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EX-32.1 - EXHIBIT 32.1 - VALMONT INDUSTRIES INCvmi-ex321_2015926x10q.htm
EX-31.1 - EXHIBIT 31.1 - VALMONT INDUSTRIES INCvmi-ex311_2015926x10q.htm
EX-31.2 - EXHIBIT 31.2 - VALMONT INDUSTRIES INCvmi-ex312_2015926x10q.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
Form 10-Q
(Mark One)
x    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 2015
or
o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to
Commission file number 1-31429
_____________________________________
Valmont Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 
(State or Other Jurisdiction of
Incorporation or Organization)
47-0351813 
(I.R.S. Employer
Identification No.)
One Valmont Plaza, 
Omaha, Nebraska 
(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 Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x 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 x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Accelerated filer o
Non‑accelerated filer o 
Smaller reporting company o
 
 
(Do not check if a
smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
23,038,856
Outstanding shares of common stock as of October 19, 2015




VALMONT INDUSTRIES, INC.

INDEX TO FORM 10-Q
 
 
Page No.
 
PART I. FINANCIAL INFORMATION
 
 
 
 
 
ended September 26, 2015 and September 27, 2014
 
 
 
thirty-nine weeks ended September 26, 2015 and September 27, 2014
 
Condensed Consolidated Balance Sheets as of September 26, 2015 and December 27,
 
 
2014
 
Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended
 
 
September 26, 2015 and September 27, 2014
 
Condensed Consolidated Statements of Shareholders' Equity for the thirty-nine
 
 
weeks ended September 26, 2015 and September 27, 2014
 
Item 2.
Item 3.
45
Item 4.
45
 
 
 
 
PART II. OTHER INFORMATION
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
46
Item 6.
46
47
 
 
 
 
 
 
 
 
 


2




VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
(Unaudited)
 
Thirteen Weeks Ended
 
Thirty-nine Weeks Ended
 
September 26,
2015
 
September 27,
2014
 
September 26,
2015
 
September 27,
2014
Product sales
$
560,518

 
$
686,508

 
$
1,776,194

 
$
2,134,395

Services sales
72,057

 
79,160

 
208,902

 
225,612

Net sales
632,575

 
765,668

 
1,985,096

 
2,360,007

Product cost of sales
427,688

 
515,217

 
1,348,402

 
1,586,127

Services cost of sales
48,136

 
50,951

 
144,941

 
146,921

Total cost of sales
475,824

 
566,168

 
1,493,343

 
1,733,048

Gross profit
156,751

 
199,500

 
491,753

 
626,959

Selling, general and administrative expenses
104,539

 
111,697

 
327,858

 
335,532

Impairment of goodwill and intangible assets
15,200

 

 
15,200

 

Operating income
37,012

 
87,803

 
148,695

 
291,427

Other income (expenses):
 
 
 
 
 
 
 
Interest expense
(11,120
)
 
(8,716
)
 
(33,480
)
 
(25,217
)
Interest income
905

 
1,477

 
2,395

 
4,793

Costs associated with refinancing of debt

 
(38,705
)
 

 
(38,705
)
Other
(1,230
)
 
(2,344
)
 
(242
)
 
(6,253
)
 
(11,445
)
 
(48,288
)
 
(31,327
)
 
(65,382
)
Earnings before income taxes
25,567

 
39,515

 
117,368

 
226,045

Income tax expense (benefit):
 
 
 
 
 
 
 
Current
6,746

 
23,290

 
37,656

 
82,345

Deferred
5,272

 
(9,064
)
 
5,217

 
(4,034
)
 
12,018

 
14,226

 
42,873

 
78,311

Earnings before equity in earnings of nonconsolidated subsidiaries
13,549

 
25,289

 
74,495

 
147,734

Equity in earnings of nonconsolidated subsidiaries

 
(4
)
 

 
(34
)
Net earnings
13,549

 
25,285

 
74,495

 
147,700

Less: Earnings attributable to noncontrolling interests
(1,483
)
 
(1,726
)
 
(3,817
)
 
(4,185
)
Net earnings attributable to Valmont Industries, Inc.
$
12,066

 
$
23,559

 
$
70,678

 
$
143,515

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.52

 
$
0.93

 
$
3.02

 
$
5.48

Diluted
$
0.52

 
$
0.92

 
$
3.00

 
$
5.43

Cash dividends declared per share
$
0.375

 
$
0.375

 
$
1.125

 
$
1.000

Weighted average number of shares of common stock outstanding - Basic (000 omitted)
23,057

 
25,287

 
23,420

 
26,208

Weighted average number of shares of common stock outstanding - Diluted (000 omitted)
23,170

 
25,513

 
23,534

 
26,439

See accompanying notes to condensed consolidated financial statements.

3



VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
 
Thirteen Weeks Ended
 
Thirty-nine Weeks Ended
 
September 26,
2015
 
September 27,
2014
 
September 26,
2015
 
September 27,
2014
Net earnings
$
13,549

 
$
25,285

 
$
74,495

 
$
147,700

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
 
 
Unrealized translation gain (loss)
(53,518
)
 
(59,001
)
 
(93,368
)
 
(33,495
)
Unrealized gain/(loss) on cash flow hedge:
 
 
 
 
 
 
 
Amortization cost included in interest expense
18

 
383

 
55

 
450

     Realized (gain) loss included in net earnings during the period
(439
)
 
983

 
(439
)
 
983

     Gain on cash flow hedges
110

 
4,837

 
1,155

 
4,837

Actuarial gain (loss) in defined benefit pension plan

 
1,116

 

 
269

Other comprehensive income (loss)
(53,829
)
 
(51,682
)
 
(92,597
)
 
(26,956
)
Comprehensive income (loss)
(40,280
)
 
(26,397
)
 
(18,102
)
 
120,744

Comprehensive loss (income) attributable to noncontrolling interests
847

 
89

 
206

 
(1,615
)
Comprehensive income (loss) attributable to Valmont Industries, Inc.
$
(39,433
)
 
$
(26,308
)
 
$
(17,896
)
 
$
119,129

















See accompanying notes to condensed consolidated financial statements.

4



VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except shares and per share amounts)
(Unaudited)
 
September 26,
2015
 
December 27,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
312,851

 
$
371,579

Receivables, net
501,403

 
536,918

Inventories
368,290

 
359,522

Prepaid expenses
52,208

 
56,912

Refundable and deferred income taxes
44,736

 
68,010

Total current assets
1,279,488

 
1,392,941

Property, plant and equipment, at cost
1,083,211

 
1,139,569

Less accumulated depreciation and amortization
539,976

 
533,116

Net property, plant and equipment
543,235

 
606,453

Goodwill
362,683

 
385,111

Other intangible assets, net
175,157

 
202,004

Other assets
129,138

 
143,159

Total assets
$
2,489,701

 
$
2,729,668

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Current installments of long-term debt
$
1,099

 
$
1,181

Notes payable to banks
1,496

 
13,952

Accounts payable
186,581

 
196,565

Accrued employee compensation and benefits
70,249

 
87,950

Accrued expenses
104,779

 
88,480

Dividends payable
8,649

 
9,086

Total current liabilities
372,853

 
397,214

Deferred income taxes
66,200

 
71,797

Long-term debt, excluding current installments
764,823

 
766,654

Defined benefit pension liability
129,600

 
150,124

Deferred compensation
48,637

 
47,932

Other noncurrent liabilities
41,811

 
45,542

Shareholders’ equity:
 
 
 
Preferred stock of $1 par value -
 
 
 
Authorized 500,000 shares; none issued

 

Common stock of $1 par value -
 
 
 
Authorized 75,000,000 shares; 27,900,000 issued
27,900

 
27,900

Retained earnings
1,767,621

 
1,718,662

Accumulated other comprehensive income (loss)
(223,007
)
 
(134,433
)
Treasury stock
(552,780
)
 
(410,296
)
Total Valmont Industries, Inc. shareholders’ equity
1,019,734

 
1,201,833

Noncontrolling interest in consolidated subsidiaries
46,043

 
48,572

Total shareholders’ equity
1,065,777

 
1,250,405

Total liabilities and shareholders’ equity
$
2,489,701

 
$
2,729,668

See accompanying notes to condensed consolidated financial statements.

5



VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 
Thirty-nine Weeks Ended
 
September 26,
2015
 
September 27,
2014
Cash flows from operating activities:
 
 
 
Net earnings
$
74,495

 
$
147,700

Adjustments to reconcile net earnings to net cash flows from operations:
 
 
 
Depreciation and amortization
70,859

 
64,460

Noncash loss on trading securities
5,020

 
4,859

Impairment of assets - restructuring activities
12,659

 

Impairment of goodwill & intangible assets
15,200

 

Non-cash debt refinancing costs

 
(2,478
)
Stock-based compensation
5,667

 
5,444

Change in fair value of contingent consideration

 
4,300

Defined benefit pension plan expense (benefit)
(460
)
 
2,003

Contribution to defined benefit pension plan
(15,735
)
 
(18,245
)
Gain on sale of property, plant and equipment
1,263

 
58

Equity in earnings in nonconsolidated subsidiaries

 
34

Deferred income taxes
5,217

 
(4,034
)
Changes in assets and liabilities (net of acquisitions):
 
 
 
Receivables
5,551

 
(19,951
)
Inventories
(25,447
)
 
(4,152
)
Prepaid expenses
5,275

 
(19,182
)
Accounts payable
832

 
(21,082
)
Accrued expenses
7,368

 
(27,926
)
Other noncurrent liabilities
887

 
(6,409
)
Income taxes refundable
14,171

 
(22,702
)
Net cash flows from operating activities
182,822

 
82,697

Cash flows from investing activities:
 
 
 
Purchase of property, plant and equipment
(34,447
)
 
(63,412
)
Proceeds from sale of assets
3,256

 
2,107

Acquisitions, net of cash acquired

 
(137,438
)
Other, net
5,980

 
2,992

Net cash flows from investing activities
(25,211
)
 
(195,751
)
Cash flows from financing activities:
 
 
 
Net borrowings under short-term agreements
(12,322
)
 
(1,065
)
Proceeds from long-term borrowings
37,000

 
652,540

Principal payments on long-term borrowings
(37,878
)
 
(357,059
)
Settlement of financial derivatives

 
4,837

Dividends paid
(26,708
)
 
(23,357
)
Dividends to noncontrolling interest
(2,323
)
 
(1,340
)
Debt issuance costs

 
(5,464
)
Purchase of treasury shares
(148,220
)
 
(316,296
)
Proceeds from exercises under stock plans
10,902

 
12,824

Excess tax benefits from stock option exercises
1,458

 
3,916

Purchase of common treasury shares—stock plan exercises
(12,135
)
 
(12,739
)
Net cash flows from financing activities
(190,226
)
 
(43,203
)
Effect of exchange rate changes on cash and cash equivalents
(26,113
)
 
(5,231
)
Net change in cash and cash equivalents
(58,728
)
 
(161,488
)
Cash and cash equivalents—beginning of year
371,579

 
613,706

Cash and cash equivalents—end of period
$
312,851

 
$
452,218

See accompanying notes to condensed consolidated financial statements.

6


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 28, 2013
$
27,900

 
$

 
$
1,562,670

 
$
(47,685
)
 
$
(20,860
)
 
$
22,821

 
$
1,544,846

Net earnings

 

 
143,515

 

 

 
4,185

 
147,700

Other comprehensive income (loss)

 

 

 
(24,386
)
 

 
(2,570
)
 
(26,956
)
Cash dividends declared

 

 
(25,950
)
 

 

 

 
(25,950
)
Dividends to noncontrolling interests

 

 

 

 

 
(1,340
)
 
(1,340
)
Acquisition of AgSense

 

 

 

 

 
16,333

 
16,333

Acquisition of DS SM

 

 

 

 

 
9,232

 
9,232

Addition of noncontrolling interest

 

 

 

 

 
404

 
404

Purchase of treasury shares; 2,126,392 shares acquired

 

 

 

 
(316,296
)
 

 
(316,296
)
Stock plan exercises; 83,431 shares acquired

 

 

 

 
(12,739
)
 

 
(12,739
)
Stock options exercised; 171,508 shares issued

 
(9,360
)
 
7,301

 

 
14,883

 

 
12,824

Tax benefit from stock option exercises

 
3,916

 

 

 

 

 
3,916

Stock option expense

 
3,767

 

 

 

 

 
3,767

Stock awards; 8,247 shares issued

 
1,677

 

 

 
1,268

 

 
2,945

Balance at September 27, 2014
$
27,900

 
$

 
$
1,687,536

 
$
(72,071
)
 
$
(333,744
)
 
$
49,065

 
$
1,358,686

Balance at December 27, 2014
$
27,900

 
$

 
$
1,718,662

 
$
(134,433
)
 
$
(410,296
)
 
$
48,572

 
$
1,250,405

Net earnings

 

 
70,678

 

 

 
3,817

 
74,495

Other comprehensive income (loss)

 

 

 
(88,574
)
 

 
(4,023
)
 
(92,597
)
Cash dividends declared

 

 
(26,249
)
 

 

 

 
(26,249
)
Dividends to noncontrolling interests

 

 

 

 

 
(2,323
)
 
(2,323
)
Purchase of treasury shares; 1,236,771 shares acquired

 

 

 

 
(148,220
)
 

 
(148,220
)
Stock plan exercises; 98,367 shares acquired

 

 

 

 
(12,135
)
 

 
(12,135
)
Stock options exercised; 138,657 shares issued

 
(11,078
)
 
4,530

 

 
17,450

 

 
10,902

Tax benefit from stock option exercises

 
1,458

 

 

 

 

 
1,458

Stock option expense

 
3,936

 

 

 

 

 
3,936

Stock awards; 5,943 shares issued

 
5,684

 

 

 
421

 

 
6,105

Balance at September 26, 2015
$
27,900

 
$

 
$
1,767,621

 
$
(223,007
)
 
$
(552,780
)
 
$
46,043

 
$
1,065,777










See accompanying notes to condensed consolidated financial statements.

7


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, 2015, the Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen and thirty-nine weeks ended September 26, 2015 and September 27, 2014, and the Condensed Consolidated Statements of Cash Flows and Shareholders' Equity for the thirty-nine week period 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, 2015 and for all periods presented.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 27, 2014. 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, 2014. The results of operations for the period ended September 26, 2015 are not necessarily indicative of the operating results for the full year.
Inventories
Approximately 38% and 44% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of September 26, 2015 and December 27, 2014, respectively. All other inventory is valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market. Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured and finished goods. The excess of replacement cost of inventories over the LIFO value is approximately $37,068 and $47,178 at September 26, 2015 and December 27, 2014, respectively.
Inventories consisted of the following:
 
September 26,
2015
 
December 27,
2014
Raw materials and purchased parts
$
181,618

 
$
179,093

Work-in-process
28,934

 
27,835

Finished goods and manufactured goods
194,806

 
199,772

Subtotal
405,358

 
406,700

Less: LIFO reserve
37,068

 
47,178

 
$
368,290

 
$
359,522


8


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 (Continued)
Income Taxes
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries for the thirteen and thirty-nine weeks ended September 26, 2015 and September 27, 2014, were as follows:
 
Thirteen Weeks Ended
 
Thirty-nine Weeks Ended
 
2015
 
2014
 
2015
 
2014
United States
$
26,343

 
$
4,844

 
$
92,625

 
$
141,635

Foreign
(776
)
 
34,671

 
24,743

 
84,410

 
$
25,567

 
$
39,515

 
$
117,368

 
$
226,045

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

The components of the net periodic pension (benefit) expense for the thirteen and thirty-nine weeks ended September 26, 2015 and September 27, 2014 were as follows:
 
Thirteen Weeks Ended
 
Thirty-nine Weeks Ended
Net periodic (benefit) expense:
2015
 
2014
 
2015
 
2014
Interest cost
$
6,186

 
$
7,274

 
$
18,486

 
$
21,783

Expected return on plan assets
(6,341
)
 
(6,605
)
 
(18,946
)
 
(19,780
)
Net periodic (benefit) expense
$
(155
)
 
$
669

 
$
(460
)
 
$
2,003

Stock Plans

The Company maintains stock‑based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, non-vested stock awards and bonuses of common stock. At September 26, 2015, 1,223,563 shares of common stock remained available for issuance under the plans. Shares and options issued and available are subject to changes in capitalization.
Under the plans, the exercise price of each option equals the closing market price at the date of the grant. Options vest beginning on the first anniversary of the grant in equal amounts over three to six years or on the fifth anniversary of the grant.




9


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 (Continued)
Expiration of grants is from six to ten years from the date of grant. The Company's compensation expense (included in selling, general and administrative expenses) and associated income tax benefits related to stock options for the thirteen and thirty-nine weeks ended September 26, 2015 and September 27, 2014, respectively, were as follows:
 
Thirteen Weeks Ended
 
Thirty-nine Weeks Ended
 
2015
 
2014
 
2015
 
2014
Compensation expense
$
1,283

 
$
1,242

 
$
3,936

 
$
3,767

Income tax benefits
494

 
478

 
1,515

 
1,450

Equity Method Investments
The Company has equity method investments in non-consolidated subsidiaries, which are recorded within "Other assets" on the Condensed Consolidated Balance Sheet.
Fair Value
The Company applies the provisions of Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other accounting pronouncements that require or permit fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
ASC 820 establishes a three‑level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.
Trading Securities: The assets and liabilities recorded for the investments held in the Valmont Deferred Compensation Plan of $38,005 ($36,439 at December 27, 2014) 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.

10


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 (Continued)
The Company's ownership of shares in Delta EMD Pty. Ltd. (JSE:DTA) is also classified as trading securities. During first quarter of 2015, the Company received a special dividend of $5,010 from Delta EMD Pty. Ltd and the market price of the shares were proportionately decreased accordingly. The shares are valued at $4,370 and $9,034 as of September 26, 2015 and December 27, 2014, respectively, which is the estimated fair value. 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, 2015
 
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 
Significant Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Trading Securities
$
42,375

 
$
42,375

 
$

 
$

 
 
 
Fair Value Measurement Using:
 
Carrying Value
December 27,
2014
 
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 
Significant Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Trading Securities
$
45,473

 
$
45,473

 
$

 
$

Comprehensive Income
Comprehensive income includes net earnings, currency translation adjustments, certain derivative-related activity and changes in net actuarial gains/losses from a pension plan. Results of operations for foreign subsidiaries are translated using the average exchange rates during the period. Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) consisted of the following at September 26, 2015 and December 27, 2014:
 
Foreign Currency Translation Adjustments
 
Unrealized Gain on Cash Flow Hedge
 
Defined Benefit Pension Plan
 
Accumulated Other Comprehensive Income
Balance at December 27, 2014
$
(99,618
)
 
$
3,879

 
$
(38,694
)
 
$
(134,433
)
Current-period comprehensive income (loss)
(89,345
)
 
771

 

 
(88,574
)
Balance at September 26, 2015
$
(188,963
)
 
$
4,650

 
$
(38,694
)
 
$
(223,007
)
Subsequent Events
On September 30, 2015, the Company purchased 100% of the outstanding shares of American Galvanizing for
$13.2 million in cash, net of assumed liabilities. American Galvanizing operates a galvanizing operation in Folsom, New Jersey. American Galvanizing's annual sales are approximately $8.5 million and it will be included in the Coatings Segment. The acquisition, which was funded by cash held by the Company, was completed to extend the Company's presence in the northeast United States.

11


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 (Continued)
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-9, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") 605, Revenue Recognition. The new revenue recognition standard requires entities to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-9 is effective for interim and annual reporting periods beginning after December 15, 2017 and is to be applied retrospectively. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated results of operations and financial position.
In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory.” Under this ASU, inventory will be measured at the “lower of cost and net realizable value” and options that currently exist for “market value” will be eliminated. The ASU defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” No other changes were made to the current guidance on inventory measurement. ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted and should be applied prospectively. Management is evaluating the provisions of this statement, including which period to adopt, and has not determined what impact the adoption of ASU 2015-11 will have on the Company's financial position or results of operations.
(2) ACQUISITIONS
On March 3, 2014, the Company purchased 90% of the outstanding shares of DS SM A/S, which was renamed Valmont SM. Valmont SM is a manufacturer of heavy complex steel structures for a diverse range of industries including wind energy, offshore oil and gas, and electricity transmission. Valmont SM operates two manufacturing locations in Denmark and its operations are reported in the Engineered Infrastructure Products Segment. The purchase price paid for the business at closing (net of $56 cash acquired) was $120,483, including the payoff of an intercompany note payable by Valmont SM to its prior affiliates. The purchase is subject to an earn-out clause that is contingent on meeting future operational metrics for which no liability has been established based on expectations. The earn-out clause expires on December 31, 2016. The acquisition, which was funded by cash held by the Company, was completed to participate in markets for wind energy, oil and gas exploration, power transmission and other related infrastructure projects and to increase the Company's geographic footprint in Europe. The Company also funded a portion of the acquisition with an intercompany note payable. The excess purchase price over the fair value of assets resulted in goodwill, which is not deductible for tax purposes.

12


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)


(2) ACQUISITIONS (Continued)
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the date of acquisition, which was finalized in the fourth quarter of 2014.
 
 
At March 3, 2014
Current assets
 
$
73,421

Property, plant and equipment
 
85,638

Intangible assets
 
30,340

Goodwill
 
16,803

     Total fair value of assets acquired
 
$
206,202

Current liabilities
 
47,754

Deferred income taxes
 
19,715

Intercompany note payable
 
37,448

Long-term debt
 
8,941

     Total fair value of liabilities assumed
 
113,858

Non-controlling interests
 
9,309

     Net assets acquired
 
$
83,035

Based on the fair value assessments, the Company allocated $30,340 of the purchase price to acquired intangible assets. The following table summarizes the major classes of Valmont SM's acquired intangible assets and the respective weighted average amortization periods:
 
 
Amount
 
Weighted Average Amortization Period (Years)
Trade Names
 
$
11,470

 
Indefinite
Backlog
 
3,145

 
1.5
Customer Relationships
 
15,725

 
12.0
Total Intangible Assets
 
$
30,340

 


On October 6, 2014, the Company acquired Shakespeare Composite Structures (Shakespeare) for $48,272 in cash, plus assumed liabilities. Shakespeare is a manufacturer of fiberglass reinforced composite structures and products with two manufacturing facilities in South Carolina. Shakespeare's annual sales are approximately $55,000 and its operations are included in the Engineered Infrastructure Products segment. The acquisition of Shakespeare was completed to expand our product offering of composite structure solutions. The fair value measurement process and purchase price allocation for Shakespeare were finalized in the third quarter of 2015.

13


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)


(2) ACQUISITIONS (Continued)
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the date of the Shakespeare acquisition (goodwill is deductible for tax purposes):
 
 
At October 6, 2014
Current assets
 
$
12,532

Property, plant and equipment
 
10,694

Intangible assets
 
13,500

Goodwill
 
15,416

     Total fair value of assets acquired
 
$
52,142

Current liabilities
 
3,870

     Net assets acquired
 
$
48,272

Based on the fair value assessments, the Company allocated $13,500 of the purchase price to acquired intangible assets. The following table summarizes the major classes of Shakespeare acquired intangible assets and the respective weighted-average amortization periods:
 
 
Amount
 
Weighted Average Amortization Period (Years)
Trade Names
 
$
4,000

 
Indefinite
Customer Relationships
 
9,500

 
12.0
Total Intangible Assets
 
$
13,500

 
 
On August 25, 2014, the Company acquired 51% of AgSense, LLC (AgSense) for $17 million in cash. AgSense operates in South Dakota and is the creator of global WagNet network which provides growers with a more complete view of their entire farming operation by tying irrigation decision making to field, crop and weather conditions. In the measurement of fair values of assets acquired and liabilities assumed, goodwill of $17,193 and $16,083 of customer relationships, trade name and other intangible assets were recorded. A portion of the goodwill is deductible for tax purposes. AgSense is included in the Irrigation Segment. The fair value measurement process and purchase price allocation for AgSense were finalized in the second quarter of 2015.
The Company’s Condensed Consolidated Statement of Earnings for the thirteen and thirteen-nine weeks ended September 26, 2015 included net sales of $45,201 and $131,396 and net earnings of $2,333 and $7,266 resulting from the Valmont SM, AgSense, and Shakespeare acquisitions. The pro forma effect of these acquisitions on the third quarter and first three quarters of the 2014 Statement of Earnings was as follows:
 
Thirteen Weeks Ended September 27, 2014
Thirty-nine Weeks Ended September 27, 2014
Net sales
$
780,478

$
2,438,811

Net earnings
$
24,002

$
147,443

Earnings per share—diluted
$
0.94

$
5.58


14


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)


(3) RESTRUCTURING ACTIVITIES    
In April 2015, the Company's Board of Directors authorized a broad restructuring plan (the "Plan") of up to $60 million to respond to the market environment in certain businesses. We anticipate the Company will recognize the following pre-tax expenses in conjunction with the initial restructuring activities from the Plan announced in 2015:

 
 
EIP
 
Utility
 
Coatings
 
Irrigation
 
Other/ Corporate
 
TOTAL
Severance
 
$
3,850

 
$
1,638

 
$
429

 
$
245

 
$
75

 
$
6,237

Other cash restructuring expenses
 
1,612

 
1,895

 
178

 
100

 

 
3,785

Asset impairments/net loss on disposals
 
2,573

 
788

 
4,699

 

 

 
8,060

   Total cost of sales
 
8,035

 
4,321

 
5,306

 
345

 
75

 
18,082

 
 
 
 
 
 
 
 
 
 
 
 
 
Severance
 
4,335

 
404

 

 
629

 
1,250

 
6,618

Other cash restructuring expenses
 

 
328

 
270

 

 

 
598

Asset impairments/net loss on disposals
 
2,080

 

 

 
130

 
3,700

 
5,910

  Total selling, general and administrative expenses
 
6,415

 
732

 
270

 
759

 
4,950

 
13,126

      Consolidated total
 
$
14,450

 
$
5,053

 
$
5,576

 
$
1,104

 
$
5,025

 
$
31,208


The Company is currently evaluating additional potential restructuring activities estimated at $8 million of asset impairments and $5 million of cash expenses.  The following is a summary of the segments affected by these additional potential restructuring activities under current evaluation and the estimated pre-tax expense:

 
 
EIP
 
Other/ Corporate
 
TOTAL
Severance
 
$
2,000

 
$
250

 
$
2,250

Other cash restructuring expenses
 
700

 
250

 
950

Asset impairments/net loss on disposals
 
3,800

 
500

 
4,300

   Total cost of sales
 
6,500

 
1,000

 
7,500

Severance
 
500

 
1,150

 
1,650

Asset impairments/net loss on disposals
 
600

 
3,500

 
4,100

  Total selling, general and administrative expenses
 
1,100

 
4,650

 
5,750

      Consolidated total
 
$
7,600

 
$
5,650

 
$
13,250


15


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)



(3) RESTRUCTURING ACTIVITES (Continued)
During the third quarter of fiscal 2015, the Company recognized the following pre-tax restructuring expenses:

 
 
EIP
 
Utility
 
Coatings
 
Irrigation
 
Other/ Corporate
 
TOTAL
Severance
 
$
1,819

 
$
204

 
$
120

 
$

 
$

 
$
2,143

Other cash restructuring expenses
 
354

 
674

 
138

 

 

 
1,166

Asset impairments/net loss on disposals
 
910

 
43

 
548

 

 

 
1,501

   Total cost of sales
 
3,083

 
921

 
806

 

 

 
4,810

 
 
 
 
 
 
 
 
 
 
 
 
 
Severance
 
1,485

 

 

 
52

 
400

 
1,937

Other cash restructuring expenses
 

 
238

 

 

 

 
238

Asset impairments/net loss on disposals
 

 

 

 

 
1,815

 
1,815

  Total selling, general and administrative expenses
 
1,485

 
238

 

 
52

 
2,215

 
3,990

      Consolidated total
 
$
4,568

 
$
1,159

 
$
806

 
$
52

 
$
2,215

 
$
8,800


In the first three quarters of 2015, the Company recognized the following pre-tax restructuring expenses:

 
 
EIP
 
Utility
 
Coatings
 
Irrigation
 
Other/ Corporate
 
TOTAL
Severance
 
$
2,814

 
$
1,813

 
$
429

 
$

 
$
73

 
$
5,129

Other cash restructuring expenses
 
399

 
820

 
178

 

 

 
1,397

Asset impairments/net loss on disposals
 
1,707

 
338

 
4,699

 

 

 
6,744

   Total cost of sales
 
4,920

 
2,971

 
5,306

 

 
73

 
13,270

 
 
 
 
 
 
 
 
 
 
 
 
 
Severance
 
2,835

 
405

 

 
271

 
640

 
4,151

Other cash restructuring expenses
 

 
238

 
270

 

 

 
508

Asset impairments/net loss on disposals
 
2,080

 

 

 
130

 
3,705

 
5,915

  Total selling, general and administrative expenses
 
4,915

 
643

 
270

 
401

 
4,345

 
10,574

      Consolidated total
 
$
9,835

 
$
3,614

 
$
5,576

 
$
401

 
$
4,418

 
$
23,844


    Liabilities recorded for the restructuring Plan and changes therein for the first three quarters of fiscal 2015 were as follows:
 
 
Balance at December 27, 2014
 
Recognized Restructuring Expense
 
Costs Paid or Otherwise Settled
 
Balance at September 26, 2015
Severance
 
$

 
$
9,280

 
$
(5,501
)
 
$
3,779

Other cash restructuring expenses
 

 
1,904

 
(1,664
)
 
240

   Total
 
$

 
$
11,184

 
$
(7,165
)
 
$
4,019


16


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)


(4) GOODWILL AND INTANGIBLE ASSETS
Amortized Intangible Assets
The components of amortized intangible assets at September 26, 2015 and December 27, 2014 were as follows:
 
September 26, 2015
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Weighted
Average
Life
Customer Relationships
$
202,199

 
$
98,523

 
13 years
Proprietary Software & Database
3,534

 
2,929

 
8 years
Patents & Proprietary Technology
12,659

 
9,211

 
8 years
Other
3,833

 
3,764

 
3 years
 
$
222,225

 
$
114,427

 
 
 
December 27, 2014
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Weighted
Average
Life
Customer Relationships
$
207,509

 
$
88,538

 
13 years
Proprietary Software & Database
3,769

 
2,977

 
8 years
Patents & Proprietary Technology
12,394

 
8,537

 
8 years
Other
4,355

 
2,998

 
3 years
 
$
228,027

 
$
103,050

 
 
Amortization expense for intangible assets for the thirteen and thirty-nine weeks ended September 26, 2015 and September 27, 2014, respectively was as follows:
Thirteen Weeks Ended
2015
 
2014
$
4,507

 
$
4,702

 
Thirty-nine Weeks Ended
 
2015
 
2014
 
$
14,157

 
$
13,439

Estimated annual amortization expense related to finite‑lived intangible assets is as follows:
 
Estimated
Amortization
Expense
2015
$
18,154

2016
15,944

2017
15,898

2018
14,261

2019
13,434


17


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)


(4) GOODWILL AND INTANGIBLE ASSETS (Continued)
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, 2015 and December 27, 2014 were as follows:
 
September 26,
2015
 
December 27,
2014
 
Year Acquired
Webforge
$
11,477

 
$
16,801

 
2010
Valmont SM
9,284

 
10,818

 
2014
Newmark
11,111

 
11,111

 
2004
Ingal EPS/Ingal Civil Products
8,668

 
8,867

 
2010
Donhad
6,539

 
6,689

 
2010
Shakespeare
4,000

 
4,000

 
2014
Industrial Galvanizers
2,713

 
3,889

 
2010
Other
13,567

 
14,852

 
 
 
$
67,359

 
$
77,027

 
 
In its determination of these intangible assets as indefinite‑lived, the Company considered such factors as its expected future use of the intangible asset, legal, regulatory, technological and competitive factors that may impact the useful life or value of the intangible asset and the expected costs to maintain the value of the intangible asset. The Company expects that these intangible assets will maintain their value indefinitely. Accordingly, these assets are not amortized.    
The Company’s trade names were tested for impairment in the third quarter of 2015. The values of the trade names were determined using the relief-from-royalty method. Based on this evaluation, the Company recorded a $5,000 impairment of the Webforge trade name (in EIP segment) and a $1,100 impairment of the Industrial Galvanizing trade name (in Coatings segment) during 2015. No other trade names were determined to be impaired. The Webforge product line's net sales decreased in 2015 as investment in oil and gas exploration within Australia and Southeast Asia declined.
Goodwill
The carrying amount of goodwill by segment as of September 26, 2015 and December 27, 2014 was as follows:
 
Engineered
Infrastructure
Products
Segment
 
Utility
Support
Structures
Segment
 
Coatings
Segment
 
Irrigation
Segment
 
Other
 
Total
Balance at December 27, 2014
$
197,074

 
$
75,404

 
$
74,862

 
$
19,536

 
$
18,235

 
$
385,111

Impairment

 

 
(9,100
)
 

 

 
(9,100
)
Foreign currency translation
(8,840
)
 

 
(2,145
)
 
(196
)
 
(410
)
 
(11,591
)
Divestiture of business
(1,737
)
 

 

 

 

 
(1,737
)
Balance at September 26, 2015
$
186,497

 
$
75,404

 
$
63,617


$
19,340

 
$
17,825

 
$
362,683




18


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)


(4) GOODWILL AND INTANGIBLE ASSETS
During the second quarter of 2015, the Company divested of a small business in its EIP segment. The goodwill allocated to that business was $1,737 and was required to be written off based on the selling price of the divested business.
The Company’s annual impairment test of goodwill was performed during the third quarter of 2015, using the discounted cash flow method. The APAC Coatings reporting unit failed step one in that the estimated fair value was lower than the carrying value. As a result, the Company recorded a preliminary $9,100 impairment of goodwill on the APAC Coatings reporting unit. The Company will complete step two of the impairment analysis during the fourth quarter as it finalizes the estimated fair values of the property, plant, and equipment for this reporting unit. The goodwill impairment was a result of difficulties in the Australian market over the last couple of years, including a general slowdown in manufacturing.
The Company determined that its goodwill for all other reporting units was not impaired, as the valuation of the reporting units exceeded their respective carrying values. The Company's Access Systems reporting unit, which has approximately $70 million in goodwill, is the reporting unit with the smallest cushion between estimated fair value over carrying value. A number of restructuring activities undertaken in 2015 are expected to improve the profitability of this reporting unit. If the net sales for this reporting unit further declines in 2016 and its profitability does not improve in 2016, the Company will have to perform an impairment test as of an interim date. The Company continues to monitor changes in the global economy that could impact future operating results of its reporting units. If such conditions arise, the Company will test a given reporting unit for impairment prior to the annual test.
(5) CASH FLOW SUPPLEMENTARY INFORMATION
The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the thirty-nine weeks ended September 26, 2015 and September 27, 2014 were as follows:
 
2015
 
2014
Interest
$
23,447

 
$
23,199

Income taxes
21,517

 
94,493

On May 13, 2014, the Company announced a new capital allocation philosophy which increased the dividend by 50% and covered a share repurchase program of up to $500 million of the Company's outstanding common stock to be acquired from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. On February 24, 2015, the Board of Directors authorized an additional purchase of up to $250 million of the Company's outstanding common stock with no stated expiration date. As of September 26, 2015, the Company has acquired 3,947,920 shares for approximately $543.3 million under the share repurchase programs.


19


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)


(6) EARNINGS PER SHARE
The following table provides a reconciliation between Basic and Diluted earnings per share (EPS):
 
Basic EPS
 
Dilutive
Effect of
Stock
Options
 
Diluted EPS
Thirteen weeks ended September 26, 2015:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
12,066

 
$

 
$
12,066

Shares outstanding
23,057

 
113

 
23,170

Per share amount
$
0.52

 
$

 
$
0.52

Thirteen weeks ended September 27, 2014:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
23,559

 
$

 
$
23,559

Shares outstanding
25,287

 
226

 
25,513

Per share amount
$
0.93

 
$
(0.01
)
 
$
0.92

Thirty-nine weeks ended September 26, 2015:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
70,678

 
$

 
$
70,678

Shares outstanding
23,420

 
114

 
23,534

Per share amount
$
3.02

 
$
(0.02
)
 
$
3.00

Thirty-nine weeks ended September 27, 2014:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
143,515

 
$

 
$
143,515

Shares outstanding
26,208

 
231

 
26,439

Per share amount
$
5.48

 
$
(0.05
)
 
$
5.43

Earnings per share are computed independently for each of the quarters. Therefore, the sum of the quarterly earnings per share may not equal the total for the year primarily due to the share buyback program that began in the second quarter of 2014.
At September 26, 2015 and September 27, 2014, there were 433,401 and 273,170 outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share, respectively.

20


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)


(7) BUSINESS SEGMENTS
The Company has four reportable segments based on its management structure. Each segment is global in nature with a manager responsible for segment operational performance and the allocation of capital within the segment. Net corporate expense is net of certain service‑related expenses that are allocated to business units generally on the basis of employee headcounts and sales dollars.
Reportable segments are as follows:
ENGINEERED INFRASTRUCTURE PRODUCTS: This segment consists of the manufacture of engineered metal structures and components for the global lighting and traffic, wireless communication, wind energy, offshore oil and gas, roadway safety and access systems applications;
UTILITY SUPPORT STRUCTURES: This segment consists of the manufacture of engineered steel and concrete structures for the global utility industry;
COATINGS: This segment consists of galvanizing, anodizing and powder coating services on a global basis; and
IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment and related parts and services for the global agricultural industry.
In addition to these four reportable segments, the Company has other businesses and activities that individually are not more than 10% of consolidated sales. These include the manufacture of forged steel grinding media for the mining industry, tubular products for industrial customers, and the distribution of industrial fasteners and are reported in the “Other” category.
The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its business segments based upon operating income and invested capital. The Company does not allocate interest expense, non-operating income and deductions, or income taxes to its business segments.

21


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)


(7) BUSINESS SEGMENTS (Continued)
Summary by Business
 
Thirteen Weeks Ended
 
Thirty-nine Weeks Ended
 
September 26,
2015
 
September 27,
2014
 
September 26,
2015
 
September 27,
2014
SALES:
 
 
 
 
 
 
 
Engineered Infrastructure Products segment:
 
 
 
 
 
 
 
Lighting, Traffic, and Roadway Products
$
147,425

 
$
158,977

 
$
447,380

 
$
462,707

Communication Products
51,940

 
45,952

 
130,431

 
119,456

Offshore Structures
26,813

 
41,284

 
74,796

 
105,805

Access Systems
33,691

 
48,686

 
106,724

 
139,745

Engineered Infrastructure Products segment
259,869

 
294,899

 
759,331

 
827,713

Utility Support Structures segment:
 
 
 
 
 
 
 
Steel
135,997

 
156,112

 
433,695

 
527,123

Concrete
28,687

 
25,073

 
70,259

 
81,819

Utility Support Structures segment
164,684

 
181,185

 
503,954

 
608,942

Coatings segment
76,200

 
86,735

 
226,654

 
254,063

Irrigation segment
112,205

 
174,288

 
420,502

 
606,938

Other
42,285

 
60,838

 
146,547

 
181,226

Total
655,243

 
797,945

 
2,056,988

 
2,478,882

INTERSEGMENT SALES:
 
 
 
 
 
 
 
Engineered Infrastructure Products segment
6,931

 
10,696

 
18,057

 
48,427

Utility Support Structures segment
287

 
626

 
849

 
2,146

Coatings segment
11,428

 
13,166

 
36,153

 
42,889

Irrigation segment
6

 
1

 
18

 
14

Other
4,016

 
7,788

 
16,815

 
25,399

Total
22,668

 
32,277

 
71,892

 
118,875

NET SALES:
 
 
 
 
 
 
 
Engineered Infrastructure Products segment
252,938

 
284,203

 
741,274

 
779,286

Utility Support Structures segment
164,397

 
180,559

 
503,105