<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<CAPTION>
<S> <C>
For the First Quarter Ended Commission File Number
March 27, 1999 0-3701
</TABLE>
------------------------
VALMONT INDUSTRIES, INC.
Valley, Nebraska 68064
Telephone Number 402-359-2201
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 47-0351813
(State of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
------------------------
Indicate by check mark whether the registrant (1) has filed all reports to
be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to such filing
requirements for the past ninety days. Yes / / No /X/
As of April 28, 1999 there were outstanding 24,241,909 common shares of the
registrant.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
------------------------
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
- -------------------------------------------------------------------------------------------------------- -----------
<S> <C>
Item 1. Condensed Consolidated Financial Statements:
Consolidated Statements of Operations for the thirteen weeks ended March 27, 1999 and March 28,
1998................................................................................................ 3
Consolidated Balance Sheets as of March 27, 1999 and December 26, 1998................................ 4
Consolidated Statements of Cash Flows for the thirteen weeks ended March 27, 1999 and March 28,
1998................................................................................................ 5
Notes to Consolidated Financial Statements............................................................ 6-9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........... 10-12
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders............................................. 13
Item 6. Exhibits and Reports on Form 8-K................................................................ 14
SIGNATURES.............................................................................................. 15
</TABLE>
2
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
----------------------
MARCH 27, MARCH 28,
1999 1998
---------- ----------
<S> <C> <C>
Net sales................................................................................. $ 154,403 $ 160,587
Cost of sales............................................................................. 114,005 117,518
---------- ----------
Gross profit............................................................................ 40,398 43,069
Selling, general and administrative expenses.............................................. 29,483 27,405
---------- ----------
Operating income........................................................................ 10,915 15,664
---------- ----------
Other income (deductions):
Interest expense........................................................................ (1,905) (1,038)
Interest income......................................................................... 230 244
Miscellaneous........................................................................... (79) 375
---------- ----------
(1,754) (419)
---------- ----------
Earnings before income taxes............................................................ 9,161 15,245
---------- ----------
Income tax expense:
Current................................................................................. 5,500 5,700
Deferred................................................................................ (2,100) (100)
---------- ----------
3,400 5,600
---------- ----------
Net Earnings............................................................................ $ 5,761 $ 9,645
---------- ----------
---------- ----------
Earnings per share:
Basic................................................................................. $ 0.23 $ 0.35
---------- ----------
---------- ----------
Diluted............................................................................... $ 0.23 $ 0.34
---------- ----------
---------- ----------
Cash dividends per share................................................................ $ 0.065 $ 0.05625
---------- ----------
---------- ----------
Weighted average number of shares of common stock outstanding (000 omitted)............... 24,588 27,654
---------- ----------
---------- ----------
Weighted average number of shares of common stock outstanding plus dilutive potential
common shares (000 omitted)........................................................... 24,784 28,271
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 26,
1998
MARCH 27, ------------
1999
-----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................................... $ 8,209 $ 7,580
Receivables......................................................................... 108,592 115,843
Inventories......................................................................... 76,866 77,694
Prepaid expenses.................................................................... 5,216 5,297
Refundable and deferred income taxes................................................ 9,310 13,532
----------- ------------
Total current assets.............................................................. 208,193 219,946
----------- ------------
Property, plant and equipment, at cost................................................ 307,105 292,944
Less accumulated depreciation and amortization...................................... 140,659 135,497
----------- ------------
Net property, plant and equipment................................................. 166,446 157,447
----------- ------------
Goodwill and other assets............................................................. 24,963 29,564
----------- ------------
Total assets...................................................................... $ 399,602 $ 406,957
----------- ------------
----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt.............................................. $ 5,713 $ 5,737
Notes payable to banks.............................................................. 20,877 25,494
Accounts payable.................................................................... 46,115 45,996
Accrued expenses.................................................................... 45,904 41,646
Dividends payable................................................................... 1,581 1,607
----------- ------------
Total current liabilities......................................................... 120,190 120,480
----------- ------------
Deferred income taxes................................................................. 10,293 11,984
Long-term debt, excl. current installments............................................ 87,503 90,481
Minority interest in consolidated subsidiaries........................................ 5,395 3,862
Other noncurrent liabilities.......................................................... 4,274 4,237
Shareholders' equity:
Preferred stock..................................................................... -- --
Common stock of $1 par value........................................................ 27,900 27,900
Additional paid-in capital.......................................................... 1,280 1,280
Retained earnings................................................................... 204,573 200,393
Accumulated other comprehensive income.............................................. (4,689) (1,423)
Treasury stock...................................................................... (57,117) (52,235)
Unearned restricted stock........................................................... -- (2)
----------- ------------
Total shareholders' equity........................................................ 171,947 175,913
----------- ------------
Total liabilities and shareholders' equity........................................ $ 399,602 $ 406,957
----------- ------------
----------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
----------------------
MARCH 27, MARCH 28,
1999 1998
---------- ----------
<S> <C> <C>
Net cash provided by operations........................................................... $ 23,725 $ 18,927
---------- ----------
Cash flows from investment activities:
Purchase of property, plant & equipment................................................. (11,116) (3,167)
Acquisitions............................................................................ (2,854) (13,309)
Proceeds from long-term borrowings...................................................... -- 5,483
Proceeds from sale of property and equipment............................................ 79 43
Proceeds from investment by minority shareholder........................................ 134 --
Proceeds from sale of nonconsolidated affiliate......................................... 8,294 --
Changes in other assets................................................................. (185) (994)
Other, net.............................................................................. 130 (253)
---------- ----------
Net cash used in investing activities................................................. (5,518) (12,197)
---------- ----------
Cash flows from financing activities:
Net repayments under short-term agreements.............................................. (7,955) (2,308)
Principal payments on long-term obligations............................................. (2,274) (2,035)
Dividends paid.......................................................................... (1,607) (1,555)
Proceeds from exercises under stock plans............................................... 16 371
Purchase of common treasury shares:
Stock repurchase program.............................................................. (4,883) --
Stock plan exercises.................................................................. (15) (478)
---------- ----------
Net cash used by financing activities................................................. (16,718) (6,005)
---------- ----------
Effect of exchange rate changes on cash and and cash equivalents.......................... (860) --
---------- ----------
Net increase in cash and cash equivalents............................................. 629 725
Cash and cash equivalents--beginning of period............................................ 7,580 11,505
---------- ----------
Cash and cash equivalents--end of period.................................................. $ 8,209 $ 12,230
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Condensed Consolidated Balance Sheet as of March 27, 1999 and the
Condensed Consolidated Statements of Operations for the thirteen week periods
ended March 27, 1999 and March 28, 1998 and the Condensed Consolidated
Statements of Cash Flows for the thirteen week periods then ended have been
prepared by the Company, without audit. In the opinion of management, all
necessary adjustments (which include normal recurring adjustments) have been
made to present fairly the financial statements as of March 27, 1999 and for all
periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These Condensed Consolidated Financial
Statements should be read in conjunction with the financial statements and notes
thereto included in the Company's December 26, 1998 Annual Report to
shareholders. The results of operations for the period ended March 27, 1999 are
not necessarily indicative of the operating results for the full year.
2. INVENTORIES
Approximately 62% of the Company's inventories are valued at cost on the
basis of the last-in first-out (LIFO) dollar value method under the natural
business unit concept, which is not in excess of market (net realizable value).
As a result, it is not possible to segregate the inventories into their
component values of raw material, work-in-process and finished goods. All other
inventories are valued at lower of first-in first-out (FIFO) cost or market (net
realizable value).
3. CASH FLOWS
The Company considers cash and cash investments with a maturity of three
months or less when purchased, to be cash equivalents. Interest paid was $1,986
and $1,021 for the thirteen week periods ended March 27, 1999 and March 28,
1998, respectively. Income taxes paid, net of refunds, were $651 and $598 for
the thirteen week periods ended March 27, 1999 and March 28, 1998, respectively.
4. EARNINGS PER SHARE
The following table provides a reconciliation between Basic and Diluted
earnings per share:
<TABLE>
<CAPTION>
DILUTIVE EFFECT
OF DILUTED
BASIC EPS STOCK OPTIONS EPS
--------- ----------------- ---------
<S> <C> <C> <C>
Thirteen weeks ended March 28, 1998:
Net earnings........................................... $ 9,645 -- $ 9,645
Shares outstanding..................................... 27,654 617 28,271
Per share amount....................................... $ 0.35 -- $ 0.34
Thirteen weeks ended March 27, 1999:
Net earnings........................................... $ 5,761 -- $ 5,761
Shares outstanding..................................... 24,588 196 24,784
Per share amount....................................... 0.23 -- 0.23
</TABLE>
6
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
5. COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------
MARCH 27, MARCH 28,
1999 1998
----------- -----------
<S> <C> <C>
Net earnings........................................................... $ 5,761 $ 9,645
Currency translation adjustments....................................... (3,266) (838)
----------- -----------
Total comprehensive income......................................... $ 2,495 $ 8,807
----------- -----------
----------- -----------
</TABLE>
6. TREASURY STOCK
In 1998, the Board of Directors authorized management to repurchase up to
5.4 million shares of the Company's common stock. Repurchased shares are
recorded as "Treasury Stock" and result in a reduction of "Shareholders'
Equity." When treasury shares are reissued, the Company uses the last-in,
first-out method, and the difference between the repurchase cost and reissuance
price is charged or credited to "Additional Paid-In Capital." As of March 27,
1999, a total of 0.386 million shares had been purchased for $4.9 during 1999.
7. BUSINESS SEGMENTS
<TABLE>
<CAPTION>
FIRST QUARTER
THIRTEEN WEEKS ENDED
----------------------
MARCH 27, MARCH 28,
1999 1998
---------- ----------
<S> <C> <C>
NET SALES
Irrigation.......................................................... $ 71,372 $ 82,117
Infrastructure...................................................... 78,878 72,665
Other............................................................... 7,931 9,131
Less: Intersegment sales............................................ (3,778) (3,326)
---------- ----------
Total............................................................. $ 154,403 $ 160,587
---------- ----------
---------- ----------
OPERATING INCOME
Irrigation operations............................................... $ 9,661 $ 14,265
Gain on sale of investment.......................................... 2,823 --
---------- ----------
Total Irrigation.................................................. 12,484 14,265
---------- ----------
Infrastructure operations........................................... 396 1,067
Impairment charge................................................... (2,431) --
---------- ----------
Total Infrastructure.............................................. (2,035) 1,067
---------- ----------
Other................................................................. 466 332
---------- ----------
Total............................................................. $ 10,915 $ 15,664
---------- ----------
---------- ----------
</TABLE>
7
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
7. BUSINESS SEGMENTS (CONTINUED)
The Company reorganized its businesses on a world-wide product line basis
during the first quarter of 1999 and has two reportable segments:
IRRIGATION: This segment consists of the manufacture and distribution of
agricultural irrigation equipment, tubular products and related parts and
services;
INFRASTRUCTURE: This segment includes the manufacture and distribution
of engineered metal structures and coatings services for the lighting,
utility and wireless communications industries.
In addition to these two reportable segments the Company has other
businesses that individually are not more than 10% of consolidated sales. These
businesses, which include pressure vessels, machine tool accessories and
industrial fasteners are reported in the "Other" category. For fiscal years 1996
and 1997, the "Other" category also includes the ballast business that was sold
in January, 1997. Following is a restatement of the 1998 Annual Report Segment
Information to conform with the first quarter 1999 reorganization:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES
Irrigation............................................... 252,745 271,512 239,989
Infrastructure........................................... 327,393 320,052 281,195
Other.................................................... 36,826 42,302 133,163
Less: Intersegment sales................................. (10,657) (11,360) (9,816)
---------- ---------- ----------
Total.................................................. 606,307 622,506 644,531
---------- ---------- ----------
---------- ---------- ----------
OPERATING INCOME
Irrigation............................................... 31,579 34,239 29,195
Infrastructure........................................... 14,256 25,495 21,105
Other.................................................... 1,917 2,256 (13,656)
---------- ---------- ----------
Total.................................................. 47,752 61,990 36,644
Interest expense--net.................................... (4,846) (2,831) (3,608)
Miscellaneous............................................ 630 (215) 12
---------- ---------- ----------
Earnings before income taxes........................... 43,536 58,944 33,048
---------- ---------- ----------
---------- ---------- ----------
TOTAL ASSETS
Irrigation............................................... 132,654 122,456 95,219
Infrastructure........................................... 255,122 227,689 195,972
Other.................................................... 19,181 17,907 50,457
---------- ---------- ----------
Total.................................................. 406,957 368,052 341,648
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
8
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
7. BUSINESS SEGMENTS (CONTINUED)
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
CAPITAL EXPENDITURES
Irrigation............................................... 16,652 12,181 11,129
Infrastructure........................................... 10,344 24,743 20,256
Other.................................................... 2,671 2,191 4,174
---------- ---------- ----------
Total.................................................. 29,667 39,115 35,559
---------- ---------- ----------
---------- ---------- ----------
DEPRECIATION AND AMORTIZATION
Irrigation............................................... 5,295 4,355 3,794
Infrastructure........................................... 13,791 11,363 10,343
Other.................................................... 757 719 695
---------- ---------- ----------
Total.................................................. 19,843 16,437 14,832
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
8. USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these condensed combined financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
9
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis contains forward looking statements
which reflect management's current 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 foreign governments and other risks described from time to time in the
Company's reports to the Securities and Exchange Commission. Any changes in such
assumptions or factors could produce significantly different results.
RESULTS OF OPERATIONS
CONSOLIDATED
Net sales for the first quarter of 1999 were $154.4 million, a decrease of
3.9% from $160.6 million for the same period last year. The reduction in 1999
was attributable to lower sales in the irrigation segment and was offset in part
by increased sales in the infrastructure segment.
Gross profit margin was 26.2% for the thirteen week period in 1999 compared
to 26.8% for the same period of 1998. Selling, general and administrative
expenses increased from $27.4 million (17.1% of sales) in the first quarter of
1998 to $29.5 million (19.1% of sales) for the first quarter of 1999. Operating
income for the first quarter of 1999 was $10.9 million, down from $15.7 million
for the same period in 1998.
Net interest expense was $1.7 million for the first quarter of 1999 up from
the $0.8 million incurred in 1998. This reflects the higher average borrowings.
Decreased tax benefits from exports resulted in the effective tax rate being
increased for the first quarter in 1999 to 37.1% up from 36.7% for the first
quarter in 1998.
Net earnings decreased 40.3% to $5.8 million and diluted earnings per share
decreased 31.4% to $0.23. The lower percentage decrease in earnings per share
compared to net earnings was attributable to the Company's repurchase of shares
during 1998 and 1999.
IRRIGATION SEGMENT
The Irrigation segment net sales for the quarter decreased in 1999 compared
to 1998 by 13.1%. Operating income declined 12.5% from $14.3 million to $12.5
million. Included in this year's operating income is a gain from the sale of an
investment of $2.8 million. Excluding this gain, 1999 operating income solely
from operations decreased 32.3% from 1998 operating income. Domestically, sales
decreased as a result of farmers' concern about low agricultural commodity
prices and the uncertainty over spring planting intentions as well as the
potential size of the 1999 crop. Weakness in the agricultural market also
lowered the Company's tubing sales. International sales in the irrigation
segment increased in Europe, Latin America and Asia. The Company's plant in
Brazil expanded its market share, increased sales and operating income in local
currency and increased operating income in U.S. dollars despite a currency
devaluation during the quarter.
INFRASTRUCTURE SEGMENT
Net sales for the first quarter in the Infrastructure segment increased 8.6%
to $78.9 million in 1999 from $72.7 million in 1998. Sales improved for poles
and structures for lighting, traffic, and utility as well as for coating
services. Domestically, lighting and traffic sales increased due to improvement
in overall
10
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
market conditions over last year. Demand for capacity and distribution needs by
electric utility customers drove an increase in sales for utility poles and
structures. Sales of communication poles were down domestically in the first
quarter of 1999 due to an ongoing slowdown in the network build-out by the
primary U.S. service providers of wireless communications. Internationally, the
Company's plant in China showed increased sales in lighting and communication
pole sales, In Europe, a market delay caused by adverse weather conditions
resulted in lower lighting sales. Acquisitions during 1998 of protective coating
facilities also increased sales volumes during the first quarter of 1999. For
the first thirteen weeks of 1999, the Infrastructure segment reported an
operating loss of $2.0 million in 1999 compared to an operating profit of $1.1
million in 1998. The operating loss included an impairment charge to adjust the
asset values to their fair values and record severance costs related to a
reduction in size of a communication tower facility in France (Note 7).
Operating income before the charge declined $0.7 million in 1999 from 1998 first
quarter results. Operating margins improved for domestic lighting and utility
products as the backlog of lower margin business has been completed. Operating
income in the Coatings division increased from the 1998 acquisitions, while
margins in the Communication business declined due to lower sales volumes.The
Company's margins in lighting and utility domestically is showing improvement as
backlog business of lower margins is completed. Also, 1998 cost cutting measures
have resulted in improvements in operating income. Coatings increased operating
income by 199% from 1998 results benefiting from new operations acquired in
1998. Communication poles and towers operating income decrease by $1.7 million
in the first quarter of 1999 from 1998 first quarter. Due to seasonality of the
construction market, the first quarter results of the infrastructure segment
normally lags the rest of the year results.
LIQUIDITY AND CAPITAL RESOURCES
Net working capital at March 27, 1999 was $88.0 million compared to $99.5
million at December 26, 1998. The ratio of current assets to current liabilities
was 1.7:1 at March 27, 1999, versus 1.8:1 at December 26, 1998.
Expenditures for property, plant and equipment for the thirteen period ended
March 27, 1999 were approximately $11.1 million. Included in these expenditures
are building and site work at the new irrigation facility in McCook, NE. and the
new coatings facility in Tulsa, OK. An additional $2.9 million was invested in
two retail irrigation outlets. During the quarter, the Company repurchased
385,600 shares for $4.9 million. Depreciation of property, plant and equipment
was $5.0 million for the first quarter of 1999 compared to $4.5 million a year
ago.
Available lines of credit total $43.7 million (of which approximately $31.5
million was unused) at March 27, 1999. Long-term debt was 30.5% of total
capitalization at March 27, 1999, versus 30.3% at December 26, 1998.
The Company believes cash flow from operations, available credit facilities,
and the present capital structure will be adequate for 1999 planned capital
expenditures, dividends and other financial commitments, and as well as
continuing its common share repurchase plan and pursuing opportunities to expand
its markets and businesses.
YEAR 2000
The following comments are to be considered in addition to the disclosure of
the Company's 1998 annual report of the Form 10-K filed with the Securities and
Exchange Commission. At March 27, 1999, the Company estimates to be 75% complete
in its overall compliance efforts. Areas nearly completed include plant
equipment, plant facilities, data trading partners and suppliers. Approximately
$6.5 million
11
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
has been spent to date, with the remaining estimated costs of $3.5 million
expected to be spent by the end of the year.
The Company estimates completion of the process to identify, evaluate and
resolve machines and equipment with embedded chips by June 30, 1999. Completion
of supplier evaluation is also expected by the end of the second quarter of
1999.
It is further expected that by the end of the third quarter the Company
should have also completed all Year 2000 planning domestically and with
international planning being completed by the end of the fourth quarter. The
majority of the network and personal computer equipment should be inventoried
and tested by the end of the third quarter.
12
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Valmont's annual shareholders' meeting was held on April 26, 1999. The
share-holders voted to elect three directors, to approve the Valmont 1999 Stock
Plan, and to ratify the appointment of Deloitte & Touche LLP as independent
accountants for fiscal 1999. For the annual meeting there were 24,608,873 shares
outstanding and eligible to vote of which 21,980,334 were present at the meeting
in person or by proxy. The tabulation for each matter voted upon at the meeting
was as follows:
Election of Directors:
<TABLE>
<CAPTION>
FOR WITHHELD ABSTAIN
------------ ----------- -----------
<S> <C> <C> <C>
Mogens C. Bay............................................... 21,946,373 33,961 -0-
John E. Jones............................................... 21,943,642 36,692 -0-
Walter Scott, Jr............................................ 21,941,392 38,942 -0-
</TABLE>
Following the election of these officers the Board of Directors numbered
nine members.
Proposal to approve the Valmont Stock Plan:
<TABLE>
<S> <C>
For............................................. 17,469,796
Against......................................... 2,917,280
Withheld........................................ 133,406
Abstain......................................... -0-
</TABLE>
Proposal to ratify the appointment of Deloitte & Touche LLP as independent
accountants for fiscal 1999:
<TABLE>
<S> <C>
For............................................. 20,305,614
Against......................................... 332,908
Withheld........................................ 1,341,812
Abstain......................................... -0-
</TABLE>
13
<PAGE>
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
<C> <S>
10.1 Valmont 1999 Stock Plan
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
The Company filed no reports on Form 8-k during the past fiscal quarter.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf and by the
undersigned hereunto duly authorized.
<TABLE>
<S> <C> <C>
VALMONT INDUSTRIES, INC.
(Registrant)
By: /s/ TERRY J. MCCLAIN
-----------------------------------------
Terry J. McClain
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
</TABLE>
Dated this 6th day of May, 1999.
15
<PAGE>
VALMONT 1999 STOCK PLAN
SECTION 1
NAME AND PURPOSE
1.1 Name. The name of the plan shall be the Valmont 1999 Stock Plan
(the "Plan").
1.2. Purpose of Plan. The purpose of the Plan is to foster and promote
the long-term financial success of the Company and increase stockholder value
by (a) motivating superior performance by means of stock incentives, (b)
encouraging and providing for the acquisition of an ownership interest in the
Company by Employees and (c) enabling the Company to attract and retain the
services of a management team responsible for the long-term financial success
of the Company.
SECTION 2
DEFINITIONS
2.1 Definitions. Whenever used herein, the following terms shall have
the respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Award" means any Option, Stock Appreciation Right, Restricted
Stock, Stock Bonus, or any combination thereof, including Awards
combining two or more types of Awards in a single grant.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation Committee of the Board, which
shall consist of two or more members, each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3 as
promulgated under the Act.
<PAGE>
(f) "Company" means Valmont Industries, Inc., a Delaware corporation
(and any successor thereto) and its Subsidiaries.
(g) "Director Award" means an award of Stock and an annual Award of a
Nonstatutory Stock Option granted to each Eligible Director pursuant
to Section 7.1 without any action by the Board or the Committee.
(h) "Eligible Director" means a person who is serving as a member of the
Board and who is not an Employee.
(i) "Employee" means any employee of the Company or any of its
Subsidiaries.
(j) "Fair Market Value" means, on any date, the average of the high and
low sales prices of the Stock as reported on the National
Association of Securities Dealers Automated Quotation system (or on
such other recognized market or quotation system on which the
trading prices of the Stock are traded or quoted at the relevant
time) on such date. In the event that there are no Stock
transactions reported on such system (or such other system) on such
date, Fair Market Value shall mean the average of the high and low
sale prices on the immediately preceding date on which Stock
transactions were so reported.
(k) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan, an Option may be
either (i) an Incentive Stock Option within the meaning of Section
422 of the Code or (ii) a Nonstatutory Stock Option.
(l) "Participant" means any Employee designated by the Committee to
participate in the Plan.
(m) "Plan" means the Valmont 1999 Stock Plan, as in effect from time to
time.
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(n) "Restricted Stock" shall mean a share of Stock granted to a
Participant subject to such restrictions as the Committee may
determine.
(o) "Stock" means the Common Stock of the Company, par value $1.00 per
share.
(p) "Stock Appreciation Right" means the right, subject to such terms
and conditions as the Committee may determine, to receive an amount
in cash or Stock, as determined by the Committee, equal to the
excess of (i) the Fair Market Value, as of the date such Stock
Appreciation Right is exercised, of the number shares of Stock
covered by the Stock Appreciation Right being exercised over
(ii) the aggregate exercise price of such Stock Appreciation Right.
(q) "Stock Bonus" means the grant of Stock as compensation from the
Company in lieu of cash salary or bonuses otherwise payable to the
Participant.
(r) "Subsidiary" means any corporation or partnership in which the
Company owns, directly or indirectly, 50% or more of the total
combined voting power of all classes of stock of such corporation or
of the capital interest or profits interest of such partnership.
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
SECTION 3
ELIGIBILITY AND PARTICIPATION
Except as otherwise provided in Section 7.1, the only persons eligible to
participate in the Plan shall be those Employees selected by the Committee as
Participants.
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<PAGE>
SECTION 4
POWERS OF THE COMMITTEE
4.1 Power to Grant. The Committee shall determine the Participants to
whom Awards shall be granted, the type or types of Awards to be granted, and the
terms and conditions of any and all such Awards. The Committee may establish
different terms and conditions for different types of Awards, for different
Participants receiving the same type of Awards, and for the same Participant for
each Award such Participant may receive, whether or not granted at different
times.
4.2 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to prescribe, amend, and rescind rules and regulations relating to
the Plan, to provide for conditions deemed necessary or advisable to protect the
interests of the Company, and to make all other determinations necessary or
advisable for the administration and interpretation of the Plan in order to
carry out its provisions and purposes. Determinations, interpretations, or other
actions made or taken by the Committee pursuant to the provisions of the Plan
shall be final, binding, and conclusive for all purposes and upon all persons.
SECTION 5
STOCK SUBJECT TO PLAN
5.1 Number. Subject to the provisions of Section 5.3, the number of
shares of Stock subject to Awards (including Director Awards) under the Plan may
not exceed 1,700,000 shares of Stock. The shares to be delivered under the Plan
may consist, in whole or in part, of treasury Stock or authorized but unissued
Stock, not reserved for any other purpose. The maximum number of shares of Stock
with respect to which Awards may be granted to any one Employee under the Plan
is 40% of the aggregate number of shares of Stock available for Awards under
Section 5.1.
5.2 Cancelled, Terminated or Forfeited Awards. Any shares of Stock
subject to an Award which for any reason are cancelled, terminated or otherwise
settled without the issuance of any Stock shall again be available for Awards
under the Plan. In the event
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a Participant pays the exercise price of an Option pursuant to Section 6.4 by
transferring or having withheld shares of stock, only the net number of
Shares shall be considered utilized under the Plan and the balance shall
again be available for Award under the Plan.
5.3 Adjustment in Capitalization. In the event of any Stock dividend or
Stock split, recapitalization (including, without limitation, the payment of an
extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change, (i) the aggregate number of shares of Stock available for
Awards under Section 5.1 and (ii) the number of shares and exercise price with
respect to Options and the number, prices and dollar value of other Awards, may
be appropriately adjusted by the Committee, whose determination shall be
conclusive. If, pursuant to the preceding sentence, an adjustment is made to the
number of shares of Stock authorized for issuance under the Plan, a
corresponding adjustment shall be made with respect to Director Awards granted
pursuant to Section 7.1.
SECTION 6
STOCK OPTIONS
6.1 Grant of Options. Options may be granted to Participants at such
time or times as shall be determined by the Committee. Options granted under
the Plan may be of two types: (i) Incentive Stock Options and (ii) Nonstatutory
Stock Options. The Committee shall have complete discretion in determining the
number of Options, if any, to be granted to a Participant. Each Option shall be
evidenced by an Option agreement that shall specify the type of Option granted,
the exercise price, the duration of the Option, the number of shares of Stock to
which the Option pertains, the exercisability (if any) of the Option in the
event of death, retirement, disability or termination of employment, and such
other terms and conditions not inconsistent with the Plan as the Committee shall
determine. Options may also be granted in replacement of or upon assumption of
options previously issued by companies acquired by the Company by merger or
stock purchase, and any options so replaced or assumed may have
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<PAGE>
the same terms including exercise price as the options so replaced or assumed.
6.2 Option Price. Nonstatutory Stock Options and Incentive Stock
Options granted pursuant to the Plan shall have an exercise price which is not
less than the Fair Market Value on the date the Option is granted.
6.3 Exercise of Options. Options awarded to a Participant under the
Plan shall be exercisable at such times and shall be subject to such
restrictions and conditions as the Committee may impose, subject to the
Committee's right to accelerate the exercisability of such Option in its
discretion. Notwithstanding the foregoing, no Option shall be exercisable for
more than ten years after the date on which it is granted.
6.4 Payment. The Committee shall establish procedures governing the
exercise of Options, which shall require that written notice of exercise be
given and that the Option price be paid in full in cash or cash equivalents,
including by personal check, at the time of exercise or pursuant to any
arrangement that the Committee shall approve. The Committee may, in its
discretion, permit a Participant to make payment (i) in Stock already owned by
the Participant valued at its Fair Market Value on the date of exercise (if such
Stock has been owned by the Participant for at least six months) or (ii) by
electing to have the Company retain Stock which would otherwise be issued on
exercise of the Option, valued at its Fair Market Value on the date of exercise.
As soon as practicable after receipt of a written exercise notice and full
payment of the exercise price, the Company shall deliver to the Participant a
certificate or certificates representing the acquired shares of Stock. The
Committee may permit a Participant to elect to pay the exercise price upon the
exercise of an Option by authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the Option and remit
to the Company a sufficient portion of the sale proceeds to pay the entire
exercise price and any required tax withholding resulting from such exercise.
6.5 Incentive Stock Options. Notwithstanding anything in the Plan to
the contrary, no term of this Plan relating to Incentive Stock Options shall be
interpreted, amended or altered,
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nor shall any discretion or authority granted under the Plan be so exercised,
so as to disqualify the Plan under Section 422 of the Code, or, without the
consent of any Participant affected thereby, to cause any Incentive Stock
Option previously granted to fail to qualify for the Federal income tax
treatment afforded under Section 421 of the Code.
6.6 Replacement Options. 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.
SECTION 7
DIRECTOR AWARDS
7.1 Amount of Award. Each Eligible Director shall receive a
non-discretionary Award of 2,000 shares of stock each year; such Award shall
be made annually on the date of and following completion of the Company's
annual stockholders' meeting (commencing with the 1999 annual stockholders'
meeting). Each Eligible 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
any such case with the prior approval of the Board, will result in forfeiture
of the Stock. If the Stock is forfeited, the director shall return the number
of
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<PAGE>
forfeited shares of Stock, or equivalent value, to the Company. The number of
shares of Stock awarded to an Eligible Director annually shall be
appropriately adjusted in the event of any stock changes as described in
Section 5.3. In addition, each Eligible Director shall receive a
non-discretionary Award of a Nonqualified Stock Option for 4,000 shares of
Stock exercisable at the Fair Market Value of the Company's common stock on
the date of grant; such Award shall be made annually on the date of and
following completion of the Company's annual stockholders' meeting
(commencing with the 1999 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 Section 5.3.
7.2 No Other Awards. An Eligible Director shall not receive any other
Award under the Plan.
SECTION 8
STOCK APPRECIATION RIGHTS
8.1 SAR's in Tandem with Options. Stock Appreciation Rights may be
granted to Participants in tandem with any Option granted under the Plan, either
at or after the time of the grant of such Option, subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine. Each Stock Appreciation Right shall only be exercisable to the
extent that the corresponding Option is exercisable, and shall terminate upon
termination or exercise of the corresponding Option. Upon the exercise of any
Stock Appreciation Right, the corresponding Option shall terminate.
8.2 Other Stock Appreciation Rights. Stock Appreciation Rights may also
be granted to Participants separately from any Option, subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine.
SECTION 9
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RESTRICTED STOCK
9.1 Grant of Restricted Stock. The Committee may grant Restricted
Stock to Participants at such times and in such amounts, and subject to such
other terms and conditions not inconsistent with the Plan as it shall
determine. Each grant of Restricted Stock shall be subject to such
restrictions, which may relate to continued employment with the Company,
performance of the Company, or other restrictions, as the Committee may
determine. Each grant of Restricted Stock shall be evidenced by a written
agreement setting forth the terms of such Award. A maximum of 20% of the
shares of Stock available for issuance under the Plan may be issued as
Restricted Stock.
9.2 Removal of Restrictions. The Committee may accelerate or waive such
restrictions in whole or in part at any time in its discretion.
SECTION 10
STOCK BONUSES
10.1 Grant of Stock Bonuses. The Committee may grant a Stock Bonus to a
Participant at such times and in such amounts, and subject to such other terms
and conditions not inconsistent with the Plan, as it shall determine.
SECTION 11
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
11.1 General. The Board may from time to time amend, modify or
terminate any or all of the provisions of the Plan, subject to the provisions
of this Section 11.1. The Board may not change the Plan in a manner which
would prevent outstanding Incentive Stock Options granted under the Plan from
being Incentive Stock Options without the consent of the optionees concerned.
Furthermore, the Board may not make any amendment which would (i)
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<PAGE>
materially modify the requirements for participation in the Plan or (ii)
increase the number of shares of Stock subject to Awards under the Plan
pursuant to Section 5.1, in each case without the approval of a majority of
the outstanding shares of Stock entitled to vote thereon. No amendment or
modification shall affect the rights of any Employee with respect to a
previously granted Award, nor shall any amendment or modification affect the
rights of any Eligible Director pursuant to a previously granted Director
Award.
11.2 Termination of Plan. No further Options shall be granted under the
Plan subsequent to December 31, 2009, or such earlier date as may be determined
by the Board.
SECTION 12
MISCELLANEOUS PROVISIONS
12.1 Nontransferability of Awards. Except as otherwise provided by the
Committee, no Awards granted under the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution.
12.2 Beneficiary Designation. Each Participant under the Plan may from
time to time name any beneficiary or beneficiaries (who may be named contingent
or successively) to whom any benefit under the Plan is to be paid or by whom any
right under the Plan is to be exercised in case of his death. Each designation
will revoke all prior designations by the same Participant shall be in a form
prescribed by the Committee, and will be effective only when filed in writing
with the Company. In the absence of any such designation, Awards outstanding at
death may be exercised by the Participant's surviving spouse, if any, or
otherwise by his estate.
12.3 No Guarantee of Employment or Participation. Nothing in the Plan
shall interfere with or limit in any way the right of
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the Company or any Subsidiary to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ
of the Company or any Subsidiary. No Employee shall have a right to be
selected as a Participant, or, having been so selected, to receive any future
Awards.
12.4 Tax Withholding. The Company shall have the power to withhold, or
require a Participant or Eligible Director to remit to the Company, an amount
sufficient to satisfy federal, state, and local withholding tax requirements on
any Award under the Plan, and the Company may defer issuance of Stock until such
requirements are satisfied. The Committee may, in its discretion, permit a
Participant to elect, subject to such conditions as the Committee shall impose,
(i) to have shares of Stock otherwise issuable under the Plan withheld by the
Company or (ii) to deliver to the Company previously acquired shares of Stock,
in each case having a Fair Market Value sufficient to satisfy all or part of the
Participant's estimated total federal, state and local tax obligation associated
with the transaction.
12.5 Change of Control. 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.
"Change of Control" shall mean:
(i) The acquisition (other than from the Company) by any person, entity
or "group", within the meaning of Section 13(d)(3) or 14(d)(2) of
the Act (excluding any acquisition or holding by (i) the Company or
its subsidiaries, (ii) any employee benefit plan of the Company or
its subsidiaries which acquires beneficial ownership of voting
securities of the Company 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
promulgated under the Act) of 50% or more of either the then
outstanding shares of common stock or the combined voting power of
the Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
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<PAGE>
(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 the Company's
stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be, for purposes
of this Plan, considered as though such person were a member of the
Incumbent Board; or
(iii) Approval by the stockholders of the Company of a reorganization,
merger or consolidation, in each case, with respect to which persons
who were the stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately
thereafter, 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 then outstanding voting securities,
or a liquidation or dissolution of the Company or of the sale of all
or substantially all of the assets of the Company.
12.6 Company Intent. The Company intends that the Plan comply in all
respects with Rule 16b-3 under the Act, and any ambiguities or inconsistencies
in the construction of the Plan shall be interpreted to give effect to such
intention.
12.7 Requirements of Law. The granting of Awards and the issuance of
shares of Stock shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or securities exchanges as
may be required.
12.8 Effective Date. The Plan shall be effective upon its adoption by
the Board subject to approval by the Company's stockholders at the 1999 annual
stockholders' meeting.
12.9 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
-12-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-25-1999
<PERIOD-START> DEC-27-1998
<PERIOD-END> MAR-27-1999
<CASH> 8,209
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<RECEIVABLES> 108,592
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<INVENTORY> 76,866
<CURRENT-ASSETS> 208,193
<PP&E> 307,105
<DEPRECIATION> 140,659
<TOTAL-ASSETS> 399,602
<CURRENT-LIABILITIES> 120,190
<BONDS> 0
0
0
<COMMON> 27,900
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<TOTAL-LIABILITY-AND-EQUITY> 399,602
<SALES> 154,403
<TOTAL-REVENUES> 154,403
<CGS> 114,005
<TOTAL-COSTS> 114,005
<OTHER-EXPENSES> 29,483
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<INTEREST-EXPENSE> 1,905
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