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 First Quarter Ended Commission File Number
March 29, 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 April 21, 1997 there were outstanding 13,727,601 common shares of the
registrant.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
------------------
PART I. FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements:
Condensed Consolidated Statements of Operations for
the thirteen weeks ended March 29, 1997 and March 30,
1996. 2
Condensed Consolidated Balance Sheets as of March 29,
1997 and December 28, 1996. 3
Condensed Consolidated Statements of Cash Flows for
the thirteen weeks ended March 29, 1997 and March 30,
1996. 4
Notes to Condensed 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 2. Changes in Securities 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)
Thirteen Weeks Ended
--------------------
March 29, March 30,
1997 1996
------- -------
Net sales $165,418 148,914
Cost of sales 120,802 108,915
------- -------
Gross profit 44,616 39,999
Selling, general and administrative
expenses 30,039 28,274
------- -------
Operating income 14,577 11,725
------- -------
Other income (deductions):
Interest expense (898) (999)
Interest income 25 89
Miscellaneous 250 (69)
------- -------
(623) (979)
------- -------
Earnings before income taxes 13,954 10,746
------- -------
Income tax expense:
Current 700 3,600
Deferred 4,300 200
------- -------
5,000 3,800
------- -------
Net earnings $ 8,954 6,946
======= =======
Net earnings per share $ 0.63 0.50
======= =======
Cash dividends per share $ 0.100 0.075
======= =======
Weighted average number of shares of
common and common equivalent shares
outstanding (000 omitted) 14,108 13,873
======= =======
See accompanying notes to condensed consolidated financial statements.
Page 2
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
March 29, December 28,
ASSETS 1997 1996
- ----------------------------------------- ------- -------
Current assets:
Cash and cash equivalents $ 9,296 9,483
Receivables 97,044 82,224
Deferred income taxes 12,050 16,521
Inventories 71,789 73,359
Assets held for sale -- 26,903
Prepaid expenses 1,954 2,356
------- -------
Total current assets 192,133 210,846
------- -------
Other assets:
Investments in nonconsolidated affiliates 4,353 4,307
Other 6,214 5,916
------- -------
Total other assets 10,567 10,223
------- -------
Net property, plant and equipment 127,348 120,579
------- -------
Total assets $ 330,048 341,648
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------
Current liabilities:
Current installments of long-term debt $ 7,431 7,693
Notes payable to banks 14,492 24,007
Accounts payable 47,811 43,699
Accrued expenses 43,445 52,678
Dividends payable 1,372 1,366
------- -------
Total current liabilities 114,551 129,443
------- -------
Deferred income taxes 8,099 9,531
Long-term debt, excl. current installments 19,621 21,880
Minority interest in consolidated
subsidiaries 1,420 2,250
Other noncurrent liabilities 3,333 3,313
Shareholders' equity:
Preferred stock -- --
Common stock of $1 par value 13,950 13,950
Additional paid-in capital 8,126 6,458
Retained earnings 160,728 153,146
Currency translation adjustment 271 1,737
Treasury stock (14) (18)
Unearned restricted stock (37) (42)
------- -------
Total shareholders' equity 183,024 175,231
------- -------
Total liabilities and shareholders'
equity $ 330,048 341,648
======= =======
See accompanying notes to condensed consolidated financial statements.
Page 3
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Thirteen Weeks Ended
--------------------
March 29, March 30,
1997 1996
------- -------
Net cash provided by operations $ 609 1,337
------- -------
Cash flows from investment activities:
Purchase of property, plant & equipment (11,829) (11,670)
Change in other assets (578) (1,804)
Acquisitions (627) (871)
Proceeds from sale, net of gain,
of property and equipment 84 1,137
Proceeds from sale of assets held for sale 25,000 --
Other, net (149) (94)
------- -------
Net cash used by investment activities 11,901 (13,302)
------- -------
Cash flows from financing activities:
Net borrowings under short-term
agreements (9,449) 8,588
Proceeds from long-term borrowings -- 1,751
Principal payments and on long-term
obligations (1,979) (2,000)
Dividends paid (1,367) (1,017)
Proceeds from exercise of employee
stock plans 838 157
Purchase of common treasury shares (740) (81)
------- -------
Net cash provided (used) by
financing activities (12,697) 7,398
------- -------
Net decrease in cash and
cash equivalents (187) (4,567)
Cash and cash equivalents--beginning of
period 9,483 16,996
------- -------
Cash and cash equivalents--end of period $ 9,296 12,429
======= =======
See accompanying notes to condensed consolidated financial statements.
Page 4
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
1. Condensed Consolidated Financial Statements
-------------------------------------------
The Condensed Consolidated Balance Sheet as of March 29, 1997 and the
Condensed Consolidated Statements of Operations for the thirteen week
periods ended March 29, 1997 and March 30, 1996 and the Condensed
Consolidated Statements of Cash Flows for the thirteen week periods then
ended have been prepared by the Company, without audit. In the opinion
of management, all necessary adjustments (which include normal recurring
adjustments) have been made to present fairly the financial position as of
March 29, 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 March 29, 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 68% 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 $633 and $770 for the thirteen week periods ended March 29, 1997 and
March 30, 1996, respectively. Income taxes paid, net of refunds, were
$490 for the thirteen week period ended March 29, 1997 whereas income tax
refunds exceeded payments by $27 for the thirteen week period ended March
30, 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.
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 condendsed 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 considered
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 first quarter of 1997 net sales were $165.4 million, an increase of
11.0% over the $148.9 million for the same period last year. Excluding sales
from Valmont Electric which the Company sold earlier this year, the sales
increase for the quarter was 28%. Sales in the Irrigation Products Segment for
the first quarter of 1997 were at record high levels. North America
irrigation sales increased from the volume reported in 1996 because of
continued strong commodity prices and expectations of increased farm income
prompting U.S. farmers to purchase irrigation equipment. Sales of irrigation
products to international markets for the first quarter of 1997 also increased
compared to sales for the same period a year ago, as a result of continuing
growth in the demand for grain products and strong commodity prices.
Sales in the Industrial Products segment also reached record sales levels in
the first quarter of 1997. Strong demand for area lighting and traffic
signal poles and continued demand for communication poles,towers, components
and installation services in North America were the primary reasons for the
sales growth. In Europe, sales were up due to acquisitions made in the second
quarter of last year and marketing emphasis on wireless communication poles
and towers. In Asia, the operation at the Shanghai, China, plant continued to
increase production levels while building a broad distribution base for its
lighting and communication pole products. The ballast business sales were
down $18.4 in the first quarter of 1997 compared to the first quarter 1996,
as the ballast business was sold during the first quarter of 1997.
Gross profit was up 11.5%, or $4.6 million, in the first quarter of 1997
compared to first quarter 1996. As a percent of sales, gross profit was
27.0% and 26.9% for the first quarters of 1997 and 1996, respectively.
The first quarter 1997 gross profit increased in both the Irrigation Products
Segment and the Industrial Products Segment compared to the same period in
1996 reflecting the increased sales levels in 1997.
Selling, general and administrative (SG&A) expenses were $30.0 million for
first quarter of 1997 and $28.3 million for the same period of 1996; and, as
a percent of sales, SG&A expenses for the respective quarters were 18.2% and
19.0%. The dollar amount of SG&A expenses increased in 1997 to support the
higher sales volume and business development in the domestic and international
markets.
For the first quarter of 1997 interest expense was $0.9 million compared to
$1.0 million in the same period of 1996. The decrease in 1997 results
primarily from average debt levels being lower.
The effective income tax rates for the first quarter of 1997 and 1996 were
35.8% and 35.4%, respectively, which do not vary significantly from the
expected statutory rate for the periods. Favorable settlement in 1996 of
previously accrued audit liabilities caused the reduced rate in 1996.
Page 7
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
As a result of the aforementioned operating factors and general business
conditions, net earnings increased to $9.0 million in the first thirteen
weeks of 1997 from $6.9 million in the same period in 1996. Earnings per
share were $0.63 and $0.50 for the first thirteen weeks of 1997 and 1996,
respectively.
Liquidity and Capital Resources
- -------------------------------
Net working capital at March 29, 1997 amounted to $77.6 million compared to
$81.4 million at December 28, 1996. The ratio of current assets to current
liabilities was 1.7:1 at March 29, 1997 and 1.6:1 at December 28, 1996.
Expenditures for property, plant and equipment for the thirteen week period
ended March 29, 1997 were approximately $11.8 million, while depreciation of
property, plant & equipment was $3.7 million.
Available lines of credit totalled $40.1 million of which approximately $27.6
million was unused at March 29, 1997. Long-term debt was 11.6% of total
capitalization at March 29, 1997 versus 12.3% at December 28, 1996.
The Company believes cash flows from operations, short-term credit facilities,
long-term debt capacity and its current equity capital structure will be
adequate for 1997 planned capital expenditures, dividends and other financial
commitments, and will allow the Company to pursue opportunities to expand its
markets and businesses.
Page 8
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 2(c). CHANGES IN SECURITIES
- --------------------------------
On February 27, 1997, the Company sold 21,957 shares of common stock to
two accredited investors for $905,728 in a transaction exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933 and
Regulation D thereunder.
Item 5. OTHER INFORMATION
- ----------------------------
On March 3, 1997, the Company announced the formation of a new Brazilian
company, Valmont Industria E Comercia Ltda, to manufacture a full line
of mechanized irrigation equipment in Brazil for distribution into Brazil,
Argentina, Paraguay, Uruguay and Chile. The facility consists of a 135,000
square foot metal fabrication and galvanizing facility employing over 100
employees in Uberaba in the Brazilian state of Minas Gerais.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
- -------------------------------------------
(a) Exhibits
--------
27 Financial Data Schedule
(b) Reports on Form 8-K:
--------------------
The Registrant filed a report on Form 8-K dated January 29, 1997 reporting
the sale of the Company's magnetic and electronic ballast businesses
located in El Paso, Texas and Juarez, Mexico and including related pro
forma financial information.
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.
By /s/Terry J. McClain
-----------------
Terry J. McClain
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated this 24th day of April, 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> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> MAR-29-1997
<CASH> 9,296
<SECURITIES> 0
<RECEIVABLES> 97,044
<ALLOWANCES> 0
<INVENTORY> 71,789
<CURRENT-ASSETS> 192,133
<PP&E> 127,348
<DEPRECIATION> 0
<TOTAL-ASSETS> 330,048
<CURRENT-LIABILITIES> 114,551
<BONDS> 0
0
0
<COMMON> 13,950
<OTHER-SE> 169,074
<TOTAL-LIABILITY-AND-EQUITY> 330,048
<SALES> 165,418
<TOTAL-REVENUES> 165,418
<CGS> 120,802
<TOTAL-COSTS> 120,802
<OTHER-EXPENSES> 30,039
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 898
<INCOME-PRETAX> 13,954
<INCOME-TAX> 5,000
<INCOME-CONTINUING> 8,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,954
<EPS-PRIMARY> 0.63
<EPS-DILUTED> 0.63
</TABLE>
