Edgar Filing: VALMONT INDUSTRIES INC

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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q


(Mark One)
ý		QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 27, 2015
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-31429

Valmont Industries, Inc.
(Exact name of registrant as specified in its charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)		47-0351813 (I.R.S. Employer Identification No.)
One Valmont Plaza,
Omaha, Nebraska		68154-5215
(Address of Principal Executive Offices)		(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 ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý 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 ý		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

23,248,776
Outstanding shares of common stock as of July 22, 2015

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VALMONT INDUSTRIES, INC.

INDEX TO FORM 10-Q

Page No.

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended June 27, 2015 and June 28, 2014	3
	Condensed Consolidated Statements of Comprehensive Income for the thirteen and twenty-six weeks ended June 27, 2015 and June 28, 2014	4
	Condensed Consolidated Balance Sheets as of June 27, 2015 and December 27, 2014	5
	Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended June 27, 2015 and June 28, 2014	6
	Condensed Consolidated Statements of Shareholders' Equity for the twenty-six weeks ended June 27, 2015 and June 28, 2014	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 6.	Exhibits	47
Signatures		48

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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

	June 27, 2015			June 28, 2014			June 27, 2015			June 28, 2014
Product sales	$	611,782		$	766,844		$	1,215,676		$	1,447,887
Services sales		70,341			75,755			136,845			146,452

Net sales		682,123			842,599			1,352,521			1,594,339
Product cost of sales		461,173			573,067			920,714			1,070,910
Services cost of sales		51,402			49,055			96,805			95,970

Total cost of sales		512,575			622,122			1,017,519			1,166,880

Gross profit		169,548			220,477			335,002			427,459
Selling, general and administrative expenses		115,548			115,701			223,319			223,835

Operating income		54,000			104,776			111,683			203,624

Other income (expenses):
Interest expense		(11,232	)		(8,304	)		(22,360	)		(16,501	)
Interest income		616			1,577			1,490			3,316
Other		(28	)		1,903			988			(3,909	)

		(10,644	)		(4,824	)		(19,882	)		(17,094	)

Earnings before income taxes		43,356			99,952			91,801			186,530

Income tax expense (benefit):
Current		19,136			26,117			30,910			59,055
Deferred		(5,219	)		7,953			(55	)		5,030

		13,917			34,070			30,855			64,085

Earnings before equity in earnings of nonconsolidated subsidiaries		29,439			65,882			60,946			122,445
Equity in earnings of nonconsolidated subsidiaries		—			(30	)		—			(30	)

Net earnings		29,439			65,852			60,946			122,415
Less: Earnings attributable to noncontrolling interests		(1,566	)		(1,876	)		(2,334	)		(2,459	)

Net earnings attributable to Valmont Industries, Inc.	$	27,873		$	63,976		$	58,612		$	119,956



Earnings per share:
Basic	$	1.19		$	2.40		$	2.48		$	4.50



Diluted	$	1.19		$	2.38		$	2.47		$	4.46



Cash dividends declared per share	$	0.375		$	0.375		$	0.750		$	0.625



Weighted average number of shares of common stock outstanding—Basic (000 omitted)		23,336			26,623			23,602			26,669



Weighted average number of shares of common stock outstanding—Diluted (000 omitted)		23,450			26,856			23,716			26,903

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

	Thirteen Weeks Ended						Twenty-six Weeks Ended

	June 27, 2015			June 28, 2014			June 27, 2015			June 28, 2014
Net earnings	$	29,439		$	65,852		$	60,946		$	122,415

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss)		18,328			13,869			(39,850	)		25,506
Unrealized gain/(loss) on cash flow hedge:
Amortization cost included in interest expense		19			(33	)		37			67
Gain on cash flow hedges		751			—			1,045			—
Actuarial gain (loss) in defined benefit pension plan		—			(614	)		—			(847	)

Other comprehensive income (loss)		19,098			13,222			(38,768	)		24,726

Comprehensive income (loss)		48,537			79,074			22,178			147,141
Comprehensive loss (income) attributable to noncontrolling interests		(1,968	)		(1,792	)		(641	)		(1,704	)

Comprehensive income (loss) attributable to Valmont Industries, Inc.	$	46,569		$	77,282		$	21,537		$	145,437

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except shares and per share amounts)

(Unaudited)

	June 27, 2015			December 27, 2014

ASSETS
Current assets:
Cash and cash equivalents	$	317,523		$	371,579
Receivables, net		491,706			536,918
Inventories		379,897			359,522
Prepaid expenses		56,653			56,912
Refundable and deferred income taxes		44,072			68,010

Total current assets		1,289,851			1,392,941

Property, plant and equipment, at cost		1,123,885			1,139,569
Less accumulated depreciation and amortization		552,908			533,116

Net property, plant and equipment		570,977			606,453

Goodwill		380,086			385,111
Other intangible assets, net		189,892			202,004
Other assets		136,586			143,159

Total assets	$	2,567,392		$	2,729,668



LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt	$	1,096		$	1,181
Notes payable to banks		7,914			13,952
Accounts payable		186,421			196,565
Accrued employee compensation and benefits		75,155			87,950
Accrued expenses		89,983			88,480
Dividends payable		8,733			9,086

Total current liabilities		369,302			397,214

Deferred income taxes		62,959			71,797
Long-term debt, excluding current installments		765,272			766,654
Defined benefit pension liability		135,068			150,124
Deferred compensation		51,056			47,932
Other noncurrent liabilities		43,142			45,542
Shareholders' equity:
Preferred stock of $1 par value—
Authorized 500,000 shares; none issued		—			—
Common stock of $1 par value—
Authorized 75,000,000 shares; 27,900,000 issued		27,900			27,900
Retained earnings		1,762,534			1,718,662
Accumulated other comprehensive income (loss)		(171,508	)		(134,433	)
Treasury stock		(525,877	)		(410,296	)

Total Valmont Industries, Inc. shareholders' equity		1,093,049			1,201,833

Noncontrolling interest in consolidated subsidiaries		47,544			48,572

Total shareholders' equity		1,140,593			1,250,405

Total liabilities and shareholders' equity	$	2,567,392		$	2,729,668

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Twenty-six Weeks Ended

	June 27, 2015			June 28, 2014
Cash flows from operating activities:
Net earnings	$	60,946		$	122,415
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization		47,761			43,368
Noncash loss on trading securities		4,582			3,501
Impairment of assets		9,292			—
Stock-based compensation		3,513			3,686
Defined benefit pension plan expense		(305	)		1,334
Contribution to defined benefit pension plan		(15,735	)		(17,484	)
Gain on sale of property, plant and equipment		542			(102	)
Equity in earnings in nonconsolidated subsidiaries		—			30
Deferred income taxes		(55	)		5,030
Changes in assets and liabilities (net of acquisitions):
Receivables		32,511			21,083
Inventories		(27,746	)		6,624
Prepaid expenses		(3,087	)		(18,289	)
Accounts payable		(5,021	)		(28,633	)
Accrued expenses		(6,431	)		(30,415	)
Other noncurrent liabilities		1,761			1,766
Income taxes refundable		15,817			(22,063	)

Net cash flows from operating activities		118,345			91,851

Cash flows from investing activities:
Purchase of property, plant and equipment		(24,758	)		(46,991	)
Proceeds from sale of assets		1,101			1,151
Acquisitions, net of cash acquired		—			(120,483	)
Other, net		5,896			(2,940	)

Net cash flows from investing activities		(17,761	)		(169,263	)

Cash flows from financing activities:
Net borrowings under short-term agreements		(5,890	)		(1,861	)
Proceeds from long-term borrowings		33,000			—
Principal payments on long-term borrowings		(33,657	)		(259	)
Dividends paid		(17,956	)		(13,427	)
Dividends to noncontrolling interest		(1,669	)		(1,340	)
Purchase of treasury shares		(121,020	)		(77,084	)
Proceeds from exercises under stock plans		9,454			11,996
Excess tax benefits from stock option exercises		1,394			3,576
Purchase of common treasury shares—stock plan exercises		(10,490	)		(11,984	)

Net cash flows from financing activities		(146,834	)		(90,383	)

Effect of exchange rate changes on cash and cash equivalents		(7,806	)		10,016

Net change in cash and cash equivalents		(54,056	)		(157,779	)
Cash and cash equivalents—beginning of year		371,579			613,706

Cash and cash equivalents—end of period	$	317,523		$	455,927

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollars in thousands)

(Unaudited)

	Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock			Noncontrolling interest in consolidated subsidiaries			Total shareholders' equity

Balance at December 28, 2013	$	27,900	$	—		$	1,562,670		$	(47,685	)	$	(20,860	)	$	22,821		$	1,544,846
Net earnings		—		—			119,956			—			—			2,459			122,415
Other comprehensive income (loss)		—		—			—			25,481			—			(755	)		24,726
Cash dividends declared		—		—			(16,651	)		—			—			—			(16,651	)
Dividends to noncontrolling interests		—		—			—			—			—			(1,340	)		(1,340	)
Acquisition of DS SM		—		—			—			—			—			9,232			9,232
Addition of noncontrolling interest																404			404
Purchase of treasury shares; 490,172 shares acquired													(77,084	)					(77,084	)
Stock plan exercises; 78,217 shares acquired		—		—			—			—			(11,984	)		—			(11,984	)
Stock options exercised; 158,317 shares issued		—		(7,262	)		6,312			—			12,946			—			11,996
Tax benefit from stock option exercises		—		3,576			—			—			—			—			3,576
Stock option expense		—		2,525			—			—			—			—			2,525
Stock awards; 8,822 shares issued		—		1,161			—			—			1,268			—			2,429

Balance at June 28, 2014	$	27,900	$	—		$	1,672,287		$	(22,204	)	$	(95,714	)	$	32,821		$	1,615,090



Balance at December 27, 2014	$	27,900	$	—		$	1,718,662		$	(134,433	)	$	(410,296	)	$	48,572		$	1,250,405
Net earnings		—		—			58,612			—			—			2,334			60,946
Other comprehensive income (loss)		—		—			—			(37,075	)		—			(1,693	)		(38,768	)
Cash dividends declared		—		—			(17,603	)		—			—			—			(17,603	)
Dividends to noncontrolling interests		—		—			—			—			—			(1,669	)		(1,669	)
Purchase of treasury shares; 989,821 shares acquired		—		—			—			—			(121,020	)		—			(121,020	)
Stock plan exercises; 82,989 shares acquired		—		—			—			—			(10,490	)		—			(10,490	)
Stock options exercised; 119,687 shares issued		—		(8,860	)		2,863			—			15,451			—			9,454
Tax benefit from stock option exercises		—		1,394			—			—			—			—			1,394
Stock option expense		—		2,653			—			—			—			—			2,653
Stock awards; 4,846 shares issued		—		4,813			—			—			478			—			5,291

Balance at June 27, 2015	$	27,900	$	—		$	1,762,534		$	(171,508	)	$	(525,877	)	$	47,544		$	1,140,593

See accompanying notes to condensed consolidated financial statements.

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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 June 27, 2015, the Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen and twenty-six weeks ended June 27, 2015 and June 28, 2014, and the Condensed Consolidated Statements of Cash Flows and Shareholders' Equity for the twenty-six week period then ended have been prepared by the Company, without audit. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial statements as of June 27, 2015 and for all periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 27, 2014. The accounting policies and methods of computation followed in these interim financial statements are the same as those followed in the financial statements for the year ended December 27, 2014. The results of operations for the period ended June 27, 2015 are not necessarily indicative of the operating results for the full year.

Inventories

Approximately 36% and 44% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of June 27, 2015 and December 27, 2014, respectively. All other inventory is valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market. Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured and finished goods. The excess of replacement cost of inventories over the LIFO value is approximately $39,093 and $47,178 at June 27, 2015 and December 27, 2014, respectively.

Inventories consisted of the following:

	June 27, 2015		December 27, 2014

Raw materials and purchased parts	$	182,927	$	179,093
Work-in-process		26,286		27,835
Finished goods and manufactured goods		209,777		199,772

Subtotal		418,990		406,700
Less: LIFO reserve		39,093		47,178

	$	379,897	$	359,522

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries for the thirteen and twenty-six weeks ended June 27, 2015 and June 28, 2014, were as follows:

	Thirteen Weeks Ended				Twenty-six Weeks Ended

	2015		2014		2015		2014
United States	$	33,641	$	65,096	$	66,282	$	136,790
Foreign		9,715		34,856		25,519		49,740

	$	43,356	$	99,952	$	91,801	$	186,530

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 June 27, 2015 and June 28, 2014 were as follows:

	Thirteen Weeks Ended						Twenty-six Weeks Ended

	2015			2014			2015			2014
Net periodic (benefit) expense:
Interest cost	$	6,189		$	7,312		$	12,300		$	14,509
Expected return on plan assets		(6,344	)		(6,640	)		(12,605	)		(13,175	)

Net periodic (benefit) expense	$	(155	)	$	672		$	(305	)	$	1,334

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 June 27, 2015, 1,176,222 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.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Expiration of grants is from six to ten years from the date of grant. The Company's compensation expense (included in selling, general and administrative expenses) and associated income tax benefits related to stock options for the thirteen and twenty-six weeks ended June 27, 2015 and June 28, 2014, respectively, were as follows:

	Thirteen Weeks Ended				Twenty-six Weeks Ended

	2015		2014		2015		2014
Compensation expense	$	1,303	$	1,262	$	2,653	$	2,525
Income tax benefits		501		486		1,021		972

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 $39,789 ($36,439 at December 27, 2014) represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with Accounting

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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.

The Company's ownership of shares in Delta EMD Pty. Ltd. (JSE:DTA) is also classified as trading securities. During first quarter of 2015, the Company received a special dividend of $5,010 from Delta EMD Pty. Ltd and the market price of the shares were proportionately decreased accordingly. The shares are valued at $4,966 and $9,034 as of June 27, 2015 and December 27, 2014, respectively, which is the estimated fair value. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.

			Fair Value Measurement Using:

	Carrying Value June 27, 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	$	44,755	$	44,755	$	—	$	—

			Fair Value Measurement Using:

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

Comprehensive Income

Comprehensive income includes net earnings, currency translation adjustments, certain derivative-related activity and changes in net actuarial gains/losses from a pension plan. Results of operations for foreign subsidiaries are translated using the average exchange rates during the period. Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) consisted of the following at June 27, 2015 and December 27, 2014:

	Foreign Currency Translation Adjustments			Unrealized Gain on Cash Flow Hedge		Defined Benefit Pension Plan			Accumulated Other Comprehensive Income

Balance at December 27, 2014	$	(99,618	)	$	3,879	$	(38,694	)	$	(134,433	)
Current-period comprehensive income (loss)		(38,157	)		1,082		—			(37,075	)

Balance at June 27, 2015	$	(137,775	)	$	4,961	$	(38,694	)	$	(171,508	)

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2017 and is to be applied retrospectively. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated results of operations and financial position.

In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory." Under this ASU, inventory will be measured at the "lower of cost and net realizable value" and options that currently exist for "market value" will be eliminated. The ASU defines net realizable value as the "estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation." No other changes were made to the current guidance on inventory measurement. ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted and should be applied prospectively. Management is evaluating the provisions of this statement, including which period to adopt, and has not determined what impact the adoption of ASU 2015-11 will have on the Company's financial position or results of operations.

(2) ACQUISITIONS

On March 3, 2014, the Company purchased 90% of the outstanding shares of DS SM A/S, which was renamed Valmont SM. Valmont SM is a manufacturer of heavy complex steel structures for a diverse range of industries including wind energy, offshore oil and gas, and electricity transmission. Valmont SM's operations are reported in the Engineered Infrastructure Products Segment. Valmont SM's annual sales are approximately $190,000 and it operates two manufacturing locations in Denmark. The purchase price paid for the business at closing (net of $56 cash acquired) was $120,483, including the payoff of an intercompany note payable by Valmont SM to its prior affiliates. The purchase is subject to an earn-out clause that is contingent on meeting future operational metrics for which no liability has been established based on expectations. The acquisition, which was funded by cash held by the Company, was completed to participate in markets for wind energy, oil and gas exploration, power transmission and other related infrastructure projects and to increase the Company's geographic footprint in Europe. The Company also funded a portion of the acquisition with an intercompany note payable. The excess purchase price over the fair value of assets resulted in goodwill, which is not deductible for tax purposes.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITIONS (Continued)

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the date of acquisition, which was finalized in the fourth quarter of 2014.

	At March 3, 2014

Current assets	$	73,421
Property, plant and equipment		85,638
Intangible assets		30,340
Goodwill		16,803

Total fair value of assets acquired	$	206,202

Current liabilities		47,754
Deferred income taxes		19,715
Intercompany note payable		37,448
Long-term debt		8,941

Total fair value of liabilities assumed		113,858
Non-controlling interests		9,309

Net assets acquired	$	83,035

Based on the fair value assessments, the Company allocated $30,340 of the purchase price to acquired intangible assets. The following table summarizes the major classes of Valmont SM's acquired intangible assets and the respective weighted average amortization periods:

	Amount

Trade Names	$	11,470	Indefinite
Backlog		3,145	1.5
Customer Relationships		15,725	12.0

Total Intangible Assets	$	30,340

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

The preliminary fair value measurement disclosed below is subject to management reviews and completion of the fair value measurements of the assets acquired and liabilities assumed. The Company expects the fair value measurement process and purchase price allocation for Shakespeare to be completed in the third quarter of 2015.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITIONS (Continued)

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the date of the Shakespeare acquisition (goodwill is not deductible for tax purposes):

	At October 6, 2014

Current assets	$	12,532
Property, plant and equipment		10,694
Intangible assets		13,500
Goodwill		15,416

Total fair value of assets acquired	$	52,142

Current liabilities		3,870

Net assets acquired	$	48,272

Based on the preliminary fair value assessments, the Company allocated $13,500 of the purchase price to acquired intangible assets. The following table summarizes the major classes of Shakespeare acquired intangible assets and the respective weighted-average amortization periods:

	Amount

Trade Names	$	4,000	Indefinite
Customer Relationships		9,500	12.0

Total Intangible Assets	$	13,500

On August 25, 2014, the Company acquired 51% of AgSense, LLC (AgSense) for $17 million in cash. AgSense operates in South Dakota and is the creator of global WagNet network which provides growers with a more complete view of their entire farming operation by tying irrigation decision making to field, crop and weather conditions. In the measurement of fair values of assets acquired and liabilities assumed, goodwill of $17,193 and $16,083 of customer relationships, trade name and other intangible assets were recorded. A portion of the goodwill is deductible for tax purposes. AgSense is included in the Irrigation Segment.

The Company's Condensed Consolidated Statement of Earnings for the thirteen and twenty-six weeks ended June 27, 2015 included net sales of $44,271 and $86,195 and net earnings of $2,935 and $4,933 resulting from the Valmont SM, AgSense, and Shakespeare acquisitions. The pro forma effect of

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITIONS (Continued)

these acquisitions on the second quarter and first half of the 2014 Statement of Earnings was as follows:

	Thirteen Weeks Ended June 28, 2014		Twenty-six Weeks Ended June 28, 2014

Net sales	$	858,068	$	1,658,333
Net earnings	$	64,525	$	123,441
Earnings per share—diluted	$	2.40	$	4.59

(3) RESTRUCTURING ACTIVITIES

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

	EIP		Utility		Coatings		Irrigation		Other/ Corporate		TOTAL

Severance	$	4,000	$	1,445	$	460	$	425	$	75	$	6,405
Other cash restructuring expenses		725		1,810		225		—		—		2,760
Asset impairments/net loss on disposals		3,850		625		4,150		250		—		8,875

Total cost of sales		8,575		3,880		4,835		675		75		18,040

Severance		3,900		450		—		575		1,025		5,950
Other cash restructuring expenses		750		270		275		100		650		2,045
Asset impairments/net loss on disposals		2,375		—		—		150		1,890		4,415

Total selling, general and administrative expenses		7,025		720		275		825		3,565		12,410

Consolidated total	$	15,600	$	4,600	$	5,110	$	1,500	$	3,640	$	30,450

Certain of these initial restructuring actions are within the APAC Coatings reporting unit which has approximately $16 million of goodwill as of June 27, 2015. The Company expects these activities to improve the profitability of this reporting unit. Should operating income not improve within this reporting unit after these restructuring activities are implemented, we may have to write off all or a portion of our goodwill for this reporting unit during our annual impairment testing during the third quarter. Inclusive of this goodwill, the Company is currently evaluating additional potential restructuring activities estimated up to $25 million of asset impairments and $5 million of cash expenses.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(3) RESTRUCTURING ACTIVITIES (Continued)

The following is a summary of the segments affected by these additional potential restructuring activities under current evaluation and the estimated pre-tax expense:

	EIP		Coatings		Other/ Corporate		TOTAL

Severance	$	2,000	$	—	$	250	$	2,250
Other cash restructuring expenses		700		—		250		950
Asset impairments/net loss on disposals		3,800		—		500		4,300

Total cost of sales		6,500		—		1,000		7,500

Severance		500		—		1,150		1,650
Asset impairments/net loss on disposals		600		16,000		3,500		20,100

Total selling, general and administrative expenses		1,100		16,000		4,650		21,750

Consolidated total	$	7,600	$	16,000	$	5,650	$	29,250

During the first quarter of fiscal 2015, the Company's EIP segment recognized approximately $800 of pre-tax expense for severance and other cash restructuring expenses. During the second quarter of fiscal 2015, the Company recognized the following pre-tax restructuring expenses:

	EIP		Utility		Coatings		Irrigation		Other/ Corporate		TOTAL

Severance	$	535	$	1,380	$	310	$	—	$	73	$	2,298
Other cash restructuring expenses		45		375		40		—		—		460
Asset impairments/net loss on disposals		797		295		4,150		—		—		5,242

Total cost of sales		1,377		2,050		4,500		—		73		8,000

Severance		965		405		—		219		240		1,829
Other cash restructuring expenses		125		—		269		—		—		394
Asset impairments/net loss on disposals		2,030		—		—		130		1,890		4,050

Total selling, general and administrative expenses		3,120		405		269		349		2,130		6,273

Consolidated total	$	4,497	$	2,455	$	4,769	$	349	$	2,203	$	14,273

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(3) RESTRUCTURING ACTIVITIES (Continued)

Liabilities recorded for the restructuring Plan and changes therein for the first half of fiscal 2015 were as follows:

	Balance at December 27, 2014		Recognized Restructuring Expense		Costs Paid or Otherwise Settled			Balance at June 27, 2015

Severance	$	—	$	4,927	$	(2,294	)	$	2,633
Other cash restructuring expenses		—		885		(645	)		240

Total cost of sales	$	—	$	5,812	$	(2,939	)	$	2,873

(4) GOODWILL AND INTANGIBLE ASSETS

Amortized Intangible Assets

The components of amortized intangible assets at June 27, 2015 and December 27, 2014 were as follows:

	June 27, 2015

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	206,053	$	96,178	13 years
Proprietary Software & Database		3,676		2,985	8 years
Patents & Proprietary Technology		13,029		9,290	8 years
Other		3,858		3,486	3 years

	$	226,616	$	111,939

	December 27, 2014

	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	207,509	$	88,538	13 years
Proprietary Software & Database		3,769		2,977	8 years
Patents & Proprietary Technology		12,394		8,537	8 years
Other		4,355		2,998	3 years

	$	228,027	$	103,050

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(4) GOODWILL AND INTANGIBLE ASSETS (Continued)

Amortization expense for intangible assets for the thirteen and twenty-six weeks ended June 27, 2015 and June 28, 2014, respectively was as follows:

Thirteen Weeks Ended				Twenty-six Weeks Ended

2015		2014		2015		2014
$	4,737	$	4,634	$	9,650	$	8,737

Estimated annual amortization expense related to finite-lived intangible assets is as follows:

	Estimated Amortization Expense

2015	$	18,124
2016		16,322
2017		16,276
2018		14,622
2019		13,795

The useful lives assigned to finite-lived intangible assets included consideration of factors such as the Company's past and expected experience related to customer retention rates, the remaining legal or contractual life of the underlying arrangement that resulted in the recognition of the intangible asset and the Company's expected use of the intangible asset.

Non-amortized intangible assets

Intangible assets with indefinite lives are not amortized. The carrying values of trade names at June 27, 2015 and December 27, 2014 were as follows:

	June 27, 2015		December 27, 2014

Webforge	$	16,997	$	16,801	2010
Valmont SM		9,294		10,818	2014
Newmark		11,111		11,111	2004
Ingal EPS/Ingal Civil Products		8,971		8,867	2010
Donhad		6,767		6,689	2010
Shakespeare		4,000		4,000	2014
Industrial Galvanizers		3,935		3,889	2010
Other		14,140		14,852

	$	75,215	$	77,027

In its determination of these intangible assets as indefinite-lived, the Company considered such factors as its expected future use of the intangible asset, legal, regulatory, technological and competitive factors that may impact the useful life or value of the intangible asset and the expected costs to

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(Dollars in thousands, except per share amounts)

(Unaudited)

(4) GOODWILL AND INTANGIBLE ASSETS (Continued)

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 2014. The values of the trade names were determined using the relief-from-royalty method. Based on this evaluation, the Company determined that its trade names were not impaired.

Goodwill

The carrying amount of goodwill by segment as of June 27, 2015 and December 27, 2014 was as follows:

	Engineered Infrastructure Products Segment			Utility Support Structures Segment		Coatings Segment			Irrigation Segment			Other		Total

Balance at December 27, 2014	$	197,074		$	75,404	$	74,862		$	19,536		$	18,235	$	385,111
Impairment		(1,737	)		—		—			—			—		(1,737	)
Foreign currency translation		(2,789	)		—		(634	)		(78	)		213		(3,288	)

Balance at June 27, 2015	$	192,548		$	75,404	$	74,228		$	19,458		$	18,448	$	380,086

During the second quarter of 2015, the Company implemented a plan to divest of a small business in its EIP segment. The goodwill allocated to that business was $1,737 and based on its current estimation of value, the goodwill was determined to be impaired and was recorded in Selling, General and Administrative Expenses in the Condensed Consolidated Statements of Earnings. The Company's annual impairment test of goodwill was last performed during the third quarter of 2014. 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 continues to monitor changes in the global economy that could impact future operating results of its reporting units. If such conditions arise, the Company will test a given reporting unit for impairment prior to the annual test.

(5) CASH FLOW SUPPLEMENTARY INFORMATION

The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the twenty-six weeks ended June 27, 2015 and June 28, 2014 were as follows:

	2015		2014

Interest	$	22,898	$	16,564
Income taxes		14,280		77,691

On May 13, 2014, the Company announced a new capital allocation philosophy which increased the dividend by 50% and covered a share repurchase program of up to $500 million of the Company's outstanding common stock to be acquired from time to time over twelve months at prevailing market

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(5) CASH FLOW SUPPLEMENTARY INFORMATION (Continued)

prices, through open market or privately-negotiated transactions. On February 24, 2015, the Board of Directors authorized an additional purchase of up to $250 million of the Company's outstanding common stock with no stated expiration date. As of June 27, 2015, the Company has acquired 3,700,970 shares for approximately $516.1 million under the share repurchase programs.

(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 June 27, 2015:
Net earnings attributable to Valmont Industries, Inc.	$	27,873	$	—		$	27,873
Shares outstanding		23,336		114			23,450
Per share amount	$	1.19	$	—		$	1.19
Thirteen weeks ended June 28, 2014:
Net earnings attributable to Valmont Industries, Inc.	$	63,976	$	—		$	63,976
Shares outstanding		26,623		233			26,856
Per share amount	$	2.40	$	(0.02	)	$	2.38
Twenty-six weeks ended June 27, 2015:
Net earnings attributable to Valmont Industries, Inc.	$	58,612	$	—		$	58,612
Shares outstanding		23,602		114			23,716
Per share amount	$	2.48	$	(0.01	)	$	2.47
Twenty-six weeks ended June 28, 2014:
Net earnings attributable to Valmont Industries, Inc.	$	119,956	$	—		$	119,956
Shares outstanding		26,669		234			26,903
Per share amount	$	4.50	$	(0.04	)	$	4.46

Earnings per share are computed independently for each of the quarters. Therefore, the sum of the quarterly earnings per share may not equal the total for the year primarily due to the share buyback program that began in the second quarter of 2014.

At June 27, 2015, there were 452,459 outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share.

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(Dollars in thousands, except per share amounts)

(Unaudited)

(7) BUSINESS SEGMENTS

The Company has four reportable segments based on its management structure. Each segment is global in nature with a manager responsible for segment operational performance and the allocation of capital within the segment. Net corporate expense is net of certain service-related expenses that are allocated to business units generally on the basis of employee headcounts and sales dollars.

Reportable segments are as follows:

ENGINEERED INFRASTRUCTURE PRODUCTS: This segment consists of the manufacture of engineered metal structures and components for the global lighting and traffic, wireless communication, wind energy, offshore oil and gas, roadway safety and access systems applications;

UTILITY SUPPORT STRUCTURES: This segment consists of the manufacture of engineered steel and concrete structures for the global utility industry;

COATINGS: This segment consists of galvanizing, anodizing and powder coating services on a global basis; and

IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment and related parts and services for the global agricultural industry.

In addition to these four reportable segments, the Company has other businesses and activities that individually are not more than 10% of consolidated sales. These include the manufacture of forged steel grinding media for the mining industry, tubular products for industrial customers, and the distribution of industrial fasteners and are reported in the "Other" category.

The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its business segments based upon operating income and invested capital. The Company does not allocate interest expense, non-operating income and deductions, or income taxes to its business segments.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) BUSINESS SEGMENTS (Continued)

Summary by Business

	Thirteen Weeks Ended						Twenty-six Weeks Ended

	June 27, 2015			June 28, 2014			June 27, 2015			June 28, 2014
SALES:
Engineered Infrastructure Products segment:
Lighting, Traffic, and Roadway Products	$	154,688		$	164,753		$	299,955		$	303,730
Communication Products		45,935			43,618			78,491			73,504
Offshore Structures		23,135			47,217			47,983			64,521
Access Systems		37,311			48,764			73,033			91,059

Engineered Infrastructure Products segment		261,069			304,352			499,462			532,814
Utility Support Structures segment:
Steel		139,425			179,574			297,698			371,011
Concrete		23,504			33,456			41,572			56,746

Utility Support Structures segment		162,929			213,030			339,270			427,757
Coatings segment		76,094			85,157			150,454			167,328
Irrigation segment		153,821			219,917			308,297			432,650
Other		50,404			61,786			104,262			120,388

Total		704,317			884,242			1,401,745			1,680,937
INTERSEGMENT SALES:
Engineered Infrastructure Products segment		4,052			18,166			11,126			37,731
Utility Support Structures segment		273			1,025			562			1,520
Coatings segment		12,178			14,770			24,725			29,723
Irrigation segment		3			4			12			13
Other		5,688			7,678			12,799			17,611

Total		22,194			41,643			49,224			86,598
NET SALES:
Engineered Infrastructure Products segment		257,017			286,186			488,336			495,083
Utility Support Structures segment		162,656			212,005			338,708			426,237
Coatings segment		63,916			70,387			125,729			137,605
Irrigation segment		153,818			219,913			308,285			432,637
Other		44,716			54,108			91,463			102,777

Total	$	682,123		$	842,599		$	1,352,521		$	1,594,339



OPERATING INCOME:
Engineered Infrastructure Products segment	$	17,424		$	28,625		$	29,406		$	42,334
Utility Support Structures segment		10,399			26,375			25,756			59,132
Coatings segment		7,862			15,820			18,861			29,706
Irrigation segment		25,814			41,473			50,116			84,619
Other		6,273			8,343			12,871			16,893
Corporate		(13,772	)		(15,860	)		(25,327	)		(29,060	)

Total	$	54,000		$	104,776		$	111,683		$	203,624

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(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 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.

In the fourth quarter of 2014, a subsidiary of the Company was removed as a guarantor of our revolving credit facility, and consequently was removed as a guarantor of the notes. All prior year consolidated financial information has been recast to reflect the current guarantor structure. 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 June 27, 2015

	Parent			Guarantors			Non- Guarantors			Eliminations			Total

Net sales	$	311,156		$	102,090		$	322,555		$	(53,678	)	$	682,123
Cost of sales		232,779			78,149			254,666			(53,019	)		512,575

Gross profit		78,377			23,941			67,889			(659	)		169,548
Selling, general and administrative expenses		50,913			11,091			53,544			—			115,548

Operating income		27,464			12,850			14,345			(659	)		54,000

Other income (expense):
Interest expense		(10,894	)		—			(338	)		—			(11,232	)
Interest income		4			2			610			—			616
Other		(248	)		24			196			—			(28	)

		(11,138	)		26			468			—			(10,644	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		16,326			12,876			14,813			(659	)		43,356

Income tax expense (benefit):
Current		7,545			5,223			6,547			(179	)		19,136
Deferred		(1,650	)		(51	)		(3,518	)		—			(5,219	)

		5,895			5,172			3,029			(179	)		13,917

Earnings before equity in earnings of nonconsolidated subsidiaries		10,431			7,704			11,784			(480	)		29,439
Equity in earnings of nonconsolidated subsidiaries		17,442			876			—			(18,318	)		—

Net earnings		27,873			8,580			11,784			(18,798	)		29,439
Less: Earnings attributable to noncontrolling interests		—			—			(1,566	)		—			(1,566	)

Net earnings attributable to Valmont Industries, Inc	$	27,873		$	8,580		$	10,218		$	(18,798	)	$	27,873

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Twenty-six weeks ended June 27, 2015

	Parent			Guarantors			Non- Guarantors			Eliminations			Total

Net sales	$	640,287		$	198,038		$	624,791		$	(110,595	)	$	1,352,521
Cost of sales		482,646			153,045			491,651			(109,823	)		1,017,519

Gross profit		157,641			44,993			133,140			(772	)		335,002
Selling, general and administrative expenses		98,955			22,388			101,976			—			223,319

Operating income		58,686			22,605			31,164			(772	)		111,683

Other income (expense):
Interest expense		(21,726	)		—			(634	)		—			(22,360	)
Interest income		13			4			1,473			—			1,490
Other		(897	)		—			1,885			—			988

		(22,610	)		4			2,724			—			(19,882	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		36,076			22,609			33,888			(772	)		91,801

Income tax expense (benefit):
Current		8,937			9,850			12,344			(221	)		30,910
Deferred		3,819			(584	)		(3,290	)		—			(55	)

		12,756			9,266			9,054			(221	)		30,855

Earnings before equity in earnings of nonconsolidated subsidiaries		23,320			13,343			24,834			(551	)		60,946
Equity in earnings of nonconsolidated subsidiaries		35,292			5,181			—			(40,473	)		—

Net earnings		58,612			18,524			24,834			(41,024	)		60,946
Less: Earnings attributable to noncontrolling interests		—			—			(2,334	)		—			(2,334	)

Net earnings attributable to Valmont Industries, Inc	$	58,612		$	18,524		$	22,500		$	(41,024	)	$	58,612

Table of Contents

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Thirteen weeks ended June 28, 2014

	Parent			Guarantors		Non- Guarantors			Eliminations			Total

Net sales	$	378,642		$	124,414	$	387,715		$	(48,172	)	$	842,599
Cost of sales		280,054			91,536		298,764			(48,232	)		622,122

Gross profit		98,588			32,878		88,951			60			220,477
Selling, general and administrative expenses		50,164			12,670		52,867			—			115,701

Operating income		48,424			20,208		36,084			60			104,776

Other income (expense):
Interest expense		(7,691	)		—		(613	)		—			(8,304	)
Interest income		6			113		1,458			—			1,577
Other		1,754			140		9			—			1,903

		(5,931	)		253		854			—			(4,824	)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries		42,493			20,461		36,938			60			99,952

Income tax expense (benefit):
Current		9,315			5,458		11,316			28			26,117
Deferred		7,672			2,079		(1,798	)		—			7,953

		16,987			7,537		9,518			28			34,070

Earnings before equity in earnings of nonconsolidated subsidiaries		25,506			12,924		27,420			32			65,882
Equity in earnings of nonconsolidated subsidiaries		38,470			8,478		—			(46,978	)		(30	)

Net earnings		63,976			21,402		27,420			(46,946	)		65,852
Less: Earnings attributable to noncontrolling interests		—			—		(1,876	)		—			(1,876	)

Net earnings attributable to Valmont Industries, Inc	$	63,976		$	21,402	$	25,544		$	(46,946	)	$	63,976