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 June 25, 2016
or
o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to
Commission file number 1-31429
_____________________________________
Valmont Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 
(State or Other Jurisdiction of
Incorporation or Organization)
47-0351813 
(I.R.S. Employer
Identification No.)
One Valmont Plaza, 
Omaha, Nebraska 
(Address of Principal Executive Offices)
 
68154-5215 
(Zip Code)

(402) 963-1000
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Accelerated filer o
Non‑accelerated filer o 
Smaller reporting company o
 
 
(Do not check if a
smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
22,637,254
Outstanding shares of common stock as of July 21, 2016


VALMONT INDUSTRIES, INC.

INDEX TO FORM 10-Q
 
 
Page No.
 
PART I. FINANCIAL INFORMATION
 
 
 
 
 
ended June 25, 2016 and June 27, 2015
 
 
 
and twenty-six weeks ended June 25, 2016 and June 27, 2015
 
Condensed Consolidated Balance Sheets as of June 25, 2016 and December 26,
 
 
2015
 
Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended
 
 
June 25, 2016 and June 27, 2015
 
Condensed Consolidated Statements of Shareholders' Equity for the twenty-six
 
 
weeks ended June 25, 2016 and June 27, 2015
 
Notes to Condensed Consolidated Financial Statements
Item 2.
Item 3.
Item 4.
 
 
 
 
PART II. OTHER INFORMATION
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 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
 
June 25,
2016
 
June 27,
2015
 
June 25,
2016
 
June 27,
2015
Product sales
$
570,762

 
$
611,782

 
$
1,103,702

 
$
1,215,676

Services sales
69,487

 
70,341

 
133,152

 
136,845

Net sales
640,249

 
682,123

 
1,236,854

 
1,352,521

Product cost of sales
418,072

 
461,173

 
811,564

 
920,714

Services cost of sales
47,060

 
51,402

 
89,204

 
96,805

Total cost of sales
465,132

 
512,575

 
900,768

 
1,017,519

Gross profit
175,117

 
169,548

 
336,086

 
335,002

Selling, general and administrative expenses
103,311

 
115,548

 
201,915

 
223,319

Operating income
71,806

 
54,000

 
134,171

 
111,683

Other income (expenses):
 
 
 
 
 
 
 
Interest expense
(11,122
)
 
(11,232
)
 
(22,176
)
 
(22,360
)
Interest income
707

 
616

 
1,518

 
1,490

Other
1,252

 
(28
)
 
(426
)
 
988

 
(9,163
)
 
(10,644
)
 
(21,084
)
 
(19,882
)
Earnings before income taxes
62,643

 
43,356

 
113,087

 
91,801

Income tax expense (benefit):
 
 
 
 
 
 
 
Current
22,745

 
19,136

 
33,259

 
30,910

Deferred
(3,544
)
 
(5,219
)
 
2,215

 
(55
)
 
19,201

 
13,917

 
35,474

 
30,855

Net earnings
43,442

 
29,439

 
77,613

 
60,946

Less: Earnings attributable to noncontrolling interests
(1,416
)
 
(1,566
)
 
(2,618
)
 
(2,334
)
Net earnings attributable to Valmont Industries, Inc.
$
42,026

 
$
27,873

 
$
74,995

 
$
58,612

Earnings per share:
 
 
 
 
 
 
 
Basic
$
1.86

 
$
1.19

 
$
3.31

 
$
2.48

Diluted
$
1.85

 
$
1.19

 
$
3.29

 
$
2.47

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)
22,602

 
23,336

 
22,651

 
23,602

Weighted average number of shares of common stock outstanding - Diluted (000 omitted)
22,749

 
23,450

 
22,782

 
23,716

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
 
June 25,
2016
 
June 27,
2015
 
June 25,
2016
 
June 27,
2015
Net earnings
$
43,442

 
$
29,439

 
$
77,613

 
$
60,946

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments:
 
 
 
 
 
 
 
Unrealized translation gain (loss)
(2,296
)
 
18,328

 
217

 
(39,850
)
Unrealized gain/(loss) on cash flow hedge:
 
 
 
 
 
 
 
Amortization cost included in interest expense
19

 
19

 
38

 
37

     Gain on cash flow hedges
—

 
751

 
—

 
1,045

Other comprehensive income (loss)
(2,277
)
 
19,098

 
255

 
(38,768
)
Comprehensive income
41,165

 
48,537

 
77,868

 
22,178

Comprehensive loss (income) attributable to noncontrolling interests
(1,787
)
 
(1,968
)
 
(4,114
)
 
(641
)
Comprehensive income attributable to Valmont Industries, Inc.
$
39,378

 
$
46,569

 
$
73,754

 
$
21,537

















See accompanying notes to condensed consolidated financial statements.

4


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
 
June 25,
2016
 
December 26,
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
344,346

 
$
349,074

Receivables, net
466,749

 
466,443

Inventories
372,106

 
340,672

Prepaid expenses, restricted cash, and other assets
63,650

 
46,137

Refundable income taxes
20,441

 
24,526

Total current assets
1,267,292

 
1,226,852

Property, plant and equipment, at cost
1,105,955

 
1,081,056

Less accumulated depreciation and amortization
579,608

 
548,567

Net property, plant and equipment
526,347

 
532,489

Goodwill
331,603

 
336,916

Other intangible assets, net
158,814

 
170,197

Other assets
111,817

 
125,928

Total assets
$
2,395,873

 
$
2,392,382

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Current installments of long-term debt
$
889

 
$
1,077

Notes payable to banks
3,735

 
976

Accounts payable
183,126

 
179,983

Accrued employee compensation and benefits
66,626

 
70,354

Accrued expenses
95,158

 
105,593

Dividends payable
8,505

 
8,571

Total current liabilities
358,039

 
366,554

Deferred income taxes
35,541

 
35,669

Long-term debt, excluding current installments
756,543

 
756,918

Defined benefit pension liability
164,329

 
179,323

Deferred compensation
48,965

 
48,417

Other noncurrent liabilities
38,285

 
40,290

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

 
—

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

 
27,900

Retained earnings
1,790,120

 
1,729,679

Accumulated other comprehensive loss
(268,459
)
 
(267,218
)
Treasury stock
(593,479
)
 
(571,920
)
Total Valmont Industries, Inc. shareholders’ equity
956,082

 
918,441

Noncontrolling interest in consolidated subsidiaries
38,089

 
46,770

Total shareholders’ equity
994,171

 
965,211

Total liabilities and shareholders’ equity
$
2,395,873

 
$
2,392,382

See accompanying notes to condensed consolidated financial statements.

5


VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 
Twenty-six Weeks Ended
 
June 25,
2016
 
June 27,
2015
Cash flows from operating activities:
 
 
 
Net earnings
$
77,613

 
$
60,946

Adjustments to reconcile net earnings to net cash flows from operations:
 
 
 
Depreciation and amortization
40,804

 
47,761

Noncash loss on trading securities
1,035

 
4,582

Impairment of assets - restructuring activities
—

 
9,292

Stock-based compensation
4,201

 
3,513

Defined benefit pension plan expense (benefit)
959

 
(305
)
Contribution to defined benefit pension plan
(712
)
 
(15,735
)
Increase in restricted cash - pension plan trust

(13,652
)
 
—

Gain on sale of property, plant and equipment
1,074

 
542

Deferred income taxes
2,215

 
(55
)
Changes in assets and liabilities:
 
 
 
Receivables
2,942

 
32,511

Inventories
(29,335
)
 
(27,746
)
Prepaid expenses and other assets
(4,859
)
 
(3,087
)
Accounts payable
1,430

 
(5,021
)
Accrued expenses
(13,636
)
 
(6,431
)
Other noncurrent liabilities
327

 
1,761

Income taxes refundable
9,516

 
15,817

Net cash flows from operating activities
79,922

 
118,345

Cash flows from investing activities:
 
 
 
Purchase of property, plant and equipment
(26,019
)
 
(24,758
)
Proceeds from sale of assets
1,827

 
1,101

Other, net
(1,608
)
 
5,896

Net cash flows from investing activities
(25,800
)
 
(17,761
)
Cash flows from financing activities:
 
 
 
Net borrowings under short-term agreements
2,593

 
(5,890
)
Proceeds from long-term borrowings
—

 
33,000

Principal payments on long-term borrowings
(659
)
 
(33,657
)
Dividends paid
(17,098
)
 
(17,956
)
Dividends to noncontrolling interest
(1,923
)
 
(1,669
)
Purchase of noncontrolling interest
(11,009
)
 
—

Purchase of treasury shares
(28,621
)
 
(121,020
)
Proceeds from exercises under stock plans
5,975

 
9,454

Excess tax benefits from stock option exercises
—

 
1,394

Purchase of common treasury shares—stock plan exercises
(1,453
)
 
(10,490
)
Net cash flows from financing activities
(52,195
)
 
(146,834
)
Effect of exchange rate changes on cash and cash equivalents
(6,655
)
 
(7,806
)
Net change in cash and cash equivalents
(4,728
)
 
(54,056
)
Cash and cash equivalents—beginning of year
349,074

 
371,579

Cash and cash equivalents—end of period
$
344,346

 
$
317,523

See accompanying notes to condensed consolidated financial statements.

6

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Dollars in thousands)
(Unaudited)
 
Common
stock
 
Additional
paid-in
capital
 
Retained
earnings
 
Accumulated
other
comprehensive
income (loss)
 
Treasury
stock
 
Noncontrolling
interest in
consolidated
subsidiaries
 
Total
shareholders’
equity
Balance at December 27, 2014
$
27,900

 
$
—

 
$
1,718,662

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

 
$
1,250,405

Net earnings
—

 
—

 
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

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










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 June 25, 2016, the Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen and twenty-six weeks ended June 25, 2016 and June 27, 2015, 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 June 25, 2016 and for all periods presented.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 2015. The accounting policies and methods of computation followed in these interim financial statements are the same as those followed in the financial statements for the year ended December 26, 2015. The results of operations for the period ended June 25, 2016 are not necessarily indicative of the operating results for the full year.
Inventories
Approximately 38% and 39% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of June 25, 2016 and December 26, 2015. All other inventory is valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market. Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured and finished goods. The excess of replacement cost of inventories over the LIFO value is approximately $36,201 and $35,075 at June 25, 2016 and December 26, 2015, respectively.
Inventories consisted of the following:
 
June 25,
2016
 
December 26,
2015
Raw materials and purchased parts
$
170,973

 
$
162,977

Work-in-process
24,762

 
25,644

Finished goods and manufactured goods
212,572

 
187,126

Subtotal
408,307

 
375,747

Less: LIFO reserve
36,201

 
35,075

 
$
372,106

 
$
340,672


8

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


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries for the thirteen and twenty-six weeks ended June 25, 2016 and June 27, 2015, were as follows:
 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
 
2016
 
2015
 
2016
 
2015
United States
$
44,240

 
$
33,641

 
$
83,840

 
$
66,282

Foreign
18,403

 
9,715

 
29,247

 
25,519

 
$
62,643

 
$
43,356

 
$
113,087

 
$
91,801

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 25, 2016 and June 27, 2015 were as follows:
 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
Net periodic (benefit) expense:
2016
 
2015
 
2016
 
2015
Interest cost
$
6,659

 
$
6,189

 
$
13,042

 
$
12,300

Expected return on plan assets
(6,084
)
 
(6,344
)
 
(12,083
)
 
(12,605
)
Net periodic (benefit) expense
$
575

 
$
(155
)
 
$
959

 
$
(305
)
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 25, 2016, 874,352 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 June 25, 2016 and June 27, 2015, respectively, were as follows:
 
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
 
2016
 
2015
 
2016
 
2015
Compensation expense
$
1,468

 
$
1,303

 
$
2,959

 
$
2,653

Income tax benefits
565

 
501

 
1,139

 
1,021

Equity Method Investments
The Company has equity method investments in non-consolidated subsidiaries, which are recorded within "Other assets" on the Condensed Consolidated Balance Sheet.
Fair Value
The Company applies the provisions of Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other accounting pronouncements that require or permit fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
ASC 820 establishes a three‑level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.
Trading Securities: The assets and liabilities recorded for the investments held in the Valmont Deferred Compensation Plan of $38,287 ($37,963 at December 26, 2015) represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with Accounting Standards Codification 320, Accounting for Certain Investments in Debt and Equity Securities, considering the employee's ability to change investment allocation of their deferred compensation at any time.

10

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


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Company's ownership of shares in Delta EMD Pty. Ltd. (JSE:DTA) is also classified as trading securities. The shares are valued at $1,821 and $4,734 as of June 25, 2016 and December 26, 2015, respectively, which is the estimated fair value. During the first quarter of 2016, the Company received a dividend of $1,541 from Delta EMD Pty. Ltd and the market price of the shares were proportionately reduced accordingly. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.
 
 
 
Fair Value Measurement Using:
 
Carrying Value
June 25, 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
$
40,108

 
$
40,108

 
$
—

 
$
—

 
 
 
Fair Value Measurement Using:
 
Carrying Value
December 26,
2015
 
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
 
Significant Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Trading Securities
$
42,697

 
$
42,697

 
$
—

 
$
—

Comprehensive Income
Comprehensive income includes net earnings, currency translation adjustments, certain derivative-related activity and changes in net actuarial gains/losses from a pension plan. Results of operations for foreign subsidiaries are translated using the average exchange rates during the period. Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) consisted of the following at June 25, 2016 and December 26, 2015:
 
Foreign Currency Translation Adjustments
 
Unrealized Gain on Cash Flow Hedge
 
Defined Benefit Pension Plan
 
Accumulated Other Comprehensive Income
Balance at December 26, 2015
$
(191,928
)
 
$
3,678

 
$
(78,968
)
 
$
(267,218
)
Current-period comprehensive income (loss)
(1,279
)
 
38

 
—

 
(1,241
)
Balance at June 25, 2016
$
(193,207
)
 
$
3,716

 
$
(78,968
)
 
$
(268,459
)
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. No ineffectiveness resulted from the hedge and the balance is recorded in the Condensed Consolidated Statements of Other Comprehensive Income as a component of Foreign currency translation adjustments. The realized gain (loss) will be deferred in other comprehensive income where it will remain until the net investments in our British subsidiaries are divested. The unrealized gain recorded at June 25, 2016 was $2,925 and is included in Other Current Assets on the Condensed Consolidated Balance Sheets.

11

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


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-9, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") 605, Revenue Recognition. The new revenue recognition standard requires entities to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-9 was to be effective for interim and annual reporting periods beginning after December 15, 2016 and is to be applied retrospectively. In August 2015, the FASB issued ASU 2015-14, Deferral of the Effective Date, which defers the effective date by one year to interim and annual reporting periods beginning after December 15, 2017 and is to be applied retrospectively. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated results of operations and financial position.
In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. Under this ASU, inventory will be measured at the “lower of cost and net realizable value” and options that currently exist for “market value” will be eliminated. The ASU defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” No other changes were made to the current guidance on inventory measurement. ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016 and should be applied prospectively. The Company is evaluating the provisions of this statement, including which period to adopt, and has not determined what impact the adoption of ASU 2015-11 will have on the Company's financial position or results of operations. The Company plans to adopt this ASU in fiscal 2017.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which provides guidance requiring debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability and further clarification guidance allows the cost of securing a revolving line of credit to be recorded as a deferred asset regardless of whether a balance is outstanding. The Company retrospectively adopted this guidance during the first quarter of 2016 and reclassified approximately $7,000 of debt issuance cost for its long-term debt (excluding its revolving line of credit) to a direct reduction of long-term debt instead of an other asset in the condensed consolidated balance sheets for December 26, 2015.
In February 2016, the FASB issued ASU 2016-02, Leases, which provides revised guidance on leases requiring lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018 and is to be applied on a modified retrospective transition. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated results of operations and financial position.
In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which provides revised guidance for employee share-based compensation payments. The ASU requires all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) be recognized as income tax expense or benefit in the income statement. It also states excess tax benefits to be classified along with other income tax cash flows as an operating activity whereas currently it is classified within a financing cash flow activity. ASU 2016-09 is effective prospectively for interim and annual reporting periods beginning after December 15, 2016. The Company early adopted this guidance prospectively in the second quarter of 2016 which resulted in an income tax benefit of approximately $289.


12

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


(2) ACQUISITIONS
On September 30, 2015, the Company purchased American Galvanizing for $12,778 in cash, net of cash acquired, plus assumed liabilities. American Galvanizing operates a custom galvanizing operation in New Jersey with annual sales of approximately $10,000. In the purchase price allocation, goodwill of $3,019 and $2,178 of customer relationships, trade name and other intangible assets were recorded. Goodwill is not deductible for tax purposes. This business is included in the Coatings segment and was acquired to expand the Company's geographic presence in the Northeast United States. The purchase price allocation was finalized in the first quarter of 2016. Pro-forma disclosures were omitted as this business did not have a significant impact on the Company's 2015 or 2016 financial results.
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 July 2016, the Company identified a restructuring plan in Australia/New Zealand (the "2016 Plan") focused primarily on closing and consolidating locations within the Energy and Mining and Coatings segments. During the remainder of 2016, the Company estimates it will incur the following pre-tax expenses from the 2016 Plan:

 
 
Energy & Mining
 
Coatings
 
Other/ Corporate
 
TOTAL
Severance
 
$
365

 
$
380

 
$
—

 
$
745

Other cash restructuring expenses
 
1,728

 
285

 
—

 
2,013

Asset impairments/net loss on disposals
 
815

 
—

 
—

 
815

   Total cost of sales
 
2,908

 
665

 
—

 
3,573

 
 
 
 
 
 
 
 
 
Severance
 
240

 
715

 
—

 
955

Other cash restructuring expenses
 
—

 
—

 
200

 
200

  Total selling, general and administrative expenses
 
240

 
715

 
200

 
1,155

      Consolidated total
 
$
3,148

 
$
1,380

 
$
200

 
$
4,728

    

In April 2015, the Company's Board of Directors authorized a broad restructuring plan (the "Plan") to respond to the market environment in certain businesses. During fiscal 2015, the Company substantially completed this Plan and recognized $21,708 of pre-tax restructuring expenses in cost of sales and $18,144 of pre-tax restructuring expenses in selling, general, and administrative expenses. Within the total fiscal 2015 pre-tax restructuring expense of $39,852 were pre-tax asset impairments of $19,836. The Company's utility segment recognized $380 of pre-tax restucturing expense during the first half of fiscal 2016.

    

13

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


During the first quarter of fiscal 2015, the Company's recognized $785 of pre-tax expense for severance and other cash related expenses within the ESS and Energy and Mining segments. During the second quarter of fiscal 2015, the Company recognized the following pre-tax restructuring expenses:

 
 
ESS
 
Energy & Mining
 
Utility
 
Coatings
 
Irrigation
 
Other/ Corporate
 
TOTAL
Severance
 
$
32

 
$
576

 
$
1,380

 
$
310

 
$
—

 
$
—

 
$
2,298

Other cash restructuring expenses
 
—

 
45

 
375

 
40

 
—

 
—

 
460

Asset impairments/net loss on disposals
 
45

 
752

 
295

 
4,150

 
—

 
—

 
5,242

   Total cost of sales
 
77

 
1,373

 
2,050

 
4,500

 
—

 
—

 
8,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Severance
 
797

 
168

 
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
 
2,952

 
168

 
405

 
269

 
349

 
2,130

 
6,273

      Consolidated total
 
$
3,029

 
$
1,541

 
$
2,455

 
$
4,769

 
$
349

 
$
2,130

 
$
14,273


Liabilities recorded for the restructuring Plan and changes therein for the first half of fiscal 2016 were as follows:
 
 
Balance at December 26, 2015
 
Recognized Restructuring Expense
 
Costs Paid or Otherwise Settled
 
Balance at June 25, 2016
Severance
 
$
1,307

 
$
—

 
$
(1,188
)
 
$
119

Other cash restructuring expenses
 
1,426

 
—

 
(305
)
 
1,121

   Total
 
$
2,733

 
$
—

 
$
(1,493
)
 
$
1,240

(4) GOODWILL AND INTANGIBLE ASSETS
Amortized Intangible Assets
The components of amortized intangible assets at June 25, 2016 and December 26, 2015 were as follows:
 
June 25, 2016
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Weighted
Average
Life
Customer Relationships
$
198,175

 
$
107,359

 
13 years
Proprietary Software & Database
3,632

 
3,031

 
8 years
Patents & Proprietary Technology
6,922

 
3,687

 
11 years
Other
3,856

 
3,790

 
3 years
 
$
212,585

 
$
117,867

 
 



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

 
$
101,614

 
13 years
Proprietary Software & Database
3,571

 
2,966

 
8 years
Patents & Proprietary Technology
6,815

 
3,421

 
11 years
Other
3,752

 
3,671

 
3 years
 
$
215,939

 
$
111,672

 
 
Amortization expense for intangible assets for the thirteen and twenty-six weeks ended June 25, 2016 and June 27, 2015, respectively was as follows:
Thirteen Weeks Ended
 
Twenty-six Weeks Ended
2016
 
2015
 
2016
 
2015
$
4,078

 
$
4,737

 
$
8,073

 
$
9,650

Estimated annual amortization expense related to finite‑lived intangible assets is as follows:
 
Estimated
Amortization
Expense
2016
$
15,906

2017
15,624

2018
13,990

2019
13,209

2020
12,158

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.

15

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


(4) GOODWILL AND INTANGIBLE ASSETS (Continued)
Non-amortized intangible assets
Intangible assets with indefinite lives are not amortized. The carrying values of trade names at June 25, 2016 and December 26, 2015 were as follows:
 
June 25,
2016
 
December 26,
2015
 
Year Acquired
Webforge
$
9,545

 
$
10,430

 
2010
Valmont SM
9,246

 
8,919

 
2014
Newmark
11,111

 
11,111

 
2004
Ingal EPS/Ingal Civil Products
7,781

 
8,504

 
2010
Donhad
5,870

 
6,415

 
2010
Shakespeare
4,000

 
4,000

 
2014
Industrial Galvanizers
2,436

 
2,662

 
2010
Other
14,107

 
13,889

 
 
 
$
64,096

 
$
65,930

 
 
In its determination of these intangible assets as indefinite‑lived, the Company considered such factors as its expected future use of the intangible asset, legal, regulatory, technological and competitive factors that may impact the useful life or value of the intangible asset and the expected costs to maintain the value of the intangible asset. The Company expects that these intangible assets will maintain their value indefinitely. Accordingly, these assets are not amortized.    
The Company’s trade names were tested for impairment in the third quarter of 2015. The values of the trade names were determined using the relief-from-royalty method. Based on this evaluation, the Company recorded a $5,000 impairment of the Webforge trade name (in Energy & Mining segment) and a $1,100 impairment of the Industrial Galvanizing trade name (in Coatings segment) during 2015. The lower price of oil and natural gas in the fourth quarter of 2015 was a qualitative event requiring the Company to re-assess the fair value of the Webforge trade name. As a result, the Company recognized an additional $830 impairment of that trade name. No other trade names were determined to be impaired during 2015 and no qualitative events were noted during the first half of 2016 requiring an interim test for potential impairment.
Goodwill
The carrying amount of goodwill by segment as of June 25, 2016 and December 26, 2015 was as follows:
 
Engineered
Support
Structures
Segment
 
Energy & Mining Segment
 
Utility
Support
Structures
Segment
 
Coatings
Segment
 
Irrigation
Segment
 
 
Total
Gross goodwill at December 26, 2015
$
101,275

 
$
99,829

 
$
75,404

 
$
75,941

 
$
19,359

 
 
$
371,808

Accumulated impairment losses
—

 
(18,670
)
 
—

 
(16,222
)
 
—

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

 
$
81,159

 
$
75,404

 
$
59,719

 
$
19,359

 
 
$
336,916

Foreign currency translation
(2,589
)
 
(3,200
)
 
—

 
411

 
65

 
 
(5,313
)
Balance at June 25, 2016
$
98,686

 
$
77,959

 
$
75,404

 
$
60,130


$
19,424

 
 
$
331,603


The Company’s annual impairment test of goodwill was performed during the third quarter of 2015, using the discounted cash flow method. The APAC Coatings reporting unit failed step one in that the estimated fair value was lower than the carrying value. As a result, the Company recorded $9,100 impairment of goodwill on the APAC Coatings reporting

16

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


unit. The Company finalized step two of the impairment analysis during the fourth quarter of 2015 recording an additional impairment of $7,122, which was the remaining goodwill on this reporting unit.
The Company recorded an $18,670 impairment of Access System's goodwill in the fourth quarter of 2015 primarily driven by the depressed price of a barrel of oil. The Company continues to monitor changes in the global economy that could impact future operating results of its reporting units and no qualitative events were noted in the first half of 2016. If such conditions arise, the Company will test a given reporting unit for impairment during 2016 prior to the annual test.
(5) CASH FLOW SUPPLEMENTARY INFORMATION
The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the twenty-six weeks ended June 25, 2016 and June 27, 2015 were as follows:
 
2016
 
2015
Interest
$
22,142

 
$
22,898

Income taxes
28,791

 
14,280

Share Repurchase Programs    
On May 13, 2014, the Company announced a new capital allocation philosophy which increased the dividend by 50% and covered a share repurchase program of up to $500,000 of the Company's outstanding common stock to be acquired from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. On February 24, 2015, the Board of Directors authorized an additional purchase of up to $250,000 of the Company's outstanding common stock with no stated expiration date. As of June 25, 2016, the Company has acquired 4,392,435 shares for approximately $592,600 under the share repurchase programs.


17

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


(6) EARNINGS PER SHARE
The following table provides a reconciliation between Basic and Diluted earnings per share (EPS):
 
Basic EPS
 
Dilutive
Effect of
Stock
Options
 
Diluted EPS
Thirteen weeks ended 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

Thirteen weeks ended June 27, 2015:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
27,873

 
$
—

 
$
27,873

Shares outstanding (000 omitted)
23,336

 
114

 
23,450

Per share amount
$
1.19

 
$
—

 
$
1.19

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

Twenty-six weeks ended June 27, 2015:
 
 
 
 
 
Net earnings attributable to Valmont Industries, Inc.
$
58,612

 
$
—

 
$
58,612

Shares outstanding (000 omitted)
23,602

 
114

 
23,716

Per share amount
$
2.48

 
$
(0.01
)
 
$
2.47

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.
At June 25, 2016 and June 27, 2015, there were 381,973 and 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, respectively.

18

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


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

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

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

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

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

IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment and related
parts and services for the global agricultural industry and tubular products for industrial customers.
    
Due to the business reorganization and restructuring activities that occurred in 2015, there are no longer business operations included in Other for fiscal 2016. In 2015, the Company had other businesses and activities that individually were not more than 1% of consolidated sales.
The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its business segments based upon operating income and invested capital. The Company does not allocate interest expense, non-operating income and deductions, or income taxes to its business segments.








19

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
 
June 25,
2016
 
June 27,
2015
 
June 25,
2016
 
June 27,
2015
SALES:
 
 
 
 
 
 
 
Engineered Support Structures segment:
 
 
 
 
 
 
 
Lighting, Traffic, and Roadway Products
$
163,191

 
$
154,821

 
$
309,493

 
$
300,169

Communication Products
40,725

 
45,935

 
71,394

 
78,491

Engineered Support Structures segment
203,916

 
200,756

 
380,887

 
378,660

Energy and Mining segment:
 
 
 
 
 
 
 
Offshore and Other Complex Steel Structures
25,908

 
23,135

 
48,877

 
47,983

Grinding Media
21,018

 
25,856

 
40,508

 
53,347

Access Systems
33,766

 
37,311

 
63,756

 
73,033

Energy and Mining segment
80,692

 
86,302

 
153,141

 
174,363

Utility Support Structures segment:
 
 
 
 
 
 
 
Steel
126,101

 
139,425

 
248,072

 
297,698

Concrete
25,144

 
23,504

 
47,693

 
41,572

Utility Support Structures segment
151,245

 
162,929

 
295,765

 
339,270

Coatings segment
75,298

 
76,093

 
143,879

 
150,453

Irrigation segment
152,252

 
173,303

 
310,766

 
347,880

Other
—

 
2,342

 
—

 
4,511

Total
663,403

 
701,725

 
1,284,438

 
1,395,137

INTERSEGMENT SALES:
 
 
 
 
 
 
 
Engineered Support Structures segment
8,114

 
4,133

 
19,126

 
11,239

Energy & Mining segment
1,409

 
52

 
3,067

 
101

Utility Support Structures segment
86

 
273

 
262

 
562

Coatings segment
11,886

 
12,178

 
21,699

 
24,725

Irrigation segment
1,659

 
1,758

 
3,430

 
3,482

Other
—

 
1,208

 
—

 
2,507

Total
23,154

 
19,602

 
47,584

 
42,616

NET SALES:
 
 
 
 
 
 
 
Engineered Support Structures segment
195,802

 
196,623

 
361,761

 
367,421

Energy & Mining segment
79,283

 
86,250

 
150,074

 
174,262

Utility Support Structures segment
151,159

 
162,656

 
295,503

 
338,708

Coatings segment
63,412

 
63,915

 
122,180

 
125,728

Irrigation segment
150,593

 
171,545

 
307,336

 
344,398

Other
—

 
1,134

 
—

 
2,004

Total
$
640,249

 
$
682,123

 
$
1,236,854

 
$
1,352,521

 
 
 
 
 
 
 
 
OPERATING INCOME:
 
 
 
 
 
 
 
Engineered Support Structures segment
$
20,968

 
$
16,219

 
$
35,176

 
$
25,669

Energy & Mining segment
3,341

 
2,698

 
5,243

 
7,064

Utility Support Structures segment
17,528

 
10,399

 
32,296

 
25,756

Coatings segment
14,023

 
7,862

 
25,436

 
18,861

Irrigation segment
27,763

 
31,865

 
56,608

 
62,039

Other
—

 
(1,271
)
 
—

 
(2,379
)
Corporate
(11,817
)
 
(13,772
)
 
(20,588
)
 
(25,327
)
Total
$
71,806

 
$
54,000

 
$
134,171

 
$
111,683


20

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


(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
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 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)


(8) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
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
)
Interest income
113

 
39

 
1,366

 
—

 
1,518

Other
324

 
27

 
(777
)
 
—

 
(426
)
 
(21,411
)
 
63

 
264

 
—

 
(21,084
)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries
47,238

 
27,142

 
40,267

 
(1,560
)
 
113,087

Income tax expense (benefit):
 
 
 
 
 
 
 
 
 
Current
15,974

 
8,814

 
9,000

 
(529
)
 
33,259

Deferred
3,487

 
—

 
(1,272
)
 
 
 
2,215

 
19,461

 
8,814

 
7,728

 
(529
)
 
35,474
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