10-Q


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 March 26, 2016
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
22,686,312
Outstanding shares of common stock as of April 18, 2016


VALMONT INDUSTRIES, INC.

INDEX TO FORM 10-Q
 
 
Page No.
 
PART I. FINANCIAL INFORMATION
 
 
 
 
 
ended March 26, 2016 and March 28, 2015
 
 
 
weeks ended March 26, 2016 and March 28, 2015
 
Condensed Consolidated Balance Sheets as of March 26, 2016 and December 26,
 
 
2015
 
Condensed Consolidated Statements of Cash Flows for the thirteen weeks ended
 
 
March 26, 2016 and March 28, 2015
 
Condensed Consolidated Statements of Shareholders' Equity for the thirteen
 
 
weeks ended March 26, 2016 and March 28, 2015
 
Notes to Condensed Consolidated Financial Statements
Item 2.
Item 3.
Item 4.
 
 
 
 
PART II. OTHER INFORMATION
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 5.
Other Information
Item 6.
 
 
 
 
 
 
 
 
 


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
 
March 26,
2016
 
March 28,
2015
Product sales
$
532,940

 
$
603,894

Services sales
63,665

 
66,504

Net sales
596,605

 
670,398

Product cost of sales
393,492

 
459,541

Services cost of sales
42,144

 
45,403

Total cost of sales
435,636

 
504,944

Gross profit
160,969

 
165,454

Selling, general and administrative expenses
98,604

 
107,771

Operating income
62,365

 
57,683

Other income (expenses):
 
 
 
Interest expense
(11,054
)
 
(11,128
)
Interest income
811

 
874

Other
(1,678
)
 
1,016

 
(11,921
)
 
(9,238
)
Earnings before income taxes
50,444

 
48,445

Income tax expense (benefit):
 
 
 
Current
10,514

 
11,774

Deferred
5,759

 
5,164

 
16,273

 
16,938

Net earnings
34,171

 
31,507

Less: Earnings attributable to noncontrolling interests
(1,202
)
 
(768
)
Net earnings attributable to Valmont Industries, Inc.
$
32,969

 
$
30,739

Earnings per share:
 
 
 
Basic
$
1.45

 
$
1.29

Diluted
$
1.45

 
$
1.28

Cash dividends declared per share
$
0.375

 
$
0.375

Weighted average number of shares of common stock outstanding - Basic (000 omitted)
22,700

 
23,868

Weighted average number of shares of common stock outstanding - Diluted (000 omitted)
22,816

 
23,982

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
 
March 26,
2016
 
March 28,
2015
Net earnings
$
34,171

 
$
31,507

Other comprehensive income (loss), net of tax:
 
 
 
Foreign currency translation adjustments:
 
 
 
Unrealized translation gain (loss)
2,513

 
(58,178
)
Unrealized gain/(loss) on cash flow hedge:
 
 
 
Amortization cost included in interest expense
19

 
18

     Gain on cash flow hedges
—

 
294

Other comprehensive income (loss)
2,532

 
(57,866
)
Comprehensive income (loss)
36,703

 
(26,359
)
Comprehensive loss (income) attributable to noncontrolling interests
(2,327
)
 
1,327

Comprehensive income (loss) attributable to Valmont Industries, Inc.
$
34,376

 
$
(25,032
)
















See accompanying notes to condensed consolidated financial statements.

4


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
 
March 26,
2016
 
December 26,
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
387,714

 
$
349,074

Receivables, net
449,379

 
466,443

Inventories
350,768

 
340,672

Prepaid expenses
46,080

 
46,137

Refundable income taxes
18,897

 
24,526

Total current assets
1,252,838

 
1,226,852

Property, plant and equipment, at cost
1,100,804

 
1,081,056

Less accumulated depreciation and amortization
568,297

 
548,567

Net property, plant and equipment
532,507

 
532,489

Goodwill
334,269

 
336,916

Other intangible assets, net
164,537

 
170,197

Other assets
115,711

 
125,928

Total assets
$
2,399,862

 
$
2,392,382

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Current installments of long-term debt
$
1,110

 
$
1,077

Notes payable to banks
2,402

 
976

Accounts payable
183,059

 
179,983

Accrued employee compensation and benefits
58,002

 
70,354

Accrued expenses
111,477

 
105,593

Dividends payable
8,527

 
8,571

Total current liabilities
364,577

 
366,554

Deferred income taxes
39,644

 
35,669

Long-term debt, excluding current installments
756,878

 
756,918

Defined benefit pension liability
170,203

 
179,323

Deferred compensation
48,456

 
48,417

Other noncurrent liabilities
39,953

 
40,290

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
1,756,082

 
1,729,679

Accumulated other comprehensive income (loss)
(265,811
)
 
(267,218
)
Treasury stock
(587,117
)
 
(571,920
)
Total Valmont Industries, Inc. shareholders’ equity
931,054

 
918,441

Noncontrolling interest in consolidated subsidiaries
49,097

 
46,770

Total shareholders’ equity
980,151

 
965,211

Total liabilities and shareholders’ equity
$
2,399,862

 
$
2,392,382

See accompanying notes to condensed consolidated financial statements.

5


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 
Thirteen Weeks Ended
 
March 26,
2016
 
March 28,
2015
Cash flows from operating activities:
 
 
 
Net earnings
$
34,171

 
$
31,507

Adjustments to reconcile net earnings to net cash flows from operations:
 
 
 
Depreciation and amortization
20,598

 
23,901

Noncash loss on trading securities
995

 
4,415

Stock-based compensation
2,049

 
1,761

Defined benefit pension plan expense (benefit)
384

 
(150
)
Contribution to defined benefit pension plan
—

 
(15,735
)
Gain on sale of property, plant and equipment
144

 
(136
)
Deferred income taxes
5,759

 
5,164

Changes in assets and liabilities:
 
 
 
Receivables
20,344

 
18,584

Inventories
(8,022
)
 
(27,041
)
Prepaid expenses
910

 
4,954

Accounts payable
1,383

 
(1,261
)
Accrued expenses
(7,178
)
 
(5,324
)
Other noncurrent liabilities
(823
)
 
1,684

Income taxes refundable
9,813

 
13,205

Net cash flows from operating activities
80,527

 
55,528

Cash flows from investing activities:
 
 
 
Purchase of property, plant and equipment
(13,961
)
 
(16,615
)
Proceeds from sale of assets
142

 
185

Other, net
(2,322
)
 
2,930

Net cash flows from investing activities
(16,141
)
 
(13,500
)
Cash flows from financing activities:
 
 
 
Net borrowings under short-term agreements
1,352

 
1,155

Principal payments on long-term borrowings
(220
)
 
(224
)
Dividends paid
(8,571
)
 
(9,086
)
Dividends to noncontrolling interest
—

 
(1,290
)
Purchase of treasury shares
(16,939
)
 
(72,900
)
Proceeds from exercises under stock plans
1,289

 
1,760

Excess tax benefits from stock option exercises
(66
)
 
345

Purchase of common treasury shares—stock plan exercises
(219
)
 
(2,156
)
Net cash flows from financing activities
(23,374
)
 
(82,396
)
Effect of exchange rate changes on cash and cash equivalents
(2,372
)
 
(12,845
)
Net change in cash and cash equivalents
38,640

 
(53,213
)
Cash and cash equivalents—beginning of year
349,074

 
371,579

Cash and cash equivalents—end of period
$
387,714

 
$
318,366

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 27, 2014
$
27,900

 
$
—

 
$
1,718,662

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

 
$
1,250,405

Net earnings
—

 
—

 
30,739

 
—

 
—

 
768

 
31,507

Other comprehensive income (loss)
—

 
—

 
—

 
(55,771
)
 
—

 
(2,095
)
 
(57,866
)
Cash dividends declared
—

 
—

 
(8,889
)
 
—

 
—

 
—

 
(8,889
)
Dividends to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
(1,290
)
 
(1,290
)
Purchase of treasury shares; 598,227 shares acquired
—

 
—

 
—

 
—

 
(72,900
)
 
—

 
(72,900
)
Stock plan exercises; 16,950 shares acquired
—

 
—

 
—

 
—

 
(2,156
)
 
—

 
(2,156
)
Stock options exercised; 25,119 shares issued


 
(2,106
)
 
740

 


 
3,126

 
—

 
1,760

Tax benefit from stock option exercises


 
345

 


 
—

 
—

 
—

 
345

Stock option expense


 
1,350

 
—

 
—

 
—

 
—

 
1,350

Stock awards; 9,656 shares issued


 
411

 
—

 
—

 
1,187

 
—

 
1,598

Balance at March 28, 2015
$
27,900

 
$
—

 
$
1,741,252

 
$
(190,204
)
 
$
(481,039
)
 
$
45,955

 
$
1,143,864

Balance at December 26, 2015
$
27,900

 
$
—

 
$
1,729,679

 
$
(267,218
)
 
$
(571,920
)
 
$
46,770

 
$
965,211

Net earnings
—

 
—

 
32,969

 
—

 
—

 
1,202

 
34,171

Other comprehensive income (loss)
—

 
—

 
—

 
1,407

 
—

 
1,125

 
2,532

Cash dividends declared
—

 
—

 
(8,527
)
 
—

 
—

 
—

 
(8,527
)
Purchase of treasury shares; 153,962 shares acquired
—

 
—

 
—

 
—

 
(16,939
)
 
—

 
(16,939
)
Stock plan exercises; 1,895 shares acquired
—

 
—

 
—

 
—

 
(219
)
 
—

 
(219
)
Stock options exercised; 12,771 shares issued
—

 
(1,983
)
 
1,961

 
—

 
1,311

 
—

 
1,289

Tax benefit from stock option exercises
—

 
(66
)
 
—

 
—

 
—

 
—

 
(66
)
Stock option expense
—

 
1,491

 
—

 
—

 
—

 
—

 
1,491

Stock awards; 4,540 shares issued
—

 
558

 
—

 
—

 
650

 
—

 
1,208

Balance at March 26, 2016
$
27,900

 
$
—

 
$
1,756,082

 
$
(265,811
)
 
$
(587,117
)
 
$
49,097

 
$
980,151










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 March 26, 2016, the Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen weeks ended March 26, 2016 and March 28, 2015, and the Condensed Consolidated Statements of Cash Flows and Shareholders' Equity for the thirteen 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 March 26, 2016 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 26, 2015. 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 26, 2015. The results of operations for the period ended March 26, 2016 are not necessarily indicative of the operating results for the full year.
Inventories
Approximately 39% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of March 26, 2016 and December 26, 2015. 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 $33,048 and $35,075 at March 26, 2016 and December 26, 2015, respectively.
Inventories consisted of the following:
 
March 26,
2016
 
December 26,
2015
Raw materials and purchased parts
$
155,585

 
$
162,977

Work-in-process
28,663

 
25,644

Finished goods and manufactured goods
199,568

 
187,126

Subtotal
383,816

 
375,747

Less: LIFO reserve
33,048

 
35,075

 
$
350,768

 
$
340,672


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 weeks ended March 26, 2016 and March 28, 2015, were as follows:
 
Thirteen Weeks Ended
 
2016
 
2015
United States
$
39,600

 
$
32,641

Foreign
10,844

 
15,804

 
$
50,444

 
$
48,445

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 weeks ended March 26, 2016 and March 28, 2015 were as follows:
 
Thirteen Weeks Ended
Net periodic (benefit) expense:
2016
 
2015
Interest cost
$
6,448

 
$
6,111

Expected return on plan assets
(6,064
)
 
(6,261
)
Net periodic (benefit) expense
$
384

 
$
(150
)
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 March 26, 2016, 878,933 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 seven 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 weeks ended March 26, 2016 and March 28, 2015, respectively, were as follows:
 
Thirteen Weeks Ended
 
2016
 
2015
Compensation expense
$
1,491

 
$
1,350

Income tax benefits
574

 
520

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 $37,777 ($37,963 at December 26, 2015) 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. The shares are valued at $2,029 and $4,734 as of March 26, 2016 and December 26, 2015, respectively, which is the estimated fair value. During the first quarter of 2016, the Company received a dividend of $1,541 from Delta EMD Pty. Ltd and the market price of the shares were proportionately reduced accordingly. 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
March 26, 2016
 
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 
Significant Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Trading Securities
$
39,806

 
$
39,806

 
$
—

 
$
—

 
 
 
Fair Value Measurement Using:
 
Carrying Value
December 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
$
42,697

 
$
42,697

 
$
—

 
$
—

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 March 26, 2016 and December 26, 2015:
 
Foreign Currency Translation Adjustments
 
Unrealized Gain on Cash Flow Hedge
 
Defined Benefit Pension Plan
 
Accumulated Other Comprehensive Income
Balance at December 26, 2015
$
(191,928
)
 
$
3,678

 
$
(78,968
)
 
$
(267,218
)
Current-period comprehensive income (loss)
1,388

 
19

 
—

 
1,407

Balance at March 26, 2016
$
(190,540
)
 
$
3,697

 
$
(78,968
)
 
$
(265,811
)


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 was to be effective for interim and annual reporting periods beginning after December 15, 2016 and is to be applied retrospectively. In August 2015, the FASB issued ASU 2015-14, Deferral of the Effective Date, which defers the effective date by one year to 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. The Company 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.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which provides guidance requiring debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability and further clarification guidance allows the cost of securing a revolving line of credit to be recorded as a deferred asset regardless of whether a balance is outstanding. The Company retrospectively adopted this guidance during the first quarter of 2016 and reclassified approximately $7,000 of debt issuance cost for its long-term debt (excluding its revolving line of credit) to a direct reduction of long-term debt instead of an other asset in the condensed consolidated balance sheets for March 26, 2016 and December 26, 2015.
In February 2016, the FASB issued ASU 2016-02, Leases, which provides revised guidance on leases requiring lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018 and is to be applied on a modified retrospective transition. 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 March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which provides revised guidance for employee share-based compensation payments. The ASU requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) be recognized as income tax expense or benefit in the income statement. It also states excess tax benefits to be classified along with other income tax cash flows as an operating activity whereas currently it is classified within a financing cash flow activity. ASU 2016-09 is effective prospectively for interim and annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated results of operations and financial position.


12

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


(2) ACQUISITIONS
On September 30, 2015, the Company purchased American Galvanizing for $12,778 in cash, net of cash acquired, plus assumed liabilities. American Galvanizing operates a custom galvanizing operation in New Jersey with annual sales of approximately $10,000. In the purchase price allocation, goodwill of $3,019 and $2,178 of customer relationships, trade name and other intangible assets were recorded. Goodwill is not deductible for tax purposes. This business is included in the Coatings segment and was acquired to expand the Company's geographic presence in the Northeast United States. The purchase price allocation was finalized in the first quarter of 2016. Pro-forma disclosures were omitted as this business did not have a significant impact on the Company's 2015 or 2016 financial results.
(3) RESTRUCTURING ACTIVITIES    
In April 2015, the Company's Board of Directors authorized a broad restructuring plan (the "Plan") to respond to the market environment in certain businesses. During fiscal 2015, the Company substantially completed this Plan and recognized $21,708 of pre-tax restructuring expenses in cost of sales and $18,144 of pre-tax restructuring expenses in selling, general, and administrative expenses. Within the total fiscal 2015 pre-tax restructuring expense of $39,852 were pre-tax asset impairments of $19,836. The Company recognized no restructuring expense during the first quarter of fiscal 2016. During the first quarter of fiscal 2015, the Company's recognized $785 of pre-tax expense for severance and other cash related expenses within the ESS and Energy and Mining segments.

Liabilities recorded for the restructuring Plan and changes therein for the first quarter of fiscal 2016 were as follows:
 
 
Balance at December 26, 2015
 
Recognized Restructuring Expense
 
Costs Paid or Otherwise Settled
 
Balance at March 26, 2016
Severance
 
$
1,307

 
$
—

 
$
(657
)
 
$
650

Other cash restructuring expenses
 
1,426

 
—

 
(137
)
 
1,289

   Total
 
$
2,733

 
$
—

 
$
(794
)
 
$
1,939


(4) GOODWILL AND INTANGIBLE ASSETS
Amortized Intangible Assets
The components of amortized intangible assets at March 26, 2016 and December 26, 2015 were as follows:
 
March 26, 2016
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Weighted
Average
Life
Customer Relationships
$
199,902

 
$
104,376

 
13 years
Proprietary Software & Database
3,611

 
2,997

 
8 years
Patents & Proprietary Technology
6,835

 
3,528

 
11 years
Other
3,862

 
3,788

 
3 years
 
$
214,210

 
$
114,689

 
 




13

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)
 
December 26, 2015
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Weighted
Average
Life
Customer Relationships
$
201,801

 
$
101,614

 
13 years
Proprietary Software & Database
3,571

 
2,966

 
8 years
Patents & Proprietary Technology
6,815

 
3,421

 
11 years
Other
3,752

 
3,671

 
3 years
 
$
215,939

 
$
111,672

 
 
Amortization expense for intangible assets for the thirteen weeks ended March 26, 2016 and March 28, 2015, respectively was as follows:
Thirteen Weeks Ended
2016
 
2015
$
3,995

 
$
4,913

Estimated annual amortization expense related to finite‑lived intangible assets is as follows:
 
Estimated
Amortization
Expense
2016
$
15,841

2017
15,754

2018
14,116

2019
13,324

2020
12,283

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.

14

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)
Non-amortized intangible assets
Intangible assets with indefinite lives are not amortized. The carrying values of trade names at March 26, 2016 and December 26, 2015 were as follows:
 
March 26,
2016
 
December 26,
2015
 
Year Acquired
Webforge
$
9,877

 
$
10,430

 
2010
Valmont SM
9,286

 
8,919

 
2014
Newmark
11,111

 
11,111

 
2004
Ingal EPS/Ingal Civil Products
8,053

 
8,504

 
2010
Donhad
6,075

 
6,415

 
2010
Shakespeare
4,000

 
4,000

 
2014
Industrial Galvanizers
2,521

 
2,662

 
2010
Other
14,093

 
13,889

 
 
 
$
65,016

 
$
65,930

 
 
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 Energy & Mining segment) and a $1,100 impairment of the Industrial Galvanizing trade name (in Coatings segment) during 2015. The lower price of oil and natural gas in the fourth quarter of 2015 was a qualitative event requiring the Company to re-assess the fair value of the Webforge trade name. As a result, the Company recognized an additional $830 impairment of that trade name. No other trade names were determined to be impaired during 2015 and no qualitative events were noted during the first quarter of 2016 requiring an interim test for potential impairment.
Goodwill
The carrying amount of goodwill by segment as of March 26, 2016 and December 26, 2015 was as follows:
 
Engineered
Support
Structures
Segment
 
Energy & Mining Segment
 
Utility
Support
Structures
Segment
 
Coatings
Segment
 
Irrigation
Segment
 
 
Total
Gross goodwill at December 26, 2015
$
101,275

 
$
99,829

 
$
75,404

 
$
75,941

 
$
19,359

 
 
$
371,808

Accumulated impairment losses
—

 
(18,670
)
 
—

 
(16,222
)
 
—

 
 
(34,892
)
Balance at December 26, 2015
$
101,275

 
$
81,159

 
$
75,404

 
$
59,719

 
$
19,359

 
 
$
336,916

Foreign currency translation
(1,502
)
 
(1,462
)
 
—

 
290

 
27

 
 
(2,647
)
Balance at March 26, 2016
$
99,773

 
$
79,697

 
$
75,404

 
$
60,009


$
19,386

 
 
$
334,269


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 $9,100 impairment of goodwill on the APAC

15

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)
Coatings reporting unit. The Company finalized step two of the impairment analysis during the fourth quarter of 2015 recording an additional impairment of $7,122, which was the remaining goodwill on this reporting unit.
The Company recorded an $18,670 impairment of Access System's goodwill in the fourth quarter of 2015 primarily driven by the depressed price of a barrel of oil. 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 during 2016 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 thirteen weeks ended March 26, 2016 and March 28, 2015 were as follows:
 
2016
 
2015
Interest
$
559

 
$
510

Income taxes
4,788

 
5,047

Share Repurchase Programs    
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 $500,000 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 $250,000 of the Company's outstanding common stock with no stated expiration date. As of March 26, 2016, the Company has acquired 4,300,599 shares for approximately $581,000 under the share repurchase programs.


16

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 March 26, 2016:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
32,969

 
$
—

 
$
32,969

Shares outstanding (000 omitted)
22,700

 
116

 
22,816

Per share amount
$
1.45

 
$
—

 
$
1.45

Thirteen weeks ended March 28, 2015:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
30,739

 
$
—

 
$
30,739

Shares outstanding (000 omitted)
23,868

 
114

 
23,982

Per share amount
$
1.29

 
$
(0.01
)
 
$
1.28

At March 26, 2016 and March 28, 2015, there were 403,407 and 452,103 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.

17

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


(7) BUSINESS SEGMENTS
In the fourth quarter of 2015, the Company changed its reportable segment structure to improve transparency. The Company now has five reportable segments and its management structure was changed to align with this new reporting structure. A new reportable segment, Energy & Mining, includes the businesses primarily serving the energy and mining end markets. This segment includes the access systems applications businesses and offshore structures business that was formerly part of the Engineered Infrastructure Products (EIP) segment, and the grinding media business that was formerly included in the "Other" category. The remaining businesses from the EIP segment was also renamed "Engineered Support Structures". The last change in the reporting structure was moving the tubing business from the "Other" category to the Irrigation segment. Prior year information in this footnote has been updated to match the new reportable segment structure.
Reportable segments are as follows:

ENGINEERED SUPPORT STRUCTURES: This segment consists of the manufacture of engineered metal
structures and components for the global lighting and traffic, wireless communication, and roadway safety
industries;

ENERGY AND MINING: This segment, all outside of the United States, consists of the manufacture of
access systems applications, forged steel grinding media, on and off shore oil, gas, and wind energy structures;

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 and tubular products for industrial customers.
    
Due to the business reorganization and restructuring activities that occurred in 2015, there are no longer business operations included in Other for fiscal 2016. In 2015, the Company has other businesses and activities that individually were not more than 1% of consolidated sales.
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.








18

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
 
March 26,
2016
 
March 28,
2015
SALES:
 
 
 
Engineered Support Structures segment:
 
 
 
Lighting, Traffic, and Roadway Products
$
146,302

 
$
145,348

Communication Products
30,669

 
32,556

Engineered Support Structures segment
176,971

 
177,904

Energy and Mining segment:
 
 
 
Offshore and Other Complex Steel Structures
22,969

 
24,848

Grinding Media
19,490

 
27,491

Access Systems
29,990

 
35,722

Energy and Mining segment
72,449

 
88,061

Utility Support Structures segment:
 
 
 
Steel
121,971

 
158,273

Concrete
22,549

 
18,068

Utility Support Structures segment
144,520

 
176,341

Coatings segment
68,581

 
74,360

Irrigation segment
158,514

 
174,577

Other
—

 
2,169

Total
621,035

 
693,412

INTERSEGMENT SALES:
 
 
 
Engineered Support Structures segment
11,012

 
7,106

Energy & Mining segment
1,658

 
49

Utility Support Structures segment
176

 
289

Coatings segment
9,813

 
12,547

Irrigation segment
1,771

 
1,724

Other
—

 
1,299

Total
24,430

 
23,014

NET SALES:
 
 
 
Engineered Support Structures segment
165,959

 
170,798

Energy & Mining segment
70,791

 
88,012

Utility Support Structures segment
144,344

 
176,052

Coatings segment
58,768

 
61,813

Irrigation segment
156,743

 
172,853

Other
—

 
870

Total
$
596,605

 
$
670,398

 
 
 
 
OPERATING INCOME:
 
 
 
Engineered Support Structures segment
$
14,208

 
$
9,450

Energy & Mining segment
1,902

 
4,366

Utility Support Structures segment
14,768

 
15,357

Coatings segment
11,413

 
10,999

Irrigation segment
28,845

 
30,174

Other
—

 
(1,108
)
Corporate
(8,771
)
 
(11,555
)
Total
$
62,365

 
$
57,683


19

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


(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
The Company has three tranches of senior unsecured notes. All of the senior notes are guaranteed, jointly, severally, fully and unconditionally (subject to certain customary release provisions, including sale of the subsidiary guarantor, or sale of all or substantially all of its assets) by certain of the Company’s current and future direct and indirect domestic and foreign subsidiaries (collectively the “Guarantors”), excluding its other current domestic and foreign subsidiaries which do not guarantee the debt (collectively referred to as the “Non-Guarantors”). All Guarantors are 100% owned by the parent company.

Consolidated financial information for the Company ("Parent"), the Guarantor subsidiaries and the Non-Guarantor subsidiaries is as follows:
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Thirteen weeks ended March 26, 2016
 
Parent
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Net sales
$
285,038

 
$
91,526

 
$
272,114

 
$
(52,073
)
 
$
596,605

Cost of sales
207,861

 
67,862

 
211,393

 
(51,480
)
 
435,636

Gross profit
77,177

 
23,664

 
60,721

 
(593
)
 
160,969

Selling, general and administrative expenses
42,494

 
11,430

 
44,680

 
—

 
98,604

Operating income
34,683

 
12,234

 
16,041

 
(593
)
 
62,365

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense
(10,930
)
 
—

 
(124
)
 
—

 
(11,054
)
Interest income
67

 
25

 
719

 
—

 
811

Other
(375
)
 
12

 
(1,315
)
 
—

 
(1,678
)
 
(11,238
)
 
37

 
(720
)
 
—

 
(11,921
)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries
23,445

 
12,271

 
15,321

 
(593
)
 
50,444

Income tax expense (benefit):
 
 
 
 
 
 
 
 
 
Current
5,583

 
2,572

 
2,479

 
(120
)
 
10,514

Deferred
2,419

 
2,149

 
1,191

 
—

 
5,759

 
8,002

 
4,721

 
3,670

 
(120
)
 
16,273

Earnings before equity in earnings of nonconsolidated subsidiaries
15,443

 
7,550

 
11,651

 
(473
)
 
34,171

Equity in earnings of nonconsolidated subsidiaries
17,526

 
2,113

 
—

 
(19,639
)
 
—

Net earnings
32,969

 
9,663

 
11,651

 
(20,112
)
 
34,171

Less: Earnings attributable to noncontrolling interests
—

 
—

 
(1,202
)
 
—

 
(1,202
)
Net earnings attributable to Valmont Industries, Inc
$
32,969

 
$
9,663

 
$
10,449

 
$
(20,112
)
 
$
32,969


20

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


(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Thirteen weeks ended March 28, 2015
 
Parent
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Net sales
$
329,131

 
$
95,948

 
$
302,236

 
$
(56,917
)
 
$
670,398

Cost of sales
249,867

 
74,896

 
236,985

 
(56,804
)
 
504,944

Gross profit
79,264

 
21,052

 
65,251

 
(113
)
 
165,454

Selling, general and administrative expenses
48,042

 
11,297

 
48,432

 
—

 
107,771

Operating income
31,222

 
9,755

 
16,819

 
(113
)
 
57,683

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense
(10,832
)
 
—

 
(296
)
 
—

 
(11,128
)
Interest income
9

 
2

 
863

 
—

 
874

Other
(649
)
 
(24
)
 
1,689

 
—

 
1,016

 
(11,472
)
 
(22
)
 
2,256

 
—

 
(9,238
)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries
19,750

 
9,733

 
19,075

 
(113
)
 
48,445

Income tax expense (benefit):
 
 
 
 
 
 
 
 
 
Current
1,392

 
4,627

 
5,797

 
(42
)
 
11,774

Deferred
5,469

 
(533
)
 
228

 
—

 
5,164

 
6,861

 
4,094

 
6,025

 
(42
)
 
16,938

Earnings before equity in earnings of nonconsolidated subsidiaries
12,889

 
5,639

 
13,050

 
(71
)
 
31,507

Equity in earnings of nonconsolidated subsidiaries
17,850

 
4,305

 
—

 
(22,155
)
 
—

Net earnings
30,739

 
9,944

 
13,050

 
(22,226
)
 
31,507

Less: Earnings attributable to noncontrolling interests
—

 
—

 
(768
)
 
—

 
(768
)
Net earnings attributable to Valmont Industries, Inc
$
30,739

 
$
9,944

 
$
12,282

 
$
(22,226
)
 
$
30,739





21

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


(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirteen weeks ended March 26, 2016
 
Parent
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Net earnings
$
32,969

 
$
9,663

 
$
11,651

 
$
(20,112
)
 
$
34,171

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
 
 
 
 
        Unrealized translation gain (loss)
—

 
(178
)
 
2,691

 
—

 
2,513

Unrealized loss on cash flow hedge:
 
 
 
 
 
 
 
 
 
     Amortization cost included in interest expense
19

 
—

 
—

 
—

 
19

Equity in other comprehensive income
1,388

 
—

 
—

 
(1,388
)
 
—

Other comprehensive income (loss)
1,407

 
(178
)
 
2,691

 
(1,388
)
 
2,532

Comprehensive income (loss)
34,376

 
9,485

 
14,342

 
(21,500
)
 
36,703

Comprehensive income attributable to noncontrolling interests
—

 
—

 
(2,327
)
 
—

 
(2,327
)
Comprehensive income (loss) attributable to Valmont Industries, Inc.
$
34,376

 
$
9,485

 
$
12,015

 
$
(21,500
)
 
$
34,376





22

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


(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirteen weeks ended March 28, 2015
 
Parent
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Net earnings
$
30,739

 
$
9,944

 
$
13,050

 
$
(22,226
)
 
$
31,507

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
 
 
 
 
        Unrealized translation gain (loss)
—

 
(8,888
)
 
(49,290
)
 
—

 
(58,178
)
Unrealized loss on cash flow hedge:
 
 
 
 
 
 
 
 
 
     Amortization cost included in interest expense
18

 
—

 
—

 
—

 
18

Actuarial gain (loss) in defined benefit pension plan liability
92

 
—

 
202

 
—

 
294

Equity in other comprehensive income
(55,881
)
 
—

 
—

 
55,881

 
—

Other comprehensive income (loss)
(55,771
)
 
(8,888
)
 
(49,088
)
 
55,881

 
(57,866
)
Comprehensive income (loss)
(25,032
)
 
1,056

 
(36,038
)
 
33,655

 
(26,359
)
Comprehensive income attributable to noncontrolling interests
—

 
—

 
1,327

 
—

 
1,327

Comprehensive income (loss) attributable to Valmont Industries, Inc.
$
(25,032
)
 
$
1,056

 
$
(34,711
)
 
$
33,655

 
$
(25,032
)



23

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


(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
March 26, 2016
 
Parent
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
76,634

 
$
4,566

 
$
306,514

 
$
—

 
$
387,714

Receivables, net
128,713

 
54,384

 
266,282

 
—

 
449,379

Inventories
138,589

 
40,782

 
174,983

 
(3,586
)
 
350,768

Prepaid expenses
5,435

 
804

 
39,841

 
—

 
46,080

Refundable income taxes
18,897

 
—

 
—

 
—

 
18,897

Total current assets
368,268

 
100,536

 
787,620

 
(3,586
)
 
1,252,838

Property, plant and equipment, at cost
537,701

 
142,955

 
420,148

 
—

 
1,100,804

Less accumulated depreciation and amortization
338,782

 
74,063

 
155,452

 
—

 
568,297

Net property, plant and equipment
198,919

 
68,892

 
264,696

 
—

 
532,507

Goodwill
20,108

 
110,562

 
203,599

 
—

 
334,269

Other intangible assets
225

 
39,710

 
124,602

 
—

 
164,537

Investment in subsidiaries and intercompany accounts
1,250,625

 
837,066

 
1,096,458

 
(3,184,149
)
 
—

Other assets
39,645

 
—

 
76,066

 
—

 
115,711

Total assets
$
1,877,790

 
$
1,156,766

 
$
2,553,041

 
$
(3,187,735
)
 
$
2,399,862

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Current installments of long-term debt
$
215

 
$
—

 
$
895

 
$
—

 
$
1,110

Notes payable to banks
—

 
—

 
2,402

 
—

 
2,402

Accounts payable
58,622

 
14,148

 
110,289

 
—

 
183,059

Accrued employee compensation and benefits
21,357

 
4,665

 
31,980

 
—

 
58,002

Accrued expenses
42,241

 
16,752

 
52,484

 
—

 
111,477

Dividends payable
8,527

 
—

 
—

 
—

 
8,527

Total current liabilities
130,962

 
35,565

 
198,050

 
—

 
364,577

Deferred income taxes
15,874

 
—

 
23,770

 
—

 
39,644

Long-term debt, excluding current installments
751,541

 
—

 
5,337

 
—

 
756,878

Defined benefit pension liability
—

 
—

 
170,203

 
—

 
170,203

Deferred compensation
43,338

 
—

 
5,118

 
—

 
48,456

Other noncurrent liabilities
5,021

 
—

 
34,932

 
—

 
39,953

Shareholders’ equity:
 
 
 
 
 
 
 
 
 
Common stock of $1 par value
27,900

 
457,950

 
648,682

 
(1,106,632
)
 
27,900

Additional paid-in capital
—

 
159,414

 
1,107,536

 
(1,266,950
)
 
—

Retained earnings
1,756,082

 
568,377

 
513,246

 
(1,081,623
)
 
1,756,082

Accumulated other comprehensive income (loss)
(265,811
)
 
(64,540
)
 
(202,930
)
 
267,470

 
(265,811
)
Treasury stock
(587,117
)
 
—

 
—

 
—

 
(587,117
)
Total Valmont Industries, Inc. shareholders’ equity
931,054

 
1,121,201

 
2,066,534

 
(3,187,735
)
 
931,054

Noncontrolling interest in consolidated subsidiaries
—

 
—

 
49,097

 
—

 
49,097

Total shareholders’ equity
931,054

 
1,121,201

 
2,115,631

 
(3,187,735
)
 
980,151

Total liabilities and shareholders’ equity
$
1,877,790

 
$
1,156,766

 
$
2,553,041

 
$
(3,187,735
)
 
$
2,399,862


24

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


(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED BALANCE SHEETS
December 26, 2015
 
Parent
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
ASSETS