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 27, 1997
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 6, 1998 there were outstanding 27,670,846 common shares of the
Company. The aggregate market value of the voting stock held by non-
affiliates of the Company on March 6, 1998 was $419,698,000.
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. [ ]
Documents Incorporated by Reference
-----------------------------------
Portions of the Company's annual report to shareholders for the fiscal
year ended December 27, 1997 (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 27,
1998 (the "Proxy Statement") are incorporated by reference in Part III.
Page 1 of 85
-----
Index to Exhibits, Page 15
----
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. Early in 1997 the Company expanded one of its core
competencies to create a new coatings division for quality protective
coatings using the galvanizing process within the Irrigation Products
segment. The description of Valmont's businesses set forth on pages 6
through 13 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 business expansions 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 and the 1997 acquisition of the remaining 20% 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, (vi) the 1996
acquisitions of TelecCentre, S.A., a French manufacturer of communication
towers, and of Gibo-Conimast Verwaltung, GmbH a German manufacturer and
distributor of pole structures for the lighting market, (vii) completion
of the construction in 1997 of a new galvanizing plant in West Point,
Nebraska, (viii) the acquisition in 1997 of a 70% interest in Valmont
Services Irrigacao, Ltd., a Brazilian manufacturer of mechanized irrigation
equipment, (ix) the acquisition of two galvanizing facilities in Tualatin,
Oregon and in Lindon, Utah in January of 1998 and (x) the expansion of
facilities in Siedlce, Poland during 1997. Divestitures include (i) the
<PAGE> 2
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.
(b) Industry Segments
-----------------
The Company's business activities are currently classified into
the Following industry segments:
Industrial Products - The manufacture and distribution of engineered
metal structures and 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 35 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 6 through 13 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 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.
<PAGE> 3
Seasonal Factors in Business.
-----------------------------
Sales in the Company's irrigation segment can be somewhat
seasonal based upon the agricultural growing season.
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 $125.6 million at the end of the 1997
fiscal year and $133.6 million at the close of 1996. It is anticipated
that most of the backlog of orders will be filled during fiscal year
1998. At year end, the backlog by segment was as follows (dollar
amounts in millions):
Dec. 27, Dec. 28,
1997 1996
--------- ---------
Industrial Products $94.9 98.7
Irrigation Products 30.7 34.9
--------- ---------
$125.6 133.6
====== ======
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 fasteners and grating. The Irrigation
Products segment involves the development, manufacture and distribution
of mechanized irrigation equipment and related products for both the
U.S. and international markets; in addition, the Irrigation Products
segment supplies galvanizing services. 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.
<PAGE> 4
Research Activities.
--------------------
The information called for by this item is hereby incorporated by
reference to the "Research and Development" on page 33 in the Company's
Annual Report.
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 27, 1997, the number of employees was 3,751.
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 35 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
<PAGE> 5
located on 109 acres and has eight buildings, with 318,000 square feet
under roof. 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 one plant
in each of the following countries: the Netherlands; Germany; Poland;
and China. The Irrigation Products segment in addition to its
operations at Valley, Nebraska, operates a mechanized irrigation
facility in Uberaba, Brazil consisting of 135,000 square feet
and a manufacturing facility for irrigation systems in Madrid, Spain.
The protective coatings division operates a new 50,000 square foot
facility in West Point, Nebraska and rents galvanizing facilities in
Tualatin, Oregon, and Lindon, Utah; these two sites are 68,000 square
feet and 36,000 square feet, respectively. 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.
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 27, 1997, their ages,
positions held, and the business experience of each during the past five
years are, as follows:
Mogens C. Bay, Age 49, Chairman and Chief Executive Officer of the
Company since January 1997. President and Chief Executive Officer of
the Company from August 1993 to December 1996 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 49, 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.
<PAGE> 6
Vincent T. Corso, Age 50, 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.
Thomas P. Egan, Jr., Age 49, Vice President, Corporate Counsel and
Secretary of the Company since 1984.
Joseph M. Goecke, Age 60, President - North American Irrigation
Division since August 1993. Vice President -Operations of the
Company's Irrigation Division from 1991 to August 1993.
Terry J. McClain, Age 50, 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 50, 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.
Brian C. Stanley, Age 55, Vice President - Investor Relations and
Controller of the Company since January 1994. Vice President and
Treasurer of the Company from 1990 to January 1994.
Mark E. Treinen Age 42, Vice President - Business Development since
January 1994. Director of Business Development of the Company from
1991 until January 1994.
<PAGE> 7
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
----------------------------------------------------------------
Matters.
--------
Item 6. Selected Financial Data.
------------------------
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 Inside back cover
5 Stock Market Price and Dividends Declared 36
5 Approximate Number of Shareholders 22 - 23
5&6 Selected Eleven Year Financial Data 22 - 23
7 Management's Discussion and Analysis 16 - 21
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
24 through 35, together with the independent auditors' report on page 37. The
supplemental quarterly financial information is incorporated herein by
reference to page 36 of the Company's Annual Report. The independent
auditors' report for the year ended December 30, 1995 is 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.
<PAGE> 8
PART III
--------
Item 10. Directors and Executive Officers of the Registrant.
---------------------------------------------------
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 the sections
entitled "Certain Shareholders", "Stock Option Grants in Fiscal Year 1997",
"Options Exercised in Fiscal Year 1997 and Fiscal Year End Values", "Long-Term
Incentive Plans", and "Section 16(a) Beneficial Reporting Compliance" in 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 24 to 35 of the Company's Annual Report to Shareholders for
the year ended December 27, 1997:
Independent Auditors' Reports - 1997 and 1996 are
on page 37 of the annual report. See Exhibit 99
for the Independent Auditors' Report for 1995.
Consolidated Balance Sheets - December 27, 1997 and
December 28, 1996
Consolidated Statements of Operations - Three-Year
Period Ended December 27, 1997
Consolidated Statements of Shareholders' Equity -
Three-Year Period Ended December 27, 1997
Consolidated Statements of Cash Flows - Three-Year
Period Ended December 27, 1997
Notes to Consolidated Financial Statements - Three-
Year Period Ended December 27, 1997
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 27, 1997 and December 28,
1996, and for the years then ended, and have issued our report thereon dated
February 6, 1998; such financial statements and report are included in the
1997 Annual Report to Shareholders of the Company and are incorporated herein
by reference. Our audits also included the 1997 and 1996 financial statement
schedule of the Company listed in Item 14 of this 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 audits. In our opinion,
such 1997 and 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.
/S/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
February 6, 1998
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 financial
statements of Valmont Industries, Inc. and subsidiaries as of December 30,
1995, and for the year then ended, as contained in the 1997 Annual Report to
Shareholders and are incorporated herein by reference. Our audit also
included the financial statement schedule of Valmont Industries, Inc. listed
in the accompanying index. 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 financial statement
schedule, when considered in relation to the consolidated financial statements
taken as a whole, present 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 27, 1997 -
Reserve deducted in balance sheet from
the asset to which it applies -
Allowance for doubtful receivables $ 2,299 194 361 2,132
======= ===== ==== =====
Fifty-three 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-two 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
======= ===== ===== =====
*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,
1998.
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 3/24/98
- -------------------------- Director, President and -----------
Mogens C. Bay Chief Executive Officer Date
(Principal Executive
Officer)
/S/ Terry J. McClain 3/24/98
- -------------------------- Vice President and -----------
Terry J. McClain Chief Financial Officer Date
(Principal Financial
Officer)
/S/ Brian C. Stanley 3/24/98
- -------------------------- 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, 1998. 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) - 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(a) - 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 4(b) - Certificate of Adjustment dated May 30, 1997 to Rights
Agreement dated as of December 19, 1995...................Page 17
Exhibit 10(a) - The Company's 1983 Stock Option Plan.....................Page 18
Exhibit 10(b) - The Company's 1988 Stock Plan and certain amendments.....Page 23
Exhibit 10(c) - 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.
Exhibit 10(d) - 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 33
Exhibit 13 - The Company's Annual Report to Shareholders
for its fiscal year ended December 27, 1997..............Page 34
Exhibit 21 - Subsidiaries of the Company..............................Page 78
Exhibit 23(a) - Consent of Deloitte and Touche LLP.......................Page 79
<PAGE> 15
Exhibit 23(b) - Consent of KPMG Peat Marwick LLP.........................Page 80
Exhibit 24 - Power of Attorney........................................Page 81
Exhibit 27 - Financial Data Schedule..................................Page 82
Exhibit 99 - Independent Auditors' Report of KPMG Peat Marwick LLP....Page 84
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(d).
<PAGE> 16
Exhibit 4(b)
CERTIFICATE OF ADJUSTMENT
This is to certify pursuant to Section 12 of the Rights Agreement,
dated as of December 19, 1995, as amended (the "Rights Agreement"),
between Valmont Industries, Inc., A Delaware corporation (the "Company")
and First National Bank of Omaha, as Rights Agent, that:
I. Statement of Facts.
At its April 28, 1997 meeting, the Company's Board of Directors
declared a two-for-one split of the shares of common stock of the
Company (the "Common Stock"), which was effected in the form of a stock
dividend on May 30, 1997.
II. Adjustments Pursuant to the Rights Agreement.
Pursuant to the provisions of the Sections 11(n) of the Rights
Agreement, effective as of May 30, 1997, the Right associated with each
share of Common Stock is hereby adjusted so that one-half Right shall be
associated with each share of Common Stock outstanding immediately after
the Distribution.
Effective the 30th day of May, 1997.
VALMONT INDUSTRIES, INC,
By: /s/ Terry J. McClain
-------------------------
Name: Terry J. McClain
Title: Senior Vice President and
Chief Financial Officer
<PAGE> 17
Exhibit 10(a)
THE VALMONT INDUSTRIES, INC.
STOCK OPTION PLAN
ARTICLE I
NAME AND PURPOSE
1.1 NAME. The name of the Plan shall be The Valmont Industries, Inc.
Incentive Stock Option Plan ("Plan") herein).
1.2 PURPOSE. The purpose of the Plan is to enable Employees to share in
the growth and prosperity of the Company by encouraging stock ownership
by Employees and to assist the Company to obtain and retain key
management personnel.
ARTICLE II
DEFINITIONS
The terms used herein shall have the following meanings, unless a
different meaning is clearly required by the context:
2.1 "Board" shall mean the Board of Directors of the Company.
2.2 "Carryover Amount" equals one-half of the difference between $100,000
and the value of stock for which the employee was granted options in any
calendar year.
2.3 "Code" shall mean the Internal Revenue Code of 1954, as amended.
2.4 "Company" shall mean the Valmont Industries, Inc., a Delaware
corporation.
2.5 "Company Stock" shall mean shares of any class of common stock, which are
issued by the Company, with dividend and voting rights no less favorable
than the voting power and dividend rights of other common stock issued by
the Company.
2.6 "Employee" shall mean any person employed by the Employer or a subsidiary
during a Plan Year.
2.7 "Employer" shall mean the Company.
2.8 "Incentive Stock Option" means any option granted to a participant under
this Plan, which the Board intends at the time it is granted, to be an
incentive stock option within the meaning of Section 422A of the code.
2.9 "Optionee" is any Employee who is granted options under the Plan.
2.10 "Participant" shall mean any Employee who meets the requirements for
participation in the Plan as described in Article III.
2.11 "Subsidiary" shall mean a corporation which is a "subsidiary corporation"
as defined in Section 425 of the Code.
<PAGE> 18
ARTICLE III
ELIGIBILITY AND PARTICIPATON
3.1 ELIGIBILITY. Every employee shall be eligible to become a Participant
in the Plan.
3.2 PARTICIPATION. The Employees who shall participate in the Plan and
thereby be eligible to receive stock options shall be such key
executive employees as the Compensation Committee of the Board
("Committee") shall select from time to time.
ARTICLE IV
LIMITS ON OPTIONS
4.1 NUMBERS. The total number of shares for which options may be granted
under this Plan shall not exceed in the aggregate 175,000 shares. This
number shall be appropriately adjusted if the number of issued shares
shall be increased or reduced by change in par value, combination,
split-up, reclassification, distribution of a dividend payable in stock,
or the like. In the event that any outstanding option issued pursuant
to the Plan shall expire or terminate, the shares allocable to the
unexercised portion of such option may again be subjected to an option
under the Plan.
4.2 SHAREHOLDER-EMPLOYEE. No Incentive Stock Option shall be granted to an
employee who, at the time the option is granted, owns stock representing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Employer. This stock ownership limitation will
not apply if the option price is at least 110 percent of the fair market
value (at the time the option is granted) of the stock subject to the
option, and the option by its terms is not exercisable more than five (5)
years from the date it is granted.
ARTICLE V
ADMINISTRATION
The Plan shall be administered by the Committee. A majority vote
of the Committee at which a quorum is present, or acts reduced to or approved in
writing by a majority of the members of the Committee, shall be the valid acts
of the Committee for the purposes of this Plan.
The Committee shall have plenary authority in its discretion but subject
to the express provisions of the Plan, to determine the terms of all options
granted under the Plan including, without limitation, the purchase price of
the Common Stock covered by each option, the employees to whom, and the time
or times at which, options shall be granted, whether an option shall be an
Incentive Stock Option or not, when an options can be exercised and whether
in whole or in installments, and the number of shares covered by each option;
and to interpret the Plan and to make all other determinations deemed
advisable for the administration of the Plan. The Committee shall have the
right to require the recipient of any stock option hereunder to remit to the
Company an amount sufficient to satisfy all applicable withholding tax
requirements prior to or after delivery of any option and to require the
recipient to do any other act or acts necessary to satisfy the
withholding tax requirements. The Committee's determination on the
foregoing matters shall be conclusive. All determinations of the
Committee shall be made by not less than a majority of its members.
The Committee may designate employees of the Company to assist the Committee
in the administration of the Plan and may grant authority to such persons to
execute option agreements or other documents on behalf of the Committee.
<PAGE> 19
Payment in full for the number of shares purchased shall be made to the
Company at the time of each exercise, except in the case of the
election of an alternative settlement method as provided hereafter in
this paragraph.
(i) The Committee, in its discretion, may provide that any option
by its terms may permit the participant to elect, subject to
Committee approval, any of the alternative settlement methods
set forth in subparagraph (iii) below.
(ii) The Committee, in its discretion, may at the request of a
participant holding an option under the Plan which does not
by its terms include the right to elect any of such alternative
methods by the participant.
(iii) The alternative settlement methods are: (a) cash equal to the
excess of the value of one share over the option price times the
number of shares as to which the option is exercised; (b) the
number of full shares having an aggregate value not greater than
the cash amount calculated under alternative (a); (c) any
combination of cash and stock having an aggregate value not
greater than the cash amount calculated under alternative (a).
For purposes of determining an alternative settlement, the value
per share shall be determined under the same method as used to
determine the option price.
Exercise of an option in any manner, including an exercise
involving an election of an alternative settlement method, shall
result in a decrease in the number of shares which thereafter may
be available, both for purposes of the Plan and for sale to any
one participant, by the number of shares as to which the option
is exercised. Election of an alternative settlement method
involving the receipt of cash shall be subject to prior approval
by the Committee at the time of such election.
Payment for such shares shall be made in cash, or with the
consent of the Committee, in shares of the Company's common stock.
The interpretation and construction by the Committee of any provisions
of the Plan or of any option granted under it shall be final. No member of
the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any option granted under it.
ARTICLE VI
The terms of Incentive Stock Options granted under this Plan
shall be as follows:
(a) The option price shall be fixed by the Committee in good faith,
but in no event be less than 100 percent of the fair market value
of the shares subject to the option on the date the option is
granted. The option price shall be paid by the Participant in
cash or, at the absolute discretion of the Committee, by the
transfer of Company stock at the time the option is exercised.
(b) Options shall not be transferrable otherwise than by will or the
laws of descent and distribution, and during an Optionee's
lifetime, an option shall be exercisable only the Optionee.
<PAGE> 20
(c) Subject to Section 4.2, the Committee shall fix the term or
duration of all options issued under this Plan provided that such term shall
not exceed ten (10) years after the date on which the option was granted and
shall not extend beyond the Optionee's employment with the Company. The
Committee shall also set the date or dates on, or after which, each option
may be exercised.
(d) No Incentive Stock Option shall be exercisable while
there is outstanding any other Incentive Stock Option which was granted to the
Employee at an earlier date. For this purpose, an option which has not been
exercised in full is outstanding until the expiration of the period which,
under its initial terms, it could have been exercised. The cancellation of
an earlier option will not enable a subsequent option to be exercised any
sooner.
(e) The aggregate fair market value, determined as of the time the
option is granted, of the stock which any Employee may be granted in any
calendar year shall not exceed $100,000 plus any unused limit carryover to
such year.
An unused Carryover Amount may be carried forward for
three (3) successive years, but only to the extent not used in an
earlier calendar year. The options granted to a Participant in any year
shall be treated as first counting toward the $100,000 ceiling for that
particular year and then using up carryovers in chronological order,
beginning with older carryovers.
(f) Each option agreement (and amendments thereof) shall contain such
terms and provisions, consistent with the requirements of this Plan,
as the Committee in its discretion shall determine, including without
limitation such terms and provisions as shall be requisite to cause certain
stock options to qualify as Incentive Stock Options. Such options need not
be identical. The option agreements shall specify whether or not an option
is an Incentive Stock Option.
ARTICLE VII
REORGANIZATION OF THE COMPANY
In the event that the Company is succeeded by another corporation in a
reorganization, merger, consolidation, acquisition of property of stock,
separation or liquidation; or in the event that the Company is
dissolved, each outstanding option will terminate, provided that each
Optionee shall have the right immediately prior to such dissolution or
liquidation, merger or consolidation, to exercise his option provided it
does not violate the provisions of Article VI (f) of this Plan.
ARTICLE VIII
MISCELLANEOUS
8.1 PAYMENT FOR STOCK. No shares shall be delivered upon the exercise of an
option until price has been paid in full.
8.2 CONTINUATION OF EMPLOYMENT. Neither this Plan nor any option granted
hereunder shall confer upon any Employee any right to continue in the
employment of the Company or limit in any respect the right of the
Company to terminate his employment at any time.
8.3 ADMINISTRATION. The Committee may make such rules and regulations and
establish such procedures as it deems appropriate for the administration
of this Plan. In the event of a disagreement as to the interpretation
of this Plan or any amendment hereto or any rule, regulation or procedure
thereunder or as to any right or obligation arising from or related to
this Plan, the decision of the Committee shall be final and binding.
Notwithstanding anything in the Plan to the contrary, the Board shall
have sole authority to make any decisions relating to participation in
the Plan by any director or officer of the Company.
<PAGE> 21
ARTICLE IX
AMENDMENT, TERMINATION AND EFFECTIVE DATE
9.1 AMENDMENT. The Board may amend the Plan from time to time as it deems
desirable and shall make any amendments which may be required so that
options intended to be Incentive Stock Options shall at all times
continue to be Incentive Stock Options for the purposes of the Code;
provided, however, the Plan may not be amended to change the number of
shares subject to the Plan or decrease the price at which options may
be granted.
9.2 TERMINATION OF PLAN. The Board may in its discretion terminate the Plan
at any time, but no such termination shall deprive Particpants of their
rights under outstanding options. Notwithstanding the preceding
sentence, no options may be granted pursuant to the Plan later than ten
(10) years after the date the Plan is adopted or the date the Plan is
approved by the shareholders of the Company, whichever is earlier.
9.3 EFFECTIVE DATE; SHAREHOLDER APPROVAL. This Plan is effective on
October 25, 1983 and options hereunder may be granted at any time subject
to the limitations contained within the Plan. No option may be exercised
unless this Plan is approved by a vote of the holders of a majority of
the outstanding shares of the Company's common stock at a meeting of the
Shareholders of the Company held within twelve (12) months following the
effective date.
<PAGE> 22
Exhibit 10(b)
VALMONT 1988 STOCK PLAN
ARTICLE I
NAME AND PURPOSE
1.1 NAME. The name of the Plan shall be the Valmont 1988 Stock Plan
("Plan").
1.2 PURPOSE. The purpose of the Plan is to enable employees to share in
the growth and prosperity of the Company by encouraging stock owner-
ship by employees to assist the Company to hire and retain key
management personnel. Incentive Stock Options, Nonqualified Stock
Options, restricted stock, bargain stock, stock appreciation rights,
And other types of stock awards may be granted under this Plan.
ARTICLE II
DEFINITIONS
The terms used herein shall have the following meanings,
unless a different meaning is clearly required by the context:
2.1 "Board" shall mean the Board of Directors of the Company.
2.2 "Code" shall mean the Internal Revenue Code of 1987, as amended.
2.3 "Committee" shall mean the Compensation Committee of the Board.
2.4 "Company" shall mean Valmont Industries, Inc., a Delaware corporation.
2.5 "Company Stock" shall mean shares of common stock issued by the
Company.
2.6 "Employee" shall mean any person employed by the Employer or a
Subsidiary during a Plan Year.
2.7 "Employer" shall mean the Company.
2.8 "Incentive Stock Option" means any option granted to a participant
under this Plan, which the Board intends at the time it is granted,
to be an incentive stock option within the meaning of Section 422A
of the Code.
2.9 "Nonqualified Stock Option" means any option granted to a Participant
under this Plan, which is not an Incentive Stock Option.
2.10 "Optionee" is any Employee who is granted options under the Plan.
2.11 "Participant" shall mean any Employee who meets the requirements for
participation in the Plan as described in Article III.
2.12 "Subsidiary" shall mean a corporation which is a "subsidiary corporation"
as defined in Section 425 of the Code.
<PAGE> 23
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Every Employee shall be eligible to become a Participant
in the Plan.
3.2 PARTICIPATION. The Employee who shall participate in the Plan and
thereby be eligible to receive, the number of, and the combination of
stock options, restricted stock, and stock appreciation rights and
other stock awards, shall be such key executive Employees as the
Compensation Committee of the Board ("Committee") shall select from
Time to time.
ARTICLE IV
TYPES OF BENEFITS
Benefits under the Plan ("Benefits") may be granted in any one of
any combination of (a) Incentive Stock Options; (b) Nonqualified
Stock Options; (c) stock appreciation rights; (d) restricted
stock awards; (e) bargain purchase of common stock; (f) bonuses
of common stock; or (g) any other form of stock benefit, as described in
this Plan.
Without limiting the Committee's authority, the Committee
may: (a) make the grant of Benefits conditional upon an election
by a Participant to defer payment of a portion of his salary; (b)
give a Participant a choice between two Benefits or combinations
of Benefits; (c) award Benefits in the alternative so that
acceptance of or exercise of one Benefit cancels the right of a
Participant to another; and (d) award Benefits in any combination
or combinations and subject to any condition or conditions
consistent with the terms of the Plan that the Committee in its
sole discretion may determine.
ARTICLE V
SHARES SUBJECT TO PLAN
The total number of shares which may be issued under this
Plan shall not exceed in the aggregate 300,000 shares. This
number shall be appropriately adjusted if the number of issued
shares shall be increased or reduced by change in par value,
combination, split-up, reclassification, distribution of a
dividend payable in stock, or the like. In the event that any
outstanding option, restricted stock or other Benefit issued
pursuant to the Plan shall expire or terminate, the shares
allocable to the unexercised portion of such Benefit may again be
subjected to an award under the Plan.
ARTICLE VI
OPTIONS
The Board from time to time may grant Incentive Stock
Options and Nonqualified Stock Options. Each option agreement
between the Company and the Participant shall be in such form and
shall contain such provisions as the Committee from time to time
shall deem appropriate. Option agreements need not be identical.
The option agreements shall specify whether or not an option is
an Incentive Stock Option.
The terms of Incentive Stock Options granted shall include
the following:
(a) The option price shall be fixed by the Committee in good faith, but in
no event be less than 100 percent of the fair market value of the shares
subject to the option on the date the option is granted. The option
price shall be paid by the Participant in cash or, at the absolute
discretion of the Committee, by the transfer of Company stock at the
time the option is exercised.
<PAGE> 24
(b) Options shall not be transferrable otherwise than by will or the laws of
descent and distribution, and during an Optionee's lifetime, an option
shall be exercisable only by the Optionee.
(c) Subject to the limitations below on a 10% owner, the Committee shall fix
the term or duration of all options issued under this Plan provided that
such term shall not exceed ten years after the date on which the option
was granted and shall not extend beyond the Optionee's employment with
the Company. The Committee shall also set the date or dates on, or after
which, each option may be exercised.
(d) The aggregate fair market value, determined as of the time the option is
granted, of the stock which may become exercisable for the first time by
any Employee during any calendar year shall not exceed $100,000.
(e) Each option agreement (and amendments thereof) shall contain such terms
and provisions, consistent with the requirements of this Plan, as the
Committee in its discretion shall determine, including without limitation
such terms and provisions as shall be requisite to cause certain stock
options to qualify as Incentive Stock options.
Notwithstanding any other provisions of the Plan, no
Incentive Stock Option shall be granted to an Employee who, at
the time the option is granted, owns stock representing more than
ten percent of the total combined voting power of all classes of
stock of the Employer. This stock ownership limitation will not
apply if the option price is at least 110 percent of the fair
market value (at the time the option is granted) of the stock
subject to the option, and the option by its terms is not
exercisable more than five years from the date it is granted.
ARTICLE VII
RESTRICTED SHARES
The Board from time to time may award restricted shares
("Restricted Shares") to any Participant in the Plan. Each
Participant who is awarded Restricted Shares shall enter into an
agreement with the Company in a form specified by the Committee
agreeing to the terms and conditions of the award and such other
matters consistent with the Plan as the Committee in its sole
discretion shall determine.
Restricted Shares awarded to Participants may not be sold,
transferred, pledged or otherwise encumbered during a Restricted
Period commencing on the date of the award and ending at such
later date as the Committee may designate at the time of the
award. The Participant shall have the entire beneficial
ownership and all rights and privileges of a shareholder with
respect to Restricted Shares awarded to him, including the right
to receive dividends and the right to vote such Restricted
Shares. All of the Restricted Shares shall be forfeited and all
rights of the Participants to such Restricted Shares shall
terminate without further obligation on the part of the Company
upon termination of employment of the Participant with the
Company or a Subsidiary before the end of the restricted period
applicable to such restricted shares, provided that the Committee
may provide that Restricted Shares are not so forfeited upon
termination of employment on account of retirement, death or
disability.
The Committee may provide any other terms or conditions with
regard to Restricted Shares that it deems appropriate.
Restricted Shares and agreements related thereto need not be identical.
<PAGE> 25
ARTICLE VIII
STOCK APPRECIATION RIGHTS
The Board from time to time may grant stock appreciation
rights ("Stock Appreciation Rights") to any Participant in the
Plan. A Stock Appreciation Right shall be evidenced by a stock
appreciation right agreement between the Company and the
Participant, which shall contain such terms and conditions
consistent with the Plan as the Committee from time to time shall
deem appropriate.
A Stock Appreciation Right may be satisfied by the Company
in cash or in shares of common stock of the Company, as
determined by the Committee. The agreement may limit the maximum
amount of appreciation taken into account under a Stock
Appreciation Right.
A Stock Appreciation Right may be granted in conjunction
with an Incentive Stock Option, a Nonqualified Stock Option,
Restricted Shares or any other award hereunder. At the
discretion of the Committee, a Stock Appreciation Right may be
exercisable only to the extent that a related award is
exercisable and only upon surrender of a related award. In the
event of the exercise of a Stock Appreciation Right the exercise
of which is conditioned upon surrender of a related award, the
number of shares that may be issued under this Plan shall be
reduced by the number of shares covered by the award or portion
thereof surrendered.
The Committee may provide any other terms or conditions with
regard to Stock Appreciation Rights that it deems appropriate.
Stock Appreciation Rights and agreements related thereto need not
be identical.
ARTICLE IX
OTHER AWARDS
The Board may grant any other stock or stock-related awards
to a Participant under this Plan that the Board deems
appropriate, including, but not limited to, the bargain purchase
of Company stock and stock bonuses. Any such Benefits and any
related agreements shall contain such terms and conditions as the
Committee deems appropriate. Such awards and agreements need not
be identical.
ARTICLE X
ADMINISTRATION
The Plan shall be administered by the Committee. A majority
vote of the Committee at which a quorum is present, or acts
reduced to or approved in writing by a majority of the members of
the Committee, shall be the valid sets acts of the Committee for
the purposes of this Plan.
The Committee shall have plenary authority in its discretion
but subject to the express provisions of the Plan, to determine
the terms of all Benefits granted under the Plan including,
without limitation, the purchase price, if any, the Employees to
whom, and the time or times at which Benefits shall be granted,
when an option can be exercised, or Restricted Shares, Stock
Appreciation Rights and other Benefits become forfeitable, and
whether in whole or in installments, and the number of shares
covered by a Benefit; and to interpret the Plan and to make all
other determinations deemed advisable for the administration of
the Plan. All determinations of the Committee shall be made by
not less than a majority of its members. The Committee may
designate Employees of the Company to assist the Committee in the
administration of the Plan and may grant authority to such
persons to execute option agreements or other documents on behalf
of the Committee. Notwithstanding anything in this Plan to the
contrary, the Board shall have sole authority to make all
decisions relating to participation in the Plan by any director
or officer of the Company.
<PAGE> 26
Payment in full for the number of shares purchased under any
Benefit, including an option, shall be made to the Company at the
time of each exercise, except in the case of the election of an
alternative settlement method as provided hereafter in this
paragraph.
(i) The Committee, in its discretion, may provide that any Benefit by its
terms may permit the participant to elect, subject to Committee
approval, any of the alternative settlement methods set forth in
subparagraph (iii) below.
(ii) The Committee, in its discretion, may at the request of a Participant
holding a Benefit under the Plan which does not by its terms include the
right to elect any of such alternative settlement methods, permit the
election of any of such alternative methods by the Participant.
(iii) The alternative settlement methods are: (a) cash equal to the excess
of the value of one share over the option or purchase price times the
number of shares as to which the award is exercised; (b) the number of
full shares having an aggregate value not greater than the cash amount
calculated under alternative (a); (c) any combination of cash and stock
having an aggregate value not greater than the cash amount calculated
under alternative(a). For purposes of determining an alternative
settlement, the value per share shall be determined under the same
method as used to determine the option price in the case of stock
options.
Exercise of an option or other Benefit in any manner, including an
exercise involving an election of an alternative settlement method,
shall result in a decrease in the number of shares which thereafter
may be available, both for purposes of the Plan and for sale to any
one participant, by the number of shares as to which the option or
Benefit is exercised. Election of an alternative settlement method
Involving the receipt of cash shall be subject to prior approval by
The Committee at the time of such election.
Payment for such shares shall be made in cash, or with the
consent of the Committee, in shares of the Company's common stock.
The interpretation and construction by the Committee of any
provisions of the Plan or of any Benefit granted under it shall
be final. No member of the Committee shall be liable for any
action or determination made in good faith with respect to the
Plan or any Benefit granted under it.
ARTICLE XI
ADJUSTMENT UPON CHANGES OF STOCK
If any change is made on the shares of common stock of the
Company be reason of any merger, consolidation, reorganization,
recapitalization, stock dividend, split up, combination of
shares, exchange of shares, change in corporate structure, or
otherwise, appropriate adjustments shall be made by the Committee
to the kind and maximum number of shares subject to the Plan and
the kind and number of shares and price per share of stock
subject to each outstanding Benefit. No fractional shares of
stock shall be issued under the Plan on account of any such
adjustment, and rights to shares always shall be limited after
such an adjustment to the lower full share.
<PAGE> 27
ARTICLE XII
MISCELLANEOUS
12.1 CONTINUATION OF EMPLOYMENT. Neither this Plan nor any Benefit granted
hereunder shall confer upon any Employee any right to continue in the
employment of the Company or limit in any respect the right of the
Company to terminate his employment at any time.
12.2 ADMINISTRATION. The Committee may make such rules and regulations and
establish such procedures as it deems appropriate for the administration
of this Plan. In the event of a disagreement as to the interpretation
of the Plan or any amendment hereto or any rules, regulation or
procedure thereunder or as to any right or obligation arising from or
related to this Plan, the decision of the Committee shall be final and
binding. Notwithstanding anything in the Plan to the contrary, the
Board shall have sole authority to make all decisions relating to
Participation in the Plan by any director or officer of the Company.
12.3 WITHHOLDING. The Company shall have the right to withhold with respect
to any payments made to Participants under the Plan any taxes required
by law to be withheld because of such payments. Each Participant shall
take whatever action that the Committee deems appropriate to comply
with the law regarding withholding of Federal or State taxes.
12.4 EFFECTIVE DATE. This Plan is effective on February 26, 1988 ("Effective
Date"). Benefits hereunder may be granted at any time subject to the
limitations contained within the Plan. No Company stock may be issued
unless this Plan is approved by a vote of the holders of a majority of
the outstanding shares of the Company's common stock at a meeting of
the shareholders of the Company held within twelve months following the
Effective Date.
ARTICLE XIII
AMENDMENT AND TERMINATION
13.1 AMENDMENT. The Board may amend the Plan from time to time as it deems
desirable and shall make any amendments which may be required so that
options intended to be Incentive Stock Options shall at all times
continue to be Incentive Stock Options for the purposes of the Code;
provided, however, the Plan may not be amended to change the number of
shares subject to the Plan or decrease the price at which options may
be granted.
13.2 TERMINATION OF PLAN. The Board may in its discretion terminate the
Plan at any time, but no such termination shall deprive Participants
of their rights under outstanding Benefits. Notwithstanding the
preceding sentence, no Incentive Stock options may be granted pursuant
to the Plan later than ten years after the date the Plan is adopted or
the date the Plan is approved by the shareholders of the Company,
whichever is earlier.
<PAGE> 28
AMENDMENT NO. 1 TO VALMONT 1988 STOCK PLAN
Section 12.3 of the Valmont 1988 Stock Plan is hereby amended to read
as follows:
12.3 WITHHOLDING. The Company shall have the right to withhold with respect
to any payments made to participants under the Plan any taxes required
by law to be withheld because of such payments. With respect to any
such withholding:
(a) Each Participant shall take whatever action that the Committee
deems appropriate to comply with the law regarding withholding
of taxes.
(b) When a Participant is obligated to pay to the Company an amount
required to be withheld under applicable income tax laws in
connection with a Benefit, the board may, in its discretion and
subject to such rules as it may adopt, permit the Participant to
satisfy this obligation, in whole or in part, either (i) by having
the company withhold from the shares to be issued upon the
exercise of an option or a stock appreciation right or upon the
receipt of a Benefit, shares having a fair market value that would
satisfy the withholding amount due or (ii) by delivering to the
Company already-owned shares to satisfy the withholding amount.
<PAGE> 29
AMENDMENT TO THE VALMONT 1988 STOCK PLAN
The Valmont 1988 Stock Plan (the "Plan") is hereby amended as follows:
A. Section 2.11 is amended to read as follows:
2.11 "Participant" shall mean any Employee or director who meets the
requirements for participant in the Plan as described in Article III.
B. A new Section 2.13 is added as follows:
2.13 "Director" shall mean a director of the Company.
C. A new Section 2.14 is added as follows:
2.14 "Change of Control" shall mean:
(i) The acquisition (other than from Valmont) by any person, entity or
"group", within the meaning of Section 13(d) (3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act"), (excluding any
acquisition or holding by (i) Valmont or its subsidiaries, (ii) any
employee benefit plan of Valmont or its subsidiaries which acquires
beneficial ownership of voting securities of Valmont and (iii)
Robert B. Daugherty, his successors and assigns and any tax-exempt
entity established by him of beneficial ownership (within the
meaning of Rule 13d-3 promulagated under the Exchange Act) of 50%
or more or the combined voting power of Valmont's then outstanding
voting securities entitled to vote generally in the election of
directors; or
(ii) Individuals who, as of the date hereof, constitute the Board (as of
the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the board, provided that any
person becoming a director subsequent to the date hereof whose
election, or nomination for the election by Valmont's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be, for purposes of this
Agreement, considered as through such person were a member of the
Incumbent board; or
(iii) Approval by the stockholders of Valmont of a reorganization,
merger or consolidation, in each case, with respect to which persons
who were the stockholders of Valmont immediately prior to such
reorganization, merger or consolidation do not, immediately there-
after, own more than 50% of the combined voting power entitled to
vote generally in the election of directors of the reorganized,
merged or consolidated company's than outstanding voting securities,
or a liquidation or dissolution of Valmont or of the sale of all or
substantially all of the assets of Valmont.
D. A new Section 3.3 is added as follows:
3.3 DIRECTOR PARTICIPATION. Each director who is not an Employee or the
Company shall receive a non-discretionary award of 1,000 Shares each year
immediately following the annual stockholders' meeting. The award shall
be granted to those directors elected at such meeting. Each director
shall be issued a common stock certificate for such number of shares.
Termination of the director's services for any reason other than (i)
Death, (ii) retirement from the board at mandatory retirement age, or
(iii) resignation or failure to stand for re-election, in either case
with the prior approval of the Board, will result in forfeiture of the
Shares. If the Shares are forfeited, the director shall return the
number of forfeited Shares, or equivalent value, to the Company. The
number of Shares awarded to a director annually shall be appropriately
adjusted in the event of any stock changes as described in Article XI.
Directors are not eligible to receive any other Benefit under the Plan.
<PAGE> 30
E. The last sentence of Article V is amended to read as follows:
In the event that any outstanding option, Restricted Stock or other
Benefit issued pursuant to the Plan shall expire or terminate, the shares
allocable to the unexercised or forfeited portion of such Benefit may
again be subject to an award under the Plan. In addition, any shares
which are used for the full or partial payment of the purchase price
(or applicable withholding taxes) for shares with respect to which an
option is exercised may again be used for an award under the Plan.
F. The first paragraph of Article IV is amended to read as follows:
Benefits under the Plan ("Benefits") may be granted in any one or any
Combination of (a) Incentive Stock Options; (b) Nonqualified Stock
Options; (c) stock appreciation rights; (d) restricted stock awards;
(e) bargain purchase of common stock; (f) bonuses of common stock;
(g) any other form of stock benefit; or (h) cash.
G. A new paragraph is added at the end of to Article VI as follows:
The Committee may grant a replacement option (a "Replacement Option")
to any Employee who exercises all or part of an option granted under
this Plan using Qualifying Stock (as herein defined) as payment for the
purchase price. A Replacement Option shall grant to the Employee the
right to purchase, at the fair market value as of the date of said
exercise and grant, the number of shares of stock equal to the sum of
the number of whole shares (i) used by the Employee in payment of the
purchase price for the option which was exercised and (ii) used by the
Employee in connection with applicable withholding taxes on such
transaction. A Replacement Option may not be exercised for six months
following the date of grant, and shall expire on the same date as the
option which it replaces. Qualifying Stock is stock which has been owned
by the Employee for at least six months prior to the date of exercise and
has not been used in a stock-for-stock swap transaction within the
preceding six months.
H. The second paragraph of subsection (iii) of Article X is deleted.
I. A new Section 12.5 is added as follows:
On the date of a Change of Control, all outstanding options and stock
appreciation rights shall become immediately exercisable and all
restrictions with respect to Restricted Stock shall lapse. Following
such a Change of Control, the Committee shall grant the request of any
Employee to pay for shares purchased under any Benefit by using an
alternative settlement method described in the first paragraph of
subsection (iii) of Article X.
J. This amendment to the Plan shall be effective upon approval by stock-
holders of the Company at the 1990 annual stockholders' meeting.
<PAGE> 31
THIRD AMENDMENT TO THE VALMONT 1988 STOCK PLAN
The Valmont 1988 Stock Plan (the "Plan") was approved by
Valmont stockholders on April 25, 1988. Further amendments were
approved by Valmont stockholders on April 23, 1990. The Valmont
1988 Stock Plan, as previously amended, is hereby further amended
by deleting in its entirety the last sentence of Article V (which
was added by the amendment approved by stockholders on April 23,
1990). The deleted sentence currently reads as follows:
In addition, any shares which are used for the full or partial payment
of the purchase price (or applicable withholding taxes) for shares with
respect to which an option is exercised may again be used for an award
under the Plan.
FOURTH AMENDMENT TO THE VALMONT 1988 STOCK PLAN
The Valmont 1988 Stock Plan (as previously amended, the
"Plan") is hereby further amended as follows:
A. Section 3.3 is amended by adding the following
sentences immediately preceding the last sentence of Section 3.3:
In addition, each director who is not an Employee of the Company shall
receive a non-discretionary award of a Nonqualified Stock Option for
2,000 shares of Company Stock exercisable at the closing price of the
Company's common stock on the date of grant; such award shall be made
on the third business day following the public release by the Company
of its quarterly earnings for the second quarter of fiscal 1995, and
(ii) annually thereafter on the date of and following completion of the
Company's annual stockholders' meeting (commencing with the 1996 annual
Stockholders' meeting). The number of nonqualified options awarded to
a director shall be appropriately adjusted in the event of any stock
changes as described in Article XI.
B. This Fourth Amendment to the Plan shall be effective upon its
approval by the stockholders of the Company, and any grant of Nonqualified
Stock Options pursuant to the Fourth Amendment shall be expressly conditioned
upon such stockholder approval.
<PAGE> 32
Exhibit 11
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Statement Re: Computation of Per Share Earnings
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Net earnings $ 37,544 $ 21,248 $ 24,759
======= ====== ======
Average number of shares outstanding:
Basic 27,520,946 27,308,324 27,018,350
Diluted 28,206,670 28,058,932 27,476,794
========== ========== ==========
Earnings per share:
Basic $ 1.36 $ 0.78 $ 0.92
Diluted 1.33 0.76 0.90
====== ====== ======
</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> 33
(FRONT COVER)
Providing Efficient
Water Management
to meet the world's
growing demand For food
AND supplying
highly engineered
poles, towers & services for
Infrastructure Development
Worldwide
VALMONT LOGO:
1997 ANNUAL REPORT
<PAGE> 34
(INSIDE FRONT COVER)
Valmont is an international manufacturing company with operations
around the world. Valmont designs and manufactures: mechanized
irrigation equipment to enhance food production through efficient
water management; poles, towers and structures for lighting,
utility and communication applications; and fabricated products
for various industrial uses. Valmont also provides custom
coatings and installation services. Valmont operates 20 plants
located in nine countries in North and South America, Europe and
Asia and markets its products in more than 100 countries.
Brenham, Texas, USA
Elkhart, Indiana, USA
Lindon, Utah, USA
Salem, Oregon, USA
Springville, Utah, USA
Tualatin, Oregon, USA
Tulsa, Oklahoma, USA
Valley, Nebraska, USA
West Point, Nebraska, USA
St Hubert, Quebec, Canada
Uberaba, Brazil
Charmeil, France
Creuzier-le-Neuf, France
Lempdes, France
Rive-de-Gier, France
Gelsenkirchen, Germany
Maarheeze, The Netherlands
Madrid, Spain
Siedlce, Poland
Shanghai, China
Corporate Headquarters
Omaha, Nebraska, USA
Contents
________________________________________
www.valmont.com
Letter to Shareholders
________________________________________
2 From the Chairman
About Valmont
________________________________________
6 Water Management
10 Infrastructure Development
14 Financial Objectives and Results
Financial Review
________________________________________
16 Management's Discussion and Analysis
22 Selected Eleven-Year Financial Data
24 Consolidated Statements of Operations
25 Consolidated Balance Sheets
26 Consolidated Statements of Cash Flows
27 Consolidated Statements of Shareholders' Equity
28 Notes to Consolidated Financial Statements
35 Business Segment Information
36 Quarterly Financial Data
37 Report of Independent Accountants
38 Report of Management
39 Officers and Management
40 Board of Directors
41 Shareholder Information
MAP ILLUSTRATION:
This report contains forward-looking statements in the Letter to
Shareholders, About Valmont, and Management's Discussion and
Analysis. The statements reflect management's current views and
estimates of future economic circumstances, industry conditions,
company performance and financial results. The statements are
based on many assumptions and factors including availability and
prices of raw materials, product pricing, competitive environment
and related market conditions, operating efficiencies, access to
capital and actions of governments. Any changes in such
assumptions or factors could produce significantly different
results.
(END OF INSIDE FRONT COVER)
<PAGE> 35
Valmont Industries, Inc. and Subsidiaries
Financial Highlights
______________________________________________________________________________
(Dollars in millions, except per share amounts)
Operating results and ratios for 1996 are before asset valuation
charge and for 1993 are from continuing operations before
restructuring charge.
<TABLE>
<CAPTION>
1997 1996 1995
__________________________________________________________________________
Operating Results
<S> <C> <C> <C>
Net sales $ 622.5 $ 644.5 $ 544.6
Net earnings 37.5 31.3 24.8
Diluted earnings per share 1.33 1.12 0.90
Dividends per share 0.21875 0.1875 0.15
Financial Position
Shareholders' equity $ 207.1 $ 175.2 $ 159.3
Shareholders' equity per share 7.49 6.41 5.87
Long-term debt as a % of invested capital 10.4% 12.3% 17.3%
Operating Ratios
Gross profit as a % of net sales 27.2% 26.7% 26.6%
Operating income as a % of net sales 10.0% 8.1% 7.7%
Net earnings as a % of net sales 6.0% 4.9% 4.5%
Return on beginning equity 21.4% 19.7% 18.0%
Return on invested capital 14.6% 13.8% 12.5%
Year-End Data
Shares outstanding (000) 27,641 27,330 27,120
Approximate number of shareholders 5,400 4,400 3,900
Number of employees 3,751 4,868 4,166
</TABLE>
GRAPHS:
Net Sales
Diluted Earnings Per Share
Return on Invested Capital
1997 Annual Report
1
<PAGE> 36
PULL QUOTE:
"We again beat our
financial objectives
in 1997 and
further strengthened
Valmont's leadership
position in our industries."
1997 was another good year for Valmont. We again exceeded all our
financial objectives and established an enhanced organizational
structure designed to facilitate growth in our two main
businesses. We were fortunate to have strong market conditions in
most of our businesses and managed to further consolidate our
leadership positions.
The year was not without challenges, however. In Europe, the
drive toward qualifying for a single European currency led several
countries to curtail spending programs and in China it proved more
costly and time consuming than we expected to build our
distribution channels.
PHOTO:
Mogens C. Bay
Chairman and Chief Executive Officer
Financial Objectives 1997 Results
___________________________________________
Increase trendline earnings 15% per year. 19.8%
Achieve a minimum 10% after-tax
return on invested capital. 14.6%
Maintain long-term debt as a percent
of invested capital at less than 40%. 10.4%
___________________________________________
As we enter 1998, the market drivers for our businesses are
favorable worldwide with the possible exception of the wireless
communication industry in this country, where there is some
uncertainty as to the pace of further buildout of the cellular and
PCS systems. We are excited about the opportunities we see
developing today and expect 1998 to be another strong year.
1997 Annual Report
2
<PAGE> 37
PULL QUOTE:
"Tomorrow's
challenge is to take
advantage of the
vast opportunities
in water management
for agriculture
beyond
what we are
doing today."
Water Management for Agriculture
As you fly around the world, you cannot help but notice all those
large, green circles. They are fields of crops irrigated with
center pivots, our type of water management equipment. What I get
excited about are all the places where there are no green
circles...yet.
The demand for food products will continue to grow as the world's
population increases and diets improve. Efficient use of the
world's water supply is key to meeting the future demand for food
and fiber. Center pivot and linear move irrigation equipment is
by far the most efficient way to irrigate large scale agriculture,
often saving up to 50% compared to the amount of water used by
traditional forms of irrigation.
Approximately two-thirds of the world's fresh water is used for
agriculture today and, in some countries, that figure is as high
as 80% to 90%. Competition for fresh water will only increase.
Urban and industrial demand for water will force agriculture to
use a lesser share of the world's fresh water supply in the
future.
PHOTO:
Effective water management is a big challenge facing both the
developed and developing nations of the world. Regardless of the
status of the agricultural economy, there is no alternative to
managing scarce water resources well if we are to produce the
crops needed to feed the population of the next century.
Our task is to continue to provide farmers with ever more
efficient ways to manage their water resources. This includes
equipment as well as the scheduling techniques and management
support systems leading to precision farming. Areas of growth
opportunities for Valmont include technologies for sprinklers and
low volume irrigation products such as drip, tape and micro
sprays. Today, we have leveraged our water management expertise
by putting our irrigation equipment to good use in other sectors,
the most important of which is waste water treatment. Through the
use of center pivots, liquid waste from agriculture, industry and
municipal treatment facilities can be applied to the land where
chemical and biological actions convert the organic material to
plant nutrients.
1997 Annual Report
3
<PAGE> 38
Infrastructure Development
If you drive on just about any road...past the barricades and
around the temporary detours...you realize just how much
infrastructure development activity is taking place around the
world. This vast economy includes new road construction, upgraded
signage, enhanced traffic controls and better lighting to increase
efficiency; more outdoor lighting at commercial businesses to
improve safety; expanding electrical transmission and distribution
systems; and new poles and towers to support the demand for
wireless communication. All this translates into a growing demand
for our products and services for the foreseeable future.
We have a competitive advantage in both our pole and tower
businesses through our ability to leverage manufacturing and
engineering capabilities not only among major product
groups...lighting, utility and wireless communication...but also
among our plants around the world. This enables us to take
advantage of the growing demand in the infrastructure development
markets.
It was estimated in 1993 that nearly $70 billion would be needed
annually to meet highway capital investment needs in this country
alone. Although highway spending has increased each year since
then, less than $40 billion has been spent annually. Federal,
state and local governments are now faced with the reality that
spending for infrastructure must increase for ongoing maintenance
and to relieve congestion created by a rising population. Valmont
manufactures the structures for lighting, signage and traffic
signals that are necessary to address this problem.
Deregulation in the utility industry and an increasing world
demand for electricity at competitive rates have created new
opportunities for us to serve our utility customers. In response,
we have formed strategic alliances with utilities to jointly seek
more effective ways for them to deliver power at the lowest
possible cost.
Even though the developed countries of the world are well into
building out their wireless communication systems, projections
show that the number of cell phone subscribers will continue to
grow steadily in the years ahead. Countries such as Brazil and
China present great opportunities as they begin to rapidly expand
their systems. In the developing world, countries will often
switch to a wireless network, skipping hard-wired systems.
People
Throughout our history it is our ability to attract the best
people in our industries that enabled us to create the leadership
positions we enjoy around the world today. One of the greatest
challenges we face going forward is finding and retaining top
talent. Our growth in the future will not be limited by the
opportunities of the markets in which we participate but rather by
our ability to build an organization to take advantage of these
opportunities. This includes our distribution channels through
which we go to market. I am proud to say we have the finest
employees, dealers and representatives in the marketplace...our
greatest competitive advantage.
1997 Annual Report
4
<PAGE> 39
PULL QUOTE:
"One
competitive advantage
we have in the global
marketplace is our
ability to leverage
our engineering,
manufacturing and
marketing capabilities
around the world."
Global Markets - Global Growth
Valmont competes in the global market. As we are creating a
worldwide network of plants and capabilities, let me emphasize
that we are being prudent in our international investment
strategies. We are planting "seeds of opportunity" by making
limited investments until we have established ourselves and better
understand these new markets.
Increasing shareholder value through profitable sales growth
remains our strategic objective. While North America continues to
be our strongest, most developed market, we must continue to
expand our presence in the international arena.
We will retain our leadership positions only by meeting the
challenges that impact our core industries today and in the
future. At Valmont, we welcome these challenges. Through the
talent, hard work and dedication of our people around the world,
we aim to continue to be the global leader in providing efficient
water management for agriculture and supplying highly engineered
poles, towers and services for infrastructure development.
PHOTO:
MOGENS C. BAY SIGNATURE:
Mogens C. Bay
Chairman & Chief Executive Officer
1997 Annual Report
5
<PAGE> 40
PIE CHART:
Industry 27%
Agriculture 65%
Household & Municipalities 8%
Agriculture currently uses 65% of the world's fresh water.
Irrigation consumes 80% to 90% of the water supplies in some
countries. There is no alternative to the efficient management of
water in the future.
GRAPHS:
Irrigation and Coatings Products
Net Sales ($ In Millions)
Operating Income ($ In Millions)
Until recently, fresh water was considered cheap and plentiful,
but now is recognized as valuable and scarce. Efficient water
management through the use of Valmont's type of mechanized
irrigation equipment can save as much as 50% of the water needed
compared to less efficient irrigation methods. The center pivots
on the fields in Brazil shown at the right help increase
production and lower labor costs while conserving scarce water
resources.
VALLEY LOGO:
..."The Most Trusted
Name In Irrigation"
6
<PAGE> 41
Valmont Industries, Inc. and Subsidiaries
LEFT SIDE WATER MANAGEMENT ILLUSTRATIONS:
Top to bottom:
Valley center pivot
Precise application of water
Valley linear move
Valley modular control panel
Water Management
________________________________________
Efficient water management is absolutely essential to the
continued economic growth of the nations of the world. It is
predicted that global food production must double in the next
thirty years to satisfy the needs of a growing world population
that is undergoing a dramatic improvement in their diets. These
forces are driving the need for higher production of feed grains
worldwide.
The increase in food production must take place without an
increase in the number of acres farmed, as actual tillable acreage
has decreased over the past thirty years and continues to be
overtaken by urban development. The realities of finite supplies
of land and fresh water are additional challenges to increasing
food production. Agriculture uses over 65% of the world's
available fresh water. In some countries, this climbs to as high
as 80% to 90%. Because irrigated farmland is twice as productive
as non-irrigated, efficient water management through mechanized
irrigation equipment must play a major role in helping to feed
this hungry world.
Unfortunately, all irrigation is not equally efficient. Most of
the world continues to use a form of irrigation that began in
ancient Egypt...flooding the field with water. This type of
irrigation, referred to as "flood" or "gravity flow," can waste
more than 50% of the water put onto the field and cause
environmental damage due to soil erosion and chemical run-off.
Modern mechanized irrigation delivers the precise amount of water,
fertilizer and chemicals that growing plants need, exactly at the
time they need it. Mechanized irrigation is scheduled and
controlled so the water applied fills the root zone, without
"leaching" down to the groundwater or running off the end of the
field.
Irrigation Technology
The answer to the challenge of doubling food and fiber production
without using more land or water lies in technology.
By using tubes that drop down from the overhead pipe to minimize
loss of water due to wind or by using fabric "socks" that trail
the moving system dispensing water in a slow trickle, growers
today have truly begun to practice efficient water management
through the precise application of water.
As the technology leader, Valmont pioneered the use of
computerized controls in mechanized irrigation that enhances the
capabilities and sophistication of existing and new equipment.
Modern technology allows a farmer to monitor and control dozens of
systems from a home computer or cell phone. Continuous research
and development in this area will bring numerous new product
introductions and enhancements over the coming years.
1997 Annual Report
7
<PAGE> 42
PHOTO:
Vincent T. Corso
Group President and
Chief Operating Officer
Irrigation and Coatings Group
WATER MANAGEMENT ILLUSTRATION:
Farmers can monitor and control their pivots from their home
computer or through the use of radio and phone communications.
Water Management
(continued)
________________________________________
PULL QUOTE:
"Valmont is
the leading
manufacturer of
mechanized
irrigation equipment.
We are focused
on manufacturing
superior products
that differentiate
us from the
competition
and improving
the processes,
procedures and
tools that make
us the low cost
producer."
The introduction of another new product, the Universal Linear, has
been very successful, with installations on four continents.
Rather than pivoting around a fixed point in the center of a
field, the Universal Linear moves from one end of a rectangular
field to the other, pivoting at each end of the field.
The Universal Linear is ideal for smaller and rectangular fields
or irregular shaped ones. This innovative design increases the
range of fields that can be successfully irrigated using Valmont
equipment worldwide.
Recently, Valmont introduced a chemical application device called
Accu-Pulse. This precision applicator is a separate line on a
center pivot or linear move machine that is installed beneath the
main water pipe to apply chemicals with the precision that is
superior to aerial application or other traditional spraying
methods.
Initial trials of this technology indicate that the amount of
chemicals applied to the crops could be less than usually
recommended. This represents a savings to the farmer by lowering
chemical costs and, at the same time, protecting the environment
by avoiding over-application.
Another growing market opportunity is the need to find alternative
means to distribute treated municipal, industrial and agricultural
wastewater. Valmont's PolySpan(TM) technology, where a polyethylene
sleeve lines the main pipeline, allows efficient irrigation
equipment to distribute corrosive wastewater. This "re-use" of
water will play an even greater role in the future in the U.S. as
well as around the world.
1997 Annual Report
8
<PAGE> 43
BRAZIL ILLUSTRATION:
Valmont Irrigation Manufacturing Plant
Uberaba, Brazil
________________________________________
Value-Added Distribution
Valley dealers are crucial to the continuous introduction of new
technology to mechanized irrigation. They receive intensive
training that allows them to provide unrivaled service and
consulting expertise to their customers.
Valley dealers offer their products and services at nearly 500
locations worldwide, providing advice, mechanized irrigation
equipment and replacement parts. The Valley dealer organization
has helped make Valmont the clear world leader with the most
extensive and well-equipped system for delivering irrigation
products. For markets outside the U.S., Valmont manufactures a
sizeable portion of the irrigation pipe and structural parts
overseas, with gearboxes, controls, nozzles and other components
shipped from the United States.
Prepared for the Future
As a manufacturer, Valmont continues to make significant
improvements in production efficiency. Much of this success has
been due to the work of self-directed teams throughout the
Company. Initiated more than seven years ago, these teams
continually improve processes and products.
Major worldwide economic and population trends are helping drive
Valmont's irrigation business. Valmont technology will play an
ever-increasing role in the efficient management of precious fresh
water, while helping produce the food necessary to feed the
growing population worldwide.
Coatings
Valmont's experience in galvanizing its steel products has led to
the formation of a separate Coatings Division that is growing
rapidly. The Company currently has four coatings facilities in
the United States that apply high quality, hot-dipped galvanizing
to steel products as a long-lasting protective coating.
The Coatings Division provides custom finish coatings for products
and components manufactured by other companies in addition to many
of Valmont's products. Because of its extensive process
capabilities, Valmont can handle steel up to 60 feet long in
virtually any shape or configuration.
A study by the National Bureau of Standards of the aging
infrastructure in the United States estimated corrosion costs to
be over 4% of the Gross National Product. Based on this estimate,
the cost of corrosion in the U.S. today exceeds $200 billion per
year, 15% of which could be saved by better utilization of
existing technology. Galvanizing is a proven technology for
corrosion protection that supports expanding infrastructure
growth.
The construction of new facilities and acquisitions have placed
Valmont as an industry leader and one of the highest volume
galvanizers in North America. Future growth will support both
internal requirements and the expanding commercial coatings
market.
PIVOT ILLUSTRATION:
The Valley Universal Linear allows smaller fields to receive the
same benefits from mechanized irrigation as larger fields. A 4-
wheel ditch feed Universal Linear is shown here.
9
<PAGE> 44
TRANSMISSION POLE ILLUSTRATION:
GRAPHS:
Industrial Products
Net Sales ($ In Millions)
Operating Income ($ In Millions)
Valmont designs and manufactures poles, towers and structures for
lighting & traffic, utility and communication applications. For
the utility industry, Valmont builds steel electrical
transmission structures (top left), steel distribution poles and
substation structures. Fluted, turn-of-the-century light poles
(right) are a popular new product that come in a wide variety of
designs such as the one shown here in downtown Chicago.
CHICAGO LIGHTPOLE ILLUSTRATION:
10
<PAGE> 45
Valmont Industries, Inc. and Subsidiaries
Infrastructure Development
________________________________________
LEFT SIDE INFRASTRUCTURE DEVELOPMENT ILLUSTRATIONS:
Top to bottom:
Lighting & traffic control poles
Steel electrical distribution pole
Wireless communication tower installation
Rolled cylinder pressure vessel
Infrastructure development is presenting opportunities on every
continent. While the markets found in developing countries hold
promise for the future, today they are being outpaced by those in
the more highly industrialized nations that continue to build new
roads, bridges, airports, industrial centers, utility networks,
communication systems and countless other projects. The United
States remains Valmont's strongest market.
Valmont long ago adopted a global approach to producing products
which support various infrastructure development industries. That
strategy continues to bear fruit around the world. The most
intense competition in overseas markets comes from local and
regional competitors, as opposed to U.S. companies. By leveraging
worldwide engineering and manufacturing capabilities, Valmont is
able to remain competitive, while offering a wide range of
products, applications, coatings and designs that are unmatched
anywhere in the world.
Lighting and Traffic Signal Poles
Road and highway construction and modernization continue unabated
across the United States as federal, state and local governments
attempt to improve traffic flow and relieve congestion through
more effective signage, enhanced traffic signaling and better
lighting. New and upgraded lighting can also be found in many
commercial business parking lots and malls, providing a greater
level of customer safety and overall security.
In Western Europe, most countries are undertaking infrastructure
improvement projects. Demand is growing for high quality, long-
lasting lighting and traffic structures. Valmont is meeting these
market needs through its new product development process.
Decorative poles are also being installed at record rates in the
U.S. and around the world. In a move to enhance their important
tourism industry, European municipalities are eager to install
"fluted" light poles, combining the latest in illumination
technology and modern contemporary design. These structures are
manufactured using a proprietary, patented process that enables
Valmont to provide the highest quality products in the industry.
1997 Annual Report
11
<PAGE> 46
PHOTO:
Gary L. Cavey
Group President and
Chief Operating Officer
Industrial Products Group
PARIS LIGHTPOLE ILLUSTRATION:
Valmont manufactures steel and aluminum light poles and wireless
communication structures as part of its eight-plant pan-European
operation. This decorative aluminum light pole is in Paris,
France.
Valmont Industries, Inc. and Subsidiaries
Infrastructure Development
(continued)
________________________________________
PULL QUOTE:
"Our engineering team
is developing
cutting-edge
technology for
designing our products,
enhancing productivity
and expanding
our search for
new ideas,
products and
production techniques."
Valmont's historic strength of producing lighting and traffic
signal poles to quickly meet the customers' changing demands has
been enhanced with significant investments in upgrading existing
facilities and opening new plants.
In North America, aluminum poles were formerly produced only in
Canada and shipped to wherever they were needed. Now, these poles
are also being made in Indiana, a move that has more than doubled
Valmont's North American aluminum pole capacity. The aluminum
pole facility located in Rive-de-Gier, France, has also been
expanded.
Sports lighting continues to be a major opportunity for pole
sales. New lighting structures have been installed at the
University of Nebraska Memorial Stadium, Le Stade de France where
the World Soccer Cup will take place in 1998, Shanghai Stadium in
China and other major locations around the world.
While Asia offers excellent market potential for the long-term, it
also presents a number of challenges. In China, for example,
doing business is much more complex than in many other countries.
Valmont has made steady progress in China using a strategy based
on superior product quality and customer service. The plant in
Shanghai was expanded this past year to produce large poles to
take advantage of opportunities in high mast lighting and wireless
communication markets in that region.
Utility
The utility industry is experiencing growth and change all over
the world. Deregulation and mergers in the United States are
driving the installation of new electrical transmission and
distribution structures. Additionally, due to their strength,
durability and positive environmental characteristics, steel poles
are replacing wooden poles as the installed cost of a steel pole
becomes competitive with wood.
Valmont has partnered with many utility companies and formed
strategic alliances to provide a single source solution to any and
all of their pole needs. This ensures Valmont's utility customers
receive the finest quality structures in the world and that these
structures are readily available at a competitive price.
1997 Annual Report
12
<PAGE> 47
COAX BLOCKS ILLUSTRATION:
Valmont Microflect provides a complete line of over 1,500
components for the wireless communication industry, such as the
stackable Coax Blocks shown here.
________________________________________
Wireless Communication
The wireless industry continues to enjoy tremendous growth with
many countries outpacing the U.S. in the adoption of new
technologies. In developing countries, it is sometimes more
economical to install a nationwide network of poles and towers for
cellular and PCS networks than it is to install thousands of miles
of wires on poles.
Although the pace of growth in the United States has slowed
somewhat in the past year, industry experts predict continued
expansion of cellular and PCS usage in the U.S. for the next
several years. Valmont is pursuing opportunities in wireless
communication markets around the world through a network of sales
offices, joint ventures and agents.
Some local communities are beginning to limit the number of
structures that can be erected for wireless communication.
Because many of the older towers and poles cannot be retrofitted
to accommodate multiple users, new highly engineered structures
are being designed to handle more than one wireless service
provider, thus avoiding a forest of poles and towers in local
skylines.
Other communities are insisting providers utilize "camouflage"
techniques, making the poles blend into surrounding trees or other
structures. A wide variety of these unique structures have been
designed and built by Valmont and can be found around the world.
These stealth-like poles include a white pine "tree pole" at Mt.
Vernon near Washington, DC and a "palm tree" in southern
California. Other innovative camouflaged wireless structures have
been installed in Japan, Portugal and the United Kingdom.
Fabricated Products
Valmont designs and manufactures an extensive range of tubular
steel products to exacting customer specifications. The Company's
high-tech manufacturing capabilities ensure the precise placement
of unique bends, holes, shapes and other custom engineered
applications and delivery to customers exactly when promised. A
new high-speed mill at the Valley, Nebraska site produces tubing
at extremely precise tolerances that greatly expands the range of
products available to customers.
Valmont also produces larger industrial fabricated products such
as rolled and welded steel cylinders that other companies make
into heat exchangers and pressure vessels. In addition, the
Company distributes a wide variety of fastener products and
fabricates grating for commercial and industrial applications.
PULL QUOTE:
"There are vast
opportunities for Valmont in the
international
marketplace. We believe it is important
to have a local
presence in the
markets we serve."
PHOTO:
E. Robert Meaney
President and
Chief Operating Officer
Valmont International
PALM TREE POLE ILLUSTRATION:
Valmont builds a variety of camouflaged structures for the
wireless communication industry such as this "palm tree" pole in
southern California.
1997 Annual Report
13
<PAGE> 48
PHOTO:
Terry J. McClain
Senior Vice President and
Chief Financial Officer
Valmont Industries, Inc. and Subsidiaries
Financial Objectives and Results
________________________________________
PULL QUOTE:
"Increasing
trendline earnings
while exceeding our
cost of capital
creates value for
our shareholders."
We measure our performance against many standards. Financially,
we have selected three principal factors that tell just how well
we are managing the Company and the money invested in it. The
goals we have established for earnings growth, return on invested
capital and long-term debt leverage are appropriate for the
industries in which we participate, yet challenging enough to
demand the very best talents and performance of our management
team.
Goal: Increase trendline earnings 15% per year
1997 Result: 19.8%
Valmont's goal is to increase trendline earnings by 15% each year.
By trendline, we mean "on average," over the course of several
years and under normal industry conditions. The diversity of our
two core industries...efficient water management for agriculture
and infrastructure development...and our ability to leverage
worldwide engineering and manufacturing capabilities allows us to
"level out" the ups and downs of the markets we serve. Although
we have an excellent earnings track record, there may be years, or
quarters within years, when we do not achieve our targets. But
over the long run we expect to report earnings that produce
trendline growth of 15% or more.
GRAPH:
Net Earnings
*Before asset valuation charge
1997 Annual Report
14
<PAGE> 49
________________________________________
Goal: Achieve a minimum 10% after-tax Return on Invested Capital
1997 Result: 14.6%
Return on Invested Capital is net operating income after-tax as a
percent of invested capital. We define Invested Capital as total
assets less non-interest bearing current liabilities.
We believe that we create value for our shareholders when our
returns consistently exceed our cost of capital. We calculate
Valmont's cost of capital to be about 10% after-tax. We apply
this concept to individual new projects as well as to our existing
investments.
GRAPH:
Return on Invested Capital
*Before asset valuation charge
Goal: Maintain Long-Term Debt as a percent of Invested Capital at
less than 40%
1997 Result: 10.4%
Given the financial characteristics of our Company, we can
comfortably operate at a debt to capitalization ratio of up to
40%. Today we have a relatively low ratio. We have excellent
financial capacity to expand our business through internal growth
and acquisitions.
GRAPH:
Long-Term Debt
As A Percent of
Invested Capital
Total Value Impact
________________________________________
Total Value Impact (TVI) is a value-based measurement that we use
to determine the payments in our annual executive incentive plan.
TVI is net operating income after tax less a capital charge. Our
management group is paid a portion of the improvement in TVI from
one year to the next. Growing earnings in excess of the cost of
capital has a strong correlation to increases in shareholder
value. By understanding this correlation, our managers make better
operating and capital investment decisions which translate into
increased returns for our shareholders.
1997 Annual Report
15
<PAGE> 50
Valmont Industries, Inc. and Subsidiaries
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
position. This discussion should be read in conjunction with the
Consolidated Financial Statements and related Notes.
<TABLE>
<CAPTION>
Fiscal 1997 Compared to Fiscal 1996
(Dollars in thousands, except per share amounts) 1997 Change 1996
_____________________________________________________________________________
<S> <C> <C> <C>
Net sales $ 622,506 (3.4) % $ 644,531
Cost of sales 453,326 (4.1) % 472,463
Gross profit 169,180 (1.7) % 172,068
Selling, general and administrative expenses 107,190 (10.4) % 119,624
Asset valuation charge _ _ 15,800
Operating income 61,990 69.2 % 36,644
Interest expense, net 2,831 (21.5) % 3,608
Miscellaneous (215) _ 12
Income tax expense 21,400 81.4 % 11,800
Net earnings 37,544 76.7 % 21,248
Earnings per share:
Basic 1.36 74.4 % 0.78
Diluted 1.33 75.0 % 0.76
</TABLE>
Net sales of $622.5 million in 1997 were 3.4% lower than the
$644.5 million attained in 1996. Excluding sales of Valmont
Electric, which the Company sold in early 1997, sales increased
11.9%. The Industrial Products segment, excluding Valmont
Electric, reported 1997 sales volume of $375.2 million, an
increase of 10.6% over 1996 sales of $339.1 million. Sales
improved in each of the four major product categories: lighting
and traffic, utility, wireless communication, and fabricated
products. Infrastructure modernization, and continued road and
highway construction and improvements accounted for the domestic
sales increase. Internationally, sales were up in local
currencies due to a strong light pole demand and sales of new
products; however these sales decreased when translated into U.S.
dollars due to the strengthening of the U.S. dollar.
The Irrigation Products segment sales of $241.7 million in 1997
exceeded 1996 sales volume of $212.5 million by 13.7%. Sales grew
in both the domestic and international markets. The U.S. market
was driven by continued strong farm income, and the conversion to
center pivot and linear move irrigation from less efficient
methods. Early in 1997, the Company became the majority investor
in a new irrigation manufacturing company in Brazil, which led to
a significant increase in sales in the Latin American region.
Additionally, sales were strong in Western Europe, the Middle
East, Australia and southern Africa.
Gross profit was $169.2 million in 1997, a decrease of $2.9
million from the 1996 gross profit of $172.1 million. Gross
profit as a percentage of sales increased from 26.7% in 1996 to
27.2% in 1997. The reduction in gross profit is due to the lower
sales level, and the percentage increase resulted primarily from
the sale of the ballast business, which had a lower gross profit
margin than the Company as a whole.
1997 Annual Report
16
<PAGE> 51
As a percent of sales, Selling, general and administrative (SG&A)
expenses were 17.2% in 1997 compared to 18.6% in 1996. SG&A
expenses in 1997 were $107.2 million compared to $119.6 million in
1996. The decrease in SG&A expense as a percent of sales resulted
from the sale of the ballast business in early 1997, and from
leverage of SG&A expenses in other parts of the Company.
An asset valuation charge of $15.8 million was recorded in 1996 to
reduce the carrying value of assets in the ballast business. This
business was sold in January of 1997, for approximately the
adjusted carrying value of $25 million.
Net interest expense decreased in 1997 by $0.8 million to $2.8
million due to lower debt levels. At the end of 1997, long-term
debt had decreased by $1.5 million from the debt level at 1996
year-end, and notes payable to banks decreased from $24.0 million
at the end of 1996 to $18.5 million for year-end 1997.
For 1997 the effective tax rate was 36.3% which is lower than the
expected federal and state tax rate due to nontaxable interest
income and foreign sales corporation tax benefits. The effective
income tax rate for 1997 did not vary significantly from the
effective tax rate in 1996.
For the reasons discussed above, earnings increased to $37.5
million in 1997 from $31.3 million prior to the asset valuation
charge in 1996, and $21.2 million after the asset valuation charge
in 1996, increases of 19.8% and 76.7%, respectively. Basic
earnings per share increased to $1.36 per share in 1997 from $1.15
and $0.78 per share, pre-charge and after-charge respectively,
which are increases of 18.3% and 74.4%. Diluted earnings per
share increased to $1.33 per share in 1997 from $1.12 and $0.76
per share, pre-charge and after-charge respectively, which are
increases of 18.8% and 75.0%.
GRAPHS:
Segment Sales
* Industrial Products
* Irrigation Products
Gross Profit As A Percent of Net Sales
SG&A Expense As A Percent of Net Sales
1997 Annual Report
17
<PAGE> 52
Valmont Industries, Inc. a
Management's Discussion and Analysis
(continued)
________________________________________
<TABLE>
<CAPTION>
Fiscal 1996 Compared to Fiscal 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 612 (91.4) % 139
Income tax expense 11,800 (13.9) % 13,700
Net earnings 21,248 (14.2) % 24,759
Earnings per share:
Basic 0.78 (15.2) % 0.92
Diluted 0.76 (15.6) % 0.90
</TABLE>
Valmont's net sales in 1996 increased $99.9 million over its sales
for 1995. Industrial Products segment revenues rose primarily as
a result of strong demand for light poles and communication towers
in North America, and sales in Europe were up due to 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.
Irrigation Products segment sales increased to $212.5 million in
1996 from $162.7 million in 1995 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 and grain products, low
grain inventories, and strong commodity prices.
Gross profit increased $27.1 million or 18.7% in 1996 to $172.1
million, and as a percent 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 for 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 increase in SG&A expenses was made 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 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 expected sales price of this business.
1997 Annual Report
18
<PAGE> 53
________________________________________
For 1996 and 1995, net interest expense was $3.6 million and $3.5
million, respectively. The increase resulted from higher short-
term debt levels. 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 for year-end 1996.
The effective tax rate was essentially the same at 35.6% in 1995
and 35.7% in 1996.
For the reasons outlined above, the Company's earnings in 1996
prior to the asset valuation charge were $31.3 million or $21.2
million after the valuation charge, compared to $24.8 million for
1995, an increase of 26.6% prior to the charge and a 14.2%
decrease after the charge. Basic earnings per share were $1.15
prior to the charge and $0.78 after the charge compared to basic
earnings per share of $0.92 for 1995. Diluted earnings per
share were $1.12 prior to the charge and $0.76 after the charge
compared to diluted earnings per share of $0.90 for 1995. The pre-
charge basic earnings per share were up 25.0% and the after-charge
basic earnings per share decreased by 15.2%. For diluted earnings
per share, 1996 was up 24.4% on a pre-charge basis and down by
15.6% on an after-charge basis.
Liquidity and Capital Resources
Net working capital of $94.4 million at the end of 1997 increased
from $81.4 million at the end of 1996. The ratio of current
assets to current liabilities was 1.8:1 at the end of 1997
compared to 1.6:1 at the end of 1996.
Available short-term credit facilities through bank lines of
credit were $47 million at the end of 1997 compared to $41 million
at the end of 1996. On December 27, 1997, $34 million of these
credit facilities were unused.
GRAPHS:
Net Interest Expense ($ In Millions)
Working Capital ($ In Millions)
Long-Term Debt As A Percent of Invested Capital
1997 Annual Report
19
<PAGE> 54
Valmont Industries, Inc. and Subsidiaries
Management's Discussion and Analysis
(continued)
________________________________________
The Company's growth has been financed through a combination of
cash provided from operations and to a lesser degree through debt
financing. Cash provided from operating activities was $23.3
million in 1997 and $19.8 million in 1996. The Company's
objective is to maintain long-term debt as a percent of invested
capital below 40%. At the end of 1997, long-term debt as a
percent of invested capital was 10.4% as compared to 12.3% at the
end of 1996.
In October of 1997, the Company entered into a Revolving Credit
Agreement with a group of banks. Under the terms of the
agreement, the Company may borrow up to the equivalent of $100
million in multiple currencies. This facility is unsecured and
any outstanding principal balance is due on June 30, 2002. The
outstanding principal balance may be paid down at any time without
penalty or additional funds may be borrowed up to the maximum
limit. On December 27, 1997, the outstanding principal balance
was $5 million.
The Company believes cash flows from operations, available credit
facilities and the capital structure now in place will be adequate
for 1998 planned capital expenditures, for dividends and other
financial commitments, and for the Company to pursue opportunities
to expand its markets and businesses.
Capital Expenditures
In 1997, the Company invested $39.1 million, or a $3.5 million
increase from the $35.6 million invested in 1996, in property,
plant and equipment. Major additions included new facilities in
Creuzier-le-Neuf, France, Siedlce, Poland, and Uberaba, Brazil,
and expansion of manufacturing capabilities and capacities at the
plants in Brenham, Texas, Elkhart, Indiana, Valley, Nebraska, and
Rive-de-Gier, France. These expenditures were made to increase
capacity for manufacturing of engineered metal structures and to
access irrigation markets with improved service.
Year 2000
The Company recognizes the need to ensure that its operations will
not be adversely impacted by Year 2000 software issues.
Processing errors potentially arising from calculations using the
Year 2000 date are a known risk. The costs or consequences of
incomplete or untimely resolution of Year 2000 issues by the
Company or third parties could have a material adverse effect on
the Company. The Company is actively addressing these software
issues to minimize these risks. The additional cost of achieving
Year 2000 compliance over the cost of normal software upgrades and
replacements is estimated to be immaterial and will be incurred
throughout the fiscal years of 1998 and 1999.
Outlook For 1998
As the Company begins 1998, sales order backlogs were $125.6
million, compared to $133.6 at the start of 1997. This slight
decrease is primarily the result of the sale of the ballast
business in early 1997 and a seasonal change in irrigation order
flow.
The public's concern for safety, together with the need to improve
the world's streets and highways, should continue to enhance
demand for lighting and traffic structures. Demand for electrical
transmission, substation and distribution products is expected to
remain strong as utility customers proceed through deregulation.
While the accelerating demand for the Company's communication
poles, towers and components slowed during 1997, the market
drivers for these products are expected to remain in place and to
produce sales opportunities in U.S. and international markets.
All these factors point to continued sales opportunities for the
Industrial Products segment.
1997 Annual Report
20
<PAGE> 55
___________________________________
Several years of relatively high net farm income, resulting from a
strong demand for grain products is expected to drive sales of the
Company's center pivot and linear move irrigation equipment.
Additionally, water management policies should encourage farmers
to convert from less efficient methods of irrigation. As the
population of irrigation equipment already in the field ages, the
replacement and spare parts markets should continue to expand.
These drivers are influencing the markets around the world and
should result in improved sales of irrigation products in the
upcoming year.
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 view 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 environments,
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.
GRAPHS:
Capital Expenditures ($ In Millions)
Total Assets ($ In Millions)
Number of Employees
1997 Annual Report
21
<PAGE> 56
Valmont Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Selected Eleven-Year Financial Data
________________________________________
(Dollars in thousands, except per share amounts) 1997 1996 1995
_____________________________________________________________________________
Operating Data
<S> <C> <C> <C>
Net sales $622,506 $644,531 $544,642
Earnings (loss) from continuing operations 37,544 21,248 24,759
Earnings from discontinued operations _ _ _
Cumulative effect of accounting change _ _ _
__________________________________
Net earnings (loss) $37,544 $21,248 $24,759
__________________________________
Depreciation and amortization $16,437 $ 14,832 $12,361
Capital expenditures 39,115 35,559 34,772
Per Share Data
Earnings (loss): Basic $1.36 $ 0.78 $0.92
Diluted 1.33 0.76 0.90
Cash dividends 0.21875 0.1875 0.15
Shareholders' equity 7.49 6.41 5.87
Financial Position
Working capital $94,416 $81,403 $80,993
Property, plant and equipment, net 140,834 120,579 113,532
Total assets 368,052 341,648 308,710
Long-term debt, including current installments 28,060 29,573 36,687
Shareholders' equity 207,102 175,231 159,256
Invested capital 270,400 243,905 215,318
Key Financial Measures
Return on beginning shareholders' equity 21.4% 13.3% 18.0%
Return on invested capital 14.6% 9.7% 12.5%
Long-term debt as a percent of invested capital 10.4% 12.1% 17.3%
Year-End Data
Shares outstanding (000) 27,641 27,330 27,120
Approximate number of shareholders 5,400 4,400 3,900
Number of employees 3,751 4,868 4,166
</TABLE>
Per share amounts and number of shares reflect the two-for-one
stock splits in 1988, 1989 and 1997.
All amounts include pooling-of-interests method of accounting for
the purchase of Microflect.
1997 Annual Report
22
<PAGE> 57
________________________________________
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989 1988 1987
________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C>
$501,740 $464,274 $445,481 $446,543 $461,789 $443,444 $439,569 $291,350
18,887 7,551 11,671 (8,822) 11,373 16,818 12,301 5,672
_ 4,637 3,564 2,134 5,474 4,602 3,639 3,172
_ (4,910) _ _ _ _ _ _
________________________________________________________________________________
$18,887 $7,278 $15,235 $(6,688) $16,847 $21,420 $15,940 $8,844
________________________________________________________________________________
$11,018 $10,907 $12,585 $11,285 $9,887 $7,608 $7,788 $7,057
23,535 17,089 8,353 11,539 20,607 17,470 9,750 7,432
$0.70 $0.27 $0.57 $(0.25) $0.63 $0.81 $0.62 $0.36
0.69 0.27 0.56 (0.25) 0.63 0.81 0.62 0.36
0.15 0.145 0.13 0.13 0.13 0.11 .085 0.075
5.10 4.52 4.43 4.06 4.42 3.94 3.26 2.77
$88,278 $87,793 $68,551 $69,143 $66,302 $72,811 $58,786 $44,986
89,201 75,501 78,150 84,144 81,675 71,872 53,135 53,785
283,443 261,275 286,076 291,041 291,163 268,216 225,461 203,674
43,242 44,076 69,735 81,698 63,003 66,774 47,337 52,780
137,582 121,841 118,428 108,142 117,200 104,069 84,163 68,591
197,591 180,961 200,501 205,618 191,255 180,464 138,392 128,561
15.5% 6.1% 14.1% (5.7%) 16.2% 25.5% 23.2% 14.4%
10.2% 5.9% 7.8% (1.9%) 9.2% 11.0% 11.2% 6.1%
21.9% 24.4% 34.8% 39.7% 32.9% 37.0% 34.2% 41.1%
26,990 26,972 26,750 26,620 26,494 26,412 25,828 24,748
3,800 3,800 3,500 3,500 2,800 1,600 1,500 1,100
3,946 4,152 4,532 4,478 4,524 4,255 3,569 3,598
</TABLE>
1997 Annual Report
23
<PAGE> 58
Valmont Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Statements of Operations
_______________________________________
Three-year period ended December 27, 1997
(Dollars in thousands, except per share amounts)
1997 1996 1995
_______________________________________________________________________________
<S> <C> <C> <C>
Net sales $622,506 $644,531 $544,642
Cost of sales 453,326 472,463 399,691
Gross profit 169,180 172,068 144,951
Selling, general and administrative expenses 107,190 119,624 103,120
Asset valuation charge _ 15,800 _
_______________________________________________
Operating income 61,990 36,644 41,831
_______________________________________________
Other income (deductions):
Interest expense (3,731) (3,952) (4,331)
Interest income 900 344 820
Miscellaneous (215) 112 139
_______________________________________________
(3,046) (3,596) (3,372)
_______________________________________________
Earnings before income taxes 58,944 33,048 38,459
_______________________________________________
Income tax expense (benefit):
Current 14,400 19,970 13,713
Deferred 7,000 (8,170) (13)
_______________________________________________
21,400 11,800 13,700
_______________________________________________
Net earnings $37,544 $21,248 $24,759
_______________________________________________
Earnings per share
Basic $1.36 $0.78 $0.92
_______________________________________________
Diluted $1.33 $0.76 $0.90
_______________________________________________
Cash dividends per share $0.21875 $0.1875 $0.15
_______________________________________________
See accompanying notes to consolidated financial statements.
</TABLE>
1997 Annual Report
24
<PAGE> 59
<TABLE>
<CAPTION>
Consolidated Balance Sheets
_____________________________
December 27, 1997 and December 28, 1996
(Dollars in thousands)
1997 1996
_______________________________________________________________________________
Assets
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 11,505 $ 9,483
Receivables, less allowance for doubtful
receivables of $2,132 in 1997 and $2,299 in 1996 110,531 82,224
Inventories 79,444 73,359
Assets held for sale _ 26,903
Prepaid expenses 3,388 2,356
Deferred income taxes 13,062 16,521
_______________________________
Total current assets 217,930 210,846
_______________________________
Property, plant and equipment, at cost 258,478 228,247
Less accumulated depreciation and amortization 117,644 107,668
_______________________________
Net property, plant and equipment 140,834 120,579
_______________________________
Other assets:
Investments in nonconsolidated affiliates 4,730 4,307
Other 4,558 5,916
_______________________________
Total other assets 9,288 10,223
_______________________________
Total assets $ 368,052 $ 341,648
_______________________________
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ 7,317 $ 7,693
Notes payable to banks 18,545 24,007
Accounts payable 48,717 43,699
Accrued expenses 47,380 52,678
Dividends payable 1,555 1,366
_______________________________
Total current liabilities 123,514 129,443
_______________________________
Deferred income taxes 9,038 9,531
Long-term debt, excluding current installments 20,743 21,880
Minority interest in consolidated subsidiaries 3,957 2,250
Other noncurrent liabilities 3,698 3,313
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 27,900,000
shares in 1997 ,(13,950,000 shares in 1996) 27,900 13,950
Additional paid-in capital 838 6,458
Retained earnings 179,360 153,146
Currency translation adjustment (966) 1,737
_______________________________
207,132 175,291
Less:
Cost of common shares in treasury-
259,031 in 1997 (569,216 in 1996) 8 18
Unearned restricted stock 22 42
_______________________________
Total shareholders' equity 207,102 175,231
_______________________________
Total liabilities and shareholders' equity $ 368,052 $ 341,648
_______________________________
See accompanying notes to consolidated financial statements.
</TABLE>
1997 Annual Report
25
<PAGE> 60
Valmont Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
________________________________________
Three-year period ended December 27, 1997
(Dollars in thousands)
1997 1996 1995
________________________________________________________________________________
<S> <C> <C> <C>
Cash flows from operations:
Net earnings $ 37,544 $ 21,248 $ 24,759
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 16,437 14,832 12,361
Other adjustments 1,385 580 (102)
Changes in assets and liabilities:
Receivables (32,040) (16,484) (2,681)
Inventories (7,671) (16,270) (9,742)
Prepaid expenses (1,081) (1,217) 261
Accounts payable 7,154 10,120 1,486
Accrued expenses (4,297) 15,022 3,444
Other noncurrent liabilities 769 (394) (1,226)
Income taxes 5,147 (7,594) 64
___________________________________________
Net cash provided by operations 23,347 19,843 28,624
___________________________________________
Cash flows from investing activities:
Purchase of property, plant
and equipment (39,115) (35,559) (34,772)
Purchase of minority interest (627) _ _
Acquisitions _ (1,255) _
Investment in nonconsolidated
affiliate (377) _ _
Proceeds from investment by
minority shareholders 1,959 97 1,677
Change in other assets 924 (1,246) 1,461
Proceeds from sale of assets
held for sale 26,903 _ _
Proceeds from sale of property
and equipment 289 858 212
Other, net (3) (260) 418
___________________________________________
Net cash used in investment
activities (10,047) (37,365) (31,004)
___________________________________________
Cash flows from financing activities:
Net borrowings (repayments)
under short-term agreements (4,550) 20,630 1,754
Proceeds from long-term borrowings 7,172 1,942 _
Principal payments on long-term
obligations (7,856) (8,142) (7,489)
Dividends paid (5,838) (4,762) (3,612)
Distributions of pooled company _ _ (2,063)
Proceeds from exercises under stock plans 3,067 2,073 1,193
Purchase of common treasury shares (3,273) (1,732) (535)
___________________________________________
Net cash provided (used)
in financing activities (11,278) 10,009 (10,752)
___________________________________________
Net increase (decrease) in cash
and cash equivalents 2,022 (7,513) (13,132)
Cash and cash equivalents -
beginning of year 9,483 16,996 30,128
___________________________________________
Cash and cash equivalents -
end of year $ 11,505 $ 9,483 $ 16,996
___________________________________________
See accompanying notes to consolidated financial statements.
</TABLE>
1997 Annual Report
26
<PAGE> 61
<TABLE>
<CAPTION>
Consolidated Statements of Shareholders' Equity
_______________________________________________
Three-year period ended December 27, 1997
(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 31, 1994 $13,950 $4,285 $118,076 $2,001 $ (648) $ (82) $137,582
Net earnings _ _ 24,759 _ _ _ 24,759
Cash dividends
($0.15 per share) _ _ (3,763) _ _ _ (3,763)
Cash distributions
of pooled company _ _ (2,063) _ _ _ (2,063)
Currency translation
adjustment _ _ _ 1,688 _ _ 1,688
Purchase of 42,498
common shares _ _ _ _ (535) _ (535)
Stock options exercised;
158,392 shares issued _ 34 _ _ 1,159 _ 1,193
Tax benefit from exercise
of stock options _ 338 _ _ _ _ 338
Stock awards;
14,000 shares issued _ 37 _ _ _ 20 57
_________________________________________________________________________
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
($0.1875 per share) _ _ (5,111) _ _ _ (5,111)
Currency translation
adjustment _ _ _ (1,952) _ _ (1,952)
Purchase of 97,444
common shares _ _ _ _ (1,732) _ (1,732)
Stock options exercised;
280,000 shares issued _ 335 _ _ 1,738 _ 2,073
Tax benefit from exercise
of stock options _ 1,023 _ _ _ _ 1,023
Stock awards;
27,824 shares issued _ 406 _ _ _ 20 426
_________________________________________________________________________
Balance at
December 28, 1996 13,950 6,458 153,146 1,737 (18) (42) 175,231
Net earnings _ _ 37,544 _ _ _ 37,544
Cash dividends
($0.21875 per share) _ _ (6,027) _ _ _ (6,027)
Currency translation
adjustment _ _ _ 2,703) _ _ (2,703)
Purchase of 154,039
common shares _ _ _ _ (3,273) _ (3,273)
Sale of 43,914
common shares _ 905 _ _ _ _ 905
Stock options exercised;
393,164 shares issued _ (216) _ _ 3,283 _ 3,067
Tax benefit from exercise
of stock options _ 1,796 _ _ _ _ 1,796
Stock awards;
27,146 shares issued _ 542 _ _ _ 20 562
Two-for-one
stock split 13,950 (8,647) (5,303) _ _ _ _
_________________________________________________________________________
Balance at
December 27, 1997 $27,900 $838 $179,360 $(966) $(8) $(22) $207,102
_________________________________________________________________________
See accompanying notes to consolidated financial statements.
</TABLE>
1997 Annual Report
27
<PAGE> 62
Valmont Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
__________________________________________
Three-year period ended December 27, 1997
(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. Investments in 20% to 50% owned affiliates
are accounted for on the equity method, and investments in less
than 20% owned affiliates are accounted for on the cost method.
All significant intercompany items have been eliminated. Certain
acquisitions and divestitures, and the accounting principles
followed, are described in Note 14.
Operations
The Company designs, manufactures and distributes agricultural
irrigation equipment, engineered metal structures, and fabricated
products.
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 1997, 1996 and 1995 ended on December 27,
December 28 and December 30, respectively, and each of these
fiscal years consisted of 52 weeks.
Inventories
At December 27, 1997 approximately 64% 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 $11,000 and $10,400 at December 27, 1997 and
December 28, 1996, respectively.
Impairment of Long-Lived Assets
In 1996 the Company adopted the 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 14). 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.
There was no effect on the Company in the adoption of this
standard as of the beginning of fiscal 1996.
Property, Plant and Equipment and Other Assets
Property, plant and equipment are recorded at historical cost.
The Company uses the straight-line method in computing
depreciation and amortization for financial reporting purposes and
generally uses accelerated methods for income tax purposes. The
annual provisions for depreciation and amortization have been
computed principally in accordance with the following ranges of
asset lives: buildings 15 to 40 years; machinery and equipment 3
to 12 years; intangibles 3 to 40 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 the financial
statement and the tax basis of assets and liabilities using
enacted tax rates. The effect of tax rate changes on deferred tax
assets and liabilities is recognized in income during the period
that includes the enactment date.
1997 Annual Report
28
<PAGE> 63
________________________________________
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
Share and per share information have been adjusted to give effect
to the two-for-one stock split effected in the form of a dividend
on May 30, 1997. In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
No.128 "Earnings Per Share," which requires companies to present
basic earnings per share and diluted earnings per share, and
accordingly all prior periods have been restated. (Note 9).
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.
Recently Issued Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board (FASB)
issued Statement No. 130, "Reporting Comprehensive Income," that
will be effective in 1998. The Company anticipates minimal impact
from the adoption of this statement.
Also in June 1997, the FASB issued Statement No. 131, "Disclosure
about Segments of an Enterprise and Related Information," that
will be effective in 1998. The Company currently complies with
most provisions of the statement and additional disclosure
required by the Statement is expected to be minimal.
(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:
1997 1996 1995
______________________________________________________________________
Interest $ 3,268 $ 3,824 $ 4,456
Income taxes 16,373 17,904 11,591
(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
pretax asset valuation charge of $15,800 ($10,100 after tax) in
the fourth quarter of 1996 to reduce the value of 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. (Note 14).
(4) Property, Plant and Equipment
Property, plant and equipment, at cost, consists of the following:
1997 1996
_______________________________________________________
Land and improvements $ 12,661 $ 9,592
Buildings and improvements 65,495 56,818
Machinery and equipment 131,939 109,915
Transportation equipment 4,343 4,000
Office furniture and equipment 23,387 21,300
Construction in progress 20,653 26,622
____________________________
$ 258,478 $ 228,247
____________________________
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 $4,920, $4,963 and $4,638 for
fiscal 1997, 1996 and 1995, respectively.
1997 Annual Report
29
<PAGE> 64
Valmont Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(continued)
__________________________________________
Minimum lease payments under operating leases expiring subsequent
to December 27, 1997 are:
Fiscal Year Ending
1998 $ 3,150
1999 5,220
2000 4,676
2001 4,395
2002 3,049
Subsequent 2,409
___________
Total minimum lease payments $ 22,899
___________
(5) Bank Credit Arrangements
The Company maintains various lines of credit for short-term
borrowings totaling $47,000. 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 $34,000 at
December 27, 1997. The lines of credit can be modified at any
time at the option of the banks. The Company pays facility fees
of 1/8 of 1% in connection with $13,000 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
5.7% at December 27, 1997 and 6.5% at December 28, 1996.
(6) Income Taxes
Income tax expense (benefit) consists of:
1997 1996 1995
_______________________________________________________________________
Current: Federal $ 11,423 $ 16,914 $ 10,919
State 940 1,086 954
Foreign 2,037 1,970 1,840
___________________________________________
14,400 19,970 13,713
___________________________________________
Deferred: Federal 5,963 (7,006) (11)
State 529 (392) (2)
Foreign 508 (772) _
___________________________________________
7,000 (8,170) (13)
___________________________________________
$ 21,400 $ 11,800 $ 13,700
___________________________________________
The reconciliations of the statutory Federal income tax rate and
the effective tax rates follow:
1997 1996 1995
_______________________________________________________________________
Statutory Federal
income tax rate 35.0 % 35.0 % 35.0 %
State income taxes,
net of Federal benefit 1.9 % 2.1 % 1.6 %
Other (0.6 %) (1.4 %) (1.0 %)
___________________________________________
36.3 % 35.7 % 35.6 %
___________________________________________
The tax effects of temporary differences that give rise to
deferred tax assets and liabilities at December 27, 1997 are
presented below:
1997 1996
________________________________________________________________________
Deferred tax assets:
Accrued expenses and allowances $ 11,920 $ 20,223
Allowance for doubtful receivables 166 311
Inventory capitalization 1,273 1,622
___________________________
Total deferred tax assets 13,359 22,156
___________________________
Deferred tax liabilities:
Plant and equipment 9,578 9,713
Lease transactions 1,586 1,682
Warranty accrual 1,373 1,373
Other 1,678 3,245
___________________________
Total deferred tax liabilities 14,215 16,013
___________________________
Net deferred tax assets (liabilities) $ (856) $ 6,143
___________________________
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
1997 1996
________________________________________________________________________
9.40% to 12.77% promissory notes,
unsecured (a) $ 14,750 $ 19,250
Promissory note, secured (b) 2,165 4,762
Revolving credit agreement (c) 5,000 _
3.0% to 9.25% notes 6,145 5,561
___________________________
Total long-term debt 28,060 29,573
Less current installments of
long-term debt 7,317 7,693
___________________________
Long-term debt,
excluding current installments $ 20,743 $ 21,880
___________________________
1997 Annual Report
30
<PAGE> 65
________________________________________
(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 12.9 million French francs is
due in 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 27, 1997 the effective interest
rate was 4.63%. The note is secured by the common stock of
Sermeto, S.A., a subsidiary of the Company.
(c) The revolving credit facility is an unsecured agreement
with a group of banks for a maximum of $100,000. The facility has
a termination date of June 30, 2002. The funds borrowed may be
repaid at any time without penalty, or additional funds may be
borrowed up to the facility limit. The Company may choose from
the following three interest rate alternatives: the higher of
prime rate and the Federal Funds Rate plus 0.50%; the applicable
Eurodollar rate plus a leverage ratio-based spread (which at
December 27, 1997 was 0.175%); or up to $50,000 at a rate
determined through a competitive bid process. The effective
interest rate at December 27, 1997 was 6.18%.
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 27, 1997 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
$90,000.
The minimum aggregate maturities of long-term debt for each
of the four years following 1998 are: $5,175, $4,010, $2,736 and
$5,494.
(8) Stock Plans
The Company maintains 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 plans the
Company may grant options or other stock awards to its employees
for up to 5,400,000 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 vest beginning on
the first anniversary of the grant in equal amounts over three to
six years or on the fifth anniversary of the grant. 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, 1996 or 1997.
Had compensation cost been determined on the basis of fair value
pursuant to Statement of Financial Accounting Standards No. 123,
net income and earnings per share would have been reduced as
follows:
1997 1996 1995
_________________________________
Net income
As reported $ 37,544 $ 21,248 $ 24,759
Pro forma 36,584 20,561 24,699
Primary earnings per share
As reported: Basic $ 1.36 $ 0.78 $ 0.92
Diluted 1.33 0.76 0.90
Pro forma: Basic $ 1.33 $ 0.75 $ 0.91
Diluted 1.30 0.73 0.90
1997 Annual Report
31
<PAGE> 66
Valmont Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(continued)
__________________________________________
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. For the year 1997 the following assumptions were
used: dividend yield of 1.03%; expected volatility of 29%; risk-
free interest rate of 5.75%; and expected lives of 2.7 years from
vesting date.
Following is a summary of the activity of the stock plans during
1995, 1996 and 1997:
Weighted
Average
Number of Exercise
Shares Price
______________________________________________________________
Outstanding at December 31, 1994 1,567,548 $ 7.62
Granted 403,000 11.68
Exercised (158,392) (6.79)
Forfeited (22,114) (9.25)
__________________________
Outstanding at December 30, 1995 1,790,042 $ 8.61
__________________________
Options exercisable at
December 30, 1995 756,376 $ 6.96
__________________________
Weighted average fair value of
options granted during 1995 $ 3.67
__________________________
Weighted
Average
Number of Exercise
Shares Price
______________________________________________________________
Outstanding at December 30, 1995 1,790,042 $ 8.61
Granted 414,030 18.64
Exercised (280,000) ( 7.41)
Forfeited (57,098) ( 5.57)
__________________________
Outstanding at December 28, 1996 1,866,974 $ 11.11
__________________________
Options exercisable at
December 28, 1996 825,306 $ 8.33
__________________________
Weighted average fair value of
options granted during 1996 $ 6.24
__________________________
Weighted
Average
Number of Exercise
Shares Price
______________________________________________________________
Outstanding at December 28, 1996 1,866,974 $ 11.11
Granted 443,414 21.48
Exercised (308,876) ( 7.43)
Forfeited (76,850) (14.34)
__________________________
Outstanding at December 27, 1997 1,924,662 $ 13.96
__________________________
Options exercisable at
December 27, 1997 919,801 $ 10.22
__________________________
Weighted average fair value of
options granted during 1997 $ 6.56
__________________________
Following is a summary of the status of stock options outstanding
at December 27, 1997:
<TABLE>
<CAPTION>
Outstanding and Exercisable By Price Range
Options Outstanding Options Exercisable
________________________________________________ ________________________
Weighted
Average Weighted Weighted
Exercise Remaining Average Average
Price Contractual Exercise Exercise
Range Number Life Price Number Price
________________________________________________ ________________________
<S> <C> <C> <C> <C> <C>
$ 5.50- 9.13 725,119 5.13 years $ 8.26 589,926 $ 8.24
9.63-12.25 390,733 7.51 years 11.65 232,049 11.74
15.88-19.50 408,400 8.85 years 18.73 70,446 17.81
19.88-21.38 33,410 5.48 years 20.58 27,380 20.48
21.78-21.78 367,000 9.95 years 21.78 _ _
________________________________________________ ________________________
1,924,662 919,801
________________________________________________ ________________________
</TABLE>
1997 Annual Report
32
<PAGE> 67
________________________________________
(9) Earnings Per Share
The FASB issued SFAS 128, "Earnings Per Share" (EPS), which
is effective for 1997 financial statements. SFAS 128 requires
dual presentation of Basic and Diluted EPS, as well as restatement
of EPS for all periods for which an income statement or summary of
earnings is presented. The following table provides a
reconciliation between Basic and Diluted EPS.
_________________________________________________________________________
Basic Dilutive Effect Diluted
EPS of Stock Options EPS
_________________________________________________________________________
1995:
Net earnings $ 24,759 _ $ 24,759
Shares 27,018 459 27,477
Per share amount $ 0.92 _ $ 0.90
1996:
Net earnings $ 21,248 _ $ 21,248
Shares 27,308 751 28,059
Per share amount $ 0.78 _ $ 0.76
1997:
Net earnings $ 37,544 _ $ 37,544
Shares 27,521 686 28,207
Per share amount $ 1.36 _ $ 1.33
(10) Employee Retirement Savings Plan
Established under Internal Revenue Code Section 401(k), the
Valmont Employee Retirement Savings Plan is available to all
eligible employees. Participants can elect to contribute up to
15% of annual pay, on a pre-tax and/or after-tax basis. The
Company may also make basic, matching and/or supplemental
contributions to the Plan. 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
1997, 1996 and 1995 Company contributions to these plans amounted
to approximately $5,400, $5,000 and $4,700, respectively.
(11) Research and Development
Research and development costs are charged to operations in the
year incurred. Research and development expenses determined in
accordance with FASB Statement No. 2, "Accounting for Research and
Development Costs" were approximately $3,700 in 1997, $3,900 in
1996, and $2,800 in 1995.
(12) 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 27, 1997, the carrying amount
of the Company's long-term debt was $28,060 with an estimated fair
value of approximately $29,000. 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.
1997 Annual Report
33
<PAGE> 68
Valmont Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(continued)
__________________________________________
(13) 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 $0.01 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.
(14) 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 were reduced to fair
market value and reclassified on the December 28, 1996, balance
sheet as "Assets held for sale." (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
3,900,000 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.
(15) 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 and fabricated products.
* 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.
1997 Annual Report
34
<PAGE> 69
<TABLE>
<CAPTION>
Business Segment Information
______________________________
Summary by Business Segments
(Dollars in thousands)
1997 1996 1995
_______________________________________________________________________________
<S> <C> <C> <C>
Operating Results
Net Sales:
Industrial Products $ 380,788 $ 432,050 $ 381,898
Irrigation Products 241,718 212,481 162,744
____________________________________________
Total $ 622,506 $ 644,531 $ 544,642
Operating Income:
Industrial Products $ 40,361 $ 36,591 $ 35,924
Irrigation Products 33,976 29,766 18,736
____________________________________________
Total 74,337 66,357 54,660
General Corporate Expense, Net (12,347) (13,913) (12,829)
Asset Valuation Charge _ (15,800) _
Interest Expense, Net (2,831) (3,608) (3,511)
Miscellaneous (215) 12 139
____________________________________________
Earnings before income taxes $ 58,944 $ 33,048 $ 38,459
____________________________________________
Identifiable Assets:
Industrial Products $ 250,645 $ 248,227 $ 234,818
Irrigation Products 96,893 65,326 51,792
Corporate 20,514 28,095 22,100
____________________________________________
Total $ 368,052 $ 341,648 $ 308,710
____________________________________________
Capital Expenditures:
Industrial Products $ 28,894 $ 26,808 $ 30,200
Irrigation Products 8,694 8,720 4,204
Corporate 1,527 31 368
____________________________________________
Total $ 39,115 $ 35,559 $ 34,772
____________________________________________
Depreciation and Amortization:
Industrial Products $ 11,678 $ 11,259 $ 8,727
Irrigation Products 4,273 3,080 2,923
Corporate 486 493 711
____________________________________________
Total $ 16,437 $ 14,832 $ 12,361
____________________________________________
Summary by Geographical Area:
Net Sales:
United States $ 463,717 $ 511,516 $ 447,685
Europe 69,037 77,605 64,745
Other 89,752 55,410 32,212
____________________________________________
Total $ 622,506 $ 644,531 $ 544,642
____________________________________________
Operating Income:
United States $ 66,519 $ 58,424 $ 47,543
Europe 5,386 4,775 4,936
Other 2,432 3,158 2,181
____________________________________________
Total $ 74,337 $ 66,357 $ 54,660
____________________________________________
Identifiable Assets:
United States $ 264,111 $ 261,785 $ 228,681
Europe 73,960 64,819 64,790
Other 29,981 15,044 15,239
____________________________________________
Total $ 368,052 $ 341,648 $ 308,710
____________________________________________
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.
</TABLE>
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.
1997 Annual Report
35
<PAGE> 70
Valmont Industries, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Quarterly Financial Data
(unaudited)
__________________________
Three-year period ended December 27, 1997
(Dollars in thousands, except per share amounts)
Net Earnings (Loss)
Net Gross Per Share Stock Price Dividends
Sales Profit Amount Basic Diluted High Low Declared
________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997
First $165,418 $ 44,616 $ 8,954 $0.33 $0.32 $22.63 $ 8.63 $0.05000
Second 159,100 44,144 9,893 0.36 0.35 22.38 18.50 0.05625
Third 136,015 37,746 7,857 0.28 0.28 21.88 19.00 0.05625
Fourth 161,973 42,674 10,840 0.39 0.38 23.88 19.00 0.05625
________________________________________________________________________________
Year $622,506 $169,180 $37,544 $1.36 $1.33 $23.88 $18.50 $0.21875
________________________________________________________________________________
1996
First $148,914 $ 39,999 $ 6,946 $ .26 $ .25 $15.07 $12.13 $0.03750
Second 166,849 43,913 8,501 .32 .30 17.00 14.75 0.05000
Third 148,048 40,583 6,578 .24 .24 18.00 14.13 0.05000
Fourth 180,720 47,573 (777)1 (.03)1 (.03)1 19.75 16.88 0.05000
________________________________________________________________________________
Year $644,531 $172,068 $21,2481 $.78(1)$.76(1)$19.75 $12.13 $0.18750
________________________________________________________________________________
1995
First $142,223 $ 34,877 $ 5,694 $ .21 $ .21 $10.75 $ 8.13 $0.03750
Second 133,418 34,948 6,691 .25 .25 11.00 9.75 0.03750
Third 128,269 35,099 5,271 .20 .19 12.13 10.37 0.03750
Fourth 140,732 40,027 7,103 .26 .25 13.00 11.75 0.03750
________________________________________________________________________________
Year $544,642 $144,951 $24,759 $ .92 $ .90 $13.00 $ 8.13 $0.15000
________________________________________________________________________________
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.
Per share amounts have been adjusted for the 2-for-1 stock split
effected in the form of a dividend on May 30, 1997.
1 After a pre-tax asset valuation charge of assets of $15,800,
($10,100 after tax or $0.36 per share). (Note 3).
</TABLE>
1997 Annual Report
36
<PAGE> 71
Valmont Industries, Inc. and Subsidiaries
Report of Independent Accountants
_________________________________
To the Board of Directors and Shareholders of Valmont Industries, Inc.
We have audited the accompanying consolidated balance sheets of
Valmont Industries, Inc. and subsidiaries as of December 27, 1997
and December 28, 1996, and the related consolidated statements of
operations, shareholders' equity and cash flows for the years 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 audits. The financial
statements of the Company for the year ended December 30, 1995
were audited by other auditors whose report, dated February 16,
1996, expressed an unqualified opinion on those statements.
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 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
audits provide a reasonable basis for our opinion.
In our opinion, the 1997 and 1996 consolidated financial
statements present fairly, in all material respects, the financial
position of Valmont Industries, Inc. and subsidiaries as of
December 27, 1997 and December 28, 1996, and the results of their
operations and cash flows for the years then ended in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP SIGNATURE:
DELOITTE & TOUCHE LLP
Omaha, Nebraska
February 6, 1998
1997 Annual Report
37
<PAGE> 72
Valmont Industries, Inc. and Subsidiaries
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 for the 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.
MOGEN C. BAY SIGNATURE:
Mogens C. Bay
Chairman and Chief Executive Officer
TERRY J. MCCLAIN SIGNATURE:
Terry J. McClain
Senior Vice President and Chief Financial Officer
1997 Annual Report
38
<PAGE> 73
Officers and Management
_______________________
Corporate
______________________________
Office of the President
Mogens C. Bay
Chairman and Chief Executive Officer
Gary L. Cavey
Group President and Chief Operating Officer
Industrial Products Group
Vincent T. Corso
Group President and Chief Operating Officer
Irrigation & Coatings Group
Joseph M. Goecke
President
North American Irrigation Division
Terry J. McClain
Senior Vice President and
Chief Financial Officer
E. Robert Meaney
President and Chief Operating Officer
Valmont International
Corporate Officers
Mogens C. Bay
Chairman and Chief Executive Officer
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
Groups and Divisions
______________________________
Industrial Products Group
Gary L. Cavey
Group President and Chief Operating Officer
Leonard M. Adams
Vice President
Operations, North America
James R. Callaway
General Manager
Communication Products
John R. Foley
General Manager
Fabricated Products
Gerald A. Roessner
Group Controller
Richard M. Sampson
Vice President
Marketing & Sales
Thomas F. Sanderson
General Manager
Lighting & Traffic Products
Thomas J. Sutko
General Manager
Utility Products
Valmont International
E. Robert Meaney
President and Chief Operating Officer
Jan Driessens
President - Europe
Mark C. Jaksich
Division Controller
Cheyenne Yu
General Manager - China
Irrigation & Coatings Group
Vincent T. Corso
Group President and Chief Operating Officer
Joseph M. Goecke
President
North American Irrigation Division
Richard T. Andrulis
Vice President and General Manager
Parts Operations
James J. Eiting
Vice President
Sales
Hector A. Haget
Vice President
Marketing & Engineering
Dennis G. Thome
Vice President
Operations
Terry Lammert
Group Controller
Dennis E. Schwieger
Vice President and General Manager
International Irrigation
Richard D. Berkland
Vice President - Marketing & Sales
International Irrigation
Jeffrey Briggs
President
Coatings Division
Richard S. Cornish
Vice President
Operations
1997 Annual Report
39
<PAGE> 74
Valmont Industries, Inc. and Subsidiaries
Board of Directors
__________________
PHOTO:
(from left)
Allen F. Jacobson
Lloyd P. Johnson
Charles M. Harper
Kenneth E. Stinson
Mogens C. Bay
Robert B. Daugherty
Thomas F. Madison
Robert G. Wallace
John E. Jones
Walter Scott, Jr.
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
Former Chairman and CEO
RJR Nabisco Holdings Corp. and ConAgra, Inc.
Director since 1979
Allen F. Jacobson
Retired Chairman and CEO
3M Company
Director since 1976
Lloyd P. Johnson
Retired Chairman of the Board
Norwest Corporation
Director since 1991
John E. Jones
Retired Chairman, President and CEO
CBI Industries, Inc.
Director since 1993
Thomas F. Madison
President, MLM Partners
Chairman of the Board
Communications Holdings, Inc.
Director since 1987
Walter Scott, Jr.
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
Retired Executive Vice President
Phillips Petroleum Co.
Director since 1984
Audit Committee
Walter Scott, Jr., Chairman
John E. Jones
Robert G. Wallace
Compensation Committee
Allen F. Jacobson, Chairman
Charles M. Harper
Lloyd P. Johnson
Thomas F. Madison
1997 Annual Report
40
<PAGE> 75
(INSIDE BACK COVER)
Shareholder Information
_______________________
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 27, 1998, 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 Valmont's 1997 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
Availability of Quarterly Results
Valmont's most recent Quarterly News Releases are available on the
internet at www.valmont.com under the heading "Valmont News."
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 1998:
Dain Rauscher Inc.
George K. Baum & Company
Herzog, Heine, Geduld, Inc.
Huntleigh Securities Corporation
Kirkpatrick Pettis Inc.
Lehman Brothers Inc.
Knight Securities, L.P.
Visit Valmont's Homepage
Our internet site (www.valmont.com) contains information about our
company and our products.
We aggressively participate in specific markets within two major
global economies: water management and infrastructure
development. First, we are the world leader in manufacturing
efficient irrigation equipment for agriculture... increasing crop
yields and conserving scarce water resources to meet the world's
growing demand for food through efficient water management.
Second, we are the world's leading producer of engineered poles,
towers, structures and other products and components for various
industries including lighting, utility and communication...
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 we will leverage our
current products and technologies in new markets. This is how we
create value for all Valmont shareholders.
<PAGE> 76
(BACK COVER)
Valmont Industries, Inc.
P.O. Box 358 - Valley, Nebraska 68064 USA
402-359-2201 - Fax 402-343-0668
www.valmont.com
<PAGE> 77
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
Gate City Steel Corporation Delaware
Gibo-Conimast Verwaltung, GmbH 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
Valmont California Rentals, Inc. California
Valmont de Espana, S.A. Spain
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. zp.p Poland
Valmont Service Centers, Inc. Nebraska
Valmont Services Irrigacao, Ltd. Brazil
Valmont World Trade, N.V. Netherlands Antilles
<PAGE> 78
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 6, 1998 appearing in or
incorporated by reference in the Annual Report on Form 10-K of Valmont
Industries, Inc. for the year ended December 27, 1997.
/S/DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Omaha, Nebraska
March 24, 1998
<PAGE> 79
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 Registration Statement
Nos. 2-88663, 33-21680, 33-57117 and 333-02785 of Valmont
Industries, Inc. and subsidiaries on Form S-8 of our report
dated February 16, 1996 relating to the consolidated
statements of operations, shareholders' equity and cash
flows for the year ended December 30, 1995 and the related
consolidated financial statement schedule for the year ended
December 30, 1995 which reports appear in or are
incorporated by reference in the December 27, 1997 Annual
Report on Form 10-K of Valmont Industries, Inc.
/S/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Omaha, Nebraska
March 24, 1998
<PAGE> 80
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 27, 1997, 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 25th day of February, 1998.
/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> 81
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
These schedules contain summary financial information extracted from SEC
Forms 10-K and 10-Q and are qualified in their entirety by reference to
such financial statements. This schedule is designated as a "Restated
Financial Data Schedules."
EXHIBIT 27
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-27-1997 DEC-28-1996 DEC-30-1995 DEC-27-1997 DEC-27-1997
<PERIOD-END> DEC-27-1997 DEC-28-1996 DEC-30-1995 MAR-29-1997 JUN-28-1997
<CASH> 11,505<F1> 9,483<F1> 16,996<F1> 9,296<F1> 10,638<F1>
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 110,531<F2> 82,224<F2> 85,152<F2> 97,044<F2> 97,323<F2>
<ALLOWANCES> 0 0 0 0 0
<INVENTORY> 79,444 73,359 76,426 71,789 74,108
<CURRENT-ASSETS> 217,930 210,846 185,827 192,133 191,631
<PP&E> 258,478 228,247 222,255 127,348<F3> 138,244<F3>
<DEPRECIATION> 117,644 107,668 108,723 0 0
<TOTAL-ASSETS> 368,052 341,648 308,710 330,048 338,992
<CURRENT-LIABILITIES> 123,514 129,443 104,834 114,551 113,022
<BONDS> 0 0 0 0 0
0 0 0 0 0
0 0 0 0 0
<COMMON> 27,900 13,950 13,950 13,950 27,900
<OTHER-SE> 179,202 161,281 145,306 169,074 163,747
<TOTAL-LIABILITY-AND-EQUITY>368,052 341,648 308,710 330,048 338,992
<SALES> 622,506 644,531 544,642 165,418 324,518
<TOTAL-REVENUES> 622,506 644,531 544,642 165,418 324,518
<CGS> 453,326 472,463 399,691 120,802 235,758
<TOTAL-COSTS> 453,326 472,463 399,691 120,802 235,758
<OTHER-EXPENSES> 107,190 135,424 103,120 30,039 57,680
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 3,731 3,596 4,331 898 1,963
<INCOME-PRETAX> 58,944 33,048 38,459 13,954 29,447
<INCOME-TAX> 21,400 11,800 13,700 5,000 10,600
<INCOME-CONTINUING> 37,544 21,248 24,759 8,954 18,847
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 37,544 21,248 24,759 8,954 18,847
<EPS-BASIC> 1.36 0.78 0.92 0.33 0.69
<EPS-DILUTED> 1.33 0.76 0.90 0.32 0.67
<FN>
<F1>Cash and cash equivalents
<F2>Net of allowances.
<F3>Net of accumulated depreciation.
<PAGE> 82
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
These schedules contain summary financial information extracted from SEC
Forms 10-K and 10-Q and are qualified in their entirety by reference to such
financail statements. These schedules are designated as "Restated Financial
Data Schedules."
EXHIBIT 27
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-28-1997 DEC-28-1996 DEC-28-1996 DEC-28-1996
<PERIOD-END> SEP-27-1997 MAR-30-1996 JUN-29-1996 SEP-28-1996
<CASH> 8,616<F1> 12,429<F1> 11,173<F1> 10,910<F1>
<SECURITIES> 0 0 0 0
<RECEIVABLES> 98,295<F2> 90,979<F2> 92,202<F2> 93,823<F2>
<ALLOWANCES> 0 0 0 0
<INVENTORY> 77,640 81,195 79,081 86,070
<CURRENT-ASSETS> 204,499 194,817 191,092 201,880
<PP&E> 138,509<F3> 121,539<F3> 122,651<F3> 125,020<F3>
<DEPRECIATION> 0 0 0 0
<TOTAL-ASSETS> 351,921 327,358 324,902 338,285
<CURRENT-LIABILITIES> 122,955 118,876 109,310 119,061
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 27,900 13,950 13,950 13,950
<OTHER-SE> 169,277 150,751 158,216 164,602
<TOTAL-LIABILITY-AND-EQUITY> 351,921 327,358 324,902 338,285
<SALES> 460,533 148,914 315,763 463,811
<TOTAL-REVENUES> 460,533 148,914 315,763 463,811
<CGS> 334,027 108,915 231,851 339,316
<TOTAL-COSTS> 334,027 108,915 231,851 339,316
<OTHER-EXPENSES> 82,112 28,274 57,967 87,300
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 2,965 999 2,009 2,999
<INCOME-PRETAX> 41,804 10,746 24,047 34,325
<INCOME-TAX> 15,100 3,800 8,600 12,300
<INCOME-CONTINUING> 26,704 6,946 15,447 22,025
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 26,704 6,946 15,447 22,025
<EPS-PRIMARY> 0.97 0.26 0.58 0.82
<EPS-DILUTED> 0.95 0.25 0.55 0.79
<FN>
<F1>Cash and cash equivalents.
<F2>Net of allowances.
<F3>Net of accumulated depreciation.
<PAGE> 83
</FN>
</TABLE>
Exhibit 99
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors
Valmont Industries, Inc.:
We have audited the accompanying consolidated statements of operations,
shareholders' equity and cash flows of Valmont Industries, Inc. and
subsidiaries for the year 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 audit.
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 disclosure in the financial statement.
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 consolidated financial statements referred to above
present fairly, in all material respects, the results of their operations
and cash flows of Valmont Industries, Inc. and subsidiaries for the year
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> 84
