SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the Fiscal Year Ended December 28, 1996
Commission File No. 0-3701
Valmont Industries, Inc.
------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 47-0351813
-------- ----------
(State or Other Jurisdiction (I.R.S. Employer Identification
of Incorporation or Organization) Number)
Valley, Nebraska 68064
---------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's Phone Number, Including Area Code: (402) 359-2201
Securities Registered Pursuant to Section 12(g) of the Act:
Valmont Industries, Inc. Common Stock
-------------------------------------
$1.00 Par Value - Traded NASDAQ Stock Market (Symbol VALM)
----------------------------------------------------------
(Title of Class)
----------------
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 twelve 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 ninety days. Yes X No
--- ---
At March 7, 1997 there were outstanding 13,697,814 common shares of the
Company. The aggregate market value of the voting stock held by non-
affiliates of the Company on March 7, 1997 was $401,879,000.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [ X ]
Documents Incorporated by Reference
-----------------------------------
Portions of the Company's annual report to shareholders for the fiscal year
ended December 28, 1996 (the "Annual Report") are incorporated by reference
in Parts I and II, and portions of the Company's proxy statement for its
annual meeting of shareholders to be held on April 28, 1997 (the "Proxy
Statement") are incorporated by reference in Part III.
Page 1 of 61
-----
Index to Exhibits, Page 15
-----
<PAGE> 1
PART I
Item 1. Business.
(a) General Description of Business
Valmont Industries, Inc., a Delaware Corporation, (together with
its subsidiaries the "Company") is engaged in industrial products and
irrigation products businesses. The Industrial Products segment involves
the manufacture and distribution of engineered metal structures and other
fabricated products for industrial and commercial applications. The
Irrigation Products segment involves the manufacture and distribution of
agricultural irrigation equipment and related products. The description
of Valmont's businesses set forth on pages 4 through 9 of the Company's
Annual Report is incorporated herein by reference.
The Company entered the Irrigation Products market in 1953 from
its manufacturing location in Valley, Nebraska. The Industrial Products
segment began producing and marketing engineered metal structures as a
result of manufacturing support efforts for the irrigation business.
Valmont has grown internally and by acquisition. Valmont has
also divested certain businesses. Valmont's acquisitions include (i) an
expansion into the French steel and aluminum structures market in 1989
with the acquisition of Sermeto, (ii) the acquisition in 1991 of Valmont
Nederland B.V. (formerly Nolte Mastenfabriek B.V.), a Dutch manufacturer
of steel poles structures, (iii) the acquisition in 1991 of an 80% interest
in Lampadaires Feralux, Inc., a Canadian producer of aluminum pole
structures, (iv) the acquisition in 1994 of the assets of Energy Steel
Corporation of Tulsa, Oklahoma, a manufacturer of utility products, (v) the
acquisition of Microflect Company, Inc. in 1995, a manufacturer and installer
of microwave communication structures, and (vi) the 1996 acquisitions of
TelecCentre, S.A., a French manufacturer of communication towers, and of
Gibo-Conimast & Co. KG, a German manufacturer and distributor of pole
structures for the lighting market. Divestitures include (i) the 1989
divestiture of the Gate City Steel service center business, (ii) the 1993
exit of the Gate City Steel steel reinforcing bar business,(iii) the 1993
sale of its investment in Inacom Corp., a national microcomputer reseller
business initially established as a division of the Company, (iv) the sale
in 1994 of the assets of Good-All Electric, Inc., a Colorado producer of
cathodic protection rectifiers, and (v) the January 1997 cash sale of the
stock of Valmont Electric, Inc., a lighting ballast manufacturing business.
<PAGE> 2
(b) Industry Segments
The Company classifies its operations into two business segments:
Industrial Products - The manufacture and distribution of engineered
metal structures and other fabricated products.
Irrigation Products - The manufacture and distribution of agricultural
irrigation equipment and related products.
The amounts of revenues, operating income and identifiable assets
attributable to each segment for each of the last three years are set forth
on page 29 of the Annual Report and incorporated herein by reference.
(c) Narrative Description of Business
Principal Products Produced and Services Rendered.
--------------------------------------------------
The information called for by this item is hereby incorporated by
reference to pages 4 through 9 in the Company's Annual Report.
Suppliers and Availability of Raw Materials.
--------------------------------------------
Hot rolled steel coil and other carbon steel products are the
primary raw materials utilized in the manufacture of finished products for
the Industrial Products and Irrigation Products segments. These essential
items are purchased from steel mills and steel service centers and are
readily available. It is not likely that key raw materials would be
unavailable for extended periods.
Patents, Licenses, Franchises and Concessions.
----------------------------------------------
Valmont has a number of patents for its irrigation and ballast
designs. The Company also has a number of registered trademarks. Management
believes the loss of any individual patent would not have a material adverse
effect on the financial condition of the Company.
Seasonal Factors in Business.
-----------------------------
Sales in the Company's irrigation segment can be somewhat seasonal
based upon the agricultural growing season.
<PAGE> 3
Customers.
----------
The Company is not dependent for a material part of its business
upon a single customer, or upon very few customers, the loss of any one of
which would have a material adverse effect on the financial condition of
the Company.
Backlog.
--------
The backlog of orders for the principal products manufactured and
marketed was approximately $133.6 million at the end of the 1996 fiscal
year and $109.6 million at the close of 1995. It is anticipated that most of
the backlog of orders will be filled during fiscal year 1997. At year end,
the backlog by segment was as follows (dollar amounts in millions):
Dec. 28, Dec. 30,
1996 1995
--------- ---------
Industrial Products $98.7 84.3
Irrigation Products 34.9 25.3
--------- ---------
$133.6 109.6
====== ======
Competitive Conditions.
-----------------------
In the Industrial Products segment, Valmont is a major manufacturer
and supplier of engineered metal structures to the lighting and traffic,
utility and wireless communication industries; the Company delivers
a broad line of custom engineered tubular steel products and manufactures and
distributes lighting ballasts, fasteners and grating. The Irrigation
Products segment involves the development, manufacture and distribution of
mechanized irrigation equipment for both the U.S. and international markets.
The Company believes it is the world's leading manufacturer of mechanized
irrigation systems. The key competitive strategy used by the Company in each
segment is one of high quality and service.
Research Activities.
--------------------
The information called for by this item is hereby incorporated by reference
to the "Research and Development" on page 27 in the Company's Annual Report.
<PAGE> 4
Environmental Disclosure.
-------------------------
The Company is subject to various federal, state and local laws and
regulations pertaining to environmental protection and the discharge of
materials into the environment. Although the Company continues to incur
expenses and to make capital expenditures related to environmental protection,
it does not anticipate that future expenditures will materially impact the
financial condition of the Company.
Number of Employees.
--------------------
At December 28, 1996, the number of employees was 4,868.
Financial Information about Foreign Operations and Export Sales.
----------------------------------------------------------------
Valmont's international sales activity encompasses approximately ninety
foreign countries. The information called for by this item is hereby
incorporated by reference to "Summary by Geographical Area" on page 29 in the
Annual Report.
Item 2. Properties.
-----------
The Company's primary plant and offices are located on a 352 acre site
near Valley, Nebraska, which is approximately twenty miles west of Omaha,
Nebraska. 336 of the acres are owned in fee. The other 16 acres are leased
on a yearly basis from the Union Pacific Railroad Company, which serves the
Company's primary plant, and which is entitled to terminate the lease on a
one-year notice in the event that the land is required for railroad operations.
The Valley, Nebraska location is used in common as the primary facilities by
Irrigation Products and certain Industrial Products administrative and
operating personnel. The Industrial Products segment's other significant
properties are administrative, manufacturing and distribution facilities at
Tulsa, Oklahoma and Brehnam, Texas. The Oklahoma facility has 350,000 square
feet under roof on 24 acres of land whereas the Texas facility is located on
109 acres and has 190,000 square feet under roof with another 122,000 square
feet under construction. The Company's Microflect subsidiary leases office
and plant facilities in Salem, Oregon under long-term leases.. Overseas the
Industrial Products division has four locations in France and a newly
constructed plant in Shanghai, China. The Company operates other facilities
as set forth on the inside of the back cover of the Company's Annual Report,
which information is incorporated herein by reference.
<PAGE> 5
Item 3. Pending Legal Proceedings.
--------------------------
The Company is involved in a limited number of legal actions.
Management believes that the ultimate resolution of all pending litigation
will not have a material adverse effect on the Company's financial
condition.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
Not applicable.
Executive Officers of the Company
- ---------------------------------
The executive officers of the Company at December 28, 1996, their ages,
positions held, and the business experience of each during the past five years
are, as follows:
Robert B. Daugherty, Age 75, Chairman of the Board and
Director of the Company continuously since March 1947.
Mogens C. Bay, Age 48, President and Chief Executive Officer
of the Company since August 1993 and Director of the Company
since October 1993. From 1991 to August 1993 served as
President and Chief Operating Officer of the Irrigation
Division of the Company.
Gary L. Cavey, Age 48, President and Chief Operating Officer,
Industrial Products Group since June 1995. President, North
American Operations - Industrial and Construction Products of
the Company from July 1994 to June 1995. From 1985 to July
1994 served as Vice President Marketing of Industrial and
Construction Products of the Company.
Phillip C. Cooke, Age 49, became an executive officer as Senior Vice
President - Human Resources as of January 17, 1997. Previously
Consolidated Communications Systems and Services, Inc. President
from 1992 until November 1996.
Vincent T. Corso, Age 49, Group President and Chief Operating Officer-
Irrigation & Coatings Group. Previously Vice President -Operations
from June 1994 until December 1996. Previously served as Vice
President - Corporate Manufacturing, Emerson Electric from 1992
to June 1994 and Vice President of Operations for Appleton Electric
(a wholly owned subsidiary of Emerson Electric) from 1987 to 1992.
Thomas P. Egan, Jr., Age 48, Vice President, Corporate Counsel and
Secretary of the Company since 1984.
Joseph M. Goecke, Age 59, President and Chief Operating Officer -
Valmont Irrigation since August 1993. Vice President -Operations
of the Company's Irrigation Division from 1991 to August 1993.
<PAGE> 6
Lewis P. Hays, Age 55, President, Valmont Europe since January
1996. Corporate Vice President from June 1995 until January 1996.
President and Chief Operating Officer, Industrial and Construction
Products of the Company from 1985 to June 1995.
Terry J. McClain, Age 49, Senior Vice President and Chief Financial
Officer. Previously Vice President and Chief Financial Officer of
the Company from January 1994 until December 1996. Vice President
-Finance and Accounting of the Irrigation Division of the Company
from 1990 to January 1994.
E. Robert Meaney, Age 49, President and Chief Operating Officer
- Valmont International since February 1994. Previously served as
President Directeur General, Continental Can France, S.A. from
1989 to February 1994.
Howard G. Sachs, Age 54, President and Chief Operating Officer
- Valmont Electric, Inc. since October 1993. Previously Honeywell
Keyboard Division Vice President and General Manager from 1991 to
October 1993.
Brian C. Stanley, Age 54, Vice President - Investor Relations and
Controller of the Company since January 1994. Vice President and
Treasurer of the Company since 1990.
Mark E. Treinen Age 41, Vice President - Business Development since
January 1994. Director of Business Development of the Company from
1991 until January 1994.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
----------------------------------------------------------------
Matters.
--------
Item 6. Selected Financial Data.
------------------------
<PAGE> 7
Item 7. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations.
----------------------
The information called for by items 5, 6 and 7 is hereby incorporated
by reference to the following captioned paragraphs (at the pages indicated)
in the Company's Annual Report:
Page(s) In
Annual
Item Caption in Annual Report Report
---- ------------------------ ------
5 Stock Trading 34
5 Stock Market Price and Dividends Declared 30
5 Approximate Number of Shareholders 16 - 17
5&6 Selected Eleven Year Financial Data 16 - 17
7 Management's Discussion and Analysis 10 - 15
Item 8. Financial Statements and Supplementary Data.
--------------------------------------------
The financial statements called for by this item are hereby
incorporated by reference to the Company's Annual Report as set forth on pages
18 through 29, together with the independent auditors' report on page 31. The
supplemental quarterly financial information is incorporated herein by
reference to page 30 of the Company's Annual Report. The independent
auditors' report for the years ended December 30, 1995 and December 31, 1994
are incorporated herein by reference to exhibit 99 of this Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure.
---------------------
None.
PART III
--------
Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
<PAGE> 8
Item 11. Executive Compensation.
-----------------------
Item 12. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
Item 13. Certain Relationships and Related Transactions.
-----------------------------------------------
Except for the information relating to the executive officers of the
Company set forth in Part I of this 10-K Report, the information called for
by items 10, 11, 12 and 13 is hereby incorporated by reference to pages 4
through 15 of the Company's Proxy Statement.
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
----------------------------------------------------------------
(a)(1)(2) Financial Statements. See index to financial statement schedules
---------------------
on page F-1.
(a)(3) Exhibits. See exhibit index, incorporated herein by reference.
---------
(b) Reports on Form 8-K. The Company filed no reports on Form 8-K
--------------------
during the past fiscal quarter.
<PAGE> 9
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements and Consolidated Financial
Statement Schedules
Consolidated Financial Statements
The following consolidated financial statements of Valmont
Industries, Inc. and subsidiaries have been incorporated by reference
to pages 18 to 31 of the Company's Annual Report to Shareholders for
the year ended December 28, 1996:
Independent Auditors' Reports - 1996 is on page 31
of the annual report. See Exhibit 99 for the
Independent Auditors' Report for 1995 and 1994.
Consolidated Balance Sheets - December 28, 1996 and
December 30, 1995
Consolidated Statements of Operations - Three-Year
Period Ended December 28, 1996
Consolidated Statements of Shareholders' Equity -
Three-Year Period Ended December 28, 1996
Consolidated Statements of Cash Flows - Three-Year
Period Ended December 28, 1996
Notes to Consolidated Financial Statements - Three-
Year Period Ended December 28, 1996
Page
----
Consolidated Financial Statement Schedule
Supporting Consolidated Financial Statement
SCHEDULE II - Valuation and Qualifying Accounts F-4
All other schedules have been omitted as the required information is
inapplicable or the information is included in the consolidated financial
statements or related notes.
Separate financial statements of the Registrant have been omitted because
the Registrant meets the requirements which permit omission.
F-1
<PAGE> 10
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
------------------------------------------------------------
To the Board of Directors and Shareholders of
Valmont Industries, Inc.
Valley, Nebraska
We have audited the consolidated financial statements of Valmont Industries,
Inc. and Subsidiaries (the Company) as of December 28, 1996, and for the
year then ended, and have issued our report thereon dated February 7; such
financial statements and report are included in the 1996 Annual Report to
Shareholders of the Company and are incorporated herein by reference. Our
audit also included the 1996 financial statement schedule of the Company
listed in Item 14 of the Form 10-K. This financial statement schedule is
the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audit. In our opinion, such 1996 financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
February 7, 1997
F-2
<PAGE> 11
INDEPENDENT AUDITORS' REPORT
-----------------------------
The Board of Directors and Shareholders
Valmont Industries, Inc.:
Under date of February 16, 1996, we reported on the consolidated balance
sheets of Valmont Industries, Inc. and subsidiaries as of December 30, 1995,
and the related consolidated statements of operations, shareholders' equity
and cash flows for each of the two-year period ended December 30, 1995, as
contained in the 1996 Annual Report to Shareholders. These consolidated
financial statements and our report thereon are incorporated by reference
in the Annual Report on Form 10-K for the year 1996. In connection with our
audits of the aforementioned consolidated financial statements, we also have
audited the consolidated financial statement schedule for the two-year period
ended December 30, 1995, as listed in the accompanying index. This
consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
consolidated financial statement schedule based on our audits.
In our opinion, such consolidated financial statement schedule, when considered
in relation to the consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Omaha, Nebraska
February 16, 1996
F-3
<PAGE> 12
Schedule II
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
(Dollars in thousands)
<TABLE>
<CAPTION>
Balance at Charged to Deductions Balance at
beginning profit and from close
of period loss reserves* of period
--------- ---- --------- ---------
<S> <C> <C> <C> <C>
Fifty-two weeks ended December 28, 1996 -
Reserve deducted in balance sheet from
the asset to which it applies -
Allowance for doubtful receivables $ 2,941 796 1,438 2,299
======= ===== ===== =====
Fifty-three weeks ended December 30, 1995 -
Reserve deducted in balance sheet from
the asset to which it applies -
Allowance for doubtful receivables $ 2,798 684 541 2,941
======= ===== ===== =====
Fifty-two weeks ended December 31, 1994 -
Reserve deducted in balance sheet from
the asset to which it applies -
Allowance for doubtful receivables $ 2,605 908 715 2,798
======= ===== ===== =====
*The deductions from reserves are net of recoveries.
</TABLE>
F-4
<PAGE> 13
SIGNATURES
The Registrant. Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Omaha, State of Nebraska, on the 24th day of March,
1997.
Valmont Industries, Inc.
/S/Mogens C. Bay
By ___________________________
Mogens C. Bay
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of Valmont
Industries, Inc. and in the capacities indicated on the dates indicated.
/S/ Mogens C. Bay 3/24/97
- -------------------------- Director, President and -----------
Mogens C. Bay Chief Executive Officer Date
(Principal Executive
Officer)
/S/ Terry J. McClain 3/24/97
- -------------------------- Vice President and -----------
Terry J. McClain Chief Financial Officer Date
(Principal Financial
Officer)
/S/ Brian C. Stanley 3/24/97
- -------------------------- Vice President - Investor ----------
Brian C. Stanley Relations & Controller Date
(Principal Accounting
Officer)
Robert B. Daugherty* John E. Jones *
Charles M. Harper* Thomas F. Madison*
Allen F. Jacobson* Walter Scott, Jr.*
Lloyd P. Johnson * Kenneth E. Stinson*
Robert G. Wallace *
*Mogens C. Bay, by signing his name hereto, signs the Annual Report on behalf
of each of the directors indicated on this 24th day of March, 1997. A Power
of Attorney authorizing Mogens C. Bay to sign the Annual Report of Form 10-K
on behalf of each of the indicated directors of Valmont Industries, Inc. has
been filed herein as Exhibit 24.
/S/ Mogens C. Bay
By -------------------------
Mogens C. Bay
Attorney-in-Fact
<PAGE> 14
INDEX TO EXHIBITS
This Exhibit Index relates to exhibits filed as a part of this Report.
Numbers are assigned to exhibits in accordance with Item 601 of Regulation S-K.
Page numbers relate to the pages in the sequential numbering system where the
exhibits can be found (for those exhibits which are not incorporated by
reference).
Exhibit 2(a) Agreement and Plan of Merger dated July 9, 1995 among the
Company and Microflect Company, Inc. This document was filed
with the Company's Current Report on Form 8-K dated July 31,
1995 and is incorporated herein by reference.
Exhibit 2(b) Stock Purchase Agreement dated January 3, 1997 between Valmont
Industries, Inc. and Chicago Miniature Lamp, Inc. This document
was filed with the Company's Current Report on Form 8-K dated
January 29, 1997 and is incorporated herein by reference.
Exhibit 3(a) - The Company's Certificate of Incorporation, as amended. This
document was filed with the Company's Quarterly Report on Form
10-Q for the quarter ended March 30, 1996 and is incorporated
herein by reference.
Exhibit 3(b) - The Company's By-Laws, as amended. This document was filed with
the Company's Quarterly Report on Form 10-Q for the quarter
ended September 28, 1996 and is incorporated herein by
reference.
Exhibit 4 - Rights Agreement dated as of December 19, 1995 between the
Company and First National Bank of Omaha as Rights Agent. This
document was filed with the Company's Current Report on Form
8-K dated December 19, 1995 and is incorporated herein by
reference.
Exhibit 10(a) - The Company's 1983 Stock Option Plan. This document was filed
as Exhibit 10(a) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 26, 1992 and is incorporated
herein by reference.
Exhibit 10(b) - The Company's 1988 Stock Plan and certain amendments. This
document was filed as Exhibit 10(b) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 26, 1992
and is incorporated herein by reference.
Exhibit 10(c) - Fourth Amendment to the Company's 1988 Stock Plan. This
document was filed as Exhibit 10(c) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 30,
1995 and is incorporated herein by reference.
Exhibit 10(d) - Valmont Industries, Inc. 1994 Incentive Bonus Plan. This
document was filed as Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 24, 1994
and is incorporated herein by reference.
Exhibit 10(e) - The Company's 1996 Stock Plan. This document was filed as
Exhibit 10(e) to the Company's Annual Report on Form 10-K for
the fiscal year ended December 30, 1995 and is incorporated
herein by reference.
<PAGE> 15
Exhibit 10(f) - The Valmont Executive Incentive Plan. This document was filed
as Exhibit 10(c) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 30, 1995 and is incorporated
herein by reference.
Exhibit 11 - Statement Regarding Computation of Per Share Earnings...Page 17
Exhibit 13 - The Company's Annual Report to Shareholders
for its fiscal year ended December 28, 1996.............Page 18
Exhibit 21 - Subsidiaries of the Company.............................Page 56
Exhibit 23(a) - Consent of Deloitte and Touche LLP......................Page 57
Exhibit 23(b) - Consent of KPMG Peat Marwick LLP........................Page 58
Exhibit 24 - Power of Attorney.......................................Page 59
Exhibit 27 - Financial Data Schedule.................................Page 60
Exhibit 99 - Independent Auditors' Report of KPMG Peat Marwick LLP...Page 61
Pursuant to Item 601(b)(4) of Regulation S-K, certain instruments with respect
to Valmont Industries' long-term debt are not filed with this Form 10-K.
Valmont will furnish a copy of such long-term debt agreements to the Securities
and Exchange Commission upon request.
Management contracts and compensatory plans are set forth as exhibits 10(a)
through 10(f).
<PAGE> 16
Exhibit 11
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Statement Re: Computation of Per Share Earnings
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net earnings $ 21,248 24,759 18,887
======== ====== ======
Average number of shares outstanding:
Primary 14,016,766 13,733,286 13,615,004
Fully diluted 14,105,085 13,815,191 13,628,950
========== ========== ==========
Earnings per share:
Primary $ 1.52 1.80 1.39
Fully diluted 1.51 1.79 1.39
====== ==== ====
</TABLE>
Earnings per share are determined by dividing net earnings by the weighted
number of shares outstanding and equivalent common shares from dilutive
stock options.
<PAGE> 17
Exhibit 13
Outside front cover:
VALMONT LOGO:
1996 Annual Report
Serving Infrastructure Development And Irrigated Agriculture Worldwide
<PAGE> 18
INSIDE FRONT COVER:
Contents
Valmont Industries, Inc. and Subsidiaries
www.valmont.com
Letter to Shareholders
2 From the Chairman
About Valmont
4 Industrial Products
6 Irrigation Products
8 International
Financial Review
10 Management's Discussion and Analysis
16 Selected Eleven-Year Financial Data
18 Consolidated Statements of Operations
19 Consolidated Balance Sheets
20 Consolidated Statements of Cash Flows
21 Consolidated Statements of Shareholders' Equity
22 Notes to Consolidated Financial Statements
29 Business Segment Information
30 Quarterly Financial Data
31 Report of Independent Accountants
31 Report of Management
32 Board of Directors and Officers
34 Shareholder Information
Valmont participates in two global economies...infrastructure development and
food production. We design and manufacture poles, towers and structures for
lighting, communication and utility applications, mechanized irrigation
equipment to enhance food production and fabricated products for various
industrial uses. Valmont operates 18 plants located in eight countries in
North and South America, Europe and Asia and markets its products in more
than 90 countries around the world.
This Annual Report contains forward looking statements which reflect
management's current views and estimates of future economic and market
circumstances, industry conditions, company performance and financial results.
The statements are based on many assumptions and factors including operating
efficiencies, availability and price of raw materials, availability and
market acceptance of new products, product pricing, domestic and international
competitive environment, actions and policy changes of domestic and
international governments and other risks described from time to time in
Valmont's reports to the Securities and Exchange Commission. Any changes in
such assumptions or factors could produce significantly different results.
<PAGE> 19
Financial Highlights
Valmont Industries, Inc. and Subsidiaries
GLOBE ILLUSTRATION:
(Dollars in millions, except per share amounts)
1996 operating results and ratios are before a pre-tax
asset valuation charge of $15.8 ($10.1 after-tax or $.72 per share).
<TABLE>
<CAPTION>
1996 1995 1994
Operating Results
<S> <C> <C> <C>
Net sales $ 644.5 544.6 501.7
Net earnings 31.3 24.8 18.9
Earnings per share 2.24 1.80 1.39
Dividends per share .375 .30 .30
Financial Position
Shareholders' equity $ 175.2 159.3 137.6
Shareholders' equity per share 12.82 11.74 10.20
Long-term debt as a % of invested capital 12.3% 17.3% 22.4%
Operating Ratios
Gross profit as a % of net sales 26.7% 26.6% 24.2%
Operating income as a % of net sales 8.1% 7.7% 6.3%
Net earnings as a % of net sales 4.9% 4.5% 3.8%
Return on beginning equity 19.7% 18.0% 15.5%
Return on invested capital 13.0% 11.7% 9.8%
Year-End Data
Shares outstanding (000) 13,665 13,560 13,495
Approximate number of shareholders 4,400 3,900 3,800
Number of employees 4,868 4,166 3,946
</TABLE>
FOUR GRAPHS:
1996 Annual Report
1
<PAGE> 20
Letter to Fellow Shareholders
PHOTO OF MOGENS C. BAY:
Mogens C. Bay
Chairman and Chief Executive Officer
Valmont Industries, Inc.
Financial Objectives 1996 Results
Increase trendline earnings 26.6%
15% per year.
Achieve a minimum 13.0%
10% after-tax return
on invested capital.
Maintain long-term debt as a 12.3%
percent of invested capital
at less than 40%.
GLOBE ILLUSTRATION:
1996 was another very good year at Valmont. We continued to
profitably grow our two core businesses: serving irrigated
agriculture and infrastructure development worldwide.
Shortly after the end of the year, we sold our ballast
business, Valmont Electric, for cash.
Our financial results surpassed our objectives (prior to the
fourth quarter Valmont Electric charge):
After-tax earnings increased more than 26% to $31.3
million from record 1995 earnings of $24.8 million.
Earnings per share grew to $2.24 from $1.80.
Our after-tax return on invested capital rose to 13.0%
from 11.7% the prior year.
We were pleased to have the stock market recognize this
performance and the Company's growth potential. Valmont's
stock price increase together with dividends paid resulted
in a total return to our shareholders of 68.5% during 1996.
All the people at Valmont worldwide can take pride in these
results and I thank them for their significant contributions
to our company. They are creating our future. I also thank
our distribution partners, our dealers and agents. They are
our face in front of our customers...and they are second to
none.
Before I address the record performance of our core
businesses, let me talk about the divestiture of Valmont
Electric. We managed to improve this business from severe
losses to the break-even level and reduced our invested
capital as well, but the sale of Valmont Electric, in my
opinion, was the most desirable action given the business
alternatives. We were not happy taking a fourth quarter
charge to earnings, but we could not see a way to improve
this operation sufficiently to earn the return we expect
from our business units.
Serving Irrigated Agriculture
Our irrigation business had an outstanding year. Sales were
up about 30% and operating income up 60%. What impressed me
the most was the fact that we achieved this with the same
average capital invested as the prior year. The Irrigation
Division's focus over the last few years on productivity
improvements and improved market coverage is paying off.
Our increased sales were not only a result of favorable
market conditions in the U.S., but also strong demand
worldwide. Our International sales grew three times faster
than the U.S. business but from a much smaller base.
We have by far the strongest leadership position in this
market both in the U.S. and overseas. It is important that
we protect our position and strengthen it where possible.
Often industry leaders become complacent over time and take
their leadership position for granted just to see it slip
away. We are determined not to let that happen to Valmont.
What will the future bring for our irrigation
business?...Significant opportunities! The world's demand
for food is expected to double over the next 30 years and
this must be accomplished with no major additional land and
water resources. Our industry must respond with ever more
efficient ways to use water for plant growth and Valmont
will remain on the leading edge to meet this challenge.
Water conservation...which translates into efficient
irrigation, which in turn translates into opportunities for
Valmont...is one of the keys to increased food production.
1996 Annual Report
2
<PAGE> 21
Serving Infrastructure Development
Our Industrial Products Group serves a number of different
markets with poles, towers and a variety of engineered steel
products. These businesses had a good year in 1996, with
sales increasing nicely although operating income grew at a
slower rate. We prefer that operating income grow faster
than revenue and usually we achieve this goal. In 1996, it
did not happen for two reasons. First, we invested heavily
in our sales, marketing and engineering organization in the
U.S. We are seeing rapid growth in these markets and must
ensure our organization is prepared to drive and support
future expansion. Second, we experienced significant
weakness in two major European markets.
During the year we added manufacturing capacity at a number
of facilities worldwide: large pole capacity in France and
Oklahoma and small pole capacity in Texas. We also had a
successful start-up of our plant in China and added two
small acquisitions, one in Germany and one in France.
In North America, even with heavy investments for the
future, we still returned more than twice our cost of
capital. Europe, on the other hand, had a challenging year.
This was partly a result of weak markets in France and
Germany and partly because we have not yet fully succeeded
in integrating and leveraging the strengths of our various
European organizations. These issues are being addressed in
1997 and I am confident that I can report progress to you a
year from now. On the positive side, we expanded our
product offerings in Europe and entered new markets such as
wireless communication, thus minimizing the negative effect
of the weak market conditions in our traditional markets.
The total European market for poles and towers is as large,
if not larger, than the U.S. market. Our challenge is to
improve our return on invested capital.
What will the future bring to our Industrial Products
Group? Significant opportunities! The world's demand for
lighting and traffic structures will continue to grow as
infrastructure is put into place in developing countries and
upgraded in areas such as the United States and Europe.
Efficient use of the world's road systems is important in
responding to increased population and higher standards of
living. This means more lighting and more signage which
translates into business opportunities for Valmont.
We will also benefit from the world's increasing need to
generate and distribute electrical power as we are a major
manufacturer of transmission poles and substation structures
for the utility industry. In addition, in this country we
see the conversion from wood to steel electrical
distribution poles as a significant opportunity in the years
to come.
In the wireless communication industry, which we serve with
poles and towers, components and installation and
maintenance services, the future is rapid global growth.
This is a unique industry where growth is as fast in the
developing world as it is in the industrialized world.
Developing countries are moving from a limited communication
infrastructure directly to wireless. Our challenge is to
leverage the experience we gained in the United States into
international markets.
In 1996 we celebrated our 50th year as a company and Robert
B. Daugherty, our founder, celebrated his 50th anniversary
as Chairman. He announced his retirement as of year's end
but, fortunately, will stay on as a member of our Board of
Directors, so we will continue to benefit from his wisdom.
We owe him immense gratitude for his leadership and
friendship over the years and wish the Daughertys all the
best in their retirement.
The Future
The key to Valmont's continued success as a leader in the
global markets we serve is to execute a strategy that takes
full advantage of our core business competencies: our
knowledge of our markets and their potentials and our
ability to leverage our engineering and manufacturing
capabilities to serve customers across product lines and
across continents.
As we move forward, our greatest asset will remain the
loyalty and dedication of our people. They are our finest
competitive edge.
/s/ MOGENS C. BAY
Mogens C. Bay
Chairman and Chief Executive Officer
1996 Annual Report
3
<PAGE> 22
GLOBE ILLUSTRATION:
TOWER ILLUSTRATION:
Industrial Products
Valmont is a worldwide leader in manufacturing a wide
variety of highly engineered metal products to serve
selected markets for infrastructure development. These
products, consisting principally of steel and aluminum poles
and towers, fall into four basic categories: lighting and
traffic, utility, wireless communication and fabricated
products. Each product is engineered to the customer's
specifications using the latest in advanced, automated
design and manufacturing techniques and equipment. Valmont
also applies protective finishes to its products using hot-
dip galvanizing and powder coating processes.
With demand growing in every product line during 1996, the
Industrial Products Group continued its planned expansion
program to increase manufacturing capacity. A facility now
under modification was added to the Elkhart, Indiana
operation and a second expansion began at the Brenham, Texas
facility to boost lighting and traffic pole production.
Additional capacity was also put in place at the plant in
Tulsa, Oklahoma to manufacture utility and wireless
communication poles. By carefully matching capacity to
demand, Valmont will ensure it remains the industry leader
providing its customers with on-time delivery of quality
products.
Lighting and Traffic Signals
Valmont is the leading manufacturer of lighting and traffic
signal poles for government infrastructure development and
light poles for outdoor commercial and industrial use.
Federal, state and local governments trying to solve traffic
congestion problems have found they can improve traffic flow
by first adding better signals, more signage and upgraded
lighting without starting new road construction. Improved
safety and crime prevention are concerns shared by both the
government and the private sector. The public will not
patronize businesses and public facilities unless they are
well illuminated and provide secure environments. Demand
for lighting and traffic signal poles is expected to remain
strong as cities renovate older areas and move into new
ones, as the nation's roadways are expanded and made more
efficient, and as commercial and industrial businesses
upgrade existing lighting at current facilities and make
improved lighting an integral part of new construction.
Utility
Valmont produces high-voltage steel transmission poles,
structural components for electrical sub-stations and steel
distribution poles for the utility industry. Deregulation
currently underway throughout this industry has created a
number of opportunities. Valmont is building lasting
business relationships with its utility customers as they
work their way through the effects of deregulation by
sharing structural engineering capabilities with them.
Greater energy consumption and an expanding grid system for
sharing electrical power throughout the country is expected
to continue to drive transmission pole demand. The
conversion of wooden distribution poles (often called
"telephone poles") to steel represents a vast market
opportunity for the long-term. As the cost of wood
continues to rise relative to steel, the economics of wood-
to-steel conversion become more attractive to the utility
industry. In addition, there are growing environmental
concerns regarding disposal of old wooden poles because of
the chemicals used to initially treat them. With some 3 to
5 million of these wooden poles being replaced each year,
this market has the potential of $1 billion-plus in annual
revenues.
1996 Annual Report
4
<PAGE> 23
TWO GRAPHS:
STREET LIGHT ILLUSTRATION:
Wireless Communication
The wireless communication industry continues to experience
exponential growth as cellular phone and personal
communication service (or PCS) providers expand their
systems as rapidly as possible. Demand in this market is
expected to continue to increase in North America as the
wireless communication industry builds out existing systems
and moves into new technologies and new markets.
Opportunities in overseas markets are expected to grow well
into the next century.
Valmont has participated in this market for many years and
is a recognized leader in providing tapered steel monopoles,
guyed and self-supporting towers, antenna and wave guide
attachment components, and a full line of related services.
The Company also develops alternative structures (such as
the "tree pole") for its customers to help expedite the
permitting process in difficult zoning locations. As an
added service to its customers, Valmont provides site
installation, an array of system testing services and annual
inspections. In addition, Valmont is also the world's
leading producer of passive repeaters and designs and
manufactures custom towers for microwave, television and UHF-
VHF applications.
Fabricated Products
Valmont produces a wide variety of custom engineered tubular
steel products for industrial and consumer use.
Manufactured to precise specifications and delivered when
promised, these products often become a part of other
companies' just-in-time manufacturing processes. Tubing can
be produced in a wide range of sizes, shapes, thicknesses,
lengths and finishes as the customer desires and is used in
products such as pneumatic conveyor tubes for hospitals and
airports, health fitness exercise equipment, and heat
exchangers for energy generation and textile processing.
Valmont also manufactures large rolled and welded cylinders
for the pressure vessel industry, distributes a full line of
fasteners for segments of the construction and original
equipment manufacturers (OEM) markets and fabricates steel
and fiberglass grating that is used by a number of
industries including high-tech manufacturing companies.
Valmont engineers, manufactures and installs a wide variety
of poles and towers to the exact specifications of its
customers. Shown on page 4 is a self-supporting tower used
by the wireless communication industry. Traffic signal pole
arms like the one shown above can reach as far as 85 feet
into an intersection to help effectively control the flow of
traffic.
1996 Annual Report
5
<PAGE> 24
Irrigation Products
GLOBE ILLUSTRATION:
Valley TM_The Most Trusted Name In Irrigation
PIVOT ILLULSTRATION:
Dean Schielke, from the Western Sprinklers' Valley TM
dealership, makes the final adjustments to a new center
pivot machine. Valmont has the largest mechanized
irrigation dealer network and distribution system in the
world. Valley TM dealers carry a full line of parts and
provide "on the farm" customer service.
Valmont is the world leader in the development, manufacture
and distribution of center pivot and linear move irrigation
equipment for agriculture. Since producing the first large-
scale mechanized irrigation machine over 40 years ago,
Valmont has built and maintained an extensive worldwide
network of dealers who provide complete support services to
customers across North America and in more than 40 countries
around the world.
Valmont has invested a considerable amount of time, effort
and capital to develop its dealer network into the largest
and most efficient in the industry. Valmont provides its
dealers with continuous education and training programs in
design, installation, new products and advanced irrigation
technology. Valmont's shipping and transportation systems
ensure the prompt delivery of custom designed mechanized
irrigation equipment directly to the farmer's field as
well as supplying a full line of Valley TM replacement parts.
1996 Annual Report
6
<PAGE> 25
The successful implementation of a manufacturing strategy
based on automated production processes and reduced cycle
times has resulted in dramatically improved levels of
quality and productivity. Capital projects implemented over
the past three years have increased capacity and helped
drive down costs. Valmont Irrigation has moved from a
traditional factory layout and organization to a process
that is called "Just In Time" based on cross-functional
cells and employee involvement.
A number of primary factors affect today's grain and fiber
producers. A growing world population, improving diets and
expanding world economies have all increased the demand for
grain products. This increased demand, in combination with
relatively low worldwide grain inventories, has recently
resulted in elevated commodity prices and higher farm
income. Improved farm income gives growers the ability to
make new investments in products such as center pivot and
linear move irrigation equipment that will increase their
productivity. Center pivot and linear move machines can
save water by as much as 50 percent compared to less
efficient irrigation methods.
At the same time, farmers must consider ways to lower labor
and energy costs, conserve the limited amount of fresh water
and reduce groundwater contamination. One of the most
efficient ways to address these concerns is through
precision farming. Valmont has led the industry in
developing computerized controls and remote data-links that
allow the precise application of water, fertilizer and
chemicals when and where needed. This process greatly
improves application efficiency by lowering labor and energy
costs, by applying just the right amount of water needed to
effectively feed the plant root zone and by reducing
chemical and water runoff. Mechanized irrigation has
demonstrated it can save labor, energy and water, making it
one of the most efficient and productive operations in
mechanized agriculture.
Another important factor in this market is the growing need
to replace older irrigation machines, many of which were
installed during the 1970s. With newer equipment having the
added benefit of enhanced computer technology, remote
control operation and environmental improvements, a
significant number of growers are expected to replace older
equipment over the next five to ten years. There is also a
growing market for highly reliable Valley TM irrigation
replacement components and parts, which Valmont offers for
its own equipment as well as those of other manufacturers.
Valmont's leadership position in the industry encompasses
all phases of the business_the product, the manufacturing
process and the dealer distribution system.
Coatings
During the latter part of 1996, Valmont leveraged one of its
core competencies to create a new coatings division within
the Company to address the growing demand for quality
protective coatings using galvanizing and powder coat
processes. Valmont is recognized as one of the premier hot-
dip galvanizers in the United States. A new galvanizing
plant was built in West Point, Nebraska to support growing
internal needs as well as an expanding custom galvanizing
market. This plant began coating products in early 1997.
In addition, Valmont is currently in the process of
expanding its powder coating capability at a number of its
plants to meet increased demand for this protective process.
SPRINKLERS ILLUSTRATION:
Valley TM center pivots apply just the right amount of
water, chemicals and fertilizer at the right height above
the crops so that only the plant's root zone is fed, thus
increasing yields, conserving water, and reducing chemical
and water runoff.
TWO GRAPHS:
1996 Annual Report
7
<PAGE> 26
International
INTERNATIONAL MAP ILLUSTRATION:
"Our strength lies in the ability to leverage our
engineering and manufacturing capabilities to serve
customers across product lines and across continents."
Mogens C. Bay
Chairman and CEO
SUGARCANE FIELD ILLUSTRATION:
Sugar cane growers worldwide depend on Valley TM irrigation
equipment for increased production, low labor costs and high
reliability. This sugar cane field is located on the island
of Mauritius, east of Madagascar in the Indian Ocean.
Valmont aggressively participates in the international
marketplace through its worldwide dealer, sales and
distribution networks and through its manufacturing presence
in major geographical regions. The Company produces light
poles at plants in Canada, France, Germany, the Netherlands,
Poland and China; wireless communication towers and utility
poles in France; and has irrigation facilities in Brazil and
Spain. Valmont is able to leverage these worldwide
manufacturing and distribution capabilities to take full
advantage of opportunities regardless of the products or
markets.
Irrigation
The nations of the world are facing a major challenge.
Experts predict worldwide food production must double over
the next 30 years, not only to feed an additional 2.6
billion people, but also to meet the growing demand for
grain due to improving diets. Today, the amount of land
used for agriculture worldwide is no greater than it was in
1960. In developing countries, only 20 percent of the
arable land is irrigated, compared to 40 percent in
developed countries. Valmont's center pivot and linear move
irrigation equipment provides a solution to this worldwide
challenge by helping farmers increase crop yields and
conserve water at the same time.
Valmont's broad-based dealer network and distribution system
has allowed the Company to retain and strengthen its global
leadership position in this industry. International
marketing opportunities are especially strong in South
America, western Europe and southern Africa. Valmont's new
universal linear irrigation machine was designed for use on
smaller fields and has become the product of choice in many
markets, while center pivots and standard linears remain in
high demand by larger producers.
The worldwide need to increase food production is no longer
a subject for debate...it is a fact of life that must be
addressed by every developing country that intends to grow
and prosper in the 21st century. The long-term outlook for
mechanized irrigation is excellent as farmers study the
advantages of center pivot and linear move irrigation
equipment and come to accept this new technology as the most
efficient way to increase production.
1996 Annual Report
8
<PAGE> 27
CHINA PLANT ILLUSTRATION:
Valmont Manufacturing Plant
Shanghai, China
Poles and Towers
Valmont sells lighting and traffic poles, utility structures
and wireless communication poles and towers in many
international markets. In Europe, Valmont has taken a pan-
European approach to organizing its sales efforts as it
expands into new markets and introduces new products for
sale in Europe and export markets. Two new companies were
acquired in Europe during 1996 which expanded Valmont's
market area in the lighting and wireless communication
industry. Demand in the lighting market remains strong as
governments make infrastructure improvements. For the
wireless communication industry, demand is increasing as
providers expand their operations in Europe, responding to
privatization and more open markets.
In addition to sales on the continent, Valmont has increased
the export of products from its European plants. These
exports include wireless communication poles to South
America and the Middle East, utility poles to Asia, and
decorative aluminum light poles to Asia and North Africa.
In China, Valmont's plant in Shanghai completed its first
full year of operation in 1996. This new plant enables
Valmont to leverage its in-country capabilities as it
expands its marketing and distribution systems and
introduces new products and services. Patience and
perseverance remain the keys to success in developing the
Chinese market. The same is true throughout Asia as
developing countries build new infrastructure to support
economic growth. Valmont will be well positioned to respond
to the many opportunities that will materialize in this vast
marketplace in the years ahead.
LIGHT POLES ILLUSTRATION:
Valmont makes steel and aluminum light poles in every size
and shape imaginable. These decorative light poles
installed in Fleury-les-Aubrais, France were manufactured at
one of Valmont's European facilities.
1996 Annual Report
9
<PAGE> 28
Financial Review
Valmont Industries, Inc. and Subsidiaries
GLOBE ILLUSTRATION:
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis provides information
which management believes is relevant to an assessment and
understanding of the Company's consolidated results of
operations and financial condition. This discussion should
be read in conjunction with the Consolidated Financial
Statements and related Notes.
<TABLE>
<CAPTION>
Fiscal 1996 Compared To 1995
(Dollars in thousands , except per share amounts) 1996 Change 1995
<S> <C> <C> <C>
Net sales $ 644,531 18.3 % $ 544,642
Cost of sales 472,463 18.2 % 399,691
Gross profit 172,068 18.7 % 144,951
Selling, general and administrative expenses 119,624 16.0 % 103,120
Asset valuation charge 15,800 _ _
Operating income 36,644 (12.4)% 41,831
Interest expense, net 3,608 2.8 % 3,511
Miscellaneous income 12 (91.4)% 139
Income tax expense 11,800 (13.9)% 13,700
Net earnings 21,248 (14.2)% 24,759
Earnings per share 1.52 (15.6)% 1.80
</TABLE>
Valmont's net sales in 1996 increased $99.9 million over its
sales for 1995. Irrigation Products segment sales increased
to $212.5 million in 1996 from $162.7 million as good crop
yields and commodity prices resulted in strong farm income,
prompting U.S. farmers to purchase irrigation equipment.
Sales to international markets, primarily western Europe,
South America and southern Africa, rose as a result of
increasing demand for grain products, low grain inventories,
and strong commodity prices.
Industrial Products segment revenues rose primarily as a
result of strong demand for communication towers and light
poles in North America. In Europe, sales were up from
acquisitions made at the beginning of the year. Sales of
poles and towers for the wireless communication market
continued to grow in 1996 and the 1995 acquisition of
Microflect substantially improved the Company's position in
this expanding market. The ballast business experienced a
small increase in sales for the year 1996 compared to 1995
sales levels.
1996 Annual Report
10
<PAGE> 29
Gross profit increased $27.1 million or 18.7% in 1996 to
$172.1 million, and as a percentage of sales increased to
26.7% in 1996 from 26.6% in 1995. The Irrigation Products
segment gross profit increased as a result of a favorable
pricing environment, cost reductions and productivity
improvements. Industrial Products segment gross profit
increased as the impact of higher sales volume in engineered
metal structures more than offset a gross profit decline in
the ballast business.
Selling, general and administrative (SG&A) expenses in 1996
were $119.6 million compared to $103.1 million in 1995. In
1996, SG&A expense as a percent of sales was 18.6% compared
to the prior year's 18.9%. The SG&A expense increase was to
support the higher sales volumes in 1996 and to invest in
market and product development.
In the fourth quarter of 1996, a pre-tax asset valuation
charge of $15.8 million was recorded to reduce the carrying
value of the net assets in the ballast business. The
reduced carrying value approximated the fair market value of
the net assets based on the expected sales price of this
business.
For 1996 and 1995, net interest expense was $3.6 million and
$3.5 million, respectively. The increase results from
higher short-term debt levels at lower average interest
rates. At the end of 1996, long-term debt had decreased by
$7.1 million from the debt level at 1995 year-end, and short-
term debt was up from $3.5 million at the end of 1995 to
$24.0 million at year-end 1996.
The effective tax rate was essentially the same at 35.6% in
1995 and 35.7% in 1996.
For the reasons discussed above, the Company's earnings in
1996 prior to the asset valuation charge were $31.3 million
or $21.2 million after the asset valuation charge compared
to $24.8 million for 1995, an increase prior to the charge
of 26.6% and a 14.2% decrease after the charge. Earnings
per share were $2.24 prior to the charge and $1.52 after the
charge compared to earnings per share of $1.80 for 1995.
The pre-charge earnings per share were up 24.4% from 1995
and the after-charge earnings per share were off by 15.6%.
LEGEND:
THREE GRAPHS:
1996 Annual Report
11
<PAGE> 30
Management's Discussion and Analysis Continued
Valmont Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Fiscal 1995 Compared To 1994
(Dollars in thousands , except per share amounts) 1995 Change 1994
<S> <C> <C> <C>
Net sales $ 544,642 8.6 % $ 501,740
Cost of sales 399,691 5.1 % 380,254
Gross profit 144,951 19.3 % 121,486
Selling, general and administrative expenses 103,120 14.8 % 89,807
Operating income 41,831 32.0 % 31,679
Interest expense, net 3,511 (8.4)% 3,832
Miscellaneous income 139 (91.9)% 1,723
Income tax expense 13,700 28.2 % 10,683
Net earnings 24,759 31.1 % 18,887
Earnings per share 1.80 29.5 % 1.39
</TABLE>
Valmont's net sales in 1995 increased $42.9 million over its
sales for 1994. Industrial Products segment revenues rose
primarily as a result of strong sales growth of pole and
tower structures to the U.S. communication markets and the
lighting markets in the United States and Europe.
Communication structures for the wireless communication
market led the growth with the acquisition of Microflect
substantially improving the Company's position in this
expanding market. The ballast business experienced sales
similar to 1994 sales.
Irrigation Products segment sales declined slightly to
$162.7 million in 1995 from $164.0 million as unfavorable
weather conditions during the spring and summer in the U.S.
markets slowed demand. Sales to international markets,
primarily Europe, South America and Africa, rose to offset
much of the domestic market decline.
Gross profit increased $23.5 million or 19.3% in 1995 to
$145.0 million, and as a percentage of sales increased from
24.2% in 1994 to 26.6% in 1995. The Irrigation Products
segment gross profit increased despite lower sales as a
result of productivity improvements and lower steel prices.
Industrial Products segment gross profit increased from
sales increases in engineered metal structures and
productivity increases in the ballast operation. A shift in
the mix of products sold also impacted gross profit as a
percentage of sales.
SG&A expenses in 1995 were $103.1 million compared to $89.8
million in 1994. In 1995, SG&A expense as a percentage of
sales was 18.9% compared to the prior year's 17.9%. The
SG&A expense increase was to support the sales volume
growth, for incentive accruals and for the development of
various international markets to foster future sales growth.
For 1995 and 1994, net interest expense was $3.5 million and
$3.8 million, respectively. The decrease results from lower
debt levels and lower interest rates on variable rate debt.
At the end of 1995, long-term debt had decreased by $6.6
million from the debt level at 1994 year-end.
Miscellaneous income of $1.7 million in 1994 decreased to
$.1 million in 1995. The figure for 1994 included gains
from the sale and disposal of excess property of $1.2
million.
In 1995, the effective tax rate of 35.6% decreased from the
1994 effective rate of 36.1% primarily due to the relocation
of businesses to states with lower tax rates and state tax
incentives.
For the reasons discussed above, the Company's earnings in
1995 were $24.8 million compared to $18.9 million for 1994,
an increase of 31.1%. Earnings per share increased $.41 per
share in 1995 to $1.80 per share, an increase of 29.5%.
1996 Annual Report
12
<PAGE> 31
Liquidity and Capital Resources
Net working capital of $81.4 million at the end of 1996 was
relatively unchanged compared to $81.0 million of working
capital at the end of 1995. The ratio of current assets to
current liabilities was 1.6:1 at the end of 1996 compared to
1.8:1 at the end of 1995. The decrease resulted primarily
from the increased short-term debt and the reduction of cash
on hand at the end of 1996 due to capital expenditures in
excess of depreciation and payments of scheduled
installments of long-term debt.
Available short-term credit facilities through bank lines of
credit were $40.6 million at the end of 1996 compared to
$54.6 million at the end of 1995. At the end of 1996, $18.4
million was unused.
The Company's growth has been financed through a combination
of cash provided from operations and short-term financing.
Cash provided from operating activities amounted to $19.8
million in 1996 and $28.6 million in 1995. Net borrowings
under short-term agreements were $20.6 million in 1996 and
$1.8 million in 1995. At the end of 1996 long-term debt as
a percent of invested capital was 12.3% as compared to 17.3%
at the end of 1995, due to payment of scheduled installments.
The Company's objective is to maintain long-term debt as a
percent of invested capital at less than 40%. It is expected
that the Company will incur additional long-term debt in 1997
to support growth and expansion plans and to refinance existing
short-term borrowings. 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.
1996 Annual Report
13
<PAGE> 32
Management's Discussion and Analysis Continued
Valmont Industries, Inc. and Subsidiaries
Capital Expenditures
In 1996 the Company expended $35.6 million in property,
plant and equipment, an $.8 million increase from the $34.8
million invested in 1995. Major additions included new
facilities in Elkhart, Indiana, and West Point, Nebraska, to
increase manufacturing capabilities and capacities. At the
Valley, Nebraska, Brenham, Texas, and Tulsa, Oklahoma
plants, additional capacity was also added. These capital
expenditures are designed to enable the Company to reach new
markets and customers, improve productivity and maintain up-
to-date equipment and facilities.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board (FASB) issued
statement No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS 121), and statement No. 123, "Accounting for Stock-
Based Compensation" (SFAS 123), both of which are effective
for fiscal years beginning after December 15, 1995. In the
case of SFAS 121, there was no effect of adoption at the
beginning of 1996. However, an asset valuation charge was
recorded in the fourth quarter of 1996 in compliance with
the provisions of this pronouncement as described in Notes 3
and 13 to the financial statements. SFAS 123 requires that
an employer's financial statements include certain
disclosures about stock-based employee compensation
arrangements regardless of the method used to account for
such plans. The Company has complied with SFAS 123 in
fiscal year 1996 by footnote disclosure in Note 8 to the
financial statements.
Outlook For 1997
As the Company begins 1997, order backlogs are above the
prior year levels, $133.6 million for 1997 compared to
$110.0 million a year ago.
The driving forces for the irrigation markets are a growing
world population, improving diets and expanding world
economies. These factors have resulted in increased
commodity prices, which in turn have given farmers the
ability to make new investments in the Company's center
pivot and linear move irrigation equipment. In addition,
the conversion from less efficient irrigation methods to the
Company's center pivot and linear move products is driven by
the need to conserve the world's fresh water supply and
reduce runoff of unused chemicals. With currently produced
equipment having the added benefit of enhanced computer
technology, remote control operation and environmental
improvements, there has been an increase in the number of
owners replacing older machines. The Company also offers
replacement components and parts to a growing market of
prior purchasers of irrigation products. The international
market opportunities are strong in South America, western
Europe and southern Africa. The long-term demand for
mechanized irrigation equipment is expected to be good as
countries throughout the world come to accept this
technology as an efficient way to increase productivity.
For the Industrial Products segment, the Company continued
to increase its manufacturing capacity during 1996. Demand
for lighting and traffic signal poles is expected to remain
strong. Deregulation in the utility industry is currently
underway. The Company's developed business relationships
within this industry, as well as increasing energy
consumption and expanding distribution networks, are
expected to keep transmission pole demand at desirable
levels. The conversion of wooden distribution poles to
steel also represents increased market opportunities for the
long-term. The rapid growth in the wireless communication
industry continues to create demand for poles, towers,
components and services. Both North America and overseas
markets are expected to experience growth well into the next
century.
1996 Annual Report
14
<PAGE> 33
Overall, the Company's performance can be influenced by
developments in national and world economies and other
factors, however, management feels that the markets the
Company serves provide ample opportunities for growth in the
future.
Management's Discussion and Analysis contains forward
looking statements which reflect management's current views
and estimates of future economic and market circumstances,
industry conditions, company performance and financial
results. The statements are based on many assumptions and
factors including operating efficiencies, availability and
price of raw materials, availability and market acceptance
of new products, product pricing, domestic and international
competitive environment, actions and policy changes of
domestic and international governments and other risks
described from time to time in Valmont's reports to the
Securities and Exchange Commission. Any changes in such
assumptions or factors could produce significantly different
results.
THREE GRAPHS:
1996 Annual Report
15
<PAGE> 34
<TABLE>
<CAPTION>
Selected Eleven-Year Financial Data
Valmont Industries, Inc. & Subsidiaries
(Dollars in thousands, except per share amounts)
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
Operating Data
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 644,531 544,642 501,740 464,274 445,481 446,543 461,789 443,444 439,569 291,350 217,511
Earnings (loss) from continuing
operations 21,248 24,759 18,887 7,551 11,671 (8,822) 11,373 16,818 12,301 5,672 67
Earnings from discontinued operations _ _ _ 4,637 3,564 2,134 5,474 4,602 3,639 3,172 2,321
Cumulative effect of accounting change _ _ _ (4,910) _ _ _ _ _ _ _
Net earnings (loss) $ 21,248 24,759 18,887 7,278 15,235 (6,688) 16,847 21,420 15,940 8,844 2,388
Depreciation and amortization $ 14,832 12,361 11,018 10,907 12,585 11,285 9,887 7,608 7,788 7,057 5,970
Capital expenditures 35,559 34,772 23,535 17,089 8,353 11,539 20,607 17,470 9,750 7,432 6,733
Per Share Data
Earnings (loss):
Continuing operations $ 1.52 1.80 1.39 .55 .87 (.65) .84 1.24 .94 .45 .01
Discontinued operations _ _ _ .34 .26 .15 .40 .34 .28 .25 .18
Cumulative effect of accounting change _ _ _ (.36) _ _ _ _ _ _ _
Net earnings (loss) $ 1.52 1.80 1.39 .53 1.13 (.50) 1.24 1.58 1.22 .70 .19
Cash dividends $ .375 .30 .30 .29 .26 .26 .26 .22 .17 .15 .15
Shareholders' equity 12.82 11.74 10.20 9.03 8.85 8.12 8.85 7.88 6.52 5.54 4.96
Financial Position
Working capital $ 81,403 80,993 88,278 87,793 68,551 69,143 66,302 72,811 58,786 44,986 25,718
Property, plant and equipment, net 120,579 113,532 89,201 75,501 78,150 84,144 81,675 71,872 53,135 53,785 41,726
Total assets 341,648 308,710 283,443 261,275 286,076 291,041 291,163 268,216 225,461 203,674 137,799
Long-term debt, including current
installments 29,573 36,687 43,242 44,076 69,735 81,698 63,003 66,774 47,337 52,780 25,798
Shareholders' equity 175,231 159,256 137,582 121,841 118,428 108,142 117,200 104,069 84,163 68,591 61,209
Invested capital 40,592 212,198 193,261 178,719 198,521 200,650 191,255 180,464 138,392 128,561 91,836
Key Financial Measures
Return on beginning shareholders' equity 13.3% 18.0% 15.5% 6.1% 14.1% (5.7%) 16.2% 25.5% 23.2% 14.4% 4.0%
Return on invested capital 8.8% 11.7% 9.8% 4.1% 7.7% (3.3%) 8.8% 11.9% 11.5% 6.9% 2.6%
Long-term debt as a percent of invested
capital 12.3% 17.3% 22.4% 24.7% 35.1% 40.7% 32.9% 37.0% 34.2% 41.1% 28.1%
Year-End Data
Shares outstanding (000) 13,665 13,560 13,495 13,486 13,375 13,310 13,247 13,206 12,914 12,374 12,346
Approximate number of shareholders 4,400 3,900 3,800 3,800 3,500 3,500 2,800 1,600 1,500 1,100 1,150
Number of employees 4,868 4,166 3,946 4,152 4,532 4,478 4,524 4,255 3,569 3,598 1,746
</TABLE>
1996 earnings are after a pre-tax asset valuation charge of
$15,800 ($10,100 after-tax or $.72 per share).
Per share amounts and number of shares reflect the two-for-
one stock splits in 1988 and 1989.
Prior periods have been restated to include the 1995
acquisition of Microflect using the pooling of interests
method of accounting.
1996 Annual Report
16 & 17
<PAGE> 35
<TABLE>
<CAPTION>
Consolidated Statements Of Operations
Valmont Industries, Inc. and Subsidiaries
Three-year period ended December 28, 1996
(Dollars in thousands, except per share amounts) 1996 1995 1994
<S> <C> <C> <C>
Net sales $ 644,531 544,642 501,740
Cost of sales 472,463 399,691 380,254
Gross profit 172,068 144,951 121,486
Selling, general and administrative expenses 119,624 103,120 89,807
Asset valuation charge 15,800 _ _
Operating income 36,644 41,831 31,679
Other income (deductions):
Interest expense (3,952) (4,331) (4,711)
Interest income 344 820 879
Miscellaneous 12 139 1,723
(3,596) (3,372) (2,109)
Earnings before income taxes 33,048 38,459 29,570
Income tax expense (benefit):
Current 19,970 13,713 7,405
Deferred (8,170) (13) 3,278
11,800 13,700 10,683
Net earnings $ 21,248 24,759 18,887
Earnings per share $ 1.52 1.80 1.39
Cash dividends per share $ .375 .30 .30
Weighted average number of common and common
equivalent shares outstanding (000) 14,017 13,733 13,615
See accompanying notes to consolidated financial statements.
</TABLE>
1996 Annual Report
18
<PAGE> 36
<TABLE>
<CAPTION>
Consolidated Balance Sheets
Valmont Industries, Inc. and Subsidiaries
December 28, 1996 and December 30, 1995
(Dollars in thousands) 1996 1995
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 9,483 16,996
Receivables, less allowance for doubtful receivables
of $2,299 in 1996 and $2,941 in 1995 82,224 82,211
Deferred income taxes 16,521 8,524
Inventories 73,359 76,426
Assets held for sale 26,903 _
Prepaid expenses 2,356 1,670
Total current assets 210,846 185,827
Other assets:
Investments in nonconsolidated affiliates 4,307 1,375
Other 5,916 7,976
Total other assets 10,223 9,351
Property, plant and equipment, at cost 228,247 222,255
Less accumulated depreciation and amortization 107,668 108,723
Net property, plant and equipment 120,579 113,532
Total assets $ 341,648 308,710
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ 7,693 7,950
Notes payable to banks 24,007 3,492
Accounts payable 43,699 46,900
Accrued expenses 52,678 45,475
Dividends payable 1,366 1,017
Total current liabilities 129,443 104,834
Deferred income taxes 9,531 10,543
Long-term debt, excluding current installments 21,880 28,737
Minority interest in consolidated subsidiaries 2,250 2,220
Other noncurrent liabilities 3,313 3,120
Shareholders' equity:
Preferred stock of $1 par value.
Authorized 500,000 shares; none issued _ _
Common stock of $1 par value.
Authorized 36,000,000 shares; issued 13,950,000 shares 13,950 13,950
Additional paid-in capital 6,458 4,694
Retained earnings 153,146 137,009
Currency translation adjustment 1,737 3,689
175,291 159,342
Less:
Cost of common shares in treasury-
284,608 in 1996 (389,798 in 1995) 18 24
Unearned restricted stock 42 62
Total shareholders' equity 175,231 159,256
Total liabilities and shareholders' equity $ 341,648 308,710
See accompanying notes to consolidated financial statements.
</TABLE>
1996 Annual Report
19
<PAGE> 37
<TABLE>
<CAPTION>
Consolidated Statements Of Cash Flows
Valmont Industries, Inc. and Subsidiaries
Three-year period ended December 28, 1996
(Dollars in thousands) 1996 1995 1994
<S> <C> <C> <C>
Cash flows from operations:
Net earnings $ 21,248 24,759 18,887
Adjustments to reconcile net earnings to net cash
provided by operations:
Depreciation and amortization 14,832 12,361 11,018
Other adjustments 580 (102) (198)
Changes in assets and liabilities:
Receivables (16,484) (2,681) (2,083)
Inventories (16,270) (9,742) 11,195
Prepaid expenses (1,217) 261 169
Accounts payable 10,120 1,486 6,001
Accrued expenses 15,022 3,444 (2,151)
Other noncurrent liabilities (394) (1,226) 2,088
Income taxes (7,594) 64 3,735
Total adjustments (1,405) 3,865 29,774
Net cash provided by operations 19,843 28,624 48,661
Cash flows from investing activities:
Purchase of property, plant and equipment (35,559) (34,772) (23,535)
Acquisitions (1,255) _ (2,034)
Proceeds from investment by minority shareholder 97 1,677 _
Change in other assets (1,246) 1,461 (1,638)
Proceeds from sale of property and equipment 858 212 2,334
Other, net (260) 418 334
Net cash used by investment activities (37,365) (31,004) (24,539)
Cash flows from financing activities:
Net borrowings (repayments) under short-term
agreements 20,630 1,754 (1,688)
Proceeds from long-term borrowings 1,942 _ 3,845
Principal payments on long-term obligations (8,142) (7,489) (5,802)
Dividends paid (4,762) (3,612) (3,467)
Distributions of pooled company _ (2,063) (1,102)
Proceeds from exercises under employee stock plans 2,073 1,193 663
Purchase of common treasury shares (1,732) (535) (996)
Net cash provided (used) in financing
activities 10,009 (10,752) (8,547)
Net increase (decrease) in cash and cash
equivalents (7,513) (13,132) 15,575
Cash and cash equivalents - beginning of year 16,996 30,128 14,553
Cash and cash equivalents - end of year $ 9,483 16,996 30,128
See accompanying notes to consolidated financial statements.
</TABLE>
1996 Annual Report
20
<PAGE> 38
<TABLE>
<CAPTION>
Consolidated Statements of Shareholders' Equity
Valmont Industries, Inc. and Subsidiaries
Three-year period ended December 28, 1996
(Dollars in thousands, except per share amounts)
Additional Unearned Total
Common paid-in Retained Currency Treasury restricted shareholders'
stock capital earnings translation stock stock equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 25, 1993 $ 13,950 1,951 105,529 557 (29) (117) 121,841
Net earnings _ _ 18,887 _ _ _ 18,887
Cash dividends ($.30 per share) _ _ (3,467) _ _ _ (3,467)
Cash distributions of pooled company _ _ (1,102) _ _ _ (1,102)
Reclassification of retained earnings,
pooled company _ 1,771 (1,771) _ _ _ _
Currency translation adjustment _ _ _ 1,444 _ _ 1,444
Purchase of 62,718 common shares _ _ _ _ (996) _ (996)
Stock options exercised;
64,575 shares issued _ 286 _ _ 377 _ 663
Tax benefit from exercise of stock options _ 173 _ _ _ _ 173
Stock awards; 7,000 shares issued _ 104 _ _ _ 135 139
Balance at December 31, 1994 13,950 4,285 118,076 2,001 (648) (82) 137,582
Net earnings _ _ 24,759 _ _ _ 24,759
Cash dividends ($.30 per share) _ _ (3,763) _ _ _ (3,763)
Cash distributions of pooled company _ _ (2,063) _ _ _ (2,063)
Currency translation adjustment _ _ _ 1,688 _ _ 1,688
Purchase of 21,249 common shares _ _ _ _ (535) _ (535)
Stock options exercised;
79,196 shares issued _ 134 _ _ 1,159 _ 1,193
Tax benefit from exercise of stock options _ 338 _ _ _ _ 338
Stock awards; 7,000 shares issued _ 137 _ _ _ 120 157
Balance at December 30, 1995 13,950 4,694 137,009 3,689 (24) (62) 159,256
Net earnings _ _ 21,248 _ _ _ 21,248
Cash dividends ($.375 per share) _ _ (5,111) _ _ _ (5,111)
Currency translation adjustment _ _ _ (1,952) _ _ (1,952)
Purchase of 48,722 common shares _ _ _ _ (1,732) _ (1,732)
Stock options exercised;
140,000 shares issued _ 335 _ _ 1,738 _ 2,073
Tax benefit from exercise of stock options _ 1,023 _ _ _ _ 1,023
Stock awards; 13,912 shares issued _ 406 _ _ _ 120 426
Balance at December 28, 1996 $ 13,950 6,458 153,146 1,737 (18) (42) 175,231
See accompanying notes to consolidated financial statements.
</TABLE>
1996 Annual Report
21
<PAGE> 39
Notes to Consolidated Financial Statements
Valmont Industries, Inc. and Subsidiaries
Three-year period ended December 28, 1996
(Dollars in thousands, except per share amounts)
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts
of Valmont Industries, Inc. (the Company) and its wholly and
majority-owned subsidiaries. All significant intercompany
items have been eliminated.
In 1996, the Company purchased majority interests in Telec
Centre, S.A. and Gibo-Conimast, GmbH. In 1994, the Company
acquired the assets of Energy Steel Corporation of Tulsa,
Oklahoma. These acquisitions are not considered significant
and, therefore, pro forma consolidated financial information
has been omitted (Note 13).
Operations
The Company manufactures and distributes agricultural
irrigation equipment and related products and engineered
metal structures, fabricated products and lighting ballasts.
Fiscal Year
The Company operates on a 52/53 week fiscal year basis with
each year ending on the last Saturday in December.
Accordingly, the Company's fiscal years 1996, 1995 and 1994
ended on December 28, December 30 and December 31,
respectively and contained 52 weeks, 52 weeks and 53 weeks
respectively.
Inventories
At December 28, 1996 approximately 72% of inventory is
valued at the lower of cost, determined on the basis of the
last-in, first-out (LIFO) method or market. All other
inventory is valued at the lower of cost, determined on the
basis of the first-in, first-out (FIFO) method or market.
The excess of replacement cost of inventories over the LIFO
value is approximately $10,400 and $10,200 at December 28,
1996 and December 30, 1995, respectively.
Impairment of Long-Lived Assets
In 1996 the Company adopted Statement of Financial
Accounting Standards No. 121, (SFAS 121), "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" (Note 3). SFAS 121 prescribes
that an impairment loss be recognized if the carrying amount
of an asset may not be recoverable and exceeds estimated
future undiscounted cash flows of the asset. A recognized
impairment loss reduces the carrying amount of the asset to
its estimated future discounted cash flows (Note 13). There
was no effect of adoption of this standard at the beginning
of fiscal 1996.
Property, Plant and Equipment
Property, plant and equipment are stated at historical cost.
Depreciation and amortization are provided on the straight-
line method over the estimated useful lives of the
respective assets. The range of lives of various assets
follows:
Land improvements 10 Years
Buildings and improvements 15-39 Years
Machinery and equipment 3-12 Years
Transportation equipment 3-5 Years
Office furniture and equipment 3-7 Years
Income Taxes
The Company uses the asset and liability method to calculate
deferred income taxes. Deferred tax assets and liabilities
are recognized on temporary differences between financial
statements and tax bases of assets and liabilities using
enacted tax rates. The effect of tax rate changes on
deferred tax assets and liabilities is recognized in income
in the period that includes the enactment date.
1996 Annual Report
22
<PAGE> 40
Foreign Currency Translations
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.
Cumulative translation adjustments are included as a
separate component of shareholders' equity.
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.
Miscellaneous
The miscellaneous caption of "Other income (deductions)" in
the consolidated statements of operations contains gains and
losses which are of an unusual or infrequent nature. Pre-
tax gains from disposal of excess property amounting to
$1,183 were included in 1994.
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 financial statements in
conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
(2) Cash Flow Supplementary Information
The Company considers all highly liquid temporary cash
investments purchased with a maturity of three months or
less to be cash equivalents. Cash payments for interest and
income taxes (net of refunds) were as follows:
1996 1995 1994
Interest $3,824 4,456 4,792
Income taxes 17,904 11,591 4,819
(3) Asset Valuation Charge
During 1996, the Company initiated a plan to dispose of its
ballast business. In January, 1997, the Company sold this
business for approximately $25,000. As a result, the
Company recorded a pre-tax asset valuation charge of $15,800
($10,100 after-tax) in the fourth quarter of 1996 to reduce
the net assets of the ballast business to the sales price,
net of expenses.
"Assets held for sale" in the balance sheet as of December
28, 1996 of $26,903 represents the carrying value of the net
assets of the ballast business. Operating loss for the
ballast business of $620 is included in the Company's
Industrial Products segment results for 1996.
(4) Property, Plant and Equipment
Property, plant and equipment, at cost, consists of the
following:
1996 1995
Land and improvements $ 9,592 9,503
Buildings and improvements 56,818 54,959
Machinery and equipment 109,915 106,890
Transportation equipment 4,000 3,319
Office furniture and equipment 21,300 20,581
Construction in progress 26,622 27,003
$228,247 222,255
The Company also leases certain facilities, machinery,
computer equipment and transportation equipment under
operating leases with unexpired terms ranging from one to
eight years. Rental expense for operating leases amounted
to $4,963, $4,638 and $3,807 for fiscal 1996, 1995 and 1994,
respectively.
1996 Annual Report
23
<PAGE> 41
Minimum lease payments under operating leases expiring
subsequent to December 28, 1996 are:
Fiscal Year Ending
1997 $ 3,065
1998 2,833
1999 2,541
2000 2,154
2001 1,982
Subsequent 5,660
Total minimum lease payments $ 18,235
(5) Bank Credit Arrangements
The Company maintains various lines of credit for short-term
borrowings totaling $40,628. The interest rates charged on
these lines of credit vary in relation to the banks' cost of
funds. The unused borrowings under the lines of credit were
$18,428 at December 28, 1996. The lines of credit can be
modified at any time at the option of the banks. The
Company pays facility fees of 1/8 to 1/5 of 1% (or
equivalent balances) in connection with $23,000 of its lines
of credit, and pays no fees in connection with the remaining
lines of credit. The weighted average interest rate on
short-term borrowings was 6.5% at December 28, 1996 and 8.9%
at December 30, 1995.
(6) Income Taxes
Income tax expense (benefit) consists of:
1996 1995 1994
Current:
Federal $ 16,914 10,919 5,454
State 1,086 954 682
Foreign 1,970 1,840 1,269
19,970 13,713 7,405
Deferred:
Federal (7,006) (11) 3,428
State (392) (2) 278
Foreign (772) _ (428)
(8,170) (13) 3,278
$ 11,800 13,700 10,683
The reconciliations of the statutory Federal income tax rate
and the effective tax rates follow:
1996 1995 1994
Statutory Federal income tax rate 35.0 % 35.0 % 35.0 %
State income taxes, net of Federal
benefit 2.1 % 1.6 % 2.4 %
Other (1.4)% (1.0)% (1.3)%
35.7 % 35.6 % 36.1 %
1996 Annual Report
24
<PAGE> 42
The tax effects of temporary differences that give rise to
deferred tax assets and liabilities are presented below:
1996 1995
Deferred tax assets:
Accrued expenses and allowances $ 20,223 13,008
Allowance for doubtful receivables 311 400
Inventory capitalization 1,622 979
Total deferred tax assets 22,156 14,387
Deferred tax liabilities:
Plant and equipment 6,274 5,448
Lease transactions 1,682 1,769
Warranty accrual 1,373 1,373
Business combination adjustments 3,439 3,439
Other 3,245 4,377
Total deferred tax liabilities 16,013 16,406
Net deferred tax assets (liabilities) $ 6,143 (2,019)
No valuation allowance for deferred tax assets has been
provided since all tax benefits are more likely than not to
be used to offset future taxable income.
(7) Long-Term Debt
1996 1995
9.40% to 12.77% promissory notes, unsecured (a) $ 19,250 23,750
Promissory note, secured (b) 4,762 7,714
6.50% to 9.34% notes 5,561 5,223
Total long-term debt 29,573 36,687
Less current installments of long-term debt 7,693 7,950
Long-term debt, excluding current installments $ 21,880 28,737
(a) The promissory notes payable are due in varying annual
principal installments through 2001. The notes are subject
to prepayment in whole or in part with or without premium as
specified in the agreements.
(b) The promissory note totaling 25.7 million French francs
is due in two equal annual principal installments through
1998. The interest rate on the note is variable based on 6-
month PIBOR (Paris Interbank Offering Rate), or can be fixed
at the Company's option. At December 28, 1996 the effective
interest rate was 3.78%. The note is secured by the common
stock of Sermeto, S.A., a subsidiary of the Company.
The agreements place certain restrictions on working
capital, capital expenditures, payment of dividends,
purchase of Company stock and additional borrowings. The
amount of retained earnings at December 28, 1996, not
restricted as to payment of cash dividends and purchase of
the Company's capital stock under the most restrictive
provisions of the agreements, was approximately $58,000.
The minimum aggregate maturities of long-term debt for each
of the four years following 1997 are: $7,564, $5,254,
$4,054 and $2,757.
1996 Annual Report
25
<PAGE> 43
(8) Stock Plans
The Company has three fixed employee stock-based
compensation plans approved by the shareholders which
provide that the Compensation Committee of the Board of
Directors may grant incentive stock options, nonqualified
stock options, stock appreciation rights, restricted stock
awards and bonuses of common stock. Under the 1983 Employee
Incentive Stock Option Plan, the Company may grant options
to its employees for up to 700,000 shares of common stock.
Under the 1988 Stock Plan, the Company may grant options and
other awards to its employees and directors for up to
1,200,000 shares of common stock. Under the 1996 Stock
Plan, the Company may grant options and other awards to
employees and directors for up to 800,000 shares of common
stock. The optioned shares are subject to changes in
capitalization.
Under the Plans, the exercise price of each option equals
the market price at the time of the grant. Options have
vesting schedules of four to seven years and vest either
ratably after one year from date of grant or vest after five
years from date of grant. Expiration of grants is from six
to ten years from the date of grant.
The Company applies APB Opinion 25 in accounting for its
fixed stock compensation plans. Accordingly, no
compensation cost has been recognized for the fixed plans in
1995 or 1996. Had compensation cost been determined on the
basis of fair value pursuant to Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based
Compensation," net earnings and earnings per share would
have been reduced as follows:
1996 1995
Net earnings:
As reported $ 21,248 24,759
Pro forma $ 20,561 24,699
Earnings per share:
As reported $ 1.52 1.80
Pro forma $ 1.47 1.80
The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option-pricing model with
the following weighted-average assumptions used for grants
in 1995 and 1996: dividend yield of 1.03%; expected
volatility of 28%; risk-free interest rate of 6.11%; and
expected lives of 2.5 years from vesting date.
Following is a summary of the status of the stock plans
during 1994, 1995 and 1996:
Weighted
Average
Number of Exercise
Shares Price
Outstanding at December 26, 1993 778,207 $ 14.82
Granted 152,000 16.25
Exercised (64,575) (10.27)
Forfeited (81,858) (16.96)
Outstanding at December 31, 1994 783,774 $ 15.24
Options exercisable at December 31, 1994 450,107 $ 12.70
Weighted
Average
Number of Exercise
Shares Price
Outstanding at January 1, 1995 783,774 $ 15.24
Granted 201,500 23.35
Exercised (79,196) (13.57)
Forfeited (11,057) (18.50)
Outstanding at December 30, 1995 895,021 $ 17.21
Options exercisable at December 30, 1995 378,188 $ 13.91
Weighted average fair value of options granted during 1995 $ 7.34
1996 Annual Report
26
<PAGE> 44
Weighted
Average
Number of Exercise
Shares Price
Outstanding at December 31, 1995 895,021 $ 17.21
Granted 207,015 37.28
Exercised (140,000) (14.81)
Forfeited (28,549) (11.13)
Outstanding at December 28, 1996 933,487 $ 22.21
Options exercisable at December 28, 1996 412,653 $ 16.65
Weighted average fair value of options granted during 1996 $ 12.48
Following is a summary of the status of fixed options
outstanding at December 28, 1996:
<TABLE>
<CAPTION>
Outstanding and Exercisable By Price Range
Options Outstanding Options Exercisable
- ----------------------------------------------------------------- -------------------------
Weighted Average
Exercise Remaining Weighted Average Weighted Average
Price Range Number Contractual Life Exercise Price Number Exercise Price
<S> <C> <C> <C> <C> <C>
$ 5.91-12.00 123,050 1.85 years $ 10.67 118,050 $ 10.61
12.75-14.88 33,500 4.87 years 14.05 _ _
16.25-16.25 123,300 7.96 years 16.25 81,970 16.25
18.25-18.25 242,333 5.99 years 18.25 150,521 18.25
18.50-22.50 30,789 4.48 years 20.10 3,792 19.60
23.75-23.75 173,500 8.98 years 23.75 57,855 23.75
24.50-37.38 22,350 7.01 years 31.81 _ _
37.63-37.63 15,000 9.89 years 37.63 _ _
38.00-38.00 169,484 9.93 years 38.00 284 38.00
39.00-39.00 181 .97 years 39.00 181 39.00
933,487 412,653
</TABLE>
(9) Employee Retirement Savings Plan
Established under Internal Revenue Code Section 401(k), the
Valmont Employee Retirement Savings Plan is available to all
eligible employees. The Company makes an annual basic
contribution equal to $.25 on the dollar of the first 3% of
each participant's annual pay. In addition, participants
can elect to contribute up to 15% of annual pay, on a pre-
tax and/or after-tax basis. The Company will match $.50 to
$.75 on the dollar of the first 6% of the employee pre-tax
contribution. The Company, at the discretion of the Board
of Directors, may also pay a supplemental contribution of up
to $.50 on the dollar of the first 6% of the participants'
pre-tax contributions. In addition, the Company has a
defined contribution plan covering the employees of
Microflect. Contributions under this plan are based
primarily on the performance of the business unit and
employee compensation. The 1996, 1995 and 1994 Company
contributions to these plans amounted to approximately
$5,000, $4,700 and $3,000, respectively.
(10) Research and Development
It is estimated that the research and development costs
charged against earnings were approximately $3,900 in 1996,
$2,800 in 1995, and $2,700 in 1994.
1996 Annual Report
27
<PAGE> 45
(11) Disclosures About the Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents,
receivables, accounts payable, notes payable to banks and
accrued expenses approximates fair value because of the
short maturity of these instruments. The fair values of
each of the Company's long-term debt instruments are based
on the amount of future cash flows associated with each
instrument discounted using the Company's current borrowing
rate for similar debt instruments of comparable maturity.
The fair value estimates are made at a specific point in
time and the underlying assumptions are subject to change
based on market conditions. At December 28, 1996, the
carrying amount of the Company's long-term debt was $29,573
with an estimated fair value of approximately $30,000. At
December 30, 1995, the carrying amount of the Company's long-
term debt was $36,687 with an estimated fair value of
approximately $39,000.
(12) Stockholders' Right Plan
In December 1995, the Company's Board of Directors declared
a dividend of one preferred stock purchase right ("Right")
for each outstanding share of common stock. The Right
becomes exercisable ten days after a person (other than
Robert B. Daugherty and his related persons and entities)
acquires or commences a tender offer for 15% or more of the
Company's common stock. Each Right entitles the holder to
purchase one one-thousandth of a share of a new series of
preferred stock at an exercise price of $100, subject to
adjustment. The Right expires on December 19, 2005 and may
be redeemed at the option of the Company at $.01 per Right,
subject to adjustment. Under certain circumstances, if (i)
any person becomes an Acquiring Person or (ii) the Company
is acquired in a merger or other business combination, each
holder of a Right (other than the Acquiring Person) will
have the right to receive, upon exercise of the Right,
shares of common stock (of the Company under (i) and of the
acquiring company under (ii)) having a value of twice the
exercise price of the Right.
(13) Divestiture and Acquisitions
In January 1997, the Company sold the common stock of
Valmont Electric, Inc. for approximately $25,000. In
accordance with SFAS 121, the net assets of Valmont Electric
have been written down to fair market value and reclassified
on the balance sheet as "Assets held for sale" at December
28, 1996 (Note 3).
In February 1996, the Company purchased a majority interest
in Telec Centre S.A., a small French manufacturer of
communication towers. In March 1996, the Company purchased
a majority interest in Gibo-Conimast GmbH, a German
manufacturer and distributor of pole structures for the
lighting market.
In July 1995, Microflect Company, Inc. was merged with and
became a wholly-owned subsidiary of the Company pursuant to
the terms of an agreement and Plan of Merger under which the
Company exchanged 1,950,000 shares of its common stock for
all of the outstanding common stock of Microflect. The
merger qualified as a tax-free reorganization and was
accounted for as a pooling of interests. Accordingly, the
Company's consolidated financial statements include the
results of Microflect for all periods presented.
(14) Business Segments
The Company's business activities are currently classified
into the following industry segments:
Industrial Products - The manufacture and distribution of
engineered metal structures, fabricated products and
lighting ballasts.
Irrigation Products - The manufacture and distribution of
agricultural irrigation equipment and related products.
Financial information concerning the Company's business
segments is summarized on the following page and is
considered an integral part of this note.
1996 Annual Report
28
<PAGE> 46
<TABLE>
<CAPTION>
Business Segment Information
Valmont Industries, Inc. and Subsidiaries
(Dollars in thousands) 1996 1995 1994
<S> <C> <C> <C>
Net Sales:
Industrial Products $ 432,050 381,898 337,810
Irrigation Products 212,481 162,744 164,030
Less intersegment sales _ _ (100)
Total $ 644,531 544,642 501,740
Operating Income:
Industrial Products 36,591 35,924 23,638
Irrigation Products 29,766 18,736 17,742
Total 66,357 54,660 41,380
General Corporate Expense, Net (13,913) (12,829) (9,701)
Asset Valuation Charge (15,800) _ _
Interest Expense Net (3,608) (3,511) (3,832)
Miscellaneous 112 139 1,723
Earnings before income taxes $ 33,048 38,459 29,570
Identifiable Assets:
Industrial Products 271,538 234,818 197,856
Irrigation Products 65,326 51,792 46,554
Corporate 4,784 22,100 39,033
Total $ 341,648 308,710 283,443
Capital Expenditures:
Industrial Products 26,808 30,200 16,011
Irrigation Products 8,720 4,204 7,191
Corporate 131 368 333
Total $ 35,559 34,772 23,535
Depreciation and Amortization:
Industrial Products 11,259 8,727 8,044
Irrigation Products 3,080 2,923 2,173
Corporate 493 711 801
Total $ 14,832 12,361 11,018
Summary by Geographical Area:
Net Sales:
United States 511,516 447,685 424,666
Europe 77,605 64,745 51,018
Other 55,410 32,21 226,056
Total $ 644,531 544,642 501,740
Operating Income:
United States 58,424 47,543 34,830
Europe 4,775 4,936 3,248
Other 3,158 2,181 3,302
Total $ 66,357 54,660 41,380
Identifiable Assets:
United States 261,785 228,681 216,320
Europe 64,819 64,790 62,334
Other 15,044 15,239 4,789
Total $ 341,648 308,710 283,443
</TABLE>
Net sales by business segment are to unaffiliated customers.
Net sales by geographical area are based on destination of
sales.
Operating income by business segment is based on net sales
less identifiable operating expenses. Operating income by
geographical area is based on destination of sales less
appropriate expense allocations.
Corporate assets consist of cash, deferred income taxes,
investment in nonconsolidated affiliates, and administrative
buildings and equipment. Identifiable assets by
geographical area are based on location of facilities.
1996 Annual Report
29
<PAGE> 47
<TABLE>
<CAPTION>
Quarterly Financial Data (Unaudited)
Valmont Industries, Inc. and Subsidiaries
(Dollars in thousands, Net Gross Net Earnings (Loss) Stock Price Dividends
except per share amounts) Sales Profit Amount Per Share High Low Declared
<S> <C> <C> <C> <C> <C> <C> <C>
1996
First $ 148,914 39,999 6,946 .50 30.13 24.25 .075
Second 166,849 43,913 8,501 .61 34.00 29.50 .100
Third 148,048 40,583 6,578 .47 36.00 28.25 .100
Fourth 180,720 47,573 (777) 1 (.05) 1 39.50 33.75 .100
Year $ 644,531 172,068 21,248 1 1.52 1 39.50 24.25 .375
1995
First $ 142,223 34,877 5,694 .42 21.50 16.25 .075
Second 133,418 34,948 6,691 .49 22.00 19.50 .075
Third 128,269 35,099 5,271 .38 24.25 20.75 .075
Fourth 140,732 40,027 7,103 .51 26.00 23.50 .075
Year $ 544,642 144,951 24,759 1.80 26.00 16.25 .300
1994
First $ 117,671 26,756 3,583 .26 20.50 14.50 .075
Second 128,656 30,092 4,893 .36 17.00 13.50 .075
Third 118,500 29,420 4,647 .34 16.75 14.50 .075
Fourth 136,913 35,218 5,764 .42 17.50 15.75 .075
Year $ 501,740 121,486 18,887 1.39 20.50 13.50 .300
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.
1 After a pre-tax asset valuation charge of $15,800 ($10,100 after-tax or $.72 per share).
</TABLE>
1996 Annual Report
30
<PAGE> 48
Report of Independent Accountants
To the Board of Directors and Shareholders of Valmont
Industries, Inc.
We have audited the accompanying consolidated balance sheet
of Valmont Industries, Inc. and Subsidiaries as of December
28, 1996, and the related consolidated statements of
operations, shareholders' equity and cash flows for the year
then ended. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of
the Company for the years ended December 30, 1995 and
December 31, 1994 were audited by other auditors whose
report, dated February 16, 1996, expressed an unqualified
opinion on those statements.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the 1996 consolidated financial statements
present fairly, in all material respects, the financial
position of Valmont Industries, Inc. and subsidiaries as of
December 28, 1996, and the results of their operations and
their cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ DELOITTE & TOUCHE
DELOITTE & TOUCHE LLP
Omaha, Nebraska
February 7, 1997
Report of Management
The consolidated financial statements of Valmont Industries,
Inc. and Subsidiaries and the other information contained in
the Annual Report were prepared by and are the
responsibility of management. The statements have been
prepared in accordance with generally accepted accounting
principles and necessarily include amounts based on
management's best estimates and judgments.
In fulfilling its responsibilities, management relies on a
system of internal controls which provide reasonable
assurance that the financial records are reliable for
preparing financial statements and maintaining
accountability of assets. Internal controls are designed to
reduce the risk that material errors or irregularities in
the financial statements may occur and not be timely
detected. These systems are augmented by written policies,
careful selection and training of qualified personnel, an
organizational structure providing division of
responsibilities and a program of financial, operational and
systems audits. The Company also has a business ethics
policy which requires employees to maintain high ethical
standards in the conduct of Company business.
The Audit Committee, composed of non-employee directors is
responsible for recommending to the Board of Directors,
subject to ratification by shareholders, the independent
accounting firm to be retained each year. The Audit
Committee meets regularly, and when appropriate separately,
with the independent certified public accountants,
management and the internal auditors to review company
performance. The independent certified public accountants,
internal auditors, and the Audit Committee have unrestricted
access to each other in the discharge of their
responsibilities.
/s/ MOGENS C. BAY /s/ TERRY J. MC CLAIN
Mogens C. Bay Terry J. McClain
Chairman and Chief Executive Officer Senior Vice President and
Chief Financial Officer
1996 Annual Report
31
<PAGE> 49
Board of Directors and Officers
BOARD OF DIRECTOR AND OFFICERS PHOTO:
(from left) Walter Scott, Jr., Robert G. Wallace, Charles M.
Harper, Allen F. Jacobson, Kenneth E. Stinson, Mogens C.
Bay, Thomas F. Madison, Robert B. Daugherty and John E.
Jones
Board of Directors
Mogens C. Bay
Chairman and Chief Executive Officer
Valmont Industries, Inc.
Director since 1993
Robert B. Daugherty
Founder and Chairman Emeritus
Valmont Industries, Inc.
Director since 1947
Charles M. Harper 1
Former Chairman of the Board
RJR Nabisco Holdings Corp.
Director since 1979
Allen F. Jacobson 1
Retired Chairman and CEO
3M Company
Director since 1976
Lloyd P. Johnson 1
Retired Chairman of the Board
Norwest Corporation
Director since 1991
John E. Jones 2
Retired Chairman, President and CEO
CBI Industries, Inc.
Director since 1993
Thomas F. Madison 1
President, MLM Partners
Chairman of the Board
Communications Holdings, Inc.
Director since 1987
Walter Scott, Jr. 2
Chairman and President
Peter Kiewit Sons', Inc.
Director since 1981
Kenneth E. Stinson
Chairman and CEO
Kiewit Construction Group Inc.
Director since 1996
Robert G. Wallace 2
Retired Executive Vice President
Phillips Petroleum Co.
Director since 1984
1 Compensation Committee
2 Audit Committee
Corporate Officers
Mogens C. Bay*
Chairman and Chief Executive Officer
Phillip C. Cooke*
Senior Vice President - Human Resources
Thomas P. Egan, Jr.
Vice President - Corporate Counsel
and Secretary
Terry J. McClain*
Senior Vice President and
Chief Financial Officer
Brian C. Stanley
Vice President - Investor Relations
and Controller
Mark E. Treinen
Vice President - Business Development
Group and Division Officers
Gary L. Cavey*
Group President and Chief Operating Officer
Industrial Products Group
Leonard M. Adams
Vice President - Operations, North America
Industrial Products Group
James R. Callaway
President - Microflect Division
Martin Ostransky
Vice President - Installation Services
Industrial Products Group
Richard M. Sampson
Vice President - Marketing & Sales
Industrial Products Group
Vincent T. Corso*
Group President and Chief Operating Officer
Irrigation & Coatings Group
Joseph M. Goecke*
President and Chief Operating Officer
Valmont Irrigation
James J. Eiting
Vice President - Sales
Valmont Irrigation
Dennis E. Schwieger
Vice President - Marketing & Sales
Valmont Irrigation
Dennis G. Thome
Vice President - Operations
Valmont Irrigation
E. Robert Meaney*
President and Chief Operating Officer
International Division
Jan Driessens
President - Valmont Europe
Richard D. Berkland
Vice President - Marketing & Sales
International Irrigation
Winfield J. Weber
Vice President - Marketing & Sales
International Poles
* Member, Office of the President
1996 Annual Report
32
<PAGE> 50
INSIDE BACK COVER:
Founder
GLOBE ILLUSTRATION:
ROBERT B. DAUGHERTY PHOTO:
Robert B. Daugherty
Founder and Chairman Emeritus
Valmont Industries, Inc.
As 1996 drew to a close and after 50 years with the Company,
Robert B. Daugherty...ValmontOs founder and only
chairman...decided that it was time to turn the management
of the Company over to the leadership team he had put in
place.
What a magnificent 50 years it has been. It all started in
a small cornfield just west of Valley, Nebraska, when a young
Marine returning from World War II invested his life savings in
a promising business opportunity called Valley Manufacturing Company, a
small farm equipment manufacturer.
A few years later, Mr. Daugherty was looking for ways to
diversify the business when he came upon a strange
contraption that propelled a long pipeline mounted on wheels
around a field, sprinkler irrigating the crop as it went.
It did not work very well when he purchased the patent
rights from the inventor in the early 1950s, but it would
soon revolutionize agriculture. Today, over 10 million
acres are irrigated with Valley mechanized center pivot and
linear move irrigation equipment in the U.S. and more than
90 other countries worldwide.
Mr. Daugherty continued to find business opportunities
wherever he looked. Not too many years after Valmont began
to manufacture its own pipe for the irrigation equipment,
they invented machinery to produce tapered light and traffic signal
poles. Soon the Company was making products for the utility industry
and, most recently, the wireless communication market. The Company
changed its name to Valmont Industries in the late 1960s.
At every step along the path to success, Mr. Daugherty was
active throughout the business and civic community.
Although he claims to be "retired" today, he is still very
much involved in a number of projects and programs in the
community. We are also fortunate that Mr. Daugherty will
continue to provide wise counsel as a member of Valmont's
Board of Directors.
Mr. Daugherty built the Company on the principles of
integrity, perseverance and the worth and dignity of the
individual. The entire Valmont team thanks him for his
leadership and keen eye for picking the right "opportunities" and
for allowing us to walk this path with him for the past 50 years.
BUILDING ILLUSTRATION:
Valley Manufacturing
Circa 1950s
1996 Annual Report
33
<PAGE> 51
Shareholder Information
Valmont Industries, Inc. and Subsidiaries
Corporate Headquarters
Valmont Industries, Inc.
Omaha, Nebraska USA
(402) 359-2201
Independent Public Accountants
Deloitte & Touche LLP
Omaha, Nebraska USA
Legal Counsel
McGrath, North, Mullin & Kratz, P.C.
Omaha, Nebraska USA
Stock Transfer Agent and Registrar
First National Bank of Omaha
Trust Department
One First National Center
Omaha, Nebraska 68102-1596 USA
(402) 341-0500
Notices regarding changes of address and inquiries regarding
lost dividend checks, lost or stolen certificates and
transfers of stock, should be directed to the transfer agent.
Annual Meeting
The annual meeting of Valmont's shareholders will be held at 2:00 p.m.
on Monday, April 28, 1997, at Joslyn Art Museum, 2200 Dodge Street,
Omaha, Nebraska USA
Stock Trading
Valmont's common stock trades on the Nasdaq Stock Market
under the symbol VALM. Current share price and related
information can be found in the financial section of many
daily newspapers.
Availability of 10-K Report
A copy of ValmontOs 1996 Annual Report on Form 10-K may be
obtained by calling or writing:
Investor Relations Department
Valmont Industries, Inc.
P.O. Box 358
Valley, Nebraska 68064 USA
Phone: (402) 359-2201
Fax: (402) 343-0668
Stock Held in "Street Name"
Valmont maintains a direct mailing list to ensure that
shareholders with stock held in broker accounts receive
information on a timely basis. If you would like your name
added to this list, please direct your request to:
Investor Relations Department
Valmont Industries, Inc.
P.O. Box 358
Valley, Nebraska 68064 USA
Phone: (402) 359-2201
Fax: (402) 343-0668
Shareholder and Investor Relations
Valmont maintains an active investor relations program to
keep shareholders and potential investors informed about the
Company. Comments and inquiries are welcome and should be
directed to:
Investor Relations Department
Valmont Industries, Inc.
P.O. Box 358
Valley, Nebraska, 68064 USA
Phone: (402) 359-2201
Fax: (402) 343-0668
Market Makers
The following firms make a market in Valmont Industries,
Inc. common stock as of March 6, 1997:
Dain Bosworth Inc.
George K. Baum & Company
Herzog, Heine, Geduld, Inc.
Huntleigh Securities Corporation
Kirkpatrick Pettis Inc.
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner & Smith Inc.
Visit Valmont's Homepage at
www.valmont.com
1996 Annual Report
34
<PAGE> 52
OUTSIDE BACK COVER:
A World Leader...
Valmont Industries, Inc. & Subsidiaries
INTERNATIONAL MAP ILLUSTRATION:
GLOBE ILLUSTRATION:
Brenham, Texas, USA
Elkhart, Indiana, USA
Salem, Oregon, USA
Salt Lake City, Utah, USA
Tulsa, Oklahoma, USA
Valley, Nebraska, USA
West Point, Nebraska, USA
St. Hubert, Quebec, Canada
Uberaba, Brazil
Corporate Headquarters
Omaha, Nebraska, USA
Charmeil, France
Cusset, France
Lempdes, France
Rive-de-Gier, France
Gelsenkirchen, Germany
Maarheeze, The Netherlands
Madrid, Spain
Shanghai, China
We aggressively participate in specific markets within two
major global economies: Food Production and Infrastructure
Development. First, we are the world leader in manufacturing
efficient irrigation equipment for agriculture...increasing
crop yields and conserving scarce water resources. Second,
we are the world's leading producer of engineered poles,
towers and structures and other products and components for
various industries including communication, lighting, and
utility...improving the world's infrastructure. In the
future, we will grow by leveraging our strengths. We will
take new products and technologies into existing markets and
leverage our current products and technologies in new
markets. This is how we plan to create value for all Valmont
shareholders.
<PAGE> 53
VALMONT LOGO:
GLOBE ILLUSTRATION:
Valmont Industries, Inc.
P.O. Box 358
Valley, Nebraska 68064 USA
(402) 359-2201
Fax (402) 343-0668
www.valmont.com
54
Exhibit 21
SUBSIDIARIES OF VALMONT INDUSTRIES, INC.
State or Country
Name of Subsidiary of Incorporation
------------------ ----------------
American Lighting Standards Corp.
d/b/a Valmont/ALS Texas
Best-All Electric, Inc. Nebraska
CCC de Mexico, S.A. de C.V. Mexico
Gate City Steel Corporation Delaware
Gibo-Conimast & Co.KG Germany
Golden State Irrigation, Inc. California
InterAg Technologies, Inc. Delaware
Lampadaires Feralux, Inc. Canada
Microflect Company, Inc. Oregon
NeuValco S.A. France
NeuValco GmbH Germany
Sermeto S.A. France
Sermeto Iberica S.A. Spain
Shanghai Valmont Special Steel Tube Co., Ltd. China
TelecCentre, S.A. France
Tubalco S.A. France
VBT, Inc. Delaware
Valmont DeEspana, S.A. Spain
Valmont Electric, Inc. Delaware
Valmont S.A. Spain
Valmont Industries (Asia-Pacific) Ltd. Hong Kong
Valmont Industries Holland B.V. The Netherlands
Valmont International, L.L.C. Delaware
Valmont International Corp. Texas
Valmont International Inc. U. S. Virgin Islands
Valmont Nederlands B.V. The Netherlands
Valmont Northwest, Inc. Nebraska
Valmont Polska Sp. zo.o Poland
Valmont Service Centers, Inc. Nebraska
Valmont World Trade, N.V. Netherlands Antilles
<PAGE> 55
Exhibit 23(a)
DELOITTE & TOUCHE LLP (letterhead)
2000 First National Center Telephone 402-346-7788
Omaha, NE 68102-1578 Facsimile 402-346-0711
402-344-0372
INDEPENDENT AUDITORS' CONSENT
- -----------------------------
We consent to incorporation by reference in Registration Statements No.
2-88663, 33-21680, 33-57117, and 333-02785 of Valmont Industries, Inc. on
Form S-8 of our reports dated February 7, 1997 appearing in the Annual
Report on Form 10-K of Valmont Industries, Inc. for the year ended December
28, 1996.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
March 20, 1997
<PAGE> 56
Exhibit 23(b)
KPMG Peat Marwick LLP (letterhead)
Two Central Park Plaza Telephone 402-348-1450 Telefax
402-348-0152
Suite 1501
Omaha, NE 68102
233 South 13th Street Telephone 402-476-1216 Telefax
402-476-1944
Suite 1600
Lincoln, NE 68508-2041
ACCOUNTANTS' CONSENT
--------------------
The Board of Directors
Valmont Industries, Inc.:
We consent to incorporation by reference in this Registration Statement
(No. 33-21680) on Form S-8, Registration Statement (No. 2-88663) on Form S-8,
Registration Statement (No. 333-02785) on Form S-8 and Registration Statement
(No. 33-57117) on form S-8 of Valmont Industries, Inc. of our report dated
February 16, 1996 relating to the consolidated balance sheet of Valmont
Industries, Inc. and subsidiaries as of December 30, 1995 and the related
consolidated statements of operations, shareholders' equity and cash flows
and related consolidated financial statement schedule for each of the years
in the two-year period ended December 30, 1995 which report appears in or is
incorporated by reference in the December 28, 1996 Annual Report on Form 10-K
of Valmont Industries, Inc.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Omaha, Nebraska
March 19, 1997
<PAGE> 57
Exhibit 24
POWER OF ATTORNEY
The undersigned Directors of Valmont Industries, Inc., a Delaware
corporation, hereby constitute and appoint Mogens C. Bay as attorney-in-fact
in their name, place and stead to execute Valmont's Annual Report on Form 10-K
for the fiscal year ended December 28, 1996, together with any and all
subsequent amendments thereof in their capacity as Chairman of the Board and
hereby ratify all that said attorney-in-fact may do by virtue thereof.
DATED this 26th day of February, 1997.
/s/Robert B.Daugherty /s/John E. Jones
______________________________ ______________________________
Robert B. Daugherty, Director John E. Jones, Director
/s/Charles M. Harper /s/Thomas F. Madison
______________________________ ______________________________
Charles M. Harper, Director Thomas F. Madison, Director
/s/Allen F. Jacobson /s/Walter Scott, Jr.
______________________________ ______________________________
Allen F. Jacobson, Director Walter Scott, Jr., Director
/s/Lloyd P. Johnson /s/Kenneth E. Stinson
______________________________ ______________________________
Lloyd P. Johnson, Director Kenneth E. Stinson, Director
/s/Robert G. Wallace
______________________________
Robert G. Wallace, Director
<PAGE> 58
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from SEC Form 10-K and is qualified in its
entirety by reference to such financial statements.
Exhibit 27
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> DEC-28-1996
<CASH> 9,483
<SECURITIES> 0
<RECEIVABLES> 82,224<F1>
<ALLOWANCES> 0
<INVENTORY> 73,359
<CURRENT-ASSETS> 210,846
<PP&E> 228,247
<DEPRECIATION> 107,668
<TOTAL-ASSETS> 341,648
<CURRENT-LIABILITIES> 129,443
<BONDS> 0
0
0
<COMMON> 13,950
<OTHER-SE> 161,281
<TOTAL-LIABILITY-AND-EQUITY> 341,648
<SALES> 644,531
<TOTAL-REVENUES> 644,531
<CGS> 472,463
<TOTAL-COSTS> 472,463
<OTHER-EXPENSES> 135,424
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,596
<INCOME-PRETAX> 33,048
<INCOME-TAX> 11,800
<INCOME-CONTINUING> 21,248
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,248
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 0
<FN>
<F1>Net of allowances of $2,299.
<PAGE> 59
</FN>
</TABLE>
Exhibit 99
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Valmont Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Valmont
Industries, Inc. and subsidiaries as of December 30, 1995, and the related
consolidated statements of operations, shareholders' equity and cash flows
for each of the years in the two-year period ended December 30, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining on a test basis,
evidence supporting the amounts and disclosure in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Valmont
Industries, Inc. and subsidiaries as of December 30, 1995, and the results
of their operations and their cash flows for each of the years in the two-year
period ended December 30, 1995, in conformity with generally accepted
accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Omaha, Nebraska
February 16, 1996
<PAGE> 60
