Document


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 July 1, 2017
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
Emerging growth company  o

(Do not check if a
smaller reporting company)
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
22,590,934
Outstanding shares of common stock as of July 21, 2017


VALMONT INDUSTRIES, INC.

INDEX TO FORM 10-Q
 
 
Page No.
 
PART I. FINANCIAL INFORMATION
 
 
 
 
 
ended July 1, 2017 and June 25, 2016
 
 
 
and twenty-six weeks ended July 1, 2017 and June 25, 2016
 
Condensed Consolidated Balance Sheets as of July 1, 2017 and December 31,
 
 
2016
 
Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended
 
 
July 1, 2017 and June 25, 2016
 
Condensed Consolidated Statements of Shareholders' Equity for the twenty-six
 
 
weeks ended July 1, 2017 and June 25, 2016
 
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 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
 
Twenty-six Weeks Ended
 
July 1,
2017
 
June 25,
2016
 
July 1,
2017
 
June 25,
2016
Product sales
$
632,507

 
$
570,762

 
$
1,205,459

 
$
1,103,702

Services sales
80,230

 
69,487

 
144,751

 
133,152

Net sales
712,737

 
640,249

 
1,350,210

 
1,236,854

Product cost of sales
477,174

 
418,072

 
904,021

 
811,564

Services cost of sales
52,283

 
47,060

 
98,304

 
89,204

Total cost of sales
529,457

 
465,132

 
1,002,325

 
900,768

Gross profit
183,280

 
175,117

 
347,885

 
336,086

Selling, general and administrative expenses
104,990

 
103,311

 
205,093

 
201,915

Operating income
78,290

 
71,806

 
142,792

 
134,171

Other income (expenses):
 
 
 
 
 
 
 
Interest expense
(10,818
)
 
(11,122
)
 
(22,122
)
 
(22,176
)
Interest income
967

 
707

 
1,894

 
1,518

Other
(32
)
 
1,252

 
1,167

 
(426
)
 
(9,883
)
 
(9,163
)
 
(19,061
)
 
(21,084
)
Earnings before income taxes
68,407

 
62,643

 
123,731

 
113,087

Income tax expense:
 
 
 
 
 
 
 
Current
27,803

 
22,745

 
29,101

 
33,259

Deferred
(6,718
)
 
(3,544
)
 
7,347

 
2,215

 
21,085

 
19,201

 
36,448

 
35,474

Net earnings
47,322

 
43,442

 
87,283

 
77,613

Less: Earnings attributable to noncontrolling interests
(1,658
)
 
(1,416
)
 
(2,640
)
 
(2,618
)
Net earnings attributable to Valmont Industries, Inc.
$
45,664

 
$
42,026

 
84,643

 
74,995

Earnings per share:
 
 
 
 
 
 
 
Basic
$
2.03

 
$
1.86

 
$
3.76

 
$
3.31

Diluted
$
2.01

 
$
1.85

 
$
3.73

 
$
3.29

Cash dividends declared per share
$
0.375

 
$
0.375

 
$
0.750

 
$
0.750

Weighted average number of shares of common stock outstanding - Basic (000 omitted)
22,517

 
22,602

 
22,494

 
22,651

Weighted average number of shares of common stock outstanding - Diluted (000 omitted)
22,740

 
22,749

 
22,700

 
22,782

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
 
Twenty-six Weeks Ended
 
July 1,
2017
 
June 25,
2016
 
July 1,
2017
 
June 25,
2016
Net earnings
$
47,322

 
$
43,442

 
$
87,283

 
$
77,613

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
 
 
Unrealized translation gain (loss)
21,551

 
(2,296
)
 
40,941

 
217

Gain/(loss) on hedging activities:
 
 
 
 
 
 
 
      Net investment hedge
(550
)
 
—

 
(1,076
)
 
—

Amortization cost included in interest expense
18

 
19

 
37

 
38

Other comprehensive income (loss)
21,019

 
(2,277
)
 
39,902

 
255

Comprehensive income
68,341

 
41,165

 
127,185

 
77,868

Comprehensive loss (income) attributable to noncontrolling interests
(2,223
)
 
(1,787
)
 
(1,982
)
 
(4,114
)
Comprehensive income attributable to Valmont Industries, Inc.
$
66,118

 
$
39,378

 
$
125,203

 
$
73,754

















See accompanying notes to condensed consolidated financial statements.

4


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
 
July 1,
2017
 
December 31,
2016
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
448,222

 
$
399,948

Receivables, net
496,962

 
439,342

Inventories
382,648

 
350,028

Prepaid expenses, restricted cash, and other assets
43,545

 
57,297

Refundable income taxes
4,830

 
6,601

Total current assets
1,376,207

 
1,253,216

Property, plant and equipment, at cost
1,148,482

 
1,105,736

Less accumulated depreciation and amortization
628,375

 
587,401

Net property, plant and equipment
520,107

 
518,335

Goodwill
329,708

 
321,110

Other intangible assets, net
141,557

 
144,378

Other assets
155,583

 
154,692

Total assets
$
2,523,162

 
$
2,391,731

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Current installments of long-term debt
$
921

 
$
851

Notes payable to banks
376

 
746

Accounts payable
193,087

 
177,488

Accrued employee compensation and benefits
68,944

 
72,404

Accrued expenses
102,247

 
89,914

Dividends payable
8,472

 
8,445

Total current liabilities
374,047

 
349,848

Deferred income taxes
32,642

 
35,803

Long-term debt, excluding current installments
754,436

 
754,795

Defined benefit pension liability
194,517

 
209,470

Deferred compensation
47,799

 
44,319

Other noncurrent liabilities
17,275

 
14,910

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
1,945,874

 
1,874,722

Accumulated other comprehensive loss
(305,799
)
 
(346,359
)
Treasury stock
(603,726
)
 
(612,781
)
Total Valmont Industries, Inc. shareholders’ equity
1,064,249

 
943,482

Noncontrolling interest in consolidated subsidiaries
38,197

 
39,104

Total shareholders’ equity
1,102,446

 
982,586

Total liabilities and shareholders’ equity
$
2,523,162

 
$
2,391,731

See accompanying notes to condensed consolidated financial statements.

5


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 
Twenty-six Weeks Ended
 
July 1,
2017
 
June 25,
2016
Cash flows from operating activities:
 
 
 
Net earnings
$
87,283

 
$
77,613

Adjustments to reconcile net earnings to net cash flows from operations:
 
 
 
Depreciation and amortization
41,754

 
40,804

Noncash loss on trading securities
188

 
1,035

Stock-based compensation
4,590

 
4,201

Defined benefit pension plan expense
314

 
959

Contribution to defined benefit pension plan
(25,379
)
 
(712
)
Change in restricted cash - pension plan trust

12,568

 
(13,652
)
       (Gain)/loss on sale of property, plant and equipment
(64
)
 
1,074

Deferred income taxes
7,347

 
2,215

Changes in assets and liabilities:
 
 
 
Receivables
(49,416
)
 
2,942

Inventories
(24,963
)
 
(29,335
)
Prepaid expenses and other assets
(5,892
)
 
(4,859
)
Accounts payable
10,715

 
1,430

Accrued expenses
5,252

 
(13,636
)
Other noncurrent liabilities
1,973

 
327

Income taxes refundable
2,028

 
9,516

Net cash flows from operating activities
68,298

 
79,922

Cash flows from investing activities:
 
 
 
Purchase of property, plant and equipment
(26,183
)
 
(26,019
)
Proceeds from sale of assets
890

 
1,827

Proceeds from settlement of net investment hedge
5,123

 
—

Other, net
(2,467
)
 
(1,608
)
Net cash flows from investing activities
(22,637
)
 
(25,800
)
Cash flows from financing activities:
 
 
 
Net borrowings under short-term agreements
(369
)
 
2,593

Principal payments on long-term borrowings
(434
)
 
(659
)
Dividends paid
(16,913
)
 
(17,098
)
Dividends to noncontrolling interest
(2,889
)
 
(1,923
)
Purchase of noncontrolling interest
—

 
(11,009
)
Purchase of treasury shares
—

 
(28,621
)
Proceeds from exercises under stock plans
10,168

 
5,975

Purchase of common treasury shares—stock plan exercises
(3,056
)
 
(1,453
)
Net cash flows from financing activities
(13,493
)
 
(52,195
)
Effect of exchange rate changes on cash and cash equivalents
16,106

 
(6,655
)
Net change in cash and cash equivalents
48,274

 
(4,728
)
Cash and cash equivalents—beginning of year
399,948

 
349,074

Cash and cash equivalents—end of period
$
448,222

 
$
344,346

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 26, 2015
$
27,900

 
$
—

 
$
1,729,679

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

 
$
965,211

Net earnings
—

 
—

 
74,995

 
—

 
—

 
2,618

 
77,613

Other comprehensive income (loss)
—

 
—

 
—

 
(1,241
)
 
—

 
1,496

 
255

Cash dividends declared
—

 
—

 
(17,027
)
 
—

 
—

 
—

 
(17,027
)
Dividends to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
(1,923
)
 
(1,923
)
Purchase of noncontrolling interests
—

 
(137
)
 
—

 
—

 
—

 
(10,872
)
 
(11,009
)
Purchase of treasury shares; 245,798 shares acquired
—

 
—

 
—

 
—

 
(28,621
)
 
—

 
(28,621
)
Stock plan exercises; 10,747 shares acquired
—

 
—

 
—

 
—

 
(1,453
)
 
—

 
(1,453
)
Stock options exercised; 62,535 shares issued
—

 
(4,064
)
 
2,473

 
—

 
7,566

 
—

 
5,975

Stock option expense
—

 
2,959

 
—

 
—

 
—

 
—

 
2,959

Stock awards; 6,976 shares issued
—

 
1,242

 
—

 
—

 
949

 
—

 
2,191

Balance at June 25, 2016
$
27,900

 
$
—

 
$
1,790,120

 
$
(268,459
)
 
$
(593,479
)
 
$
38,089

 
$
994,171

Balance at December 31, 2016
$
27,900

 
$
—

 
$
1,874,722

 
$
(346,359
)
 
$
(612,781
)
 
$
39,104

 
$
982,586

Net earnings
—

 
—

 
84,643

 
—

 
—

 
2,640

 
87,283

Other comprehensive income (loss)
—

 
—

 
—

 
40,560

 
—

 
(658
)
 
39,902

Cash dividends declared
—

 
—

 
(16,939
)
 
—

 
—

 
—

 
(16,939
)
Dividends to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
(2,889
)
 
(2,889
)
Stock plan exercises; 19,086 shares acquired
—

 
—

 
—

 
—

 
(3,056
)
 
—

 
(3,056
)
Stock options exercised; 84,432 shares issued
—

 
(4,590
)
 
3,448

 
—

 
11,310

 
—

 
10,168

Stock option expense
—

 
2,578

 
—

 
—

 
—

 
—

 
2,578

Stock awards; 5,677 shares issued
—

 
2,012

 
—

 
—

 
801

 
—

 
2,813

Balance at July 1, 2017
$
27,900

 
$
—

 
$
1,945,874

 
$
(305,799
)
 
$
(603,726
)
 
$
38,197

 
$
1,102,446










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 July 1, 2017, the Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen and twenty-six weeks ended July 1, 2017 and June 25, 2016, and the Condensed Consolidated Statements of Cash Flows and Shareholders' Equity for the twenty-six 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 July 1, 2017 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 31, 2016. 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 31, 2016. The results of operations for the period ended July 1, 2017 are not necessarily indicative of the operating results for the full year.
Inventories
Approximately 35% and 38% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of July 1, 2017 and December 31, 2016. 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 $39,260 and $38,047 at July 1, 2017 and December 31, 2016, respectively.
Inventories consisted of the following:
 
July 1,
2017
 
December 31,
2016
Raw materials and purchased parts
$
163,214

 
$
143,659

Work-in-process
33,543

 
27,291

Finished goods and manufactured goods
225,151

 
217,125

Subtotal
421,908

 
388,075

Less: LIFO reserve
39,260

 
38,047

 
$
382,648

 
$
350,028


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 twenty-six weeks ended July 1, 2017 and June 25, 2016, were as follows:
    
 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
 
2017
 
2016
 
2017
 
2016
United States
$
50,773

 
$
44,240

 
$
86,197

 
$
83,840

Foreign
17,634

 
18,403

 
37,534

 
29,247

 
$
68,407

 
$
62,643

 
$
123,731

 
$
113,087

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 twenty-six weeks ended July 1, 2017 and June 25, 2016 were as follows:
 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
Net periodic (benefit) expense:
2017
 
2016
 
2017
 
2016
Interest cost
$
4,478

 
$
6,659

 
$
8,799

 
$
13,042

Expected return on plan assets
(5,054
)
 
(6,084
)
 
(9,931
)
 
(12,083
)
Amortization of actuarial loss
736

 
—

 
1,446

 
—

Net periodic expense
$
160

 
$
575

 
$
314

 
$
959

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 July 1, 2017, 700,078 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 and twenty-six weeks ended July 1, 2017 and June 25, 2016, respectively, were as follows:
 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
 
2017
 
2016
 
2017
 
2016
Compensation expense
$
1,289

 
$
1,468

 
$
2,578

 
$
2,959

Income tax benefits
496

 
565

 
993

 
1,139

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 $38,732 ($35,784 at December 31, 2016) 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 $1,931 and $2,016 as of July 1, 2017 and December 31, 2016, 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
July 1, 2017
 
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 
Significant Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Trading Securities
$
40,663

 
$
40,663

 
$
—

 
$
—

 
 
 
Fair Value Measurement Using:
 
Carrying Value
December 31,
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
$
37,800

 
$
37,800

 
$
—

 
$
—

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 July 1, 2017 and December 31, 2016:
 
Foreign Currency Translation Adjustments
 
Gain on Hedging Activities
 
Defined Benefit Pension Plan
 
Accumulated Other Comprehensive Loss
Balance at December 31, 2016
$
(251,228
)
 
$
7,978

 
$
(103,109
)
 
$
(346,359
)
Current-period comprehensive income (loss)
41,599

 
(1,039
)
 
—

 
40,560

Balance at July 1, 2017
$
(209,629
)
 
$
6,939

 
$
(103,109
)
 
$
(305,799
)
Net Investment Hedge
In the second quarter of 2016, the Company entered into a one-year foreign currency forward contract which qualified as a net investment hedge, in order to mitigate foreign currency risk on a portion of our investments denominated in British pounds. The forward contract had a notional amount to sell British pounds and receive $44,000, and matured in May 2017. The realized gain of $5,123 ($3,150 after tax) has been deferred in other comprehensive income where it will remain until the Company's net investments in its British subsidiaries are divested. No ineffectiveness resulted from the hedge prior to its maturity.

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. This standard is effective for interim and annual reporting periods beginning after December 15, 2017, and can be adopted either retrospectively or as a cumulative effect adjustment as of the date of adoption. Early adoption is permitted for interim and annual 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. One area under assessment is the timing of revenue recognition for the Company’s product lines that are custom engineered to a single customer’s specifications resulting in limited ability that the asset can be used for another customer. These product lines reside in the Utility and Engineered Support Structures segments.  When the terms and conditions allow the Company to bill a customer for full compensation on a canceled order for the performance completed to date, revenue will be recognized over the production period and not the current practice which is upon shipment or time of delivery to the customer.  The Company is also evaluating the necessary changes to its internal control processes to recognize revenue over time using an inputs based model after adoption. Based on the current status of the evaluation, the adoption of the standard is not expected to have a material effect on the amounts or timing of revenue recognition for the Company’s other segments.  The Company expects to adopt the new standard using the modified retrospective approach effective January 1, 2018.
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 but expects the adoption will result in a significant increase in total assets and liabilities.
In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments in the Statement of Cash Flows, which provides more specific guidance on cash flow presentation for certain transactions. ASU 2016-15 is effective for interim periods and fiscal years beginning after December 15, 2017, with early adoption permitted. We do not expect the provisions of this new standard will have a material impact on our consolidated financial statements and plan to adopt it in the first quarter of 2018.
In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. ASU 2017-04 is effective for periods and fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company will consider early adopting this standard prior to the annual goodwill impairment test in the third quarter of 2017.

In March 2017, the FASB issued ASU 2017-07, Presentation of Net Periodic Benefit Cost Related to Defined Benefit Plans, which amends the income statement presentation requirements for the components of net periodic benefit cost for an entity's defined benefit pension and post-retirement plans. ASU 2017-07 is effective for periods and fiscal years beginning after December 15, 2017. Early adoption is permitted as of the beginning of any annual period for which an entity's financial statements have not been issued. The Company does not believe this ASU will have a material impact on our consolidated financial statements and plans to adopt this ASU in the first quarter of 2018.


12

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


(2) ACQUISITIONS
Acquisitions of Noncontrolling Interests
In April 2016, the Company acquired the remaining 30% of IGC Galvanizing Industries (M) Sdn Bhd that it did not own for $5,841. In June 2016, the Company acquired 5.2% of the remaining 10% of Valmont SM that it did not own for $5,168. As these transactions were for acquisitions of part or all of the remaining shares of consolidated subsidiaries with no change in control, they were recorded within shareholders' equity and as a financing cash flow in the Consolidated Statements of Cash Flows.
3) RESTRUCTURING ACTIVITIES    
In April 2015, the Company's Board of Directors authorized a broad restructuring plan (the "2015 Plan") to respond to the market environment in certain businesses. During fiscal 2016, the Company incurred pre-tax restructuring charges of $4,581 as it completed the 2015 Plan.

In 2016, the Company identified and executed further region specific restructuring activities (the "2016 Plan") and incurred $5,045 of pre-tax restructuring expenses in cost of sales and $2,780 of pre-tax restructuring expense in SG&A in 2016. Within the total $7,825, were pre-tax asset impairments of $1,099. The 2016 Plan was primarily completed by year-end 2016. A significant change in market conditions in any of the Company's segments may affect of the Company's assessment of necessity for further restructuring activities.
    
Liabilities recorded for the restructuring plans and changes therein for the first half of fiscal 2017 were as follows:
 
 
Balance at December 31, 2016
 
Recognized Restructuring Expense
 
Costs Paid or Otherwise Settled
 
Balance at July 1, 2017
Severance
 
$
1,597

 
$
—

 
$
(1,597
)
 
$
—

Other cash restructuring expenses
 
4,581

 
—

 
(2,226
)
 
2,355

   Total
 
$
6,178

 
$
—

 
$
(3,823
)
 
$
2,355



(4) GOODWILL AND INTANGIBLE ASSETS
Amortized Intangible Assets
The components of amortized intangible assets at July 1, 2017 and December 31, 2016 were as follows:
 
July 1, 2017
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Weighted
Average
Life
Customer Relationships
$
196,201

 
$
121,382

 
13 years
Proprietary Software & Database
3,659

 
3,083

 
8 years
Patents & Proprietary Technology
6,581

 
3,720

 
11 years
Other
3,942

 
3,912

 
3 years
 
$
210,383

 
$
132,097

 
 


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 31, 2016
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Weighted
Average
Life
Customer Relationships
$
191,316

 
$
111,342

 
13 years
Proprietary Software & Database
3,616

 
3,056

 
8 years
Patents & Proprietary Technology
6,434

 
3,420

 
11 years
Other
3,713

 
3,668

 
3 years
 
$
205,079

 
$
121,486

 
 
Amortization expense for intangible assets for the thirteen and twenty-six weeks ended July 1, 2017 and June 25, 2016, respectively was as follows:
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
2017
 
2016
 
2017
 
2016
3,903

 
4,078

 
7,767

 
8,073

Estimated annual amortization expense related to finite‑lived intangible assets is as follows:
 
Estimated
Amortization
Expense
2017
$
15,498

2018
13,840

2019
13,079

2020
11,989

2021
9,903

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 July 1, 2017 and December 31, 2016 were as follows:
 
July 1,
2017
 
December 31,
2016
 
Year Acquired
Webforge
$
9,101

 
$
8,624

 
2010
Valmont SM
9,525

 
8,765

 
2014
Newmark
11,111

 
11,111

 
2004
Ingal EPS/Ingal Civil Products
7,420

 
7,032

 
2010
Donhad
5,598

 
5,305

 
2010
Shakespeare
4,000

 
4,000

 
2014
Industrial Galvanizers
2,323

 
2,201

 
2010
Other
14,193

 
13,747

 
 
 
$
63,271

 
$
60,785

 
 
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 2016. The values of each trade name was determined using the relief-from-royalty method. Based on this evaluation, no trade names were determined to be impaired as of the third quarter of 2016.
Goodwill
The carrying amount of goodwill by segment as of July 1, 2017 and December 31, 2016 was as follows:
 
Engineered
Support
Structures
Segment
 
Energy & Mining Segment
 
Utility
Support
Structures
Segment
 
Coatings
Segment
 
Irrigation
Segment
 
 
Total
Balance at December 31, 2016
$
94,314

 
$
72,212

 
$
75,404

 
$
59,569

 
$
19,611

 
 
$
321,110

Foreign currency translation
2,885

 
4,628

 
—

 
483

 
602

 
 
8,598

Balance at July 1, 2017
$
97,199

 
$
76,840

 
$
75,404

 
$
60,052


$
20,213

 
 
$
329,708


The Company’s annual impairment test of goodwill was performed during the third quarter of 2016, using the discounted cash flow method. As a result of that testing, the Company determined that its goodwill was not impaired, as the valuation of the reporting units exceeded their respective carrying values. The Company's offshore and other complex steel structures reporting unit with $14,179 of goodwill, is the reporting unit with the least amount of cushion between its estimated fair value and its carrying value. In the impairment model, the Company is forecasting steady growth in sales between 2018 to 2020 of the other complex steel structures to offset the significant decline in sales from offshore oil and gas structures realized in fiscal 2016. Sales and profitability amounts for the first half of 2017 approximated the amounts in the 2016 annual impairment model. The Company continues to monitor the sales backlog of this reporting unit and changes in the global economy that could impact future operating results of any of its reporting units.

15

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


(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 twenty-six weeks ended July 1, 2017 and June 25, 2016 were as follows:
 
2017
 
2016
Interest
$
22,113

 
$
22,142

Income taxes
26,966

 
28,791


(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 July 1, 2017:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
45,664

 
$
—

 
$
45,664

Shares outstanding (000 omitted)
22,517

 
223

 
22,740

Per share amount
$
2.03

 
$
(0.02
)
 
$
2.01

Thirteen weeks ended June 25, 2016:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
42,026

 
$
—

 
$
42,026

Shares outstanding (000 omitted)
22,602

 
147

 
22,749

Per share amount
$
1.86

 
$
(0.01
)
 
$
1.85

Twenty-six weeks ended July 1, 2017:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
84,643

 
$
—

 
$
84,643

Shares outstanding (000 omitted)
22,494

 
206

 
22,700

Per share amount
$
3.76

 
$
(0.03
)
 
$
3.73

Twenty-six weeks ended June 25, 2016:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
74,995

 
$
—

 
$
74,995

Shares outstanding (000 omitted)
22,651

 
131

 
22,782

Per share amount
$
3.31

 
$
(0.02
)
 
$
3.29

At July 1, 2017 and June 25, 2016, there were 84,712 and 381,973 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.

16

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


(7) BUSINESS SEGMENTS
The accounting principles used in the preparation of the segment information are the same as those used for the consolidated financial statements as disclosed in Note 1, except that the segment assets and income reflect the FIFO basis of accounting for inventory. Certain inventories are accounted for using the LIFO basis in the consolidated financial statements. In the first quarter of 2017, the Company changed its reportable segment operating income to separate out the LIFO expense (benefit). Prior year financial information has been updated to reflect this change.
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 offshore 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.
    
The Company evaluates the performance of its business segments based upon operating income and invested capital. The Company does not allocate LIFO expense, interest expense, non-operating income and deductions, or income taxes to its business segments.

17

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
 
Twenty-six Weeks Ended
 
July 1,
2017
 
June 25,
2016
 
July 1,
2017
 
June 25,
2016
SALES:
 
 
 
 
 
 
 
Engineered Support Structures segment:
 
 
 
 
 
 
 
Lighting, Traffic, and Roadway Products
$
173,768

 
$
163,191

 
$
322,850

 
$
309,493

Communication Products
43,813

 
40,725

 
75,289

 
71,394

Engineered Support Structures segment
217,581

 
203,916

 
398,139

 
380,887

Energy and Mining segment:
 
 
 
 
 
 
 
Offshore and Other Complex Steel Structures
24,619

 
25,908

 
50,326

 
48,877

Grinding Media
21,072

 
21,018

 
40,666

 
40,508

Access Systems
31,516

 
33,766

 
64,187

 
63,756

Energy and Mining segment
77,207

 
80,692

 
155,179

 
153,141

Utility Support Structures segment:
 
 
 
 
 
 
 
Steel
161,716

 
126,101

 
310,124

 
248,072

Concrete
22,906

 
25,144

 
49,110

 
47,693

Utility Support Structures segment
184,622

 
151,245

 
359,234

 
295,765

Coatings segment
79,781

 
75,298

 
153,249

 
143,879

Irrigation segment
188,287

 
152,252

 
355,511

 
310,766

Total
747,478

 
663,403

 
1,421,312

 
1,284,438

INTERSEGMENT SALES:
 
 
 
 
 
 
 
Engineered Support Structures segment
16,456

 
8,114

 
36,663

 
19,126

Energy & Mining segment
—

 
1,409

 
—

 
3,067

Utility Support Structures segment
982

 
86

 
1,217

 
262

Coatings segment
15,181

 
11,886

 
29,317

 
21,699

Irrigation segment
2,122

 
1,659

 
3,905

 
3,430

Total
34,741

 
23,154

 
71,102

 
47,584

NET SALES:
 
 
 
 
 
 
 
Engineered Support Structures segment
201,125

 
195,802

 
361,476

 
361,761

Energy & Mining segment
77,207

 
79,283

 
155,179

 
150,074

Utility Support Structures segment
183,640

 
151,159

 
358,017

 
295,503

Coatings segment
64,600

 
63,412

 
123,932

 
122,180

Irrigation segment
186,165

 
150,593

 
351,606

 
307,336

Total
$
712,737

 
$
640,249

 
$
1,350,210

 
$
1,236,854

 
 
 
 
 
 
 
 
OPERATING INCOME:
 
 
 
 
 
 
 
Engineered Support Structures segment
$
20,244

 
$
20,817

 
$
29,457

 
$
33,292

Energy & Mining segment
3,941

 
3,341

 
7,778

 
5,243

Utility Support Structures segment
20,189

 
17,582

 
42,897

 
32,006

Coatings segment
12,108

 
14,023

 
21,514

 
25,436

Irrigation segment
34,670

 
31,013

 
64,961

 
59,908

Adjustment to LIFO inventory valuation method
(434
)
 
(3,153
)
 
(1,213
)
 
(1,126
)
Corporate
(12,428
)
 
(11,817
)
 
(22,602
)
 
(20,588
)
Total
$
78,290

 
$
71,806

 
$
142,792

 
$
134,171


18

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 July 1, 2017
 
Parent
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Net sales
$
316,185

 
$
122,359

 
$
328,016

 
$
(53,823
)
 
$
712,737

Cost of sales
233,535

 
91,374

 
259,158

 
(54,610
)
 
529,457

Gross profit
82,650

 
30,985

 
68,858

 
787

 
183,280

Selling, general and administrative expenses
46,922

 
11,849

 
46,219

 
—

 
104,990

Operating income
35,728

 
19,136

 
22,639

 
787

 
78,290

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense
(10,646
)
 
(3,785
)
 
(172
)
 
3,785

 
(10,818
)
Interest income
144

 
10

 
4,598

 
(3,785
)
 
967

Other
1,167

 
15

 
(1,214
)
 
—

 
(32
)
 
(9,335
)
 
(3,760
)
 
3,212

 
—

 
(9,883
)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries
26,393

 
15,376

 
25,851

 
787

 
68,407

Income tax expense (benefit):
 
 
 
 
 
 
 
 
 
Current
15,344

 
4,782

 
7,444

 
233

 
27,803

Deferred
(5,788
)
 
—

 
(930
)
 
—

 
(6,718
)
 
9,556

 
4,782

 
6,514

 
233

 
21,085

Earnings before equity in earnings of nonconsolidated subsidiaries
16,837

 
10,594

 
19,337

 
554

 
47,322

Equity in earnings of nonconsolidated subsidiaries
28,827

 
6,296

 
—

 
(35,123
)
 
—

Net earnings
45,664

 
16,890

 
19,337

 
(34,569
)
 
47,322

Less: Earnings attributable to noncontrolling interests
—

 
—

 
(1,658
)
 
—

 
(1,658
)
Net earnings attributable to Valmont Industries, Inc
$
45,664

 
$
16,890

 
$
17,679

 
$
(34,569
)
 
$
45,664


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 (Continued)
 


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Twenty-six Weeks Ended July 1, 2017
 
Parent
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Net sales
$
609,450

 
$
239,584

 
$
623,312

 
$
(122,136
)
 
$
1,350,210

Cost of sales
450,021

 
182,863

 
491,648

 
(122,207
)
 
1,002,325

Gross profit
159,429

 
56,721

 
131,664

 
71

 
347,885

Selling, general and administrative expenses
97,139

 
23,509

 
84,445

 
—

 
205,093

Operating income
62,290

 
33,212

 
47,219

 
71

 
142,792

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense
(21,788
)
 
(6,051
)
 
(334
)
 
6,051

 
(22,122
)
Interest income
295

 
24

 
7,626

 
(6,051
)
 
1,894

Other
2,521

 
31

 
(1,385
)
 
—

 
1,167

 
(18,972
)
 
(5,996
)
 
5,907

 
—

 
(19,061
)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries
43,318

 
27,216

 
53,126

 
71

 
123,731

Income tax expense (benefit):
 
 
 
 
 
 
 
 
 
Current
10,457

 
10,102

 
8,553

 
(11
)
 
29,101

Deferred
5,539

 
—

 
1,808

 
—

 
7,347

 
15,996

 
10,102

 
10,361

 
(11
)
 
36,448

Earnings before equity in earnings of nonconsolidated subsidiaries
27,322

 
17,114

 
42,765

 
82

 
87,283

Equity in earnings of nonconsolidated subsidiaries
57,321

 
5,316

 
—

 
(62,637
)
 
—

Net earnings
84,643

 
22,430

 
42,765

 
(62,555
)
 
87,283

Less: Earnings attributable to noncontrolling interests
—

 
—

 
(2,640
)
 
—

 
(2,640
)
Net earnings attributable to Valmont Industries, Inc
$
84,643

 
$
22,430

 
$
40,125

 
$
(62,555
)
 
$
84,643



20

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


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Thirteen weeks ended June 25, 2016
 
Parent
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Net sales
$
290,171

 
$
97,159

 
$
300,911

 
$
(47,992
)
 
$
640,249

Cost of sales
211,675

 
71,234

 
229,248

 
(47,025
)
 
465,132

Gross profit
78,496

 
25,925

 
71,663

 
(967
)
 
175,117

Selling, general and administrative expenses
44,530

 
11,080

 
47,701

 
—

 
103,311

Operating income
33,966

 
14,845

 
23,962

 
(967
)
 
71,806

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense
(10,918
)
 
(3
)
 
(201
)
 
—

 
(11,122
)
Interest income
46

 
14

 
647

 
—

 
707

Other
699

 
15

 
538

 
—

 
1,252

 
(10,173
)
 
26

 
984

 
—

 
(9,163
)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries
23,793

 
14,871

 
24,946

 
(967
)
 
62,643

Income tax expense (benefit):
 
 
 
 
 
 
 
 
 
Current
10,391

 
6,242

 
6,521

 
(409
)
 
22,745

Deferred
1,068

 
(2,149
)
 
(2,463
)
 
—

 
(3,544
)
 
11,459

 
4,093

 
4,058

 
(409
)
 
19,201

Earnings before equity in earnings of nonconsolidated subsidiaries
12,334

 
10,778

 
20,888

 
(558
)
 
43,442

Equity in earnings of nonconsolidated subsidiaries
29,692

 
5,746

 
—

 
(35,438
)
 
—

Net earnings
42,026

 
16,524

 
20,888

 
(35,996
)
 
43,442

Less: Earnings attributable to noncontrolling interests
—

 
—

 
(1,416
)
 
—

 
(1,416
)
Net earnings attributable to Valmont Industries, Inc
$
42,026

 
$
16,524

 
$
19,472

 
$
(35,996
)
 
$
42,026




21

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


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Twenty-six Weeks Ended June 25, 2016
 
Parent
 
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Total
Net sales
$
575,209

 
$
188,685

 
$
573,025

 
$
(100,065
)
 
$
1,236,854

Cost of sales
419,536

 
139,096

 
440,641

 
(98,505
)
 
900,768

Gross profit
155,673

 
49,589

 
132,384

 
(1,560
)
 
336,086

Selling, general and administrative expenses
87,024

 
22,510

 
92,381

 
—

 
201,915

Operating income
68,649

 
27,079

 
40,003

 
(1,560
)
 
134,171

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest expense
(21,848
)
 
(3
)
 
(325
)
 
—

 
(22,176
)