SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Second Quarter Ended Commission File Number
June 28, 1997 0-3701
VALMONT INDUSTRIES, INC.
Valley, Nebraska 68064
Telephone Number 402-359-2201
Delaware 47-0351813
(State of Incorporation) (I.R.S. Employer Identification No.)
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to such filing
requirements for the past ninety days. Yes__X__ No_____
As of July 28, 1997 there were outstanding 27,513,371 common shares of the
registrant.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
------------------
PART I. FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Condensed Financial Statements:
Consolidated Statements of Operations for the thirteen
and twenty-six weeks ended June 28, 1997 and
June 29, 1996 2
Consolidated Balance Sheets as of June 28,
1997 and December 28, 1996 3
Consolidated Statement of Cash Flows for the
twenty-six weeks ended June 28, 1997 and
June 29, 1996 4
Notes to Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
PART II. OTHER INFORMATION
- ---------------------------
Item 4. Submission of Matters to a Vote of Security
Holders 9
Item 5. Other Events 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 9
- ----------
Page 1
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share amounts)
(Unaudited)
<TABLE>
Thirteen Weeks Ended Twenty-six Weeks Ended
-------------------- ----------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
------- ------- ------- -------
<CAPTION>
<S> <C> <C> <C> <C>
Net sales $159,100 $166,849 $324,518 $315,763
Cost of sales 114,956 122,936 235,758 231,851
------- ------- ------- -------
Gross profit 44,144 43,913 88,760 83,912
Selling, general and administrative
expenses 27,641 29,693 57,680 57,967
------- ------- ------- -------
Operating income 16,503 14,220 31,080 25,945
------- ------- ------- -------
Other income (deductions):
Interest expense (1,065) (1,010) (1,963) (2,009)
Interest income 246 75 271 164
Miscellaneous (191) 16 59 (53)
------- ------- ------- -------
(1,010) (919) (1,633) (1,898)
------- ------- ------- -------
Earnings before income taxes 15,493 13,301 29,447 24,047
------- ------- ------- -------
Income tax expense:
Current 6,140 5,127 6,840 8,727
Deferred (540) (327) 3,760 (127)
------- ------- ------- -------
5,600 4,800 10,600 8,600
------- ------- ------- -------
Net Earnings $ 9,893 $ 8,501 $ 18,847 $ 15,447
======= ======= ======= =======
Net Earnings per share $ 0.35 $ 0.30 $ 0.67 $ 0.56
======= ======= ======= =======
Cash dividends per share $0.05625 $ 0.05 $0.10625 $ 0.0875
======= ======= ======= =======
Weighted average number of shares of
common and common equivalent shares
outstanding (000) 28,232 28,026 28,221 27,790
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
Page 2
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
June 28, December 28,
ASSETS 1997 1996
- ----------------------------------------- ------- -------
Current assets:
Cash and cash equivalents $ 10,638 $ 9,483
Receivables 97,323 82,224
Deferred income taxes 7,511 16,521
Inventories 74,108 73,359
Assets held for sale -- 26,903
Prepaid expenses 2,051 2,356
------- -------
Total current assets 191,631 210,846
------- -------
Other assets:
Investments in nonconsolidated affiliates 4,353 4,307
Other 4,764 5,916
------- -------
Total other assets 9,117 10,223
------- -------
Net property, plant and equipment 138,244 120,579
------- -------
Total assets $ 338,992 $ 341,648
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------
Current liabilities:
Current installments of long-term debt $ 7,321 $ 7,693
Notes payable to banks 7,657 24,007
Accounts payable 50,095 43,699
Accrued expenses 46,402 52,678
Dividends payable 1,547 1,366
------- -------
Total current liabilities 113,022 129,443
------- -------
Deferred income taxes 7,638 9,531
Long-term debt, excl. current installments 19,431 21,880
Minority interest in consolidated
subsidiaries 3,806 2,250
Other noncurrent liabilities 3,448 3,313
Shareholders' equity:
Preferred stock -- --
Common stock of $1 par value 27,900 13,950
Additional paid-in capital 140 6,458
Retained earnings 163,771 153,146
Currency translation adjustment (119) 1,737
Treasury stock (12) (18)
Unearned restricted stock (33) (42)
------- -------
Total shareholders' equity 191,647 175,231
------- -------
Total liabilities and shareholders'
equity $ 338,992 $ 341,648
======= =======
See accompanying notes to consolidated financial statements.
Page 3
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Twenty-six Weeks Ended
-----------------------
June 28, June 29,
1997 1996
------- -------
Net cash provided by operations $ 20,240 $ 11,573
------- -------
Cash flows from investment activities:
Purchase of property, plant & equipment (26,936) (16,618)
Change in other assets 810 (2,203)
Acquisitions (627) (762)
Proceeds from investment by minority
shareholders 2,381 --
Proceeds from sale, net of gain,
of property and equipment 96 1,266
Proceeds from sale of assets held for
sale 25,000 --
Other, net (57) (246)
------- -------
Net cash provided (used) by
investment activities 667 (18,563)
------- -------
Cash flows from financing activities:
Net borrowings (repayments) under
short-term agreements (16,154) 3,170
Proceeds from long-term borrowings -- 1,598
Principal payments on long-term
obligations (2,127) (1,999)
Dividends paid (2,739) (2,036)
Proceeds from exercise of employee
stock plans 1,247 831
Proceeds from issuance of common stock 905 --
Purchase of common treasury shares (884) (397)
------- -------
Net cash provided (used) by
financing activities (19,752) 1,167
------- -------
Net increase (decrease) in cash and
cash equivalents 1,155 (5,823)
Cash and cash equivalents--beginning of
period 9,483 16,996
------- -------
Cash and cash equivalents--end of period $10,638 $ 11,173
======= =======
See accompanying notes to consolidated financial statements.
Page 4
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
1. Condensed Consolidated Financial Statements
-------------------------------------------
The Condensed Consolidated Balance Sheet as of June 28, 1997 and the
Condensed Consolidated Statements of Operations for the thirteen and
twenty-six week periods ended June 28, 1997 and June 29, 1996 and the
Condensed Consolidated Statements of Cash Flows 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 position as of June 28, 1997 and for all periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles 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 December 28, 1996
Annual Report to shareholders. The results of operations for the period
ended June 28, 1997 are not necessarily indicative of the operating
results for the full year.
2. Dispositions of Assets
----------------------
On January 29, 1997, pursuant to a stock purchase agreement between the
Company and Chicago Miniature Lamp, Inc. dated January 3, 1997, the Company
completed the sale to Chicago Miniature Lamp, Inc., of all outstanding
stock of Valmont Electric, Inc. for approximately $25.0 million cash.
The sale of the subsidiary's stock included Valmont's magnetic and
electronic ballast businesses located in El Paso, Texas and Juarez,
Mexico. In compliance with Statement of Financial Accounting Standards
(SFAS) Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of", the Company recorded
an asset valuation charge in 1996 to reflect the value of the assets of
the ballast businesses. As such, there was no gain or loss recorded in
1997 upon the sale of such assets.
3. Inventories
-----------
Approximately 71% of the Company's inventories are valued at cost on the
basis of the last-in first-out (LIFO) dollar value method under the
natural business unit concept, which is not in excess of market (net
realizable value). As a result, it is not possible to segregate the
inventories into their component values of raw material, work-in-process
and finished goods. All other inventories are valued at lower of first-in
first-out (FIFO) cost or market (net realizable value).
Page 5
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
(Continued)
4. Cash Flows
----------
The Company considers cash and cash investments with a maturity of three
months or less when purchased, to be cash equivalents. Interest paid was
$2,112 and $1,733 for the twenty-six week periods ended June 28, 1997 and
June 29, 1996, respectively. Income taxes paid, net of refunds, were
$1,564 and $6,233 for the twenty-six week periods ended June 28, 1997 and
June 29, 1996.
5. Earnings Per Share
------------------
Earnings per share are based on the weighted average number of common shares
outstanding and equivalent common shares from in-the-money stock options.
The difference between primary and fully-diluted earnings per share is not
material. On April 28, 1997, the Company's Board of Directors declared a
two-for-one stock split. All references in the financial statements with
regard to number of shares of common stock and related dividends and per
share amounts have been restated to reflect the stock split.
6. Use of Estimates
----------------
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these condensed combined
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
7. Recently Issued Accounting Pronouncements
---------------------------------------
In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings Per Share", which is effective for fiscal years ending
after December 15, 1997. SFAS 128 specifies the computation, presentation
and disclosure requirements for earnings per share. The objective of the
statement is to simplify the computation of earnings per share. Earnings
per share computed in accordance with SFAS 128 is not expected to be
materially different than earnings per share as currently reported.
Page 6
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis contains forward looking statements which
reflect management's current views and estimates of future economic
circumstances, industry conditions, company performance and the financial
results. The statements are based on many assumptions and factors, including
availability and price of raw materials, product pricing, competitive
environment and related domestic and international market conditions,
operating efficiencies, and actions of domestic and foreign governments.
Any changes in such assumptions or factors could produce significantly
different results.
Results of Operations
- ---------------------
For the second quarter of 1997 net sales were $159.1 million, a decrease of
4.6% over the $166.8 million for the same period last year. Excluding 1996
sales from Valmont Electric which the Company sold earlier this year, sales
increased for the quarter. Net sales for the first two quarters of 1997
excluding the Valmont Electric sales were $324.5 million versus $315.8
million in the same period last year. Sales in the Irrigation Products Segment
for the second quarter of 1997 and year-to-date were at record high levels.
North America irrigation sales were at the same levels as reported in 1996 as
high farm income prompted U.S. farmers to continue to purchase irrigation
equipment. Sales of irrigation products to international markets for the
second quarter of 1997 increased compared to sales for the same period a year
ago, as a result of continuing growth in the demand for grain products and
the need to use water and land resources more efficiently.
Sales in the Industrial Products Segment decreased in the second quarter
and increased year-to-date 1997, compared to the same periods in 1996.
Excluding second quarter 1996 sales of Valmont Electric which the Company
sold in January of 1997, both second quarter and year-to-date sales increased
compared to the same periods in 1996. Increased shipments in lighting and
traffic signal poles and continued demand for communication poles, towers,
components and installation services as well as a shift in large capacity
to support a growing utility business in North America combined to provide
the primary reasons for the sales growth. In Europe, sales were up due
to improving market conditions. Wireless communication pole and tower
sales in Europe were up significantly. Also, the start-up operation in China
has continued to increase its sales levels and has added to the overall
increase in sales both for the quarter and year-to-date.
Gross profit as a percent of sales was 27.7% and 26.3% for the second
quarter of 1997 and 1996, respectively. Year-to-date gross profit was
27.4% compared to 26.6% for 1997 and 1996, respectively. These increases
result from the sale of the ballast business in January of 1997 which had
lower gross profit margins than that of the Company as a whole.
Selling, general and administrative (SG&A) expenses were reduced to $27.6
million for second quarter of 1997 and $29.7 million for the same
period of 1996 reflecting the sale of Valmont Electric in early 1997; and,
as a percent of sales, SG&A expenses for the respective quarters were 17.4%
and 17.8%. SG&A expenses for the first two quarters of 1997 and 1996 were
$57.7 million and $58.0 million, respectively. Year-to-date SG&A expenses,
as a percent of sales, were 17.8% for 1997 and 18.4% for 1996. The changes
reflect the Company's ability to leverage SG&A expenses.
Page 7
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
For the second quarter of 1997 interest expense increased to $1.1 million
compared from $1.0 million in the same period of 1996. Year-to-date,
interest expense was unchanged at $2.0 million in 1997 and 1996.
The effective income tax rates for the first two quarters of 1997 and 1996
were 36.1% and 35.8%, respectively, which do not vary significantly from
the expected statutory rate for the periods.
As a result of the aforementioned operating factors and general business
conditions, net earnings increased to $18.8 million in the first twenty-six
weeks of 1997 from $15.4 million in the same period in 1996. For the
second quarter, net earnings were $9.9 million in 1997 versus $8.5 million
in 1996. Earnings per share were $0.67 and $0.56 for the first twenty-six
weeks of 1997 and 1996, respectively and $0.35 and $0.30 for the second
quarter of 1997 and 1996, respectively.
Liquidity and Capital Resources
- -------------------------------
Net working capital at June 28, 1997 amounted to $78.6 million compared to
$81.4 million at December 28, 1996. The ratio of current assets to current
liabilities was 1.7:1 at June 28, 1997 versus 1.6:1 at December 28, 1996.
Expenditures for property, plant and equipment for the twenty-six week
period ended June 28, 1997 were approximately $26.9 million, while
depreciation of property, plant & equipment was $7.5 million.
Available lines of credit total $55.0 million of which approximately $51.4
million was unused at June 28, 1997. Long-term debt was 11.3% of total
capitalization at June 28, 1997 versus 12.3% at December 28, 1996.
The Company believes that cash flow from operations, the credit facilities
and capital structure now in place will be adequate to satisfy
planned capital expenditures, dividends and other financial commitments.
Page 8
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -------------------------------------------------------------
Valmont's annual shareholders' meeting was held on April 28, 1997.
The shareholders voted to elect four directors and to ratify
the appointment of Deloitte & Touche LLP as independent accountants for
fiscal 1997. For the annual meeting there were 13,697,814 shares
outstanding and eligible to vote of which 12,400,213 were present at
the meeting in person or by proxy. The tabulation for each matter
voted upon at the meeting was as follows:
Election of Directors:
(all shares shown pre-split)
For Withheld Abstain
--- -------- --------
Robert B. Daugherty 12,393,237 6,976 -0-
Allen F. Jacobson 12,391,938 8,275 -0-
Kenneth E. Stinson 12,392,838 7,375 -0-
Robert G. Wallace 12,392,738 7,475 -0-
Proposal to ratify the appointment Deloitte & Touche LLP as
independent accountants for fiscal 1997:
For 12,114,234
Against 173,052
Abstain 112,927
Broker Non-vote -0-
Item 5. OTHER INFORMATION
- ----------------------------
On April 28, 1997, the Board of Directors of the Company declared a
two-for-one split in the form of a dividend of the Company's common stock
and a 12.5% increase in the cash dividend. The additional shares from the
stock split were paid on May 30, 1997 to holders of record on May 9, 1997.
The second quarter cash dividend payable in July 1997, was 5.625 cents per
share on a post-splitbasis (11.5 cents pre-split) up from a previous 5 cent
post split quarterly rate (10 cents pre-split).
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
- -------------------------------------------
(a) Exhibits
--------
27 Financial Data Schedule
(b) Reports on Form 8-K:
--------------------
The Company filed no reports on Form 8-K during the past fiscal quarter.
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf and by
the undersigned hereunto duly authorized.
VALMONT INDUSTRIES, INC.
(Registrant)
/s/ Terry J. McClain
_______________________
Terry J. McClain
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated this 29th day of July, 1997.
Page 9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
SEC Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> JUN-28-1997
<CASH> 10,638
<SECURITIES> 0
<RECEIVABLES> 97,323
<ALLOWANCES> 0
<INVENTORY> 74,108
<CURRENT-ASSETS> 191,631
<PP&E> 138,244
<DEPRECIATION> 0
<TOTAL-ASSETS> 338,992
<CURRENT-LIABILITIES> 113,022
<BONDS> 0
0
0
<COMMON> 27,900
<OTHER-SE> 163,747
<TOTAL-LIABILITY-AND-EQUITY> 338,992
<SALES> 324,518
<TOTAL-REVENUES> 324,518
<CGS> 235,758
<TOTAL-COSTS> 235,758
<OTHER-EXPENSES> 57,680
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,963
<INCOME-PRETAX> 29,447
<INCOME-TAX> 10,600
<INCOME-CONTINUING> 18,847
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,847
<EPS-PRIMARY> 0.67
<EPS-DILUTED> 0.67
</TABLE>
