stock plan exercises; 77,328 shares purchased |
| | | | (7,896 | ) | | (7,896 | ) | |||||||||||||||
Stock options exercised; 266,973 shares issued |
| (11,360 | ) | 6,866 | | 11,149 | | 6,655 | ||||||||||||||||
Tax benefit from exercise of stock options |
| 7,117 | | | | | 7,117 | |||||||||||||||||
Stock option expense |
2,248 | | | | | 2,248 | ||||||||||||||||||
Stock awards; 13,025 shares issued |
| 1,995 | | | | | 1,995 | |||||||||||||||||
Balance at September 27, 2008 |
$ | 27,900 | $ | | $ | 597,674 | $ | 16,339 | $ | (27,418 | ) | $ | 19,710 | $ | 634,205 | |||||||||
Balance at December 27, 2008 |
$ |
27,900 |
$ |
|
$ |
624,254 |
$ |
(533 |
) |
$ |
(27,490 |
) |
$ |
16,845 |
$ |
640,976 |
||||||||
Comprehensive income: |
||||||||||||||||||||||||
Net earnings |
| | 120,568 | | | 1,890 | 122,458 | |||||||||||||||||
Currency translation adjustment |
| | | 15,314 | | 2,800 | 18,114 | |||||||||||||||||
Total comprehensive income |
| | | | | | 140,572 | |||||||||||||||||
Cash dividends ($0.43 per share) |
| | (11,292 | ) | | | | (11,292 | ) | |||||||||||||||
Dividends to noncontrolling interests |
| | | | | (289 | ) | (289 | ) | |||||||||||||||
Stock plan exercises; 152,864 shares issued |
| (6,410 | ) | 7,254 | | 3,705 | | 4,549 | ||||||||||||||||
Stock plan exercises; 49,709 shares purchased |
| | | | (3,440 | ) | | (3,440 | ) | |||||||||||||||
Tax benefit from exercise of stock options |
| 1,954 | | | | | 1,954 | |||||||||||||||||
Stock option expense |
| 3,061 | | | | | 3,061 | |||||||||||||||||
Stock awards; 9,746 shares issued |
| 1,395 | | | 436 | | 1,831 | |||||||||||||||||
Balance at September 26, 2009 |
$ | 27,900 | $ | | $ | 740,784 | $ | 14,781 | $ | (26,789 | ) | $ | 21,246 | $ | 777,922 | |||||||||
See accompanying notes to condensed consolidated financial statements.
6
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)
1. Summary of Significant Accounting Policies
Condensed Consolidated Financial Statements
The Condensed Consolidated Balance Sheet as of September 26, 2009, the Condensed Consolidated Statements of Operations for the thirteen and thirty-nine week periods ended September 26, 2009 and September 27, 2008, the Condensed Consolidated Statements of Cash Flows and the Condensed Consolidated Statements of Shareholders' Equity for the thirty-nine week periods then ended have been prepared by the Company, without audit. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial statements as of September 26, 2009 and for all periods presented. Information related to noncontrolling interest in consolidated subsidiaries for 2008 has been reclassified to conform to the 2009 presentation, as required under Accounting Standards Codification 810, Consolidation, which was adopted effective December 28, 2008, the beginning of the Company's 2009 fiscal year. The effect of this standard was to classify noncontrolling interests on the condensed consolidated balance sheets as equity and to reclassify the related earnings in the condensed consolidated statements of operations 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 27, 2008. 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 27, 2008. The results of operations for the periods ended September 26, 2009 are not necessarily indicative of the operating results for the full year.
Inventories
At September 26, 2009, approximately 44.8% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market. 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 finished goods. The excess of replacement cost of inventories over the LIFO value was approximately $41,600 and $58,200 at September 26, 2009 and December 27, 2008, respectively.
7
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
1. Summary of Significant Accounting Policies (Continued)
Inventories consisted of the following:
|
September 26, 2009 |
December 27, 2008 |
||||||
---|---|---|---|---|---|---|---|---|
Raw materials and purchased parts |
$ | 128,584 | $ | 207,011 | ||||
Work-in-process |
18,562 | 28,925 | ||||||
Finished goods and manufactured goods |
110,968 | 135,671 | ||||||
Subtotal |
258,114 | 371,607 | ||||||
LIFO reserve |
41,631 | 58,196 | ||||||
Net inventory |
$ | 216,483 | $ | 313,411 | ||||
In 2009, the Company reduced its inventory quantities, thereby liquidating a portion of its LIFO inventories acquired in prior years. The result of this liquidation was an increase in operating income of $1,204 and $4,047 for the thirteen and thirty-nine week periods ended September 26, 2009, respectively.
Stock Plans
The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Compensation Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, non-vested stock awards and bonuses of common stock. At September 26, 2009, 1,335,570 shares of common stock remained available for issuance under the plans. Shares and options issued and available for issuance are subject to changes in capitalization.
Under the plans, the exercise price of each option equals the market price at the time of the grant. Options vest beginning on the first anniversary of the grant in equal amounts over three to six years or on the fifth anniversary of the grant. Expiration of grants is from six to ten years from the date of grant. The Company's compensation expense related to stock options (included in selling, general and administrative expenses) and associated tax benefits for the periods listed below were as follows:
|
Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
September 26, 2009 |
September 27, 2008 |
September 26, 2009 |
September 27, 2008 |
|||||||||
Compensation expense |
$ | 1,021 | $ | 760 | $ | 3,061 | $ | 2,248 | |||||
Related tax benefits |
394 | 289 | 1,178 | 854 |
Fair Value
On December 30, 2007, the Company adopted Accounting Standards Codification 820, Fair Value Measurements and Disclosures (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. The Company
8
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)
adopted ASC 820 in 2008, except as it applies to those nonfinancial assets and liabilities affected by the one-year delay, which was adopted in fiscal 2009.
ASC 820 establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refers broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
-
- Level 1: Quoted market prices in active markets for identical assets or liabilities.
-
- Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
-
- Level 3: Unobservable inputs that are not corroborated by market data.
The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.
Trading Securities: The assets and liabilities recorded for the investments held in the Valmont Deferred Compensation Plan represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with Accounting Standards Codification 320, Accounting for Certain Investments in Debt and Equity Securities, considering the employee's ability to change investment allocation of their deferred compensation at any time. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.
|
|
Fair Value Measurement Using: | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Carrying Value September 26, 2009 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||
Assets: |
||||||||||||||
Trading Securities |
$ | 15,238 | $ | 15,238 | $ | | $ | |
|
|
Fair Value Measurement Using: | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Carrying Value December 27, 2008 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||
Assets: |
||||||||||||||
Trading Securities |
$ | 10,488 | $ | 10,488 | $ | | $ | |
9
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)
Subsequent Events
The Company implemented Accounting Standards Codification 855, Subsequent Events, in the second quarter of 2009. In accordance with this pronouncement, the Company evaluated subsequent events through November 3, 2009. The Company evaluated all subsequent events requiring recognition as of September 26, 2009 and did not identify any subsequent events that require disclosure.
Recently Issued Accounting Pronouncements
In June 2009, the FASB updated ASC Topic 860, Transfers and Servicing, which significantly changes the accounting for transfers of financial assets. The update to ASC 860 eliminates the qualifying special purpose entity ("QSPE") concept, establishes conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies the financial-asset derecognition criteria, revises how interests retained by the transferor in a sale of financial assets initially are measured, and removes the guaranteed mortgage securitization recharacterization provisions. The Company is currently assessing the potential impact of adopting this new accounting guidance.
2. Acquisitions
In the first quarter of 2008, the Company acquired substantially all of the assets of Penn Summit LLC (Penn Summit), a manufacturer of steel utility and wireless communication poles located in Hazelton, Pennsylvania and 70% of the outstanding shares of West Coast Engineering Group, Ltd. (West Coast), a Canadian and U.S. manufacturer of steel structures for the lighting, transportation and wireless communication industries headquartered in Delta, British Columbia. In July 2008, the Company acquired the assets of Site Pro 1, Inc. (Site Pro), a company that distributes wireless communication components for the U.S. market.
In November 2008, the Company acquired all of the outstanding shares of Stainton Metals Co., Ltd. (Stainton), an English manufacturer of steel structures for the lighting, transportation and wireless communication industries headquartered in Stockton-on-Tees, England. The Company completed the purchase price allocation related to this acquisition in the third quarter of fiscal 2009. The changes to the purchase price allocation from what was previously recorded were related to the adjustment of the recorded amount of fixed assets to fair value, and certain deferred income tax assets with corresponding adjustments to intangible assets.
In addition, the Company acquired the assets of a provider of materials analysis, testing and inspection services, formed a 51% owned joint venture in Turkey with a Turkish company to manufacture and sell pole structures and acquired the assets of a galvanizing operation located near Louisville, Kentucky in 2008.
The aggregate amount paid by the Company for the businesses acquired in the year-to-date period ended September 27, 2008 was $119,044.
10
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
2. Acquisitions (Continued)
The Company's pro forma results of operations for the thirteen and thirty-nine weeks ended September 27, 2008, assuming that these transactions occurred at the beginning of fiscal 2008 were as follows:
|
Thirteen Weeks Ended September 27, 2008 |
Thirty-nine Weeks Ended September 27, 2008 |
|||||
---|---|---|---|---|---|---|---|
Net sales |
$ | 507,112 | $ | 1,462,657 | |||
Net earnings attributable to Valmont Industries, Inc. |
37,685 | 107,154 | |||||
Earnings per share attributable to Valmont Industries, Inc.diluted |
$ | 1.43 | $ | 4.07 |
3. Goodwill and Intangible Assets
The Company's annual impairment testing of goodwill and intangible assets was performed during the third quarter of fiscal 2009. As a result of that testing, it was determined the goodwill and other intangible assets on the Company's Consolidated Balance Sheet were not impaired, other than certain intangible assets associated with a sign structures operation. The Company continues to monitor changes in the global economy that could impact future operating results of its reporting units and related components.
Amortized Intangible Assets
The components of amortized intangible assets at September 26, 2009 and December 27, 2008 were as follows:
|
As of September 26, 2009 | |
||||||
---|---|---|---|---|---|---|---|---|
|
Gross Carrying Amount |
Accumulated Amortization |
Weighted Average Life |
|||||
Customer Relationships |
$ | 97,046 | $ | 25,683 | 14 years | |||
Proprietary Software & Database |
2,628 | 2,399 | 6 years | |||||
Patents & Proprietary Technology |
3,466 | 1,176 | 13 years | |||||
Non-compete Agreements |
1,711 | 765 | 6 years | |||||
|
$ | 104,851 | $ | 30,023 | ||||
11
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)
|
As of December 27, 2008 | |
||||||
---|---|---|---|---|---|---|---|---|
|
Gross Carrying Amount |
Accumulated Amortization |
Weighted Average Life |
|||||
Customer Relationships |
$ | 97,202 | $ | 19,560 | 14 years | |||
Proprietary Software & Database |
2,609 | 2,295 | 6 years | |||||
Patents & Proprietary Technology |
3,427 | 929 | 13 years | |||||
Non-compete Agreements |
1,696 | 548 | 7 years | |||||
|
$ | 104,934 | $ | 23,332 | ||||
Amortization expense for intangible assets for the thirteen and thirty-nine weeks ended September 26, 2009 and September 27, 2008, respectively was as follows:
|
Thirteen Weeks Ended September 26, 2009 |
Thirteen Weeks Ended September 27, 2008 |
Thirty-nine Weeks Ended September 26, 2009 |
Thirty-nine Weeks Ended September 27, 2008 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$ | 2,419 | $ | 1,768 | $ | 6,534 | $ | 4,600 |
|
Estimated Amortization Expense |
|||
---|---|---|---|---|
2009 |
$ | 8,231 | ||
2010 |
8,077 | |||
2011 |
7,836 | |||
2012 |
7,798 | |||
2013 |
6,964 |
The useful lives assigned to finite-lived intangible assets included consideration of factors such as the Company's past and expected experience related to customer retention rates, the remaining legal or contractual life of the underlying arrangement that resulted in the recognition of the intangible asset and the Company's expected use of the intangible asset.
Non-amortized intangible assets
Intangible assets with indefinite lives are not amortized. The carrying values of trade names at September 26, 2009 and December 27, 2008 were as follows:
|
September 26, 2009 |
December 27, 2008 |
|||||
---|---|---|---|---|---|---|---|
PiRod |
$ | 4,750 | $ | 4,750 | |||
Newmark |
11,111 | 11,111 | |||||
Tehomet |
1,374 | 1,316 | |||||
West Coast |
2,268 | 2,030 | |||||
Site Pro |
1,800 | 1,800 | |||||
Stainton |
1,360 | 1,254 | |||||
Other |
643 | 643 | |||||
|
$ | 23,306 | $ | 22,904 | |||
12
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)
These trade names were tested for impairment separately from goodwill in the third quarter of 2009. 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 as of September 26, 2009.
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.
Goodwill
The carrying amount of goodwill as of September 26, 2009 was as follows:
|
Engineered Support Structures Segment |
Utility Support Structures Segment |
Coatings Segment |
Irrigation Segment |
Total | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance December 27, 2008 |
$ | 52,324 | $ | 77,141 | $ | 43,777 | $ | 2,049 | $ | 175,291 | ||||||
Purchase accounting adjustment |
(2,911 | ) | | | | (2,911 | ) | |||||||||
Impairment |
(395 | ) | | | | (395 | ) | |||||||||
Foreign currency translation |
2,042 | | | 15 | 2,057 | |||||||||||
Balance September 26, 2009 |
$ | 51,060 | $ | 77,141 | $ | 43,777 | $ | 2,064 | $ | 174,042 | ||||||
The purchase accounting adjustment was related to the finalization of the purchase price allocation of the Company's acquisition of 100% of the shares of Stainton. The impairment charge was related to the Company's evaluation of its goodwill and intangible assets assigned to a sign structure operation in the third quarter of 2009, which were all determined to be impaired based on estimated future cash flows.
4. Cash Flows
The Company considers all highly liquid temporary cash investments purchased with a maturity of three months or less to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the thirty-nine weeks ended were as follows:
|
Sept. 26, 2009 |
Sept. 27, 2008 |
|||||
---|---|---|---|---|---|---|---|
Interest |
10,104 | $ | 11,216 | ||||
Income taxes |
59,940 | 57,076 |
13
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 reconciles Basic and Diluted earnings per share (EPS):
|
Basic EPS | Dilutive Effect of Stock Options |
Diluted EPS | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Thirteen weeks ended September 26, 2009: |
|||||||||||
Net earnings attributable to Valmont Industries, Inc. |
$ | 40,474 | | $ | 40,474 | ||||||
Shares outstanding |
25,963 | 439 | 26,402 | ||||||||
Per share amount |
$ | 1.56 | (.03 | ) | $ | 1.53 | |||||
Thirteen weeks ended September 27, 2008: |
|||||||||||
Net earnings attributable to Valmont Industries, Inc. |
$ | 36,984 | | $ | 36,984 | ||||||
Shares outstanding |
25,864 | 498 | 26,362 | ||||||||
Per share amount |
$ | 1.43 | (.03 | ) | $ | 1.40 | |||||
Thirty-nine weeks ended September 26, 2009: |
|||||||||||
Net earnings attributable to Valmont Industries, Inc. |
$ | 120,568 | | $ | 120,568 | ||||||
Shares outstanding |
25,936 | 321 | 26,257 | ||||||||
Per share amount |
$ | 4.65 | (.06 | ) | $ | 4.59 | |||||
Thirty-nine weeks ended September 27, 2008: |
|||||||||||
Net earnings attributable to Valmont Industries, Inc. |
$ | 103,947 | | $ | 103,947 | ||||||
Shares outstanding |
25,793 | 528 | 26,321 | ||||||||
Per share amount |
$ | 4.03 | (.08 | ) | $ | 3.95 |
At September 26, 2009 there were 185,773 of outstanding stock options with exercise prices exceeding the market price of common stock that were therefore excluded from the computation of fully diluted shares earnings per share for the thirteen and thirty-nine weeks ended September 26, 2009. At September 27, 2008, there were no outstanding stock options with exercise prices exceeding the market price of common stock. Therefore, there were no shares contingently issuable upon exercise of stock options excluded from the computation of diluted earnings per share for the thirteen and thirty-nine weeks ended September 27, 2008.
6. Comprehensive Income
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. Currency translation adjustment is the Company's only component of accumulated other
14
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
6. Comprehensive Income (Continued)
comprehensive income. The Company's total comprehensive income for the thirteen and thirty-nine weeks ended September 26, 2009 and September 27, 2008, respectively, were as follows:
|
Thirteen Weeks Ended |
Thirty-nine Weeks Ended |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Sept. 26, 2009 |
Sept. 27, 2008 |
Sept. 26, 2009 |
Sept. 27, 2008 |
|||||||||
Net earnings attributable to Valmont Industries, Inc. |
$ | 40,474 | $ | 36,984 | $ | 120,568 | $ | 103,947 | |||||
Currency translation adjustment |
5,070 | (11,139 | ) | 15,314 | (657 | ) | |||||||
Total comprehensive income attributable to Valmont Industries, Inc. |
$ | 45,544 | $ | 25,845 | $ | 135,882 | $ | 103,290 | |||||
7. Business Segments
The Company aggregates its operating segments into four reportable segments. Aggregation is based on similarity of operating segments as to economic characteristics, products, production processes, types or classes of customer and the methods of distribution. Net corporate expense is net of certain service-related expenses that are allocated to business units generally based on employee headcounts and sales dollars.
Reportable segments are as follows:
ENGINEERED SUPPORT STRUCTURES: This segment consists of the manufacture of engineered metal structures and components for the lighting and traffic and wireless communication industries, certain international utility industries and for other specialty applications;
UTILITY SUPPORT STRUCTURES: This segment consists of the manufacture of engineered steel and concrete structures primarily for the North American utility industry;
COATINGS: This segment consists of galvanizing, anodizing and powder coating services; and
IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment and related parts and services
In addition to these four reportable segments, the Company has other businesses that individually are not more than 10% of consolidated sales. These businesses, which include the manufacture of tubular products and the distribution of industrial fasteners, 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
15
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
7. Business Segments (Continued)
invested capital. The Company does not allocate interest expense, non-operating income and deductions, or income taxes to its business segments.
|
Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Sept. 26, 2009 |
Sept. 27, 2008 |
Sept. 26, 2009 |
Sept. 27, 2008 |
|||||||||||
Sales: |
|||||||||||||||
Engineered Support Structures segment: |
|||||||||||||||
Lighting & Traffic |
$ | 142,184 | $ | 132,466 | $ | 396,504 | $ | 395,215 | |||||||
Specialty |
33,478 | 37,174 | 99,991 | 96,742 | |||||||||||
Utility |
14,736 | 17,429 | 34,832 | 35,509 | |||||||||||
|
190,398 | 187,069 | 531,327 | 527,466 | |||||||||||
Utility Support Structures segment: |
|||||||||||||||
Steel |
127,199 | 92,888 | 424,516 | 252,580 | |||||||||||
Concrete |
23,520 | 20,098 | 101,409 | 62,878 | |||||||||||
|
150,719 | 112,986 | 525,925 | 315,458 | |||||||||||
Coatings segment |
29,683 | 35,889 | 88,295 | 108,217 | |||||||||||
Irrigation segment |
75,230 | 150,445 | 279,339 | 440,890 | |||||||||||
Other |
16,943 | 33,564 | 54,246 | 89,815 | |||||||||||
|
462,973 | 519,953 | 1,479,132 | 1,481,846 | |||||||||||
Intersegment Sales: |
|||||||||||||||
Engineered Support Structures |
17,961 | 7,880 | 58,740 | 20,680 | |||||||||||
Utility Support Structures |
553 | 1,973 | 1,639 | 4,087 | |||||||||||
Coatings |
7,020 | 6,961 | 19,351 | 21,823 | |||||||||||
Irrigation |
2 | 5 | 16 | 18 | |||||||||||
Other |
3,427 | 8,333 | 11,412 | 21,022 | |||||||||||
|
28,963 | 25,152 | 91,158 | 67,630 | |||||||||||
Net Sales: |
|||||||||||||||
Engineered Support Structures |
172,437 | 179,189 | 472,587 | 506.786 | |||||||||||
Utility Support Structures |
150,166 | 111,013 | 524,286 | 311,371 | |||||||||||
Coatings |
22,663 | 28,928 | 68,944 | 86,394 | |||||||||||
Irrigation |
75,228 | 150,440 | 279,323 | 440,872 | |||||||||||
Other |
13,516 | 25,231 | 42,834 | 68,793 | |||||||||||
Consolidated Net Sales |
$ | 434,010 | $ | 494,801 | $ | 1,387,974 | $ | 1,414,216 | |||||||
Operating Income: |
|||||||||||||||
Engineered Support Structures |
$ | 18,186 | $ | 16,336 | $ | 40,301 | $ | 44,394 | |||||||
Utility Support Structures |
40,372 | 14,531 | 126,797 | 43,033 | |||||||||||
Coatings |
7,581 | 9,284 | 19,965 | 24,915 | |||||||||||
Irrigation |
5,633 | 25,249 | 27,479 | 75,663 | |||||||||||
Other |
3,046 | 5,821 | 9,921 | 15,521 | |||||||||||
Net corporate expense |
(12,085 | ) | (9,325 | ) | (33,995 | ) | (27,794 | ) | |||||||
Total Operating Income |
$ | 62,733 | $ | 61,896 | $ | 190,468 | $ | 175,732 | |||||||
16
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
8. Guarantor/Non-Guarantor Financial Information
On May 4, 2004, the Company completed a $150,000,000 offering of 67/8% Senior Subordinated Notes. The Notes are guaranteed, jointly, severally, fully and unconditionally, on a senior subordinated basis by certain of the Company's current and future direct and indirect domestic 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. Condensed consolidated financial information for the Company ("Parent"), the Guarantor subsidiaries and the Non-Guarantor subsidiaries is as follows:
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Thirteen Weeks Ended September 26, 2009
|
Parent | Guarantors | Non- Guarantors |
Eliminations | Total | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales |
$ | 225,013 | $ | 101,875 | $ | 143,657 | $ | (36,535 | ) | $ | 434,010 | ||||||
Cost of sales |
160,249 | 69,914 | 104,594 | (37,105 | ) | 297,652 | |||||||||||
Gross profit |
64,764 | 31,961 | 39,063 | 570 | 136,358 | ||||||||||||
Selling, general and administrative expenses |
37,667 | 13,121 | 22,837 | | 73,625 | ||||||||||||
Operating income |
27,097 | 18,840 | 16,226 | 570 | 62,733 | ||||||||||||
Other income (deductions): |
|||||||||||||||||
Interest expense |
(3,331 | ) | | (256 | ) | | (3,587 | ) | |||||||||
Interest income |
15 | | 355 | | 370 | ||||||||||||
Miscellaneous |
1,440 | 46 | 620 | | 2,106 | ||||||||||||
|
(1,876 | ) | 46 | 719 | | (1,111 | ) | ||||||||||
Earnings before income taxes, minority interest, and equity in earnings of nonconsolidated subsidiaries |
25,221 | 18,886 | 16,945 | 570 | 61,622 | ||||||||||||
Income tax expense: |
|||||||||||||||||
Current |
9,439 | 5,872 | 7,468 | | 22,779 | ||||||||||||
Deferred |
(789 | ) | 1,618 | (3,270 | ) | | (2,441 | ) | |||||||||
|
8,650 | 7,490 | 4,198 | | 20,338 | ||||||||||||
Earnings before equity in earnings of nonconsolidated subsidiaries |
16,571 | 11,396 | 12,747 | 570 | 41,284 | ||||||||||||
Equity in earnings of nonconsolidated subsidiaries |
23,333 | | | (23,249 | ) | 84 | |||||||||||
Net earnings |
39,904 | 11,396 | 12,747 | (22,679 | ) | 41,368 | |||||||||||
Less: Earnings attributable to noncontrolling interests |
| | (894 | ) | | (894 | ) | ||||||||||
Net earnings attributable to Valmont Industries, Inc |
$ | 39,904 | $ | 11,396 | $ | 11,853 | $ | (22,679 | ) | $ | 40,474 | ||||||
17
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
8. Guarantor/Non-Guarantor Financial Information (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Thirty-nine Weeks Ended September 26, 2009
|
Parent | Guarantors | Non- Guarantors |
Eliminations | Total | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales |
$ | 732,898 | $ | 359,051 | $ | 414,983 | $ | (118,958 | ) | $ | 1,387,974 | ||||||
Cost of sales |
530,621 | 260,205 | 308,660 | (120,867 | ) | 978,619 | |||||||||||
Gross profit |
202,277 | 98,846 | 106,323 | 1,909 | 409,355 | ||||||||||||
Selling, general and administrative expenses |
114,842 | 41,401 | 62,644 | | 218,887 | ||||||||||||
Operating income |
87,435 | 57,445 | 43,679 | 1,909 | 190,468 | ||||||||||||
Other income (deductions): |
|||||||||||||||||
Interest expense |
(11,003 | ) | (13 | ) | (831 | ) | | (11,847 | ) | ||||||||
Interest income |
44 | 1 | 941 | | 986 | ||||||||||||
Miscellaneous |
2,536 | 149 | (769 | ) | | 1,916 | |||||||||||
|
(8,423 | ) | 137 | (659 | ) | | (8,945 | ) | |||||||||
Earnings before income taxes, minority interest, and equity in earnings of nonconsolidated subsidiaries |
79,012 | 57,582 | 43,020 | 1,909 | 181,523 | ||||||||||||
Income tax expense: |
|||||||||||||||||
Current |
22,215 | 19,807 | 12,323 | | 54,345 | ||||||||||||
Deferred |
5,822 | 1,949 | (2,472 | ) | | 5,299 | |||||||||||
|
28,037 | 21,756 | 9,851 | | 59,644 | ||||||||||||
Earnings before equity in earnings of nonconsolidated subsidiaries |
50,975 | 35,826 | 33,169 | 1,909 | 121,879 | ||||||||||||
Equity in earnings of nonconsolidated subsidiaries |
67,684 | | | (67,105 | ) | 579 | |||||||||||
Net earnings |
118,659 | 35,826 | 33,169 | (65,196 | ) | 122,458 | |||||||||||
Less: Earnings attributable to noncontrolling interests |
| | (1,890 | ) | | (1,890 | ) | ||||||||||
Net earnings attributable to Valmont Industries, Inc |
$ | 118,659 | $ | 35,826 | $ | 31,279 | $ | (65,196 | ) | $ | 120,568 | ||||||
18
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
8. Guarantor/Non-Guarantor Financial Information (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Thirteen Weeks Ended September 27, 2008
|
Parent | Guarantors | Non- Guarantors |
Eliminations | Total | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales |
$ | 286,461 | $ | 93,062 | $ | 160,629 | $ | (45,351 | ) | $ | 494,801 | ||||||
Cost of sales |
216,297 | 71,132 | 118,724 | (46,351 | ) | 359,802 | |||||||||||
Gross profit |
70,164 | 21,930 | 41,905 | 1,000 | 134,999 | ||||||||||||
Selling, general and administrative expenses |
39,703 | 12,966 | 20,434 | | 73,103 | ||||||||||||
Operating income |
30,461 | 8,964 | 21,471 | 1,000 | 61,896 | ||||||||||||
Other income (deductions): |
|||||||||||||||||
Interest expense |
(3,778 | ) | (3 | ) | (483 | ) | | (4,264 | ) | ||||||||
Interest income |
17 | 9 | 356 | | 382 | ||||||||||||
Miscellaneous |
(758 | ) | 59 | 323 | | (376 | ) | ||||||||||
|
(4,519 | ) | 65 | 196 | | (4,258 | ) | ||||||||||
Earnings before income taxes, minority interest, and equity in earnings of nonconsolidated subsidiaries |
25,942 | 9,029 | 21,667 | 1,000 | 57,638 | ||||||||||||
Income tax expense: |
|||||||||||||||||
Current |
13,108 | 3,578 | 7,403 | | 24,089 | ||||||||||||
Deferred |
(3,406 | ) | (77 | ) | (1,018 | ) | | (4,501 | ) | ||||||||
|
9,702 | 3,501 | 6,385 | | 19,588 | ||||||||||||
Earnings before equity in earnings/ (losses) of nonconsolidated subsidiaries |
16,240 | 5,528 | 15,282 | 1,000 | 38,050 | ||||||||||||
Equity in earnings of nonconsolidated subsidiaries |
19,744 | | | (19,332 | ) | 412 | |||||||||||
Net earnings |
35,984 | 5,528 | 15,282 | (18,332 | ) | 38,462 | |||||||||||
Less: Earnings attributable to noncontrolling interests |
| | (1,478 | ) | | (1,478 | ) | ||||||||||
Net earnings attributable to Valmont Industries, Inc |
$ | 35,984 | $ | 5,528 | $ | 13,804 | $ | (18,332 | ) | $ | 36,984 | ||||||
19
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
8. Guarantor/Non-Guarantor Financial Information (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Thirty-nine Weeks Ended September 27, 2008
|
Parent | Guarantors | Non- Guarantors |
Eliminations | Total | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Net sales |
$ | 834,881 | $ | 255,982 | $ | 430,455 | $ | (107,102 | ) | $ | 1,414,216 | ||||||
Cost of sales |
620,442 | 196,743 | 317,372 | (108,351 | ) | 1,026,206 | |||||||||||
Gross profit |
214,439 | 59,239 | 113,083 | 1,249 | 388,010 | ||||||||||||
Selling, general and administrative expenses |
115,476 | 36,031 | 60,771 | | 212,278 | ||||||||||||
Operating income |
98,963 | 23,208 | 52,312 | 1,249 | 175,732 | ||||||||||||
Other income (deductions): |
|||||||||||||||||
Interest expense |
(11,457 | ) | (14 | ) | (1,975 | ) | | (13,446 | ) | ||||||||
Interest income |
170 | 28 | 1,682 | | 1,880 | ||||||||||||
Miscellaneous |
(1,779 | ) | 161 | (616 | ) | | (2,234 | ) | |||||||||
|
(13,066 | ) | 175 | (909 | ) | | (13,800 | ) | |||||||||
Earnings before income taxes, minority interest, and equity in earnings of nonconsolidated subsidiaries |
85,897 | 23,383 | 51,403 | 1,249 | 161,932 | ||||||||||||
Income tax expense: |
|||||||||||||||||
Current |
40,679 | 8,362 | 16,584 | | 65,625 | ||||||||||||
Deferred |
(8,699 | ) | 398 | (2,134 | ) | | (10,435 | ) | |||||||||
|
31,980 | 8,760 | 14,450 | | 55,190 | ||||||||||||
Earnings before equity in earnings (losses) of nonconsolidated subsidiaries |
53,917 | 14,623 | 36,953 | 1,249 | 106,742 | ||||||||||||
Equity in earnings of nonconsolidated subsidiaries |
48,781 | | 39 | (48,451 | ) | 369 | |||||||||||
Net earnings |
$ | 102,698 | $ | 14,623 | $ | 36,992 | $ | (47,202 | ) | $ | 107,111 | ||||||
Less: Earnings attributable to noncontrolling interests |
| | (3,164 | ) | | (3,164 | ) | ||||||||||
Net earnings attributable to Valmont Industries, Inc |
$ | 102,698 | $ | 14,623 | $ | 33,828 | $ | (47,202 | ) | $ | 103,947 | ||||||
20
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
8. Guarantor/Non-Guarantor Financial Information (Continued)
CONDENSED CONSOLIDATED BALANCE SHEETS
September 26, 2009
|
Parent | Guarantors | Non-Guarantors | Eliminations | Total | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS |
||||||||||||||||||
Current assets: |
||||||||||||||||||
Cash and cash equivalents |
$ | 44,517 | $ | 3,790 | $ | 81,537 | $ | | $ | 129,844 | ||||||||
Receivables, net |
106,950 | 48,234 | 141,083 | | 296,267 | |||||||||||||
Inventories |
73,779 | 46,038 | 96,666 | | 216,483 | |||||||||||||
Prepaid expenses |
4,148 | 487 | 21,961 | | 26,596 | |||||||||||||
Refundable and deferred income taxes |
17,390 | 5,579 | 8,926 | | 31,895 | |||||||||||||
Total current assets |
246,784 | 104,128 | 350,173 | | 701,085 | |||||||||||||
Property, plant and equipment, at cost |
406,981 | 94,356 | 173,425 | | 674,762 | |||||||||||||
Less accumulated depreciation and amortization |
254,624 | 43,432 | 90,040 | | 388,096 | |||||||||||||
Net property, plant and equipment |
152,357 | 50,924 | 83,385 | | 286,666 | |||||||||||||
Goodwill |
20,108 | 107,542 | 46,392 | | 174,042 | |||||||||||||
Other intangible assets |
1,025 | 75,822 | 21,287 | | 98,134 | |||||||||||||
Investment in subsidiaries and intercompany accounts |
545,495 | 59,782 | (17,269 | ) | (588,008 | ) | | |||||||||||
Other assets |
22,366 | | 6,419 | | 28,785 | |||||||||||||
Total assets |
$ | 988,135 | $ | 398,198 | $ | 490,387 | $ | (588,008 | ) | $ | 1,288,712 | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||||||||||||
Current liabilities: |
||||||||||||||||||
Current installments of long-term debt |
$ | 880 | | $ | 97 | | $ | 977 | ||||||||||
Notes payable to banks |
| 3 | 24,947 | | 24,950 | |||||||||||||
Accounts payable |
42,548 | 15,379 | 60,536 | | 118,463 | |||||||||||||
Accrued expenses |
60,354 | 13,961 | 46,551 | | 120,866 | |||||||||||||
Dividends payable |
3,941 | | | | 3,941 | |||||||||||||
Total current liabilities |
107,723 | 29,343 | 132,131 | | 269,197 | |||||||||||||
Deferred income taxes |
27,522 | 8,369 | 7,502 | | 43,393 | |||||||||||||
Long-term debt, excluding current installments |
165,829 | 12 | 5,869 | | 171,710 | |||||||||||||
Other noncurrent liabilities |
22,959 | | 3,531 | | 26,490 | |||||||||||||
Commitments and contingencies |
| | | | | |||||||||||||
Shareholders' equity: |
||||||||||||||||||
Common stock of $1 par value |
27,900 | 14,249 | 3,494 | (17,743 | ) | 27,900 | ||||||||||||
Additional paid-in capital |
| 181,542 | 149,600 | (331,142 | ) | | ||||||||||||
Retained earnings |
662,991 | 164,683 | 152,233 | (239,123 | ) | 740,784 | ||||||||||||
Accumulated other comprehensive income |
| | 14,781 | | 14,781 | |||||||||||||
Treasury stock |
(26,789 | ) | | | | (26,789 | ) | |||||||||||
Total Valmont Industries, Inc. shareholders' equity |
664,102 | 360,474 | 320,108 | (588,008 | ) | 756,676 | ||||||||||||
Noncontrolling interest in consolidated subsidiaries |
| | 21,246 | | 21,246 | |||||||||||||
Total shareholders' equity |
664,102 | 360,474 | 341,354 | (588,008 | ) | 777,922 | ||||||||||||
Total liabilities and shareholders' equity |
$ | 988,135 | $ | 398,198 | $ | 490,387 | $ | (588,008 | ) | $ | 1,288,712 | |||||||
21
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
8. Guarantor/Non-Guarantor Financial Information (Continued)
CONDENSED CONSOLIDATED BALANCE SHEETS
December 27, 2008
|
Parent | Guarantors | Non-Guarantors | Eliminations | Total | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ASSETS |
||||||||||||||||||
Current assets: |
||||||||||||||||||
Cash and cash equivalents |
$ | 18,989 | $ | 1,503 | $ | 48,075 | $ | | $ | 68,567 | ||||||||
Receivables, net |
114,510 | 61,625 | 151,485 | | 327,620 | |||||||||||||
Inventories |
132,896 | 69,913 | 110,602 | | 313,411 | |||||||||||||
Prepaid expenses |
3,362 | 639 | 9,820 | | 13,821 | |||||||||||||
Refundable and deferred income taxes |
19,636 | 6,235 | 6,509 | | 32,380 | |||||||||||||
Total current assets |
289,393 | 139,915 | 326,491 | | 755,799 | |||||||||||||
Property, plant and equipment, at cost |
386,488 | 88,723 | 155,199 | | 630,410 | |||||||||||||
Less accumulated depreciation and amortization |
243,153 | 38,903 | 79,034 | | 361,090 | |||||||||||||
Net property, plant and equipment |
143,335 | 49,820 | 76,165 | | 269,320 | |||||||||||||
Goodwill |
20,108 | 107,542 | 47,641 | | 175,291 | |||||||||||||
Other intangible assets |
1,147 | 80,329 | 23,030 | | 104,506 | |||||||||||||
Investment in subsidiaries and intercompany accounts |
679,653 | 2,722 | (56,869 | ) | (625,506 | ) | | |||||||||||
Other assets |
17,584 | | 3,788 | | 21,372 | |||||||||||||
Total assets |
$ | 1,151,220 | $ | 380,328 | $ | 420,246 | $ | (625,506 | ) | $ | 1,326,288 | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||||||||||||
Current liabilities: |
||||||||||||||||||
Current installments of long-term debt |
$ | 852 | $ | 16 | $ | 36 | | $ | 904 | |||||||||
Notes payable to banks |
| 13 | 19,539 | | 19,552 | |||||||||||||
Accounts payable |
52,891 | 19,812 | 64,165 | | 138,868 | |||||||||||||
Accrued expenses |
62,958 | 13,175 | 43,725 | | 119,858 | |||||||||||||
Dividends payable |
3,402 | | | | 3,402 | |||||||||||||
Total current liabilities |
120,103 | 33,016 | 127,465 | | 280,584 | |||||||||||||
Deferred income taxes |
14,558 | 22,642 | 7,924 | | 45,124 | |||||||||||||
Long-term debt, excluding current installments |
335,537 | 23 | 1,568 | | 337,128 | |||||||||||||
Other noncurrent liabilities |
19,524 | | 2,952 | | 22,476 | |||||||||||||
Commitments and contingencies |
| | | | | |||||||||||||
Shareholders' equity: |
||||||||||||||||||
Common stock of $1 par value |
27,900 | 14,248 | 3,494 | (17,742 | ) | 27,900 | ||||||||||||
Additional paid-in capital |
| 181,542 | 139,577 | (321,119 | ) | | ||||||||||||
Retained earnings |
661,088 | 128,857 | 120,954 | (286,645 | ) | 624,254 | ||||||||||||
Accumulated other comprehensive income |
| | (533 | ) | | (533 | ) | |||||||||||
Treasury stock |
(27,490 | ) | | | | (27,490 | ) | |||||||||||
Total Valmont Industries, Inc. shareholders' equity |
661,498 | 324,647 | 263,492 | (625,506 | ) | 624,131 | ||||||||||||
Noncontrolling interest in consolidated subsidiaries |
| | 16,845 | | 16,845 | |||||||||||||
Total shareholders' equity |
661,498 | 324,647 | 280,337 | (625,506 | ) | 640,976 | ||||||||||||
Total liabilities and shareholders' equity |
$ | 1,151,220 | $ | 380,328 | $ | 420,246 | $ | (625,506 | ) | $ | 1,326,288 | |||||||
22
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
8. Guarantor/Non-Guarantor Financial Information (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Thirty-nine Weeks Ended September 26, 2009
|
Parent | Guarantors | Non- Guarantors |
Eliminations | Total | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Cash flows from operating activities: |
|||||||||||||||||||
Net earnings |
$ | 118,659 | $ | 35,826 | $ | 33,169 | $ | (65,196 | ) | $ | 122,458 | ||||||||
Adjustments to reconcile net earnings to net cash flows from operations: |
|||||||||||||||||||
Depreciation and amortization |
14,155 | 9,486 | 9,998 | | 33,639 | ||||||||||||||
Stock based compensation |
4,814 | | | | 4,814 | ||||||||||||||
(Gain)/ Loss on sale of property, plant and equipment |
134 | 193 | 480 | | 807 | ||||||||||||||
Equity in earnings of nonconsolidated subsidiaries |
(579 | ) | | | | (579 | ) | ||||||||||||
Deferred income taxes |
5,673 | 1,949 | (2,323 | ) | 5,299 | ||||||||||||||
Other adjustments |
| | (238 | ) | | (238 | ) | ||||||||||||
Payment of deferred compensation |
| | | | | ||||||||||||||
Changes in assets and liabilities: |
|||||||||||||||||||
Receivables |
6,575 | 13,391 | 17,979 | | 37,945 | ||||||||||||||
Inventories |
59,116 | 23,874 | 19,830 | | 102,820 | ||||||||||||||
Prepaid expenses |
(786 | ) | 153 | (10,923 | ) | | (11,556 | ) | |||||||||||
Accounts payable |
(9,130 | ) | (4,433 | ) | (6,386 | ) | | (19,949 | ) | ||||||||||
Accrued expenses |
(2,528 | ) | 787 | 479 | | (1,262 | ) | ||||||||||||
Other noncurrent liabilities |
(1,316 | ) | | 579 | | (737 | ) | ||||||||||||
Income taxes payable |
8,326 | (15,567 | ) | 206 | | (7,035 | ) | ||||||||||||
Net cash flows from operating activities |
203,113 | 65,659 | 62,850 | (65,196 | ) | 266,426 | |||||||||||||
Cash flows from investing activities: |
|||||||||||||||||||
Purchase of property, plant and equipment |
(21,734 | ) | (6,771 | ) | (10,213 | ) | | (38,718 | ) | ||||||||||
Proceeds from sale of assets |
22 | 494 | 79 | | 595 | ||||||||||||||
Acquisitions, net of cash acquired |
| | | | | ||||||||||||||
Dividends to minority interests |
| | (289 | ) | | (289 | ) | ||||||||||||
Other, net |
21,497 | (57,060 | ) | (32,087 | ) | 65,196 | (2,454 | ) | |||||||||||
Net cash flows from investing activities |
(215 | ) | (63,337 | ) | (42,510 | ) | 65,196 | (40,866 | ) | ||||||||||
Cash flows from financing activities: |
|||||||||||||||||||
Net borrowings under short-term agreements |
| (9 | ) | 5,407 | | 5,398 | |||||||||||||
Proceeds from long-term borrowings |
| | 10,001 | | 10,001 | ||||||||||||||
Principal payments on long-term obligations |
(169,680 | ) | (26 | ) | (6,203 | ) | | (175,909 | ) | ||||||||||
Dividends paid |
(10,753 | ) | | | | (10,753 | ) | ||||||||||||
Proceeds from exercises under stock plans |
4,549 | | | | 4,549 | ||||||||||||||
Excess tax benefits from stock option exercises |
1,954 | | | | 1,954 | ||||||||||||||
Purchase of common treasury sharesstock plan exercises |
(3,440 | ) | | | | (3,440 | ) | ||||||||||||
Net cash flows from financing activities |
(177,370 | ) | (35 | ) | 9,205 | | (168,200 | ) | |||||||||||
Effect of exchange rate changes on cash and cash equivalents |
| | 3,917 | | 3,917 | ||||||||||||||
Net change in cash and cash equivalents |
25,528 | 2,287 | 33,462 | | 61,277 | ||||||||||||||
Cash and cash equivalentsbeginning of year |
18,989 | 1,503 | 48,075 | | 68,567 | ||||||||||||||
Cash and cash equivalentsend of period |
$ | 44,517 | $ | 3,790 | $ | 81,537 | | $ | 129,844 | ||||||||||
23
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Dollars in thousands, except per share amounts)
(Unaudited)
8. Guarantor/Non-Guarantor Financial Information (Continued)