UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x☒QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September ~~30, 2017~~28, 2019

o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ____________ to

Commission file number 1-31429

Valmont Industries, Inc.

(Exact name of registrant as specified in its charter)



Delaware		47-0351813
(State or Other Jurisdiction of Incorporation or Organization)		~~47-0351813~~ (I.R.S. Employer Identification No.)
One Valmont Plaza,
Omaha,	Nebraska ~~(Address~~	68154-5215
(Address of Principal Executive Offices)		~~68154-5215~~ ~~(Zip~~ (Zip Code)

~~(402)~~ (402) 963-1000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

________________________

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Symbol	Name of exchange on which registered
Common Stock $1.00 par value	VMI	New York Stock Exchange

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 12 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 90 days. Yesx No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yesx No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” ~~and~~ “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filerx	☒	Accelerated filer o	☐	Non‑accelerated filero	☐	Smaller reporting company o	☐
Emerging growth company o		~~(Do not check if a~~ ~~smaller reporting company)~~☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐

No x

~~22,607,680~~21,525,585

Outstanding shares of common stock as of October ~~23, 2017~~25, 2019

VALMONT INDUSTRIES, INC.

INDEX TO FORM 10-Q


		Page No.		Page No.
	PART I. FINANCIAL INFORMATION		PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):		Financial Statements (unaudited):
	Condensed Consolidated Statements of Earnings for the thirteen and thirty-nine weeks		Condensed Consolidated Statements of Earnings for the thirteen and thirty-nine weeks
	ended September 30, 2017 and September 24, 2016	3	ended September 28, 2019 and September 29, 2018	3
	Condensed Consolidated Statements of Comprehensive Income for the thirteen		Condensed Consolidated Statements of Comprehensive Income for the thirteen
	and thirty-nine weeks ended September 30, 2017 and September 24, 2016	4	and thirty-nine weeks ended September 28, 2019 and September 29, 2018	4
	Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31,		Condensed Consolidated Balance Sheets as of September 28, 2019 and December 29,
	2016	5	2018	5
	Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended		Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended
	September 30, 2017 and September 24, 2016	6	September 28, 2019 and September 29, 2018	6
	Condensed Consolidated Statements of Shareholders' Equity for the thirty-nine		Condensed Consolidated Statements of Shareholders' Equity for the thirteen and
	weeks ended September 30, 2017 and September 24, 2016	7	thirty-nine weeks ended September 28, 2019 and September 29, 2018	7
	Notes to Condensed Consolidated Financial Statements	8	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31	Management's Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	40	Controls and Procedures	49

	PART II. OTHER INFORMATION		PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 6.	Exhibits	41	Exhibits	50
Signatures	Signatures	42	Signatures	52

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(Unaudited)


	Thirteen Weeks Ended						Thirty-nine Weeks Ended						Thirteen weeks ended						Thirty-nine weeks ended
	September 30, 2017			September 24, 2016			September 30, 2017			September 24, 2016			September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Product sales	$	602,080		$	544,828		$	1,807,539		$	1,648,530		$	605,439		$	597,469		$	1,829,919		$	1,816,597
Services sales	78,699			65,419			223,450			198,571			84,901			81,223			253,431			243,184
Net sales	680,779			610,247			2,030,989			1,847,101			690,340			678,692			2,083,350			2,059,781
Product cost of sales	462,854			409,003			1,366,875			1,220,567			457,750			460,547			1,393,236			1,389,832
Services cost of sales	54,331			46,221			152,635			135,425			56,504			53,805			168,485			161,370
Total cost of sales	517,185			455,224			1,519,510			1,355,992			514,254			514,352			1,561,721			1,551,202
Gross profit	163,594			155,023			511,479			491,109			176,086			164,340			521,629			508,579
Selling, general and administrative expenses	103,671			101,783			308,764			303,698			112,223			110,200			338,950			326,809
Impairment of goodwill and intangible assets													—			15,780			—			15,780
Operating income	59,923			53,240			202,715			187,411			63,863			38,360			182,679			165,990
Other income (expenses):
Interest expense	(11,190		)	(11,100		)	(33,312		)	(33,276		)	(9,976		)	(10,954		)	(29,971		)	(33,819		)
Interest income	1,311			771			3,205			2,289			969			1,000			2,815			3,713
Gain on investments (unrealized)													402			1,068			4,754			1,146
Costs associated with refinancing of debt													—			(14,820		)	—			(14,820		)
Loss from divestiture of grinding media business													—			—			—			(6,084		)
Other	517			878			1,684			452			768			1,428			1,938			2,053
	(9,362		)	(9,451		)	(28,423		)	(30,535		)	(7,837		)	(22,278		)	(20,464		)	(47,811		)
Earnings before income taxes	50,561			43,789			174,292			156,876			56,026			16,082			162,215			118,179
Income tax expense:
Income tax expense (benefit):
Current	21,163			18,017			50,264			51,276			12,375			10,777			33,053			35,214
Deferred	(7,268		)	(3,749		)	79			(1,534		)	1,388			(1,686		)	7,098			814
	13,895			14,268			50,343			49,742			13,763			9,091			40,151			36,028
Net earnings	36,666			29,521			123,949			107,134			42,263			6,991			122,064			82,151
Less: Earnings attributable to noncontrolling interests	(1,458		)	(1,348		)	(4,098		)	(3,966		)	(2,119		)	(2,543		)	(4,042		)	(5,462		)
Net earnings attributable to Valmont Industries, Inc.	$	35,208		$	28,173		119,851			103,168			$	40,144		$	4,448		$	118,022		$	76,689
Earnings per share:
Basic	$	1.56		$	1.25		$	5.33		$	4.56		$	1.86		$	0.20		$	5.43		$	3.42
Diluted	$	1.55		$	1.24		$	5.28		$	4.54		$	1.85		$	0.20		$	5.41		$	3.40
Cash dividends declared per share	$	0.375		$	0.375		$	1.125		$	1.125
Weighted average number of shares of common stock outstanding - Basic (000 omitted)	22,527			22,505			22,505			22,602
Weighted average number of shares of common stock outstanding - Diluted (000 omitted)	22,751			22,659			22,717			22,741

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)


	Thirteen Weeks Ended						Thirty-nine Weeks Ended						Thirteen Weeks Ended						Thirty-nine Weeks Ended
	September 30, 2017			September 24, 2016			September 30, 2017			September 24, 2016			September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Net earnings	$	36,666		$	29,521		$	123,949		$	107,134		42,263			6,991			122,064			82,151
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss)	19,530			770			60,471			(1,938		)	(23,781		)	(10,632		)	(20,466		)	(50,781		)
Gain/(loss) on hedging activities:
Net investment hedge	(740		)	1,972			(1,816		)	4,897
Realized loss on divestiture of grinding media business recorded in earnings													—			—			—			9,203
Gain (loss) on hedging activities:
Net investment hedges													2,580			1,223			3,360			2,830
Realized loss on net investment hedge for grinding media business recorded in earnings													—			—			—			1,215
Amortization cost included in interest expense	19			18			56			56			(16		)	395			(48		)	439
Other comprehensive income (loss)	18,809			2,760			58,711			3,015
Deferred loss on interest rate hedges													—			—			—			(2,467		)
Commodity hedges													(21		)	226			(2,130		)	1,571
Realized gain (loss) on commodity hedges recorded in earnings													1,329			(717		)	1,329			(717		)
Cross currency swaps													5,443			(2,037		)	3,771			(2,037		)
Other comprehensive income													(14,466		)	(11,542		)	(14,184		)	(40,744		)
Comprehensive income	55,475			32,281			182,660			110,149			27,797			(4,551		)	107,880			41,407
Comprehensive loss (income) attributable to noncontrolling interests	(2,570		)	(1,618		)	(4,552		)	(5,732		)
Comprehensive income attributable to noncontrolling interests													(1,297		)	(2,389		)	(3,390		)	(8,250		)
Comprehensive income attributable to Valmont Industries, Inc.	$	52,905		$	30,663		$	178,108		$	104,417		$	26,500		$	(6,940	)	$	104,490		$	33,157

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)


	September 30, 2017			December 31, 2016			September 28, 2019			December 29, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	493,490		$	399,948		$	327,200		$	313,210
Receivables, net	492,842			439,342			501,215			483,963
Inventories	403,234			350,028			377,300			383,566
Prepaid expenses, restricted cash, and other assets	50,064			57,297
Contract asset - costs and profits in excess of billings							120,376			112,525
Prepaid expenses and other assets							50,420			42,800
Refundable income taxes	8,493			6,601			11,893			4,576
Total current assets	1,448,123			1,253,216			1,388,404			1,340,640
Property, plant and equipment, at cost	1,169,854			1,105,736			1,233,762			1,160,865
Less accumulated depreciation and amortization	647,430			587,401			685,394			646,873
Net property, plant and equipment	522,424			518,335			548,368			513,992
Goodwill	336,754			321,110			421,679			385,207
Other intangible assets, net	142,090			144,378			177,734			175,956
Other assets	160,780			154,692			189,257			114,479
Total assets	$	2,610,171		$	2,391,731		$	2,725,442		$	2,530,274

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt	$	949		$	851		$	745		$	779
Notes payable to banks	197			746			19,324			10,678
Accounts payable	216,104			177,488			197,535			218,115
Accrued employee compensation and benefits	81,494			72,404			78,540			79,291
Accrued expenses	106,238			89,914			226,715			91,942
Dividends payable	8,478			8,445			8,088			8,230
Total current liabilities	413,460			349,848			530,947			409,035
Deferred income taxes	28,183			35,803			43,778			43,489
Long-term debt, excluding current installments	754,202			754,795			764,524			741,822
Defined benefit pension liability	199,562			209,470			121,282			143,904
Operating lease liabilities							78,790			—
Deferred compensation	48,612			44,319			43,837			46,107
Other noncurrent liabilities	13,557			14,910			11,113			10,394
Shareholders’ equity:
Preferred stock of $1 par value -
Authorized 500,000 shares; none issued	—			—
Common stock of $1 par value -
Authorized 75,000,000 shares; 27,900,000 issued	27,900			27,900			27,900			27,900
Retained earnings	1,974,601			1,874,722			2,119,843			2,027,596
Accumulated other comprehensive loss	(288,102		)	(346,359		)	(316,717		)	(303,185		)
Treasury stock	(601,565		)	(612,781		)	(744,335		)	(692,549		)
Total Valmont Industries, Inc. shareholders’ equity	1,112,834			943,482			1,086,691			1,059,762
Noncontrolling interest in consolidated subsidiaries	39,761			39,104			44,480			75,761
Total shareholders’ equity	1,152,595			982,586			1,131,171			1,135,523
Total liabilities and shareholders’ equity	$	2,610,171		$	2,391,731		$	2,725,442		$	2,530,274

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Thirty-nine Weeks Ended						Thirty-nine weeks ended
	September 30, 2017			September 24, 2016			September 28, 2019			September 29, 2018
Cash flows from operating activities:
Net earnings	$	123,949		$	107,134		$	122,064		$	82,151
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization	63,500			61,242			60,424			62,018
Noncash loss on trading securities	395			973			(48		)	(62		)
Impairment of assets - restructuring activities	—			618
Impairment of property, plant and equipment							—			4,197
Impairment of goodwill & intangible assets							—			15,780
Loss on divestiture of grinding media business							—			6,084
Stock-based compensation	7,300			6,572			8,889			8,076
Change in fair value of contingent consideration	—			(3,527		)
Defined benefit pension plan expense	481			1,486
Defined benefit pension plan benefit							(382		)	(1,713		)
Contribution to defined benefit pension plan	(26,064		)	(712		)	(17,426		)	(1,555		)
Change in restricted cash - pension plan trust	12,568			(13,652		)
(Gain)/loss on sale of property, plant and equipment	(732		)	250
Gain on sale of property, plant and equipment							(465		)	(353		)
Deferred income taxes	79			(1,534		)	7,098			814
Changes in assets and liabilities:
Receivables	(39,584		)	16,436			(21,117		)	(612		)
Inventories	(41,545		)	(34,413		)	5,348			(33,004		)
Prepaid expenses and other assets	(11,636		)	(10,624		)	(14,451		)	(18,486		)
Contract asset - costs and profits in excess of billings							(7,850		)	(33,029		)
Accounts payable	28,895			(11,338		)	(19,256		)	(19,069		)
Accrued expenses	20,157			3,272			129,901			7,288
Other noncurrent liabilities	(1,627		)	240			(4,563		)	(1,249		)
Income taxes refundable	(1,732		)	4,831			(8,936		)	(9,223		)
Net cash flows from operating activities	134,404			127,254			239,230			68,053
Cash flows from investing activities:
Purchase of property, plant and equipment	(39,898		)	(42,233		)	(71,981		)	(48,919		)
Proceeds from sale of assets	1,575			3,938			1,325			64,786
Acquisitions, net of cash acquired	(5,362		)	—			(81,841		)	(125,309		)
Proceeds from settlement of net investment hedge	5,123			—
Settlement of net investment hedges							11,184			(1,621		)
Other, net	(3,462		)	(2,824		)	2,117			(2,371		)
Net cash flows from investing activities	(42,024		)	(41,119		)	(139,196		)	(113,434		)
Cash flows from financing activities:
Net borrowings under short-term agreements	(549		)	(128		)
Proceeds from short-term agreements							9,284			3,217
Proceeds from long-term borrowings							31,000			236,936
Principal payments on long-term borrowings	(658		)	(1,563		)	(10,578		)	(252,952		)
Settlement of financial derivatives							—			(2,467		)
Debt issuance costs							—			(2,322		)
Dividends paid	(25,386		)	(25,604		)	(24,554		)	(25,415		)
Dividends to noncontrolling interest	(3,895		)	(2,527		)	(6,549		)	(5,737		)
Purchase of noncontrolling interest	—			(11,009		)	(27,845		)	(5,510		)
Purchase of treasury shares	—			(46,581		)	(55,172		)	(86,919		)
Proceeds from exercises under stock plans	12,446			6,509			3,211			6,376
Purchase of common treasury shares—stock plan exercises	(3,929		)	(1,453		)	(1,456		)	(1,914		)
Net cash flows from financing activities	(21,971		)	(82,356		)	(82,659		)	(136,707		)
Effect of exchange rate changes on cash and cash equivalents	23,133			(3,478		)	(3,385		)	(15,095		)
Net change in cash and cash equivalents	93,542			301			13,990			(197,183		)
Cash and cash equivalents—beginning of year	399,948			349,074
Cash and cash equivalents—end of period	$	493,490		$	349,375
Cash, cash equivalents, and restricted cash—beginning of year							313,210			492,805
Cash, cash equivalents, and restricted cash—end of period							$	327,200		$	295,622

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollars in thousands)

(Unaudited)

Common
stock Additional
paid-in
capital Retained
earnings Accumulated
other
comprehensive
income (loss) Treasury
stock Noncontrolling
interest in
consolidated
subsidiaries Total
shareholders’
equity
Balance at December 26, 2015 $ 27,900
$ —
$ 1,729,679
$ (267,218 ) $ (571,920 ) $ 46,770
$ 965,211
Net earnings —
—
103,168
—
—
3,966
107,134
Other comprehensive income (loss) —
—
—
1,249
—
1,766
3,015
Cash dividends declared —
—
�� (25,482 ) —
—
—
(25,482 )
Dividends to noncontrolling interests —
—
—
—
—
(2,527 ) (2,527 )
Purchase of noncontrolling interests —
(137 ) —
—
—
(10,872 ) (11,009 )
Purchase of treasury shares; 384,622 shares acquired —
—
—
—
(46,581 ) —
(46,581 )
Stock plan exercises; 10,747 shares acquired —
—
—
—
(1,453 ) —
(1,453 )
Stock options exercised; 68,631 shares issued —
(6,435 ) 4,582
—
8,362
—
6,509
Stock option expense —
4,358
—
—
—
—
4,358
Stock awards; 6,725 shares issued —
2,214
—
—
912
—
3,126
Balance at September 24, 2016 $ 27,900
$ —
$ 1,811,947
$ (265,969 ) $ (610,680 ) $ 39,103
$ 1,002,301
Balance at December 31, 2016 $ 27,900
$ —
$ 1,874,722
$ (346,359 ) $ (612,781 ) $ 39,104
$ 982,586
Net earnings —
—
119,851
—
—
4,098
123,949
Other comprehensive income (loss) —
—
—
58,257
—
454
58,711
Cash dividends declared —
—
(25,417 ) —
—
—
(25,417 )
Dividends to noncontrolling interests —
—
—
—
—
(3,895 ) (3,895 )
Stock plan exercises; 24,672 shares acquired —
—
—
—
(3,929 ) —
(3,929 )
Stock options exercised; 106,351 shares issued —
(7,300 ) 5,445
—
14,301
—
12,446
Stock option expense —
3,868
—
—
—
—
3,868
Stock awards; 6,034 shares issued —
3,432
—
—
844
—
4,276
Balance at September 30, 2017 $ 27,900
$ —
$ 1,974,601
$ (288,102 ) $ (601,565 ) $ 39,761
$ 1,152,595



	Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock			Noncontrolling interest in consolidated subsidiaries			Total shareholders’ equity
Balance at June 30, 2018	$	27,900	$	—		$	2,023,919		$	(311,166	)	$	(628,487	)	$	37,658		$	1,149,824
Net earnings	—		—			4,448			—			—			2,543			$	6,991
Other comprehensive income (loss)	—		—			—			(11,388		)	—			(154		)	$	(11,542	)
Cash dividends declared ($0.375 per share)	—		—			(8,311		)	—			—			—			$	(8,311	)
Dividends to noncontrolling interests	—		—			—			—			—			(885		)	$	(885	)
Addition of noncontrolling interest	—		—			—			—			—			37,369			$	37,369
Purchase of treasury shares; 309,198 shares acquired	—		—			—			—			(42,920		)	—			$	(42,920	)
Stock plan exercises; 1,033 shares acquired	—		—			—			—			(145		)	—			$	(145	)
Stock options exercised; 6,191 shares issued	—		(2,713		)	2,482			—			896			—			$	665
Stock option expense	—		987			—			—			—			—			$	987
Stock awards; 82 shares issued	—		1,726			—			—			(11		)	—			$	1,715
Balance at September 29, 2018	$	27,900	$	—		$	2,022,538		$	(322,554	)	$	(670,667	)	$	76,531		$	1,133,748
Balance at June 29, 2019	$	27,900	$	—		$	2,085,594		$	(303,072	)	$	(728,680	)	$	45,272		$	1,127,014
Net earnings	—		—			40,144			—			—			2,119			$	42,263
Other comprehensive income (loss)	—		—			—			(13,645		)	—			(821		)	$	(14,466	)
Cash dividends declared ($0.375 per share)	—		—			(8,085		)	—			—			—			$	(8,085	)
Dividends to noncontrolling interests	—		—			—			—			—			(2,090		)	$	(2,090	)
Purchase of treasury shares; 126,734 shares acquired	—		—			—			—			(16,822		)	—			$	(16,822	)
Stock plan exercises; 4,403 shares acquired	—		—			—			—			(629		)	—			$	(629	)
Stock options exercised; 12,856 shares issued	—		(2,514		)	2,190			—			1,791			—			$	1,467
Stock option expense	—		600			—			—			—			—			$	600
Stock awards; 223 shares issued	—		1,914			—			—			5			—			$	1,919
Balance at September 28, 2019	$	27,900	$	—		$	2,119,843		$	(316,717	)	$	(744,335	)	$	44,480		$	1,131,171

See accompanying notes to the condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollars in thousands)

(Unaudited)



	Common stock		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock			Noncontrolling interest in consolidated subsidiaries			Total shareholders’ equity
Balance at December 30, 2017	$	27,900	$	—		$	1,954,344		$	(279,022	)	$	(590,386	)	$	38,959		$	1,151,795
Net earnings	—		—			76,689			—			—			5,462			82,151
Other comprehensive income (loss)	—		—			—			(43,532		)	—			2,788			(40,744		)
Cash dividends declared ($1.125 per share)	—		—			(25,204		)	—			—			—			(25,204		)
Dividends to noncontrolling interests	—		—			—			—			—			(5,737		)	(5,737		)
Cumulative impact of ASC 606 adoption	—		—			9,771			—			—			—			9,771
Impact of ASU 2016-16 adoption	—		—			1,038			—			—			—			1,038
Addition of noncontrolling interest	—		—			—			—			—			40,569			40,569
Purchase of noncontrolling interest	—		—			—			—			—			(5,510		)	(5,510		)
Purchase of treasury shares; 614,454 shares acquired	—		—			—			—			(86,919		)	—			(86,919		)
Stock plan exercises; 12,971 shares acquired	—		—			—			—			(1,914		)	—			(1,914		)
Stock options exercised; 52,404 shares issued	—		(7,172		)	5,900			—			7,648			—			6,376
Stock option expense	—		3,138			—			—			—			—			3,138
Stock awards; 7,774 shares issued	—		4,034			—			—			904			—			4,938
Balance at September 29, 2018	$	27,900	$	—		$	2,022,538		$	(322,554	)	$	(670,667	)	$	76,531		$	1,133,748
Balance at December 29, 2018	$	27,900	$	—		$	2,027,596		$	(303,185	)	$	(692,549	)	$	75,761		$	1,135,523
Net earnings	—		—			118,022			—			—			4,042			122,064
Other comprehensive income (loss)	—		—			—			(13,532		)	—			(652		)	(14,184		)
Cash dividends declared ($1.125 per share)	—		—			(24,424		)	—			—			—			(24,424		)
Dividends to noncontrolling interests	—		—			—			—			—			(6,549		)	(6,549		)
Purchase of noncontrolling interest	—		277			—			—			—			(28,122		)	(27,845		)
Impact of ASC 842 adoption	—		—			(8,886		)	—			—			—			(8,886		)
Purchase of treasury shares; 433,463 shares acquired	—		—			—			—			(55,172		)	—			(55,172		)
Stock plan exercises; 10,499 shares acquired	—		—			—			—			(1,456		)	—			(1,456		)
Stock options exercised; 28,493 shares issued	—		(7,756		)	7,535			—			3,432			—			3,211
Stock option expense	—		2,056			—			—			—			—			2,056
Stock awards; 10,550 shares issued	—		5,423			—			—			1,410			—			6,833
Balance at September 28, 2019	$	27,900	$	—		$	2,119,843		$	(316,717	)	$	(744,335	)	$	44,480		$	1,131,171

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Condensed Consolidated Financial Statements

The Condensed Consolidated Balance Sheet as of September ~~30, 2017~~28, 2019, the Condensed Consolidated Statements of Earnings, ~~and~~ Comprehensive Income, and Shareholders' Equity for the thirteen and thirty-nine weeks ended September ~~30, 2017~~28, 2019 and September ~~24, 2016~~,29, 2018, and the Condensed Consolidated Statements of Cash Flows ~~and Shareholders' Equity~~ for the thirty-nine 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 September ~~30, 2017~~28, 2019 and for all periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America 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 Annual Report on Form 10-K for the fiscal year ended December ~~31, 2016~~.29, 2018. The accounting policies and methods of computation followed in these interim financial statements are the same as those followed in the financial statements for the year ended December ~~31, 2016~~.29, 2018 with the exception of the lease accounting policy which changed from adopting Accounting Standards Update ("ASU") 2016-02 and is discussed in footnote 9. The results of operations for the period ended September ~~30, 2017~~28, 2019 are not necessarily indicative of the operating results for the full year.

Inventories

Approximately ~~36%~~38% and ~~38%~~37% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method or market as of September ~~30, 2017~~28, 2019 and December ~~31, 2016~~.29, 2018. All other inventory is valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market. Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured and finished goods. The excess of replacement cost of inventories over the LIFO value is approximately ~~$40,886~~$48,080 and ~~$38,047~~$53,619 at September ~~30, 2017~~28, 2019 and December ~~31, 2016~~,29, 2018, respectively.

Inventories consisted of the following:



	September 28, 2019		December 29, 2018
Raw materials and purchased parts	$	172,064	$	190,115
Work-in-process	34,696		35,566
Finished goods and manufactured goods	218,620		211,504
Subtotal	425,380		437,185
Less: LIFO reserve	48,080		53,619
	$	377,300	$	383,566

September 30,
2017 December 31,
2016
Raw materials and purchased parts $ 175,222
$ 143,659
Work-in-process 35,126
27,291
Finished goods and manufactured goods 233,772
217,125
Subtotal 444,120
388,075
Less: LIFO reserve 40,886
38,047
$ 403,234
$ 350,028

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

Earnings before income taxes ~~and equity in earnings of nonconsolidated subsidiaries~~ for the thirteen and thirty-nine weeks ended September ~~30, 2017~~28, 2019 and September ~~24, 2016~~,29, 2018, were as follows:



	Thirteen weeks ended				Thirty-nine weeks ended
	2019		2018		2019		2018
United States	$	44,897	$	15,596	$	134,417	$	99,697
Foreign	11,129		486		27,798		18,482
	$	56,026	$	16,082	$	162,215	$	118,179

Thirteen Weeks Ended Thirty-nine Weeks Ended
2017 2016 2017 2016
United States $ 28,886
$ 21,550
$ 115,082
$ 105,390
Foreign 21,675
22,239
59,210
51,486
$ 50,561
$ 43,789
$ 174,292
$ 156,876

Pension Benefits

The Company incurs expenses in connection with the Delta Pension Plan ("DPP"). The DPP was acquired as part of the Delta plc acquisition in fiscal 2010 and has no members that are active employees. In order to measure expense and the related benefit obligation, various assumptions are made including discount rates used to value the obligation, expected return on plan assets used to fund these expenses and estimated future inflation rates. These assumptions are based on historical experience as well as current facts and circumstances. An actuarial analysis is used to measure the expense and liability associated with pension benefits.

The components of the net periodic pension (benefit) expense for the thirteen and thirty-nine weeks ended September ~~30, 2017~~28, 2019 and September ~~24, 2016~~29, 2018 were as follows:



	Thirteen weeks ended						Thirty-nine weeks ended
Net periodic (benefit) expense:	2019			2018			2019			2018
Interest cost	$	4,075		$	4,400		$	12,602		$	13,602
Expected return on plan assets	(4,815		)	(5,704		)	(14,893		)	(17,633		)
Amortization of actuarial loss	617			750			1,909			2,318
Net periodic expense (benefit)	$	(123	)	$	(554	)	$	(382	)	$	(1,713	)

Thirteen Weeks Ended Thirty-nine Weeks Ended
Net periodic (benefit) expense: 2017 2016 2017 2016
Interest cost $ 4,676
$ 6,092
$ 13,475
$ 19,134
Expected return on plan assets (5,277 ) (5,565 ) (15,208 ) (17,648 )
Amortization of actuarial loss 768
—
2,214
—
Net periodic expense $ 167
$ 527
$ 481
$ 1,486

Stock Plans

The Company maintains stock‑based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, ~~non-vested~~restricted stock awards, restricted stock units, and bonuses of common stock. At September ~~30, 2017, 704,818~~28, 2019, 1,403,051 shares of common stock remained available for issuance under the plans. ~~Shares and options issued and available are subject to changes in capitalization.~~

Under the plans, the exercise price of each option equals the closing market price at the date of the grant. Options vest beginning on the first anniversary of the grant in equal amounts over three years to six years or on the grant's fifth ~~anniversary of the grant.~~

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

anniversary. Expiration of grants is ~~from~~ seven ~~to ten~~ years from the date of grant. Restricted stock units and awards generally vest in equal installments over three years beginning on the first anniversary of the grant.

The Company's compensation expense (included in selling, general and administrative expenses) and associated income tax benefits related to stock options and restricted stock for the thirteen and thirty-nine weeks ended September ~~30, 2017~~28, 2019 and September ~~24, 2016~~,29, 2018, respectively, were as follows:

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

Thirteen Weeks Ended Thirty-nine Weeks Ended
2017 2016 2017 2016
Compensation expense $ 1,290
$ 1,399
$ 3,868
$ 4,358
Income tax benefits 496
539
1,489
1,678

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)



	Thirteen weeks ended				Thirty-nine weeks ended
	2019		2018		2019		2018
Compensation expense	$	2,519	$	2,702	$	8,889	$	8,076
Income tax benefits	630		676		2,222		2,019

Fair Value

The Company applies the provisions of Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other accounting pronouncements that require or permit fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820 establishes a three‑level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

Trading Securities: The assets and liabilities recorded for the investments held in the Valmont Deferred Compensation Plan of ~~$39,283~~$35,144 ($~~35,784~~37,516 at December ~~31, 2016)~~29, 2018) represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with Accounting Standards Codification ("ASC") 320, Accounting for Certain Investments in Debt and Equity Securities, considering the employee's ability to change investment allocation of their deferred compensation at any time.

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollars in thousands, except per share amounts)~~

~~(Unaudited)~~

~~(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

The Company's ownership of shares in Delta EMD Pty. Ltd. (JSE:DTA) is also classified as trading securities. The shares are valued at ~~$1,779~~$80 and ~~$2,016~~$2,508 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively, which is the estimated fair value. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.

Derivative Financial Instruments: The fair value of foreign currency and commodity forward contracts, and cross currency contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


			Fair Value Measurement Using:								Fair Value Measurement Using:
	Carrying Value September 30, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Value September 28, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading Securities	$	41,062	$	41,062	$	—	$	—	$	35,224	$	35,224	$	—	$	—
Derivative financial instruments, net									9,408		—		9,408		—



			Fair Value Measurement Using:
	Carrying Value December 29, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading Securities	$	40,024	$	40,024	$	—	$	—
Derivative financial instruments, net	9,147		—		9,147		—

Fair Value Measurement Using:
Carrying Value
December 31,
2016 Quoted Prices in
Active Markets
for Identical
Assets (Level 1) Significant Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)
Assets:
Trading Securities $ 37,800
$ 37,800
$ —
$ —
Long-Lived Assets

The Company's other non-financial assets include goodwill and other intangible assets, which are classified as Level 3 items. These assets are measured at fair value on a non-recurring basis as part of annual impairment testing. Note 5 to these condensed consolidated financial statements contain additional information related to goodwill and intangible asset impairments.

Comprehensive Income

Comprehensive income includes net earnings, currency translation adjustments, certain derivative-related activity and changes in net actuarial gains/losses from a pension plan. 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. Accumulated other comprehensive income (loss) consisted of the following at September ~~30, 2017~~28, 2019 and December ~~31, 2016:~~29, 2018:



	Foreign Currency Translation Adjustments			Gain/(Loss) on Hedging Activities		Defined Benefit Pension Plan			Accumulated Other Comprehensive Loss
Balance at December 29, 2018	$	(230,261	)	$	11,171	$	(84,095	)	$	(303,185	)
Current-period comprehensive income (loss)	(19,814		)	6,282		—			(13,532		)
Balance at September 28, 2019	$	(250,075	)	$	17,453	$	(84,095	)	$	(316,717	)

Foreign Currency Translation Adjustments Gain/(Loss) on Hedging Activities Defined Benefit Pension Plan Accumulated Other Comprehensive Loss
Balance at December 31, 2016 $ (251,228 ) $ 7,978
$ (103,109 ) $ (346,359 )
Current-period comprehensive income (loss) 60,017
(1,760 ) —
58,257
Balance at September 30, 2017 $ (191,211 ) $ 6,218
$ (103,109 ) $ (288,102 )

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue Recognition

~~Net Investment Hedge~~

In the second quarter of 2016, the Company entered into a one-year foreign currency forward contract which qualified as a net investment hedge, in order to mitigate foreign currency risk on a portion of our investments denominated in British pounds. The forward contract had a notional amount to sell British pounds and receive $44,000, and matured in May 2017. The realized gain of ~~$5,123 ($3,150 after tax)~~ has been deferred in other comprehensive income where it will remain until the Company's net investments in its British subsidiaries are divested. No ineffectiveness resulted from the hedge prior to its maturity.

In the third quarter of 2017, the Company entered into two six-month foreign currency forward contracts which qualified as net investment hedges, in order to mitigate foreign currency risk on our grinding media business that is denominated in both Australian dollars and British pounds. The Company announced its intention to divest of this business in August 2017 and regulatory approval in Australia is currently pending. The forward contracts have a maturity date of January 2018 and a notional amount to sell Australian dollars and British pounds to receive $27,000 and $18,500, respectively. The unrealized loss recorded at September 30, 2017 is $740 and is included in Accounts Payable ondetermines the Consolidated Balance Sheets. No ineffectiveness has resulted from the hedge and the balance is recorded in the Consolidated Statement of Other Comprehensive Income within gain/(loss) on hedging activities. When the forward contract matures, the realized gain/(loss) will be deferred in Other Comprehensive Income where it will remain until the grinding media business is divested.

~~Recently Issued Accounting Pronouncements~~

~~In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-9,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606), which supersedes the revenue recognition requirements in~~ ~~Accounting Standards Codification ("ASC") 605,~~ ~~Revenue Recognition~~. ~~The new revenue recognition standard~~ requires entities to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This standard is effective for interim and annual reporting periods beginning after December 15, 2017, and can be adopted either retrospectively or as a cumulative effect adjustment as of the date of adoption. Early adoption is permitted for interim and annual periods beginning after December 15, 2016. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated results of operations and financial position. One area under assessment is the timing ofappropriate revenue recognition for our contracts by analyzing the Company’s product lines that are custom engineered to a single customer’s specifications resulting in limited ability that the asset can be used for another customer. These product lines reside in the Utility and Engineered Support Structures segments. When thetype, terms and conditions ~~allow~~of each contract or arrangement with a customer. Contracts with customers for all businesses are fixed-price with sales tax excluded from revenue, and do not include variable consideration.Discounts included in contracts with customers, typically early pay discounts, are recorded as a reduction of net sales in the ~~Company to bill a customer for full compensation on a canceled order for~~period in which the sale is recognized. Contract revenues are classified as product when the performance ~~completed~~obligation is related to ~~date,~~the manufacturing of goods. Contract revenues are classified as service when the performance obligation is the performance of a service. Service revenue ~~will be recognized over~~is primarily related to the ~~production period~~Coatings segment.

Customer acceptance provisions exist only in the design stage of our products and ~~not~~acceptance of the ~~current practice which~~design by the customer is ~~upon shipment or time of delivery~~required before the project is manufactured and delivered to the customer. The Company is ~~also evaluating~~not entitled to any compensation solely based on design of the ~~necessary changes to its internal control processes to~~product and does not recognize revenue associated with the design stage. There is one performance obligation for revenue recognition. No general rights of return exist for customers once the product has been delivered and the Company establishes provisions for estimated warranties. The Company does not sell extended warranties for any of its products.

Shipping and handling costs associated with sales are recorded as cost of goods sold. The Company elected to use the practical expedient of treating freight as a fulfillment obligation instead of a separate performance obligation and ratably recognize freight expense as the structure is being manufactured, when the revenue from the associated customer contract is being recognized over time. With the exception of the Utility segment and the wireless communication structures product line, the Company’s inventory is interchangeable for a variety of each segment’s customers. The Company elected the practical expedient to not disclose the partially satisfied performance obligation at the end of the period when the contract has an original expected duration of one year or less. In addition, the Company elected the practical expedient to not adjust the amount of consideration to be received in a contract for any significant financing component if payment is expected within twelve months of transfer of control of goods or services; the Company expects all consideration to be received in one year or less at contract inception.

Segment and Product Line Revenue Recognition

The global Utility segment revenues are derived from manufactured steel and concrete structures for the North America utility industry and offshore and other complex structures used in energy generation and distribution outside of the United States. Steel and concrete utility structures are engineered to customer specifications resulting in limited ability to sell the structure to a different customer if an order is canceled after production commences. The continuous transfer of control to the customer is evidenced either by contractual termination clauses or by our rights to payment for work performed to-date plus a reasonable profit as the products do not have an alternative use to the Company. Since control is transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment. For our steel and concrete utility and wireless communication structure product lines, we generally recognize revenue on an inputs basis, using total production hours incurred to-date for each order as a percentage of total hours estimated to produce the order. The completion percentage is applied to the order’s total revenue and total estimated costs to determine reported revenue, cost of goods sold and gross profit. Production of an order, once started, is typically completed within three months. Revenue from the offshore and other complex structures business is also recognized using an inputs method, based ~~model after adoption. Based~~ on the ~~current status~~ratio of costs incurred to date to the total estimated costs at completion of the ~~evaluation,~~performance obligation. External sales agents are used in certain sales of steel and concrete structures; the ~~adoption~~Company has chosen to use the practical expedient to expense estimated commissions owed to third parties by recognizing them proportionately as the goods are manufactured.

The global ESS segment revenues are derived from the manufacture and distribution of engineered metal, composite structures and components for lighting and traffic and roadway safety, engineered access systems, and wireless communication. For the lighting and traffic and roadway safety product lines, revenue is recognized upon shipment or delivery of goods to the customer depending on contract terms, which is the same point in time that the customer is billed. For Access Systems, revenue is generally recognized upon delivery of goods to the customer which is the same point in time that the customer is billed. The wireless communication product line has large regional customers who have unique product

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

specifications for communication structures. When the customer contract includes a cancellation clause that would require them to pay for work completed plus a reasonable margin if an order was canceled, revenue is recognized over time based on hours worked as a percent of total estimated hours to complete production. For the remaining wireless communication product line customers which do not provide a contractual right to bill for work completed on a canceled order, revenue is recognized upon shipment or delivery of the ~~standard~~goods to the customer which is ~~not expected~~the same point in time that the customer is billed.

The global Coatings segment revenues are derived by providing coating services to ~~have a material effect on~~customers’ products, which include galvanizing, anodizing, and powder coating. Revenue is recognized once the ~~amounts~~coating service has been performed and the goods are ready to be picked up or ~~timing~~delivered to the customer which is the same time that the customer is billed.

The global Irrigation segment revenues are derived from the manufacture of ~~revenue~~agricultural irrigation equipment and related parts and services for the agricultural industry and tubular products for industrial customers. Revenue recognition for the ~~Company’s other segments.~~irrigation segment is generally upon shipment of the goods to the customer which is the same point in time that the customer is billed. The remote monitoring subscription services are primarily billed annually and revenue is recognized on a straight-line basis over the subsequent twelve months.

Disaggregation of revenue by product line is disclosed in the Segment footnote. A breakdown by segment of revenue recognized over time and at a point in time for the thirteen and thirty-nine weeks ended September 28, 2019 and September 29, 2018 is as follows:



	Point in Time		Over Time		Point in Time		Over Time
	Thirteen weeks ended September 28, 2019		Thirteen weeks ended September 28, 2019		Thirty-nine weeks ended September 28, 2019		Thirty-nine weeks ended September 28, 2019
Utility Support Structures	$	3,418	$	200,778	$	43,642	$	612,821
Engineered Support Structures	252,501		13,993		713,574		38,454
Coatings	76,922		—		228,242		—
Irrigation	139,093		3,635		436,907		9,710
Total	$	471,934	$	218,406	$	1,422,365	$	660,985



	Point in Time		Over Time		Point in Time		Over Time
	Thirteen weeks ended September 29, 2018		Thirteen weeks ended September 29, 2018		Thirty-nine weeks ended September 29, 2018		Thirty-nine weeks ended September 29, 2018
Utility Support Structures	$	6,090	$	211,853	$	6,090	$	618,243
Engineered Support Structures	235,948		12,483		680,863		29,525
Coatings	74,547		—		217,544		—
Irrigation	134,710		3,061		475,744		8,692
Other	—		—		23,080		—
Total	$	451,295	$	227,397	$	1,403,321	$	656,460

Both steel and concrete utility customers are generally invoiced upon shipment or delivery of the goods to the customer's specified location and there are normally no up-front or progress payments. The offshore and complex steel structures business invoices customers a number of ways including advanced billings, progress billings, and billings upon shipment.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

At September 28, 2019 and December 29, 2018, the contract liability for revenue recognized over time was $123,878 and $4,906, respectively. The contract liability is included in Accrued Expenses on the condensed consolidated balance sheets.

During the thirteen and thirty-nine weeks ended September 28, 2019, the Company ~~expects~~recognized $314 and $2,242 of revenue that was included in the liability as of December 29, 2018. In the thirteen and thirty-nine weeks ended September 29, 2018, the Company recognized $0 and $4,456 of revenue that was included in the liability as of December 30, 2017. The revenue recognized was due to ~~adopt~~applying advance payments received for projects completed during the ~~new standard using the modified retrospective approach effective January 1, 2018.~~period.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which provides revised guidance on leases requiring lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The ~~liability~~Company implemented a lease management tool to support the new reporting requirements and adopted the ASU on the first day of fiscal 2019. The Company made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet for all classes of underlying assets. The Company elected to not recast its comparative periods in transition (the "Comparatives Under 840 Option") as allowed under ASU 2018-11. The new standard did not have an impact in the condensed consolidated statements of earnings; footnote 9 provides the impact on the condensed consolidated balance sheet including the transition adoption adjustment recorded to retained earnings.

(2) ACQUISITIONS

On May 13, 2019, the Company acquired the assets of Connect-It Wireless, Inc. ("Connect-It") for $6,034 in cash. Connect-It operates in Florida and is a manufacturer and distributor of wireless site components and safety products. In the preliminary purchase price allocation, goodwill of $3,299 and customer relationships of $828 were recorded and the remainder is net working capital. A portion of the goodwill is deductible for tax purposes. Connect-It is included in the ESS segment and was acquired to expand the Company's wireless component distribution network. The Company expects the purchase price allocation to be finalized in the fourth quarter of 2019, after all management reviews have been completed.

On February 11, 2019, the Company acquired the outstanding shares of United Galvanizing ("United"), a provider of coatings services for $26,000 in cash. The agreed upon purchase price was $28,000, with $2,000 being contingent on seller representations and warranties that will be ~~equal to~~settled within 12 months of the ~~present value~~acquisition date. The acquisition of ~~lease payments. For income statement~~United, located in Houston, Texas further expands the Company's galvanizing footprint in North America and will be reported in the Coatings segment. The preliminary fair values assigned were $11,715 for goodwill, $4,034 for customer relationships, trade name of $894, $11,016 for property, plant, and equipment, and the remainder is net working capital. Goodwill is not deductible for tax purposes and the ~~FASB retained a dual model, requiring leases~~customer relationship will be amortized over 10 years. The trade name has an indefinite life. The Company expects the purchase price allocation to be ~~classified as either operating or finance. Operating leases will result~~finalized in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria thatthe fourth quarter of 2019, once the contingent payment is settled and management reviews are largely similar to those applied in current lease accounting, but without explicit bright lines. ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018 and is to be applied on a modified retrospective transition. ~~The Company is currently evaluating the effect of adopting this new accounting guidance but expects the adoption will result in a significant increase in total assets and liabilities.~~complete.

(2) ACQUISITIONS (Continued)

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

~~In August 2016,~~On December 31, 2018, the ~~FASB issued ASU 2016-15,~~ ~~Classification~~Company acquired the assets of ~~Certain Cash Receipts~~Larson Camouflage ("Larson"), an industry leading provider of architectural and ~~Cash Payments~~camouflage concealment solutions for the wireless telecommunication market for $31,106 in cash. The agreed upon purchase price was $34,562, with 10% being held back for seller representations and warranties and will be settled within 12 months of the acquisition date. Larson was acquired to grow our product offerings in the ~~Statement of Cash Flows, which provides more specific guidance on cash flow presentation~~wireless communication market and will be reported in the ESS segment. The preliminary fair values assigned were $17,050 for ~~certain transactions. ASU 2016-15~~customer relationships, $14,519 for goodwill, $1,151 for property, plant, and equipment and the remainder is ~~effective~~net working capital. Goodwill is deductible for ~~interim periods~~tax purposes and ~~fiscal years beginning after December 15, 2017, with early adoption permitted.~~the customer relationships will be amortized over 12 years. The Company ~~does not expect~~expects the ~~provisions of this new standard will have a material impact on the consolidated financial statements and plans~~purchase price allocation to ~~adopt it~~be finalized in the ~~first~~fourth quarter of ~~2018.~~2019, once the hold back payment is settled and management reviews are complete.

On October 18, 2018, the Company acquired CSP Coatings Systems of Auckland, New Zealand, a provider of a wide range of coatings services for $17,711 in cash. The acquisition further strengthens the Company's Asia-Pacific market position and is reported in the Coatings segment. The fair values assigned were $7,373 to property, plant, and equipment, $3,113 for customer relationships, $5,120 for goodwill, with the remainder net working capital. Goodwill is not deductible for tax purposes and the customer relationships will be amortized over 10 years. The purchase price allocation was finalized in the second quarter of 2019.

On August 3, 2018, the Company purchased approximately 72% of the outstanding shares of Walpar, LLC ("Walpar") for $57,805 in cash. Walpar is an industry leader in the design, engineering and manufacturing of overhead sign structures for the North America transportation market. Walpar is located in Birmingham, Alabama and its operations are reported in the ESS segment. The transaction was funded with cash on hand. The acquisition of Walpar was completed to expand the Company's product offering in the sign structure market. Customer relationships are amortized over 12 years and the trade name has an indefinite life. Goodwill is not deductible for tax purposes.

In January ~~2017,~~2019, the ~~FASB issued ASU 2017-04,~~ ~~Simplifying the Test~~28% non-controlling interest shares of Walpar, LLC were acquired for ~~Goodwill Impairment,~~ which eliminates Step 2 from the goodwill impairment test. ASU 2017-04 is effective for periods and fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted this standard in$23,082. During the third quarter, the Company finalized its purchase price allocation including its assessment of ~~2017 which is~~ the ~~same period as~~value of intangibles on the opening balance sheet. As a result of updated cash flow projections it ~~performs~~was determined that a $3,500 reduction in customer relationships, along with an offsetting increase in goodwill less deferred tax, was necessary to adjust the ~~annual goodwill impairment testing.~~

~~In March 2017,~~preliminary allocation of fair value to assets acquired and liabilities assumed. The following table summarizes the ~~FASB issued ASU 2017-07,~~ ~~Presentation~~fair values of ~~Net Periodic Benefit Cost Related to Defined Benefit Plans,~~ ~~which amends~~ the ~~income statement presentation requirements for the components~~assets acquired and liabilities assumed of net periodic benefit cost for an entity's defined benefit pension and post-retirement plans. ASU 2017-07 is effective for periods and fiscal years beginning after December 15, 2017. Early adoption is permittedWalpar as of the ~~beginning~~date of any annual period for which an entity's financial statements have not been issued. The Company does not believe this ASU will have a material impact on the consolidated financial statements and plans to adopt this ASU in the first quarter of 2018.acquisition:



	At August 3, 2018
Current assets	$	13,210
Customer relationships	28,500
Trade name	3,500
Goodwill	45,453
Total fair value of assets acquired	$	90,663
Current liabilities	2,197
Deferred taxes	7,579
Total fair value of liabilities assumed	$	9,776
Non-controlling interest	23,082
Net assets acquired	$	57,805

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Targeted Improvements to Accounting for Hedging Activities~~, which improves the financial reporting of hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. ASU 2017-12 is effective for periods and fiscal years beginning after December 15, 2018. Early adoption is permitted for any interim period post issuance. The Company does not believe the adoption of this ASU will have a material impact on the consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(2) ACQUISITIONS~~

On July 31, 2017, the Company purchased Aircon Guardrails Private Limited ("Aircon") for $5,362 in cash, net of cash acquired, plus assumed liabilities. Aircon produces highway safety systems including guardrails, structural metal products, and solar structural products in India with annual sales of approximately $10,000. In the preliminary purchase price allocation, goodwill of $3,327 and $2,109 of customer relationships and other intangible assets were recorded. Goodwill is not deductible for tax purposes. This business is included in the Engineered Support Structures segment and was acquired to expand the Company's geographic presence in the Asia-Pacific region. The Company expects to finalize the purchase price allocation in the fourth quarter of 2017. Proforma disclosures were omitted as this business does not have a significant impact on the Company's financial results.

~~Acquisitions of Noncontrolling Interests~~

~~In April 2016,~~August 3, 2018, the Company acquired 75% of the ~~remaining 30%~~outstanding shares of ~~IGC Galvanizing Industries (M) Sdn Bhd that it did not own~~Convert Italia SpA ("Convert") for ~~$5,841.~~$43,504 in cash. In ~~June 2016,~~the second quarter of 2019, the Company ~~acquired 5.2% of~~paid the remaining 10% of Valmont SM that it did not own for $5,168. As these transactions were for acquisitions of part or all of the remaining shares of consolidated subsidiaries with no change in control, they were recorded within shareholders' equity and as a financing cash flowformer owners approximately $18,700 additional purchase price which was reflected in the ~~Consolidated Statements~~contingent consideration liability on the fair value of ~~Cash Flows.~~

~~3) RESTRUCTURING ACTIVITIES~~

~~In April 2015,~~assets and liabilities assumed on acquisition. Convert is a designer and provider of engineered solar tracker solutions that is headquartered in Italy, with offices in Brazil and Argentina. The Company acquired Convert to grow market adjacencies in the Company's Board of Directors authorized a broad restructuring plan (the "2015 Plan") to respond to the market environment in certain businesses. During fiscal 2016, the Company incurred pre-tax restructuring charges of $4,581 as it completed the 2015 Plan.

In 2016, the Company identified and executed further region specific restructuring activities (the "2016 Plan") and incurred $5,045 of pre-tax restructuring expenses in cost of sales and $2,780 of pre-tax restructuring expense in SG&A in 2016. Within the total $7,825, were pre-tax asset impairments of $1,099. The 2016 Plan was primarily completed by year-end 2016. The Energy and Mining segment incurred $1,607, the Coatings segment incurred $305, and Corporate incurred approximately $225 of restructuring expenses during the third quarter of 2016. A significant change in market conditions in any of the Company's segments may affect the Company's assessment of necessity for further restructuring activities.Utility Support Structures segment.

~~Liabilities recorded for the restructuring plans and changes therein for the first three quarters of fiscal 2017 were as follows:~~

Balance at December 31, 2016 Recognized Restructuring Expense Costs Paid or Otherwise Settled Balance at September 30, 2017
Severance $ 1,597
$ —
$ (1,597 ) $ —
Other cash restructuring expenses 4,581
—
(3,377 ) 1,204
Total $ 6,178
$ —
$ (4,974 ) $ 1,204

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITIONS (Continued)

Patents and proprietary technology will be amortized over 15 years and the trade name has an indefinite life. Goodwill is not deductible for tax purposes. The fair value measurement process and purchase price allocation was finalized in the third quarter of 2019. The following table summarizes the fair values of the assets acquired and liabilities assumed of Convert as of the date of acquisition:



	At August 3, 2018
Current assets	$	18,349
Other assets	3,166
Patent and Proprietary Technology	16,554
Trade name	8,701
Goodwill	42,169
Total fair value of assets acquired	$	88,939
Current liabilities	5,376
Contingent consideration liability	19,497
Deferred taxes	6,061
Total fair value of liabilities assumed	$	30,934
Non-controlling interest	14,501
Net assets acquired	$	43,504

The Company's condensed consolidated statements of earnings for the thirteen and thirty-nine weeks ended September 28, 2019 included net sales of $26,999 and $94,975 resulting from these acquisitions. In aggregate, these acquisitions did not contribute net earnings to the Company's consolidated 2019 results. The proforma effect of these acquisitions on the thirteen and thirty-nine weeks of 2019 and 2018 is as follows:



	Thirteen weeks ended September 28, 2019		Thirteen weeks ended September 29, 2018		Thirty-nine weeks ended September 28, 2019		Thirty-nine weeks ended September 29, 2018
Net sales	$	690,340	$	698,306	$	2,088,524	$	2,129,968
Net earnings	40,144		5,002		118,555		80,842
Earnings per share-diluted	1.85		0.22		5.43		3.58

Acquisitions of Noncontrolling Interests

In April 2019, the Company acquired the remaining 4.8% of Valmont SM that it did not own for $4,763. In March 2018, the Company acquired the remaining 10% of Valmont Industria e Commercio Ltda. that it did not own for $5,510. As these transactions were for the acquisition of all of the remaining shares of a consolidated subsidiary with no change in control, they were recorded within shareholders' equity and as a financing activity in the Consolidated Statements of Cash Flows.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(3) DIVESTITURE

On April 30, 2018, the Company completed the sale of Donhad, its grinding media business in Australia, reported in the Other segment. The business was sold because it did not fit the long-term strategic plans for the Company. The grinding media business historical annual sales, operating profit, and net assets are not significant for discontinued operations presentation. The grinding media business had an operating loss of $0 and $913 for the thirteen and thirty-nine weeks ended September 29, 2018. The Company received Australian $82,500 (U.S. $62,518) in proceeds from the sale.

The pre-tax loss recorded during the second quarter of 2018 from the divestiture is reported in other income (expense). The loss is comprised of the proceeds from buyer, less deal-related costs, less the net assets of the business which resulted in a gain of $4,334. Offsetting this amount is a $(10,418) realized loss on foreign exchange translation adjustments and net investment hedges previously reported in shareholders' equity.




Pre-tax gain from divestiture, before recognition of currency translation loss	$	4,334
Recognition of cumulative currency translation loss and hedges (out of OCI)	(10,418		)
Net pre-tax loss from divestiture of the grinding media business	$	(6,084	)

The transaction did not result in a taxable capital gain as the cash proceeds were less than the tax carrying value of the business. There is an insignificant tax benefit from the tax deductibility of deal related expenses.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(4) RESTRUCTURING ACTIVITIES

During 2018, the Company executed certain regional restructuring activities (the "2018 Plan") primarily in the ESS and Utility segments to transform its operational business model including exiting certain local markets. During the full year of 2018, the Company incurred $18,380 of cost of sales and $15,651 of selling, general, and administrative expense for the 2018 Plan. In connection with exiting certain local markets as a result of the 2018 Plan, the Company also recorded $7,944 of impairments of current and other assets during fiscal 2018, primarily inventory.

The following pre-tax expense were recognized during the third quarter of 2018:



	ESS		Utility		Corporate		Total
Severance	$	1,706	$	—	$	—	$	1,706
Other cash restructuring expenses	326		497		—		823
Asset impairments/net loss on disposals	1,406		—		—		1,406
Total cost of sales	3,438		497		—		3,935

Severance	1,757		—		—		1,757
Other cash restructuring expenses	551		—		—		551
Asset impairments/net loss on disposals	—		—		—		—
Total selling, general and administrative expenses	2,308		—		—		2,308
Consolidated total	$	5,746	$	497	$	—	$	6,243

In the first three quarters of 2018, the Company recognized the following pre-tax restructuring expenses:



	ESS		Utility		Corporate		Total
Severance	$	3,732	$	515	$	—	$	4,247
Other cash restructuring expenses	478		2,228		—		2,706
Asset impairments/net loss on disposals	3,812		—		—		$	3,812
Total cost of sales	8,022		2,743		—		10,765

Severance	5,268		—		—		$	5,268
Other cash restructuring expenses	1,118		—		126		1,244
Asset impairments/net loss on disposals	385		—		—		385
Total selling, general and administrative expenses	6,771		—		126		6,897
Consolidated total	$	14,793	$	2,743	$	126	$	17,662

Liabilities recorded for the restructuring plans and changes therein for the first three quarters of 2019 were as follows:



	Balance at December 29, 2018		Recognized Restructuring Expense		Costs Paid or Otherwise Settled			Balance at September 28, 2019
Severance	$	6,594	$	—	$	(6,237	)	$	357
Other cash restructuring expenses	3,462		—		(2,982		)	480
Total	$	10,056	$	—	$	(9,219	)	$	837

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(5) GOODWILL AND INTANGIBLE ASSETS

Amortized Intangible Assets

The components of amortized intangible assets at September ~~30, 2017~~28, 2019 and December ~~31, 2016~~29, 2018 were as follows:


	September 30, 2017					September 28, 2019
	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	200,269	$	126,845	13 years	$	236,029	$	143,306	13 years
Proprietary Software & Database	3,687		3,111		8 years
Patents & Proprietary Technology	6,633		3,859		11 years	22,936		5,945		14 years
Other	4,807		4,032		3 years	7,494		6,886		5 years
	$	215,396	$	137,847		$	266,459	$	156,137



	December 29, 2018
	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	219,508	$	132,180	13 years
Patents & Proprietary Technology	23,662		4,837		14 years
Other	7,971		6,891		5 years
	$	251,141	$	143,908

December 31, 2016
Gross
Carrying
Amount Accumulated
Amortization Weighted
Average
Life
Customer Relationships $ 191,316
$ 111,342
13 years
Proprietary Software & Database 3,616
3,056
8 years
Patents & Proprietary Technology 6,434
3,420
11 years
Other 3,713
3,668
3 years
$ 205,079
$ 121,486

Amortization expense for intangible assets for the thirteen and thirty-nine weeks ended September ~~30, 2017~~28, 2019 and September ~~24, 2016~~,29, 2018, respectively was as follows:



Thirteen weeks ended				Thirty-nine weeks ended
2019		2018		2019		2018
$	4,484	$	3,721	$	13,506	$	11,176

Thirteen Weeks Ended Thirty-nine Weeks Ended
2017 2016 2017 2016
4,025
3,964
11,792
12,037

Estimated annual amortization expense related to finite‑lived intangible assets is as follows:



	Estimated Amortization Expense
2019	$	17,687
2020	17,821
2021	15,523
2022	13,286
2023	11,594

Estimated
Amortization
Expense
2017 $ 15,823
2018 14,492
2019 13,718
2020 12,608
2021 10,474

The useful lives assigned to finite‑lived intangible assets included consideration of factors such as the Company’s past and expected experience related to customer retention rates, the remaining legal or contractual life of the underlying arrangement that resulted in the recognition of the intangible asset and the Company’s expected use of the intangible asset.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(4)~~(5) GOODWILL AND INTANGIBLE ASSETS (Continued)

Non-amortized intangible assets

Intangible assets with indefinite lives are not ~~amortized.~~amortized and consist solely of trade names. The carrying ~~values~~value of trade names at September ~~30, 2017~~28, 2019 and December ~~31, 2016~~ ~~were~~29, 2018 are as follows:



	September 28, 2019		December 29, 2018		Year Acquired
Newmark	$	11,111	$	11,111	2004
Webforge	8,587		8,872		2010
Convert Italia S.p.A	8,203		8,580		2018
Valmont SM	7,799		8,155		2014
Ingal EPS/Ingal Civil Products	7,001		7,233		2010
Walpar	3,500		4,300		2018
Shakespeare	4,000		4,000		2014
Other	17,211		16,472
	$	67,412	$	68,723

September 30,
2017 December 31,
2016 Year Acquired
Webforge $ 9,362
$ 8,624
2010
Valmont SM 9,839
8,765
2014
Newmark 11,111
11,111
2004
Ingal EPS/Ingal Civil Products 7,633
7,032
2010
Donhad 5,758
5,305
2010
Shakespeare 4,000
4,000
2014
Industrial Galvanizers 2,390
2,201
2010
Other 14,448
13,747

$ 64,541
$ 60,785

In its determination of these intangible assets as indefinite‑lived, the Company considered such factors as its expected future use of the intangible asset, legal, regulatory, technological and competitive factors that may impact the useful life or value of the intangible asset and the expected costs to maintain the value of the intangible asset. The Company expects that these intangible assets will maintain their value indefinitely. Accordingly, these assets are not amortized.

The Company’s trade names were tested for impairment in the third quarter of ~~2017.~~2019. The values of each trade name was determined using the relief-from-royalty method. Based on this evaluation, no trade names were determined to be impaired. The Company recorded a charge of $1,425 in the third quarter of 2018 for the offshore and other complex steel structures (Valmont SM) trade name.

Goodwill

The carrying amount of goodwill by segment as of September ~~30, 2017~~28, 2019 and December ~~31, 2016~~29, 2018 was as follows:



	Engineered Support Structures Segment			Utility Support Structures Segment			Coatings Segment			Irrigation Segment		Total
Gross Balance December 29, 2018	$	204,735		$	123,618		$	80,937		$	25,164	$	434,454
Accumulated impairment losses	(18,670		)	(14,355		)	(16,222		)	—		(49,247		)
Balance at December 29, 2018	186,065			109,263			64,715			25,164		385,207
Acquisitions	21,043			7,889			11,715			—		40,647
Foreign currency translation	(2,652		)	(1,758		)	(133		)	368		(4,175		)
Balance at September 28, 2019	$	204,456		$	115,394		$	76,297		$	25,532	$	421,679

Engineered
Support
Structures
Segment Energy & Mining Segment Utility
Support
Structures
Segment Coatings
Segment Irrigation
Segment Total
Balance at December 31, 2016 $ 94,314
$ 72,212
$ 75,404
$ 59,569
$ 19,611
$ 321,110
Foreign currency translation 4,568
6,704
—
951
94
12,317
Acquisitions 3,327
—
—
—
—
3,327
Balance at September 30, 2017 $ 102,209
$ 78,916
$ 75,404
$ 60,520

$ 19,705
$ 336,754

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(4)~~(5) GOODWILL AND INTANGIBLE ASSETS (Continued)

The Company’s annual impairment test of goodwill was performed during the third quarter of ~~2017,~~2019, using the discounted cash flow method. ~~As a result~~The estimated fair value of ~~that testing, the Company determined that its goodwill was not impaired, as the valuation~~all of ~~the~~our reporting units exceeded their respective carrying ~~values.~~value, so no goodwill was impaired. The ~~Company's offshore and other complex steel structures~~access systems reporting unit with ~~$14,645~~$43,400 of goodwill, is the reporting unit ~~with~~that did not have a substantial excess of estimated fair value over its carrying value. The model assumes geographic expansion of its architectural product lines which realized recent organic growth in its existing market. If architectural systems sales do not increase, the ~~smallest~~Company will be required to perform an interim test of goodwill. A hypothetical 1.0% change in the discount rate would increase/decrease the fair value of this reporting unit by approximately $15,000, which approximates the cushion between ~~its~~the estimated fair value and ~~its~~ carrying ~~value. Sales and profitability amounts for the first nine months~~value of 2017 approximated the amounts in the 2016 annual impairment model. The 2017 model assumes continued expansion into other highly engineered steel product offerings, such as utility support structures, where the reporting unit completed profitable projects in the past. The Company will continue to monitor the outlook for wind energy in Europe and oil and natural gas prices, which will affect the sales demand assumptions in the five year model for this reporting unit. ~~If demand for off and onshore structures for wind energy changes significantly,~~In the third quarter of 2018, the Company ~~will perform an interim~~recognized a goodwill impairment ~~test for goodwill. The Company also tracks changes in~~totaling $14,355, which represented all of the ~~global economy that could impact future operating results~~goodwill of ~~any of its~~the offshore and other complex steel reporting ~~units.~~unit.

~~(5)~~(6) CASH FLOW SUPPLEMENTARY INFORMATION

The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the thirty-nine weeks ended September ~~30, 2017~~28, 2019 and September ~~24, 2016~~29, 2018 were as follows:



	2019		2018
Interest	$	19,440	$	23,624
Income taxes	39,850		36,855

2017 2016
Interest $ 22,732
$ 24,036
Income taxes 52,823
47,954

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(6)~~(7) EARNINGS PER SHARE

The following table provides a reconciliation between Basic and Diluted earnings per share (EPS):



	Basic EPS		Dilutive Effect of Stock Options			Diluted EPS
Thirteen weeks ended September 28, 2019:
Net earnings attributable to Valmont Industries, Inc.	$	40,144	$	—		$	40,144
Weighted average shares outstanding (000's)	21,556		128			21,684
Per share amount	$	1.86	$	0.01		$	1.85
Thirteen weeks ended September 29, 2018:
Net earnings attributable to Valmont Industries, Inc.	$	4,448	$	—		$	4,448
Weighted average shares outstanding (000's)	22,215		137			22,352
Per share amount	$	0.20	$	—		$	0.20
Thirty-nine weeks ended September 28, 2019
Net earnings attributable to Valmont Industries, Inc.	$	118,022	$	—		$	118,022
Weighted average shares outstanding (000's)	21,725		101			21,826
Per share amount	$	5.43	$	(0.02	)	$	5.41
Thirty-nine weeks ended September 29, 2018:
Net earnings attributable to Valmont Industries, Inc.	$	76,689	$	—		$	76,689
Weighted average shares outstanding (000's)	22,421		153			22,574
Per share amount	$	3.42	$	(0.02	)	$	3.40

Basic EPS Dilutive
Effect of
Stock
Options Diluted EPS
Thirteen weeks ended September 30, 2017:
Net earnings attributable to Valmont Industries, Inc. $ 35,208
$ —
$ 35,208
Shares outstanding (000 omitted) 22,527
224
22,751
Per share amount $ 1.56
$ (0.01 ) $ 1.55
Thirteen weeks ended September 24, 2016:
Net earnings attributable to Valmont Industries, Inc. $ 28,173
$ —
$ 28,173
Shares outstanding (000 omitted) 22,505
154
22,659
Per share amount $ 1.25
$ (0.01 ) $ 1.24
Thirty-nine weeks ended September 30, 2017:
Net earnings attributable to Valmont Industries, Inc. $ 119,851
$ —
$ 119,851
Shares outstanding (000 omitted) 22,505
212
22,717
Per share amount $ 5.33
$ (0.05 ) $ 5.28
Thirty-nine weeks ended September 24, 2016:
Net earnings attributable to Valmont Industries, Inc. $ 103,168
$ —
$ 103,168
Shares outstanding (000 omitted) 22,602
139
22,741
Per share amount $ 4.56
$ (0.02 ) $ 4.54

At September ~~24, 2016,~~28, 2019 and September 29, 2018, there were ~~378,566~~177,153 and 190,021 outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per ~~share.~~share, respectively.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(7)~~(8) HEDGING ACTIVITIES

The Company manages interest rate risk, commodity price risk, and foreign currency risk related to foreign currency denominated transactions and investments in foreign subsidiaries. Depending on the circumstances, the Company may manage these risks by utilizing derivative financial instruments. Some derivative financial instruments are marked to market and recorded in the Company's consolidated statements of earnings, while others may be accounted for as fair value, cash flow, or net investment hedges. Derivative financial instruments have credit and market risk. The Company manages these risks of derivative instruments by monitoring limits as to the types and degree of risk that can be taken, and by entering into transactions with counterparties who are recognized, stable multinational banks.

Fair value of derivative instruments at September 28, 2019 and December 29, 2018 are as follows:



Derivatives designated as hedging instruments:	Balance sheet location	September 28, 2019		December 29, 2018
Commodity forward contracts	Prepaid expenses and other assets	$	—	$	(285	)
Foreign currency forward contracts	Prepaid expenses and other assets	4,936		8,357
Cross currency swap contracts	Prepaid expenses and other assets	4,472		1,075
		$	9,408	$	9,147

Gains (losses) on derivatives recognized in the condensed consolidated statements of earnings for the thirteen and thirty-nine weeks ended September 28, 2019 and September 29, 2018 are as follows:



		Thirteen weeks ended						Thirty-nine weeks ended
	Statements of earnings location	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Commodity forward contracts	Product cost of sales	$	(1,329	)	$	717		$	(1,425	)	$	717
Foreign currency forward contracts	Other income (expenses)	123			230			827			230
Foreign currency forward contracts	Loss from divestiture of grinding media business	$	—		—			—			(1,215		)
Interest rate hedges	Interest expense	(16		)	(395		)	(48		)	(439		)
Cross currency swap contracts	Interest expense	769			206			2,096			206
		$	(453	)	$	758		$	1,450		$	(501	)

Cash Flow Hedges

In 2019 and 2018, the Company entered into steel hot rolled coil (HRC) forward contracts that qualified as a cash flow hedge of the variability in cash flows attributable to future steel purchases. In 2019, the forward contracts had a notional amount of $12,128 for the purchase of 3,500 short tons for each month from May 2019 to September 2019. In 2018, the forward contracts entered into had a notional amount of $8,469 for the purchase of 3,500 short tons for each month from July 2018 to September 2018 and a notional amount of $15,563 for the purchase of 6,500 short tons for each month from October 2018 to December 2018. The gain/(loss) realized upon settlement is recorded in product cost of sales in the condensed consolidated statements of earnings over average inventory turns. The forward contracts were closed out in the third quarter of 2019.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(8) HEDGING ACTIVITIES (Continued)

On June 19, 2018, the Company issued and sold $200,000 aggregate principal amount of the Company’s 5.00% senior notes due 2044 and $55,000 aggregate principal amount of the Company’s 5.25% senior notes due 2054. During the second quarter of 2018, the Company executed contracts to hedge the risk of potential fluctuations in the treasury rates on the 2044 Notes and 2054 Notes which would change the amount of net proceeds received from the debt offering. These contracts had a combined notional amount of $175,000. On June 8, 2018, these contracts were settled with the Company paying $2,467 to the counterparties which was recorded in Other Comprehensive Income ("OCI") and will be amortized as an increase to interest expense over the term of the debt. Due to the retirement of the 2020 bonds in July 2018, the Company wrote off the remaining $411 unamortized loss on the related cash flow hedge.

Net Investment Hedges

In the second quarter of 2019, all net investment hedges incepted in 2018 were early settled and the Company received proceeds of $11,184, which will remain in OCI until either the sale or substantially complete liquidation of the related subsidiaries.

In the second quarter of 2019, the Company entered into a new foreign currency forward contract to mitigate foreign currency risk of the Company's investment in its Australian dollar denominated businesses. The forward contract, which qualifies as a net investment hedge, has a maturity date of April 2021 and a notional amount to sell Australian dollars to receive $100,000. The Australian dollar forward contract effectiveness was assessed under the spot method with forward points excluded totaling $881, which the Company has elected to amortize in other income (expense) in the condensed consolidated statements of earnings using the straight-line method over the remaining term of the contract.

In the second quarter of 2019, the Company entered into two new fixed-for-fixed cross currency swaps (“CCS”), swapping U.S. dollar principal and interest payments on a portion of its 5.00% senior unsecured notes due 2044 for Danish krone (DKK) and Euro denominated payments. The CCS were entered into in order to mitigate foreign currency risk on the Company's Euro and DKK investments and to reduce interest expense. Interest is exchanged twice per year on April 1 and October 1.

Key terms of the two CCS are as follows:



Currency	Notional Amount		Termination Date	Swapped Interest Rate	Set Settlement Amount
Danish Krone, DKK	$	50,000	April 1, 2024	2.68%	DKK 333,625
Euro	$	80,000	April 1, 2024	2.825%	€71,550

The Company designated the full notional amount of the two CCS ($130,000) as a hedge of the net investment in certain Danish and European subsidiaries under the spot method, with all changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) are recorded as cumulative foreign currency translation within OCI, and will remain in OCI until either the sale or substantially complete liquidation of the related subsidiaries. Net interest receipts will be recorded as a reduction of interest expense over the life of the CCS.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(9) LEASES

The Company has operating leases for plant locations, corporate offices, sales offices, and certain equipment. Outstanding leases at September 28, 2019 have remaining lease terms of one year to fifteen years, some of which include options to extend leases for up to five years. The Company does not have any financing leases. The Company elected practical expedients not to reassess whether existing contracts are or contain leases, to not reassess the lease classification of any existing leases, to not reassess initial direct costs for any existing leases, to use hindsight in determining the lease term and in assessing impairment of the right-of-use asset, and to not separate lease and non-lease components for all classes of underlying assets.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, accrued expenses, and operating lease liabilities in our condensed consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make future lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, the Company used its incremental borrowing rate based on information available at the date of adoption in determining the present value of future lease payments. The operating lease ROU asset also includes any lease payments made and excludes any lease incentives and impairments. Some of the Company's facility leases include options to extend the lease when it is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

Lease cost and other information related to the Company's operating leases are as follows:



	Thirteen weeks ended September 28, 2019			Thirty-nine weeks ended September 28, 2019
Operating lease cost	$	5,002		$	15,471
Short-term lease cost	$	650		$	1,919
Total lease cost	$	5,652		$	17,390

Operating cash outflows from operating leases	$	5,499		$	16,966
ROU assets obtained in exchange for lease obligations	$	626		$	3,057
Weighted average remaining lease term	10 years			10 years
Weighted average discount rate	3.9		%	3.9		%

As part of the adoption of ASC 842, the Company evaluated at the historical and projected cash flow generation of the operations at each of its long-term leased facilities. One of those facilities, a galvanizing operation in Melbourne, Australia, will not generate sufficient cash flows on an undiscounted cash flow basis to recover the carrying value of the right of use asset. The Company then estimated a value for this operation using a discounted cash flow model. The result was an impairment of the right-of-use lease asset of approximately $12,063. The after-tax balance of $8,444 was recorded as a reduction to retained earnings for the transition adjustment of adoption.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(9) LEASES (Continued)

Supplemental balance sheet information related to operating leases for the third quarter of 2019 is as follows:



	Classification	September 28, 2019
Operating lease assets	Other assets	$	80,715

Operating lease short-term liabilities	Accrued expenses	14,634
Operating lease long-term liabilities	Operating lease liabilities	78,790
Total lease liabilities		$	93,424

Minimum lease payments under operating leases expiring subsequent to September 28, 2019 are as follows:



Fiscal year ending:
2019 (excluding the nine months ended September 28, 2019)	$	4,738
2020	17,397
2021	14,154
2022	11,508
2023	8,684
Subsequent	57,574
Total minimum lease payments	$	114,055
Less: Interest	$	20,631
Present value of minimum lease payments	$	93,424

The below table as of December 29, 2018 is carried forward, including certain amounts that were historically included in the table as a result of the historical lease term conclusions but were not included in the initial ROU asset and lease liability measurement as of December 30, 2018 due to the Company's election of the hindsight practical expedient. The Company also determined one of its leases with escalating rent payments should be expensed using the straight-line method over a longer term and the result was an additional reduction to retained earnings of $442 for a transition adjustment. Minimum lease payments for operating leases under ASC 840 expiring subsequent to December 29, 2018 are as follows:



Fiscal year ending:
2019	$	18,757
2020	16,830
2021	13,992
2022	11,932
2023	8,866
Subsequent	76,438
Total minimum lease payments	$	146,815

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(10) BUSINESS SEGMENTS

The ~~accounting principles used~~Company has four reportable segments based on its management structure. Each segment is global in nature with a manager responsible for segment operational performance and the ~~preparation~~allocation of capital within the ~~segment information~~segment. Net corporate expense is net of certain service‑related expenses that are allocated to business units generally on the ~~same as those used for the consolidated financial statements as disclosed in Note 1, except that the segment assets and income reflect the FIFO~~ basis of accounting for inventory. Certain inventories are accounted for using the LIFO basis in the consolidated financial statements. In the first quarter of 2017, the Company changed its reportable segment operating income to separate out the LIFO expense (benefit). Prior year financial information has been updated to reflect this change.employee headcounts.

Reportable segments are as follows:

ENGINEERED SUPPORT STRUCTURES: This segment consists of the manufacture of engineered metal

~~structures~~ and composite poles, towers, and components for ~~the~~ global lighting, traffic, and ~~traffic,~~ wireless communication ~~and roadway safety~~

~~industries;~~

~~ENERGY AND MINING:~~ ~~This segment, all outside of the United States, consists of the manufacture of~~

markets, engineered access systems, ~~applications, forged steel grinding media, on~~integrated structure solutions for smart cities, and ~~offshore oil, gas, and wind energy structures;~~highway safety products;

UTILITY SUPPORT STRUCTURES: This segment consists of the manufacture of engineered steel and

concrete structures for the global utility ~~industry;~~transmission, distribution, and generation applications, renewable energy generation equipment, and substations;

COATINGS: This segment consists of galvanizing, painting, and anodizing services; and ~~powder coating services on a global~~

~~basis; and~~

IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment, parts, services, tubular products, water management solutions, and ~~related~~technology for precision agriculture.

~~parts~~In addition to these 4 reportable segments, the Company had other businesses and ~~services~~activities that individually are not more than 10% of consolidated sales, operating income or assets. This includes the manufacture of forged steel grinding media for the ~~global agricultural~~mining industry and ~~tubular products for industrial customers.~~

is reported in the "Other" category until its divestiture in 2018.

The Company evaluates the performance of its business segments based upon operating income and invested capital. The Company does not allocate LIFO expense, interest expense, non-operating income and deductions, or income taxes to its business segments.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(7)~~(10) BUSINESS SEGMENTS (Continued)

Summary by Business



	Thirteen weeks ended						Thirty-nine weeks ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
SALES:
Engineered Support Structures segment:
Lighting, Traffic, and Highway Safety Products	$	191,262		$	183,184		$	530,021		$	522,558
Communication Products	48,391			35,985			138,710			109,690
Access Systems	28,405			32,355			88,363			94,941
Engineered Support Structures segment	268,058			251,524			757,094			727,189
Utility Support Structures segment:
Steel	153,433			161,847			460,309			471,947
Concrete	28,011			27,715			88,415			81,562
Engineered Solar Tracker Solutions	3,418			6,090			43,642			6,090
Offshore and Other Complex Steel Structures	20,096			22,617			66,343			66,251
Utility Support Structures segment	204,958			218,269			658,709			625,850
Coatings segment	92,957			90,433			278,142			266,952
Irrigation segment:
North America	82,840			78,168			294,127			301,887
International	61,340			62,007			158,054			189,177
Irrigation segment	144,180			140,175			452,181			491,064
Other	—			—			—			23,080
Total	710,153			700,401			2,146,126			2,134,135
INTERSEGMENT SALES:
Engineered Support Structures segment	1,564			3,093			5,066			16,801
Utility Support Structures segment	762			326			2,246			1,517
Coatings segment	16,035			15,886			49,900			49,408
Irrigation segment	1,452			2,404			5,564			6,628
Total	19,813			21,709			62,776			74,354
NET SALES:
Engineered Support Structures segment	266,494			248,431			752,028			710,388
Utility Support Structures segment	204,196			217,943			656,463			624,333
Coatings segment	76,922			74,547			228,242			217,544
Irrigation segment	142,728			137,771			446,617			484,436
Other	—			—			—			23,080
Total	$	690,340		$	678,692		$	2,083,350		$	2,059,781

OPERATING INCOME:
Engineered Support Structures segment	$	21,825		$	16,499		$	55,152		$	36,411
Utility Support Structures segment	20,362			2,090			61,443			46,298
Coatings segment	13,865			14,373			39,037			41,108
Irrigation segment	18,204			21,302			59,868			82,917
Other	—			—			—			(913		)
Adjustment to LIFO inventory valuation method	2,799			(2,780		)	5,539			(5,512		)
Corporate	(13,192		)	(13,124		)	(38,360		)	(34,319		)
Total	$	63,863		$	38,360		$	182,679		$	165,990

Thirteen Weeks Ended Thirty-nine Weeks Ended
September 30,
2017 September 24,
2016 September 30,
2017 September 24,
2016
SALES:
Engineered Support Structures segment:
Lighting, Traffic, and Roadway Products $ 175,184
$ 159,089
$ 498,034
$ 468,582
Communication Products 46,324
44,095
121,613
115,489
Engineered Support Structures segment 221,508
203,184
619,647
584,071
Energy and Mining segment:
Offshore and Other Complex Steel Structures 25,046
27,330
75,372
76,207
Grinding Media 19,800
20,681
60,466
61,189
Access Systems 34,909
33,541
99,096
97,297
Energy and Mining segment 79,755
81,552
234,934
234,693
Utility Support Structures segment:
Steel 160,948
131,085
471,072
379,157
Concrete 18,811
19,582
67,921
67,275
Utility Support Structures segment 179,759
150,667
538,993
446,432
Coatings segment 82,593
70,082
235,842
213,961
Irrigation segment 147,428
127,809
502,939
438,575
Total 711,043
633,294
2,132,355
1,917,732
INTERSEGMENT SALES:
Engineered Support Structures segment 11,736
10,076
48,399
29,202
Energy & Mining segment 6
319
6
3,386
Utility Support Structures segment 1,231
276
2,448
538
Coatings segment 14,913
10,079
44,230
31,778
Irrigation segment 2,378
2,297
6,283
5,727
Total 30,264
23,047
101,366
70,631
NET SALES:
Engineered Support Structures segment 209,772
193,108
571,248
554,869
Energy & Mining segment 79,749
81,233
234,928
231,307
Utility Support Structures segment 178,528
150,391
536,545
445,894
Coatings segment 67,680
60,003
191,612
182,183
Irrigation segment 145,050
125,512
496,656
432,848
Total $ 680,779
$ 610,247
$ 2,030,989
$ 1,847,101

OPERATING INCOME:
Engineered Support Structures segment $ 16,226
$ 20,323
$ 45,683
$ 53,615
Energy & Mining segment 1,417
3,941
9,195
9,184
Utility Support Structures segment 22,108
16,195
65,005
48,201
Coatings segment 14,577
11,696
36,091
37,132
Irrigation segment 18,235
15,308
83,196
75,216
Adjustment to LIFO inventory valuation method (1,626 ) (2,066 ) (2,839 ) (3,192 )
Corporate (11,014 ) (12,157 ) (33,616 ) (32,745 )
Total $ 59,923
$ 53,240
$ 202,715
$ 187,411

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(8)~~11) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION

The Company has ~~three~~2 tranches of senior unsecured notes. All of the senior notes are guaranteed, jointly, severally, fully and unconditionally (subject to certain customary release provisions, including sale of the subsidiary guarantor, or sale of all or substantially all of its assets) by certain of the Company’s current and future direct and indirect domestic and foreign subsidiaries (collectively the “Guarantors”), excluding its other current domestic and foreign subsidiaries which do not guarantee the debt (collectively referred to as the “Non-Guarantors”). All Guarantors are 100% owned by the parent company.

Consolidated financial information for the Company ("Parent"), the Guarantor subsidiaries and the Non-Guarantor subsidiaries is as follows:

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

For the Thirteen weeks ended September ~~30, 2017~~28, 2019



	Parent			Guarantors			Non- Guarantors			Eliminations			Total
Net sales	$	302,461		$	135,392		$	310,676		$	(58,189	)	$	690,340
Cost of sales	223,949			96,566			251,561			(57,822		)	514,254
Gross profit	78,512			38,826			59,115			(367		)	176,086
Selling, general and administrative expenses	67,366			2,325			42,532			—			112,223
Operating income	11,146			36,501			16,583			(367		)	63,863
Other income (expense):
Interest expense	(9,471		)	(2,544		)	(504		)	2,543			(9,976		)
Interest income	607			2			2,903			(2,543		)	969
Other	849			12			309			—			1,170
	(8,015		)	(2,530		)	2,708			—			(7,837		)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries	3,131			33,971			19,291			(367		)	56,026
Income tax expense (benefit)	2,084			8,834			2,930			(85		)	13,763
Earnings before equity in earnings of nonconsolidated subsidiaries	1,047			25,137			16,361			(282		)	42,263
Equity in earnings of nonconsolidated subsidiaries	39,097			2,017			—			(41,114		)	—
Net earnings	40,144			27,154			16,361			(41,396		)	42,263
Less: Earnings attributable to noncontrolling interests	—			—			(2,119		)	—			(2,119		)
Net earnings attributable to Valmont Industries, Inc.	$	40,144		$	27,154		$	14,242		$	(41,396	)	$	40,144

Parent Guarantors Non-
Guarantors Eliminations Total
Net sales $ 284,538
$ 113,243
$ 343,818
$ (60,820 ) $ 680,779
Cost of sales 216,039
88,757
272,959
(60,570 ) 517,185
Gross profit 68,499
24,486
70,859
(250 ) 163,594
Selling, general and administrative expenses 46,451
12,046
45,174
—
103,671
Operating income 22,048
12,440
25,685
(250 ) 59,923
Other income (expense):
Interest expense (10,884 ) (3,989 ) (306 ) 3,989
(11,190 )
Interest income 268
9
5,023
(3,989 ) 1,311
Other 1,379
11
(873 ) —
517
(9,237 ) (3,969 ) 3,844
—
(9,362 )
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries 12,811
8,471
29,529
(250 ) 50,561
Income tax expense (benefit):
Current 9,030
3,082
9,059
(8 ) 21,163
Deferred (3,474 ) —
(3,794 ) —
(7,268 )
5,556
3,082
5,265
(8 ) 13,895
Earnings before equity in earnings of nonconsolidated subsidiaries 7,255
5,389
24,264
(242 ) 36,666
Equity in earnings of nonconsolidated subsidiaries 27,953
9,965
—
(37,918 ) —
Net earnings 35,208
15,354
24,264
(38,160 ) 36,666
Less: Earnings attributable to noncontrolling interests —
—
(1,458 ) —
(1,458 )
Net earnings attributable to Valmont Industries, Inc $ 35,208
$ 15,354
$ 22,806
$ (38,160 ) $ 35,208

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(8)~~(11) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

For the Thirty-nine ~~Weeks Ended~~weeks ended September ~~30, 2017~~

Parent Guarantors Non-
Guarantors Eliminations Total
Net sales $ 893,988
$ 352,827
$ 967,130
$ (182,956 ) $ 2,030,989
Cost of sales 666,060
271,620
764,607
(182,777 ) 1,519,510
Gross profit 227,928
81,207
202,523
(179 ) 511,479
Selling, general and administrative expenses 143,590
35,555
129,619
—
308,764
Operating income 84,338
45,652
72,904
(179 ) 202,715
Other income (expense):
Interest expense (32,672 ) (10,040 ) (640 ) 10,040
(33,312 )
Interest income 563
33
12,649
(10,040 ) 3,205
Other 3,900
42
(2,258 ) —
1,684
(28,209 ) (9,965 ) 9,751
—
(28,423 )
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries 56,129
35,687
82,655
(179 ) 174,292
Income tax expense (benefit):
Current 19,487
13,184
17,612
(19 ) 50,264
Deferred 2,065
—
(1,986 ) —
79
21,552
13,184
15,626
(19 ) 50,343
Earnings before equity in earnings of nonconsolidated subsidiaries 34,577
22,503
67,029
(160 ) 123,949
Equity in earnings of nonconsolidated subsidiaries 85,274
15,281
—
(100,555 ) —
Net earnings 119,851
37,784
67,029
(100,715 ) 123,949
Less: Earnings attributable to noncontrolling interests —
—
(4,098 ) —
(4,098 )
Net earnings attributable to Valmont Industries, Inc $ 119,851
$ 37,784
$ 62,931
$ (100,715 ) $ 119,851

28, 2019



	Parent			Guarantors			Non- Guarantors			Eliminations			Total
Net sales	$	915,436		$	413,050		$	939,484		$	(184,620	)	$	2,083,350
Cost of sales	675,093			307,209			763,499			(184,080		)	1,561,721
Gross profit	240,343			105,841			175,985			(540		)	521,629
Selling, general and administrative expenses	175,000			28,301			135,649			—			338,950
Operating income	65,343			77,540			40,336			(540		)	182,679
Other income (expense):
Interest expense	(28,638		)	(8,583		)	(1,333		)	8,583			(29,971		)
Interest income	1,060			32			10,306			(8,583		)	2,815
Other	6,264			33			395			—			6,692
	(21,314		)	(8,518		)	9,368			—			(20,464		)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries	44,029			69,022			49,704			(540		)	162,215
Income tax expense (benefit)	9,856			16,691			13,680			(76		)	40,151
Earnings before equity in earnings of nonconsolidated subsidiaries	34,173			52,331			36,024			(464		)	122,064
Equity in earnings of nonconsolidated subsidiaries	83,849			8,843			—			(92,692		)	—
Net earnings	118,022			61,174			36,024			(93,156		)	122,064
Less: Earnings attributable to noncontrolling interests	—			—			(4,042		)	—			(4,042		)
Net earnings attributable to Valmont Industries, Inc.	$	118,022		$	61,174		$	31,982		$	(93,156	)	$	118,022

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(8)~~(11) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

For the Thirteen weeks ended September ~~24, 2016~~29, 2018



	Parent			Guarantors			Non- Guarantors			Eliminations			Total
Net sales	$	293,070		$	132,059		$	319,129		$	(65,566	)	$	678,692
Cost of sales	227,467			100,130			252,353			(65,598		)	514,352
Gross profit	65,603			31,929			66,776			32			164,340
Selling, general and administrative expenses	51,159			12,908			61,913			—			125,980
Operating income	14,444			19,021			4,863			32			38,360
Other income (expense):
Interest expense	(10,511		)	(3,600		)	(443		)	3,600			(10,954		)
Interest income	174			47			4,379			(3,600		)	1,000
Other	(13,765		)	15			1,426			—			(12,324		)
	(24,102		)	(3,538		)	5,362			—			(22,278		)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries	(9,658		)	15,483			10,225			32			16,082
Income tax expense (benefit)	(4,497		)	4,732			8,882			(26		)	9,091
Earnings before equity in earnings of nonconsolidated subsidiaries	(5,161		)	10,751			1,343			58			6,991
Equity in earnings of nonconsolidated subsidiaries	9,609			4,041			—			(13,650		)	—
Net earnings	4,448			14,792			1,343			(13,592		)	6,991
Less: Earnings attributable to noncontrolling interests	—			—			(2,543		)	—			(2,543		)
Net earnings attributable to Valmont Industries, Inc.	$	4,448		$	14,792		$	(1,200	)	$	(13,592	)	$	4,448

Parent Guarantors Non-
Guarantors Eliminations Total
Net sales $ 261,928
$ 89,305
$ 300,648
$ (41,634 ) $ 610,247
Cost of sales 199,957
66,401
230,561
(41,695 ) 455,224
Gross profit 61,971
22,904
70,087
61
155,023
Selling, general and administrative expenses 46,183
11,073
44,527
—
101,783
Operating income 15,788
11,831
25,560
61
53,240
Other income (expense):
Interest expense (10,920 ) (6 ) (174 ) —
(11,100 )
Interest income 68
12
691
—
771
Other 1,370
12
(504 ) —
878
(9,482 ) 18
13
—
(9,451 )
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries 6,306
11,849
25,573
61
43,789
Income tax expense (benefit):
Current 6,112
5,095
6,762
48
18,017
Deferred (5,321 ) —
1,572
—
(3,749 )
791
5,095
8,334
48
14,268
Earnings before equity in earnings of nonconsolidated subsidiaries 5,515
6,754
17,239
13
29,521
Equity in earnings of nonconsolidated subsidiaries 22,658
—
—
(22,658 ) —
Net earnings 28,173
6,754
17,239
(22,645 ) 29,521
Less: Earnings attributable to noncontrolling interests —
—
(1,348 ) —
(1,348 )
Net earnings attributable to Valmont Industries, Inc $ 28,173
$ 6,754
$ 15,891
$ (22,645 ) $ 28,173

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(8)~~(11) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

For the Thirty-nine ~~Weeks Ended~~weeks ended September ~~24, 2016~~

Parent Guarantors Non-
Guarantors Eliminations Total
Net sales $ 837,137
$ 277,990
$ 873,673
$ (141,699 ) $ 1,847,101
Cost of sales 619,493
205,497
671,202
(140,200 ) 1,355,992
Gross profit 217,644
72,493
202,471
(1,499 ) 491,109
Selling, general and administrative expenses 133,207
33,583
136,908
—
303,698
Operating income 84,437
38,910
65,563
(1,499 ) 187,411
Other income (expense):
Interest expense (32,768 ) (9 ) (499 ) —
(33,276 )
Interest income 181
51
2,057
—
2,289
Other 1,694
39
(1,281 ) —
452
(30,893 ) 81
277
—
(30,535 )
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries 53,544
38,991
65,840
(1,499 ) 156,876
Income tax expense (benefit):
Current 22,086
13,909
15,762
(481 ) 51,276
Deferred (1,834 ) —
300
—
(1,534 )
20,252
13,909
16,062
(481 ) 49,742
Earnings before equity in earnings of nonconsolidated subsidiaries 33,292
25,082
49,778
(1,018 ) 107,134
Equity in earnings of nonconsolidated subsidiaries 69,876
7,859
—
(77,735 ) —
Net earnings 103,168
32,941
49,778
(78,753 ) 107,134
Less: Earnings attributable to noncontrolling interests —
—
(3,966 ) —
(3,966 )
Net earnings attributable to Valmont Industries, Inc $ 103,168
$ 32,941
$ 45,812
$ (78,753 ) $ 103,168

29, 2018



	Parent			Guarantors			Non- Guarantors			Eliminations			Total
Net sales	$	906,978		$	386,793		$	966,764		$	(200,754	)	$	2,059,781
Cost of sales	683,740			293,238			776,254			(202,030		)	1,551,202
Gross profit	223,238			93,555			190,510			1,276			508,579
Selling, general and administrative expenses	147,949			37,360			157,280			—			342,589
Operating income	75,289			56,195			33,230			1,276			165,990
Other income (expense):
Interest expense	(32,788		)	(11,229		)	(1,031		)	11,229			(33,819		)
Interest income	655			62			14,225			(11,229		)	3,713
Other	(15,773		)	41			(1,973		)	—			(17,705		)
	(47,906		)	(11,126		)	11,221			—			(47,811		)
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries	27,383			45,069			44,451			1,276			118,179
Income tax expense (benefit)	6,181			12,260			17,525			62			36,028
Earnings before equity in earnings of nonconsolidated subsidiaries	21,202			32,809			26,926			1,214			82,151
Equity in earnings of nonconsolidated subsidiaries	55,487			37,939			—			(93,426		)	—
Net earnings	76,689			70,748			26,926			(92,212		)	82,151
Less: Earnings attributable to noncontrolling interests	—			—			(5,462		)	—			(5,462		)
Net earnings attributable to Valmont Industries, Inc.	$	76,689		$	70,748		$	21,464		$	(92,212	)	$	76,689

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(8)~~(11) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Thirteen weeks ended September ~~30, 2017~~28, 2019



	Parent			Guarantors		Non- Guarantors			Eliminations			Total
Net earnings	$	40,144		$	27,154	$	16,361		$	(41,396	)	$	42,263
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss)	—			4,512		(28,293		)	—			(23,781		)
Gain (loss) on hedging activities	9,315			—		—			—			9,315
Equity in other comprehensive income	(22,959		)	—		—			22,959			—
Other comprehensive income (loss)	(13,644		)	4,512		(28,293		)	22,959			(14,466		)
Comprehensive income (loss)	26,500			31,666		(11,932		)	(18,437		)	27,797
Comprehensive income attributable to noncontrolling interests	—			—		(1,297		)	—			(1,297		)
Comprehensive income (loss) attributable to Valmont Industries, Inc.	$	26,500		$	31,666	$	(13,229	)	$	(18,437	)	$	26,500

Parent Guarantors Non-
Guarantors Eliminations Total
Net earnings $ 35,208
$ 15,354
$ 24,264
$ (38,160 ) $ 36,666
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
        Unrealized translation gain (loss) —
(3,613 ) 23,143
—
19,530
Unrealized gain/(loss) on hedging activities:
     Net investment hedge (740 ) —
—
—
(740 )
     Amortization cost included in interest expense 19
—
—
—
19
Equity in other comprehensive income 18,418
—
—
(18,418 ) —
Other comprehensive income (loss) 17,697
(3,613 ) 23,143
(18,418 ) 18,809
Comprehensive income (loss) 52,905
11,741
47,407
(56,578 ) 55,475
Comprehensive income attributable to noncontrolling interests —
—
(2,570 ) —
(2,570 )
Comprehensive income (loss) attributable to Valmont Industries, Inc. $ 52,905
$ 11,741
$ 44,837
$ (56,578 ) $ 52,905

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Thirty-nine ~~Weeks Ended~~weeks ended September ~~30, 2017~~28, 2019



	Parent			Guarantors		Non- Guarantors			Eliminations			Total
Net earnings	$	118,022		$	61,174	$	36,024		$	(93,156	)	$	122,064
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss)	—			291		(20,757		)	—			(20,466		)
Gain (loss) on hedging activities	6,282			—		—			—			6,282
Equity in other comprehensive income	(19,814		)	—		—			19,814			—
Other comprehensive income (loss)	(13,532		)	291		(20,757		)	19,814			(14,184		)
Comprehensive income (loss)	104,490			61,465		15,267			(73,342		)	107,880
Comprehensive income attributable to noncontrolling interests	—			—		(3,390		)	—			(3,390		)
Comprehensive income (loss) attributable to Valmont Industries, Inc.	$	104,490		$	61,465	$	11,877		$	(73,342	)	$	104,490

Parent Guarantors Non-
Guarantors Eliminations Total
Net earnings $ 119,851
$ 37,784
$ 67,029
$ (100,715 ) $ 123,949
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
        Unrealized translation gain (loss) —
64,411
(3,940 ) —
60,471
Unrealized gain/(loss) on hedging activities:
     Net investment hedge (1,816 ) —
—
(1,816 )
     Amortization cost included in interest expense 56
—
—
—
56
Equity in other comprehensive income 60,017
—
—
(60,017 ) —
Other comprehensive income (loss) 58,257
64,411
(3,940 ) (60,017 ) 58,711
Comprehensive income (loss) 178,108
102,195
63,089
(160,732 ) 182,660
Comprehensive income attributable to noncontrolling interests —
—
(4,552 ) —
(4,552 )
Comprehensive income (loss) attributable to Valmont Industries, Inc. $ 178,108
$ 102,195
$ 58,537
$ (160,732 ) $ 178,108

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(8)~~(11) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Thirteen weeks ended September ~~24, 2016~~29, 2018



	Parent			Guarantors		Non- Guarantors			Eliminations			Total
Net earnings	$	4,448		$	14,792	$	1,343		$	(13,592	)	$	6,991
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss)	—			4,289		(14,921		)	—			(10,632		)
Realized loss on divestiture of grinding media business recorded in earnings	—			—		—			—			—
Gain (loss) on hedging activities	(910		)	—		—			—			(910		)
Equity in other comprehensive income	(10,478		)	—		—			10,478			—
Other comprehensive income (loss)	(11,388		)	4,289		(14,921		)	10,478			(11,542		)
Comprehensive income (loss)	(6,940		)	19,081		(13,578		)	(3,114		)	(4,551		)
Comprehensive income attributable to noncontrolling interests	—			—		(2,389		)	—			(2,389		)
Comprehensive income (loss) attributable to Valmont Industries, Inc.	$	(6,940	)	$	19,081	$	(15,967	)	$	(3,114	)	$	(6,940	)

Parent Guarantors Non-
Guarantors Eliminations Total
Net earnings $ 28,173
$ 6,754
$ 17,239
$ (22,645 ) $ 29,521
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
        Unrealized translation gain (loss) —
(114 ) 884
—
770
Unrealized gain/(loss) on hedging activities:
     Net investment hedge 1,972
—
—
—
1,972
     Amortization cost included in interest expense 18
—
—
—
18
Equity in other comprehensive income 500
—
—
(500 ) —
Other comprehensive income (loss) 2,490
(114 ) 884
(500 ) 2,760
Comprehensive income (loss) 30,663
6,640
18,123
(23,145 ) 32,281
Comprehensive income attributable to noncontrolling interests —
—
(1,618 ) —
(1,618 )
Comprehensive income (loss) attributable to Valmont Industries, Inc. $ 30,663
$ 6,640
$ 16,505
$ (23,145 ) $ 30,663

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Thirty-nine ~~Weeks Ended~~weeks ended September ~~24, 2016~~29, 2018



	Parent			Guarantors		Non- Guarantors			Eliminations			Total
Net earnings	$	76,689		$	70,748	$	26,926		$	(92,212	)	$	82,151
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss)	—			2,122		(52,903		)	—			(50,781		)
Realized loss on divestiture of grinding media business recorded in earnings	—			—		9,203			—			9,203
Gain (loss) on hedging activities	834			—		—			—			834
Equity in other comprehensive income	(44,366		)	—		—			44,366			—
Other comprehensive income (loss)	(43,532		)	2,122		(43,700		)	44,366			(40,744		)
Comprehensive income (loss)	33,157			72,870		(16,774		)	(47,846		)	41,407
Comprehensive income attributable to noncontrolling interests	—			—		(8,250		)	—			(8,250		)
Comprehensive income (loss) attributable to Valmont Industries, Inc.	$	33,157		$	72,870	$	(25,024	)	$	(47,846	)	$	33,157

Parent Guarantors Non-
Guarantors Eliminations Total
Net earnings $ 103,168
$ 32,941
$ 49,778
$ (78,753 ) $ 107,134
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
        Unrealized translation gain (loss) —
(263 ) (1,675 ) —
(1,938 )
Unrealized gain/(loss) on hedging activities:
      Net Investment Hedge
4,897
—
—
—
4,897
     Amortization cost included in interest expense 56
—
—
—
56
Equity in other comprehensive income (3,704 ) —
—
3,704
—
Other comprehensive income (loss) 1,249
(263 ) (1,675 ) 3,704
3,015
Comprehensive income (loss) 104,417
32,678
48,103
(75,049 ) 110,149
Comprehensive income attributable to noncontrolling interests —
—
(5,732 ) —
(5,732 )
Comprehensive income (loss) attributable to Valmont Industries, Inc. $ 104,417
$ 32,678
$ 42,371
$ (75,049 ) $ 104,417

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(8)~~(11) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS

September ~~30, 2017~~

28, 2019


	Parent			Guarantors		Non- Guarantors			Eliminations			Total			Parent			Guarantors		Non- Guarantors			Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	118,499		$	4,167	$	370,824		$	—		$	493,490		$	179,765		$	1,963	$	145,472		$	—		$	327,200
Receivables, net	152,290			69,781		270,771			—			492,842			161,260			79,077		260,878			—			501,215
Inventories	141,774			46,747		219,046			(4,333		)	403,234			125,240			46,133		208,869			(2,942		)	377,300
Prepaid expenses, restricted cash, and other assets	8,903			1,023		40,138			—			50,064
Contract asset - costs and profits in excess of billings															58,713			35,195		26,468			—			120,376
Prepaid expenses and other assets															15,569			4,866		29,985			—			50,420
Refundable income taxes	8,493			—		—			—			8,493			11,893			—		—			—			11,893
Total current assets	429,959			121,718		900,779			(4,333		)	1,448,123			552,440			167,234		671,672			(2,942		)	1,388,404
Property, plant and equipment, at cost	558,484			158,087		453,283			—			1,169,854			614,979			199,176		419,607			—			1,233,762
Less accumulated depreciation and amortization	369,620			82,708		195,102			—			647,430			411,808			100,692		172,894			—			685,394
Net property, plant and equipment	188,864			75,379		258,181			—			522,424			203,171			98,484		246,713			—			548,368
Goodwill	20,108			110,562		206,084			—			336,754			20,108			140,095		261,476			—			421,679
Other intangible assets	144			32,204		109,742			—			142,090			36			46,758		130,940			—			177,734
Investment in subsidiaries and intercompany accounts	1,392,533			1,180,732		1,029,831			(3,603,096		)	—			1,333,420			1,138,854		840,925			(3,313,199		)	—
Other assets	47,613			—		113,167			—			160,780			78,721			4,859		105,677			—			189,257
Total assets	$	2,079,221		$	1,520,595	$	2,617,784		$	(3,607,429	)	$	2,610,171		$	2,187,896		$	1,596,284	$	2,257,403		$	(3,316,141	)	$	2,725,442
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt	$	—		$	—	$	949		$	—		$	949		$	—		$	—	$	745		$	—		$	745
Notes payable to banks	—			—		197			—			197			—			—		19,324			—			19,324
Accounts payable	59,467			8,032		148,605			—			216,104			64,256			18,681		114,598			—			197,535
Accrued employee compensation and benefits	40,760			8,293		32,441			—			81,494			41,371			5,994		31,175			—			78,540
Accrued expenses	44,896			9,222		52,120			—			106,238			162,640			13,024		51,051			—			226,715
Dividends payable	8,478			—		—			—			8,478			8,088			—		—			—			8,088
Total current liabilities	153,601			25,547		234,312			—			413,460			276,355			37,699		216,893			—			530,947
Deferred income taxes	15,617			—		12,566			—			28,183			16,645			—		27,133			—			43,778
Long-term debt, excluding current installments	750,933			185,674		10,060			(192,465		)	754,202			734,417			119,716		30,107			(119,716		)	764,524
Defined benefit pension liability	—			—		199,562			—			199,562			—			—		121,282			—			121,282
Deferred compensation	43,077			—		5,535			—			48,612
Other noncurrent liabilities	3,159			5		10,393			—			13,557			73,788			3,622		56,330			—			133,740
Shareholders’ equity:
Common stock of $1 par value	27,900			457,950		648,682			(1,106,632		)	27,900			27,900			457,950		648,957			(1,106,907		)	27,900
Additional paid-in capital	—			166,789		1,107,536			(1,274,325		)	—			—			162,906		1,107,536			(1,270,442		)	—
Retained earnings	1,974,601			684,532		636,283			(1,320,815		)	1,974,601			2,119,843			733,109		416,932			(1,150,041		)	2,119,843
Accumulated other comprehensive income (loss)	(288,102		)	98		(286,906		)	286,808			(288,102		)	(316,717		)	81,282		(412,247		)	330,965			(316,717		)
Treasury stock	(601,565		)	—		—			—			(601,565		)	(744,335		)	—		—			—			(744,335		)
Total Valmont Industries, Inc. shareholders’ equity	1,112,834			1,309,369		2,105,595			(3,414,964		)	1,112,834			1,086,691			1,435,247		1,761,178			(3,196,425		)	1,086,691
Noncontrolling interest in consolidated subsidiaries	—			—		39,761			—			39,761			—			—		44,480			—			44,480
Total shareholders’ equity	1,112,834			1,309,369		2,145,356			(3,414,964		)	1,152,595			1,086,691			1,435,247		1,805,658			(3,196,425		)	1,131,171
Total liabilities and shareholders’ equity	$	2,079,221		$	1,520,595	$	2,617,784		$	(3,607,429	)	$	2,610,171		$	2,187,896		$	1,596,284	$	2,257,403		$	(3,316,141	)	$	2,725,442

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(8)~~(11) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS

December ~~31, 2016~~29, 2018



	Parent			Guarantors		Non- Guarantors			Eliminations			Total
ASSETS
Current assets:
Cash and cash equivalents	$	104,256		$	5,518	$	203,436		$	—		$	313,210
Receivables, net	134,943			75,204		273,816			—			483,963
Inventories	138,158			37,019		210,791			(2,402		)	383,566
Contract asset - costs and profits in excess of billings	50,271			35,200		27,054			—			112,525
Prepaid expenses and other assets	21,858			746		20,196			—			42,800
Refundable income taxes	4,576			—		—			—			4,576
Total current assets	454,062			153,687		735,293			(2,402		)	1,340,640
Property, plant and equipment, at cost	579,046			172,050		409,769			—			1,160,865
Less accumulated depreciation and amortization	390,438			93,374		163,061			—			646,873
Net property, plant and equipment	188,608			78,676		246,708			—			513,992
Goodwill	20,108			110,562		254,537			—			385,207
Other intangible assets	76			27,452		148,428			—			175,956
Investment in subsidiaries and intercompany accounts	1,286,545			1,161,612		932,982			(3,381,139		)	—
Other assets	47,674			—		66,805			—			114,479
Total assets	$	1,997,073		$	1,531,989	$	2,384,753		$	(3,383,541	)	$	2,530,274
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt	$	—		$	—	$	779		$	—		$	779
Notes payable to banks	—			—		10,678			—			10,678
Accounts payable	68,304			21,081		128,730			—			218,115
Accrued employee compensation and benefits	41,418			7,186		30,687			—			79,291
Accrued expenses	25,936			10,132		55,874			—			91,942
Dividends payable	8,230			—		—			—			8,230
Total current liabilities	143,888			38,399		226,748			—			409,035
Deferred income taxes	14,376			—		29,113			—			43,489
Long-term debt, excluding current installments	733,964			166,729		7,858			(166,729		)	741,822
Defined benefit pension liability	—			—		143,904			—			143,904
Other noncurrent liabilities	45,083			620		10,798			—			56,501
Shareholders’ equity:
Common stock of $1 par value	27,900			457,950		648,682			(1,106,632		)	27,900
Additional paid-in capital	—			162,906		1,107,536			(1,270,442		)	—
Retained earnings	2,027,596			624,394		467,699			(1,092,093		)	2,027,596
Accumulated other comprehensive income	(303,185		)	80,991		(333,346		)	252,355			(303,185		)
Treasury stock	(692,549		)	—		—			—			(692,549		)
Total Valmont Industries, Inc. shareholders’ equity	1,059,762			1,326,241		1,890,571			(3,216,812		)	1,059,762
Noncontrolling interest in consolidated subsidiaries	—			—		75,761			—			75,761
Total shareholders’ equity	1,059,762			1,326,241		1,966,332			(3,216,812		)	1,135,523
Total liabilities and shareholders’ equity	$	1,997,073		$	1,531,989	$	2,384,753		$	(3,383,541	)	$	2,530,274

Parent Guarantors Non-
Guarantors Eliminations Total
ASSETS
Current assets:
Cash and cash equivalents $ 67,225
$ 6,071
$ 326,652
$ —
$ 399,948
Receivables, net 134,351
60,522
244,469
—
439,342
Inventories 126,669
45,457
182,056
(4,154 ) 350,028
Prepaid expenses 13,271
880
43,146
—
57,297
Refundable income taxes 6,601
—
—
—
6,601
Total current assets 348,117
112,930
796,323
(4,154 ) 1,253,216
Property, plant and equipment, at cost 547,076
153,596
405,064
—
1,105,736
Less accumulated depreciation and amortization 352,960
76,776
157,665
—
587,401
Net property, plant and equipment 194,116
76,820
247,399
—
518,335
Goodwill 20,108
110,561
190,441
—
321,110
Other intangible assets 184
35,953
108,241
—
144,378
Investment in subsidiaries and intercompany accounts 1,279,413
901,758
1,089,369
(3,270,540 ) —
Other assets 43,880
—
110,812
—
154,692
Total assets $ 1,885,818
$ 1,238,022
$ 2,542,585
$ (3,274,694 ) $ 2,391,731
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt $ —
$ —
$ 851
$ —
$ 851
Notes payable to banks —
—
746
—
746
Accounts payable 52,272
15,732
109,484
—
177,488
Accrued employee compensation and benefits 34,508
7,243
30,653
—
72,404
Accrued expenses 30,261
15,242
44,411
—
89,914
Dividends payable 8,445
—
—
—
8,445
Total current liabilities 125,486
38,217
186,145
—
349,848
Deferred income taxes 22,481
—
13,322
—
35,803
Long-term debt, excluding current installments 751,251
—
3,544
—
754,795
Defined benefit pension liability —
—
209,470
—
209,470
Deferred compensation 39,476
—
4,843
—
44,319
Other noncurrent liabilities 3,642
5
11,263
—
14,910
Shareholders’ equity:

Common stock of $1 par value 27,900
457,950
648,683
(1,106,633 ) 27,900
Additional paid-in capital —
159,414
1,107,536
(1,266,950 ) —
Retained earnings 1,874,722
646,749
603,338
(1,250,087 ) 1,874,722
Accumulated other comprehensive income (346,359 ) (64,313 ) (284,663 ) 348,976
(346,359 )
Treasury stock (612,781 ) —
—
—
(612,781 )
Total Valmont Industries, Inc. shareholders’ equity 943,482
1,199,800
2,074,894
(3,274,694 ) 943,482
Noncontrolling interest in consolidated subsidiaries —
—
39,104
—
39,104
Total shareholders’ equity 943,482
1,199,800
2,113,998
(3,274,694 ) 982,586
Total liabilities and shareholders’ equity $ 1,885,818

$ 1,238,022
$ 2,542,585
$ (3,274,694 ) $ 2,391,731

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(8)~~

(11) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Thirty-nine ~~Weeks Ended~~weeks ended September ~~30, 2017~~28, 2019


	Parent			Guarantors			Non- Guarantors			Eliminations			Total			Parent			Guarantors			Non- Guarantors			Eliminations			Total
Cash flows from operating activities:
Net earnings	$	119,851		$	37,784		$	67,029		$	(100,715	)	$	123,949		$	118,022		$	61,174		$	36,024		$	(93,156	)	$	122,064
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization	19,600			11,130			32,770			—			63,500			19,891			10,201			30,332			—			60,424
Noncash loss on trading securities	—			—			395			—			395
Noncash gain on trading securities																—			—			(48		)	—			(48		)
Stock-based compensation	7,300			—			—			—			7,300			8,889			—			—			—			8,889
Defined benefit pension plan expense	—			—			481			—			481
Defined benefit pension plan benefit																—			—			(382		)	—			(382		)
Contribution to defined benefit pension plan	—			—			(26,064		)	—			(26,064		)	—			—			(17,426		)	—			(17,426		)
Decrease in restricted cash - pension plan trust	—			—			12,568			—			12,568
Loss (gain) on sale of property, plant and equipment	(725		)	59			(66		)	—			(732		)	103			81			(649		)	—			(465		)
Equity in earnings in nonconsolidated subsidiaries	(85,274		)	(15,281		)	—			100,555			—			(83,849		)	(8,843		)	—			92,692			—
Deferred income taxes	2,065			—			(1,986		)	—			79			3,869			—			3,229			—			7,098
Changes in assets and liabilities:
Receivables	(16,190		)	(9,259		)	(14,135		)	—			(39,584		)
Inventories	(15,105		)	(1,290		)	(25,329		)	179			(41,545		)
Prepaid expenses and other assets	(2,501		)	(144		)	(8,991		)	—			(11,636		)
Accounts payable	7,196			(7,700		)	29,399			—			28,895
Accrued expenses	20,887			(4,971		)	4,241			—			20,157
Net working capital																94,054			(15,715		)	(6,305		)	541			72,575
Other noncurrent liabilities	(381		)	—			(1,246		)	—			(1,627		)	1,005			(5,461		)	(107		)	—			(4,563		)
Income taxes payable (refundable)	(11,403		)	802			8,869			—			(1,732		)	(4,488		)	(2,229		)	(2,219		)	—			(8,936		)
Net cash flows from operating activities	45,320			11,130			77,935			19			134,404			157,496			39,208			42,449			77			239,230
Cash flows from investing activities:
Purchase of property, plant and equipment	(14,046		)	(5,952		)	(19,900		)	—			(39,898		)	(33,321		)	(12,462		)	(26,198		)	—			(71,981		)
Proceeds from sale of assets	745			(48		)	878			—			1,575			35			26			1,264			—			1,325
Acquisitions, net of cash acquired	—			—			(5,362		)	—			(5,362		)	—			(63,141		)	(18,700		)	—			(81,841		)
Proceeds from settlement of net investment hedge	5,123			—			—			—			5,123
Settlement of net investment hedge																11,184			—			—			—			11,184
Other, net	15,714			(8,985		)	(10,172		)	(19		)	(3,462		)	(30,475		)	27,878			4,791			(77		)	2,117
Net cash flows from investing activities	7,536			(14,985		)	(34,556		)	(19		)	(42,024		)	(52,577		)	(47,699		)	(38,843		)	(77		)	(139,196		)
Cash flows from financing activities:
Net borrowings under short-term agreements	—			—			(549		)	—			(549		)
Proceeds from short-term agreements																—			—			9,284			—			9,284
Proceeds from long-term borrowings																31,000			—			—			—			31,000
Principal payments on long-term borrowings				—			(658		)	—			(658		)	(10,000		)	—			(578		)	—			(10,578		)
Principal payments on long-term intercompany note																—			(42,574		)	42,574			—			—
Dividends paid	(25,386		)	—			—			—			(25,386		)	(24,554		)	—			—			—			(24,554		)
Dividends to noncontrolling interest	—						(3,895		)	—			(3,895		)	—			—			(6,549		)	—			(6,549		)
Intercompany dividends	22,662			—			(22,662		)	—			—			63,650			47,541			(111,191		)	—			—
Intercompany interest on long-term note	—			(5,669		)	5,669			—			—
Purchase of noncontrolling interest																(22,805		)	—			(5,040		)	—			(27,845		)
Intercompany capital contribution	(7,375		)	7,375			—			—			—			(13,284		)	—			13,284			—			—
Purchase of treasury shares																(55,172		)	—			—			—			(55,172		)
Proceeds from exercises under stock plans	12,446			—			—			—			12,446			3,211			—			—			—			3,211
Purchase of common treasury shares - stock plan exercises	(3,929		)	—			—			—			(3,929		)	(1,456		)	—			—			—			(1,456		)
Net cash flows from financing activities	(1,582		)	1,706			(22,095		)	—			(21,971		)	(29,410		)	4,967			(58,216		)	—			(82,659		)
Effect of exchange rate changes on cash and cash equivalents	—			245			22,888			—			23,133			—			(31		)	(3,354		)	—			(3,385		)
Net change in cash and cash equivalents	51,274			(1,904		)	44,172			—			93,542			75,509			(3,555		)	(57,964		)	—			13,990
Cash and cash equivalents—beginning of year	67,225			6,071			326,652			—			399,948			104,256			5,518			203,436			—			313,210
Cash and cash equivalents—end of period	$	118,499		$	4,167		$	370,824		$	—		$	493,490		$	179,765		$	1,963		$	145,472		$	—		$	327,200

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(8)~~(11) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Thirty-nine ~~Weeks Ended~~weeks ended September ~~24, 2016~~29, 2018



	Parent			Guarantors			Non- Guarantors			Eliminations			Total
Cash flows from operating activities:
Net earnings	$	76,689		$	70,748		$	26,926		$	(92,212	)	$	82,151
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization	19,498			10,564			31,956			—			62,018
Noncash loss on trading securities	—			—			(62		)	—			(62		)
Impairment of property, plant and equipment	—			—			4,197			—			4,197
Impairment of Goodwill & Intangibles	—			—			15,780			—			15,780
Loss on divestiture of grinding media business	2,518			—			3,566			—			6,084
Stock-based compensation	8,076			—			—			—			8,076
Defined benefit pension plan expense	—			—			(1,713		)	—			(1,713		)
Contribution to defined benefit pension plan	—			—			(1,555		)	—			(1,555		)
Loss (gain) on sale of property, plant and equipment	7			(27		)	(333		)	—			(353		)
Equity in earnings in nonconsolidated subsidiaries	(55,487		)	(37,939		)	—			93,426			—
Deferred income taxes	729			1,791			(1,706		)	—			814
Changes in assets and liabilities:
Net working capital	(28,948		)	(40,255		)	(26,432		)	(1,277		)	(96,912		)
Other noncurrent liabilities	(762		)	387			(874		)	—			(1,249		)
Income taxes payable (refundable)	(23,256		)	(1,066		)	15,099			—			(9,223		)
Net cash flows from operating activities	(936		)	4,203			64,849			(63		)	68,053
Cash flows from investing activities:
Purchase of property, plant and equipment	(16,940		)	(9,546		)	(22,433		)	—			(48,919		)
Proceeds from sale of assets	39			232			64,515			—			64,786
Acquisitions, net of cash acquired	(57,805		)	—			(67,504		)	—			(125,309		)
Settlement of net investment hedge	(1,621		)	—			—			—			(1,621		)
Other, net	28,299			(3,683		)	(27,050		)	63			(2,371		)
Net cash flows from investing activities	(48,028		)	(12,997		)	(52,472		)	63			(113,434		)
Cash flows from financing activities:
Payments under short-term agreements	—			—			3,217			—			3,217
Proceeds from long-term borrowings	236,936			—			—			—			236,936
Principal payments on long-term borrowings	(252,219		)	—			(733		)	—			(252,952		)
Settlement of financial derivative	(2,467		)	—			—			—			(2,467		)
Debt issuance costs	(2,322		)	—			—			—			(2,322		)
Dividends paid	(25,415		)	—			—			—			(25,415		)
Dividends to noncontrolling interest	—			—			(5,737		)	—			(5,737		)
Intercompany dividends	123,363			11,296			(134,659		)	—			—
Purchase of noncontrolling interest	—			—			(5,510		)	—			(5,510		)
Purchase of treasury shares	(86,919		)	—			—			—			(86,919		)
Intercompany capital contribution	(3,492		)	3,492			—			—			—
Proceeds from exercises under stock plans	6,376			—			—			—			6,376
Purchase of common treasury shares - stock plan exercises	(1,914		)	—			—			—			(1,914		)
Net cash flows from financing activities	(8,073		)	14,788			(143,422		)	—			(136,707		)
Effect of exchange rate changes on cash and cash equivalents	—			(670		)	(14,425		)	—			(15,095		)
Net change in cash and cash equivalents	(57,037		)	5,324			(145,470		)	—			(197,183		)
Cash and cash equivalents—beginning of year	83,329			5,304			404,172			—			492,805
Cash and cash equivalents—end of period	$	26,292		$	10,628		$	258,702		$	—		$	295,622

Parent Guarantors Non-
Guarantors Eliminations Total
Cash flows from operating activities:
Net earnings $ 103,168
$ 32,941
$ 49,778
$ (78,753 ) $ 107,134
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization 20,482
9,897
30,863
—
61,242
Noncash loss on trading securities —
—
973
—
973
Impairment of assets - restructuring activities —
—
618
—
618
Stock-based compensation 6,572
—
—
—
6,572
Change in fair value of contingent consideration —
—
(3,527 ) —
(3,527 )
Defined benefit pension plan expense —
—
1,486
—
1,486
Contribution to defined benefit pension plan —
—
(712 ) —
(712 )
Increase in restricted cash - pension plan trust —
—
(13,652 ) —
(13,652 )
Loss (gain) on sale of property, plant and equipment 2
117
131
—
250
Equity in earnings in nonconsolidated subsidiaries (69,876 ) (7,859 ) —
77,735
—
Deferred income taxes (1,834 ) —
300
—
(1,534 )
Changes in assets and liabilities:
Receivables (10,501 ) 14,969
11,968
—
16,436
Inventories (11,847 ) (5,024 ) (19,041 ) 1,499
(34,413 )
Prepaid expenses (4,526 ) 76
(6,174 ) —
(10,624 )
Accounts payable (16,605 ) 2,530
2,737
—
(11,338 )
Accrued expenses 11,179
(7,218 ) (689 ) —
3,272
Other noncurrent liabilities (252 ) 5
487
—
240
Income taxes payable (refundable) 19,132
(16,444 ) 2,143
—
4,831
Net cash flows from operating activities 45,094
23,990
57,689
481
127,254
Cash flows from investing activities:
Purchase of property, plant and equipment (5,699 ) (17,944 ) (18,590 ) —
(42,233 )
Proceeds from sale of assets 36
84
3,818
—
3,938
Other, net 13,070
(4,488 ) (10,925 ) (481 ) (2,824 )
Net cash flows from investing activities 7,407
(22,348 ) (25,697 ) (481 ) (41,119 )
Cash flows from financing activities:
Net borrowings under short-term agreements —
—
(128 ) —
(128 )
Principal payments on long-term borrowings (215 ) —
(1,348 ) —
(1,563 )
Dividends paid (25,604 ) —
—
—
(25,604 )
Dividends to noncontrolling interest —
—
(2,527 ) —
(2,527 )
Purchase of noncontrolling interest (137 ) —
(10,872 ) —
(11,009 )
Proceeds from exercises under stock plans 6,509
—
—
—
6,509
Purchase of treasury shares (46,581 ) —
—
—
(46,581 )
Purchase of common treasury shares - stock plan exercises (1,453 ) —
—
—
(1,453 )
Net cash flows from financing activities (67,481 ) —
(14,875 ) —
(82,356 )
Effect of exchange rate changes on cash and cash equivalents —
168
(3,646 ) —
(3,478 )
Net change in cash and cash equivalents (14,980 ) 1,810
13,471
—
301
Cash and cash equivalents—beginning of year 62,281
4,008
282,785
—
349,074
Cash and cash equivalents—end of period $ 47,301
$ 5,818
$ 296,256
$ —
$ 349,375

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis contains forward‑looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward‑looking statements are based on assumptions that management has made in light of experience in the industries in which the Company operates, as well as management’s perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. Management believes that these forward‑looking statements are based on reasonable assumptions. Many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward‑looking statements. These factors include, among other things, risk factors described from time to time in the Company’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, and actions and policy changes of domestic and foreign governments.

This discussion should be read in conjunction with the financial statements and notes thereto, and the management's discussion and analysis included in the Company's Annual Report on Form 10-K for the fiscal year ended December ~~31, 2016~~.29, 2018. Segment net sales in the table below and elsewhere are presented net of intersegment sales. See Note 10 of our condensed consolidated financial statements for additional information on segment sales and intersegment sales.

Results of Operations (Dollars in millions, except per share amounts)


	Thirteen Weeks Ended								Thirty-nine Weeks Ended								Thirteen weeks ended								Thirty-nine weeks ended
	September 30, 2017			September 24, 2016			% Incr. (Decr.)		September 30, 2017			September 24, 2016			% Incr. (Decr.)		September 28, 2019			September 29, 2018			% Incr. (Decr.)		September 28, 2019			September 29, 2018			% Incr. (Decr.)
Consolidated
Net sales	$	680.8		$	610.2		11.6	%	$	2,031.0		$	1,847.1		10.0	%	$	690.3		$	678.7		1.7	%	$	2,083.4		$	2,059.8		1.1	%
Gross profit	163.6			155.0			5.5	%	511.5			491.1			4.2	%	176.1			164.3			7.2	%	521.6			508.6			2.6	%
as a percent of sales	24.0		%	25.4		%			25.2		%	26.6		%			25.5		%	24.2		%			25.0		%	24.7		%
SG&A expense	103.7			101.8			1.9	%	308.8			303.7			1.7	%	112.2			126.0			(11.0	)%	339.0			$	342.6		(1.1	)%
as a percent of sales	15.2		%	16.7		%			15.2		%	16.4		%			16.3		%	18.6		%			16.3		%	16.6		%
Operating income	59.9			53.2			12.6	%	202.7			187.4			8.2	%	63.9			38.4			66.4	%	182.7			166.0			10.1	%
as a percent of sales	8.8		%	8.7		%			10.0		%	10.1		%			9.3		%	5.7		%			8.8		%	8.1		%
Net interest expense	9.9			10.3			(3.9	)%	30.1			31.0			(2.9	)%	9.0			10.0			(10.0	)%	27.2			30.1			(9.6	)%
Effective tax rate	27.5		%	32.6		%			28.9		%	31.7		%			24.6		%	56.5		%			24.8		%	30.5		%
Net earnings	$	35.2		$	28.2		24.8	%	$	119.9		$	103.2		16.2	%	$	40.1		$	4.4		811.4	%	$	118.0		$	76.7		53.8	%
Diluted earnings per share	$	1.55		$	1.24		25.0	%	$	5.28		$	4.54		16.3	%	$	1.85		$	0.20		825.0	%	$	5.41		$	3.40		59.1	%
Engineered Support Structures (ESS)
Net sales	$	209.8		$	193.1		8.6	%	$	571.3		$	554.9		3.0	%	$	266.5		$	248.4		7.3	%	$	752.0		$	710.4		5.9	%
Gross profit	50.9			54.3			(6.3	)%	145.2			156.9			(7.5	)%	62.4			58.3			7.0	%	177.8			164.5			8.1	%
SG&A expense	34.6			34.0			1.8	%	99.5			103.3			(3.7	)%	40.5			41.8			(3.1	)%	122.6			128.1			(4.3	)%
Operating income	16.3			20.3			(19.7	)%	45.7			53.6			(14.7	)%	21.9			16.5			32.7	%	55.2			36.4			51.6	%
Energy and Mining (E&M)
Net sales	$	79.7		$	81.2		(1.8	)%	$	234.9		$	231.3		1.6	%
Gross profit	12.5			14.8			(15.5	)%	41.6			41.6			—	%
SG&A expense	11.1			10.9			1.8	%	32.4			32.5			(0.3	)%
Operating income	1.4			3.9			(64.1	)%	9.2			9.1			1.1	%
Utility Support Structures (Utility)
Net sales	$	178.5		$	150.4		18.7	%	$	536.5		$	445.9		20.3	%	$	204.2		$	218.0		(6.3	)%	$	656.5		$	624.4		5.1	%
Gross profit	39.4			31.8			23.9	%	115.4			94.2			22.5	%	44.0			41.1			7.1	%	133.6			127.0			5.2	%
SG&A expense	17.3			15.6			10.9	%	50.4			46.0			9.6	%	23.7			39.0			(39.2	)%	72.2			80.7			(10.5	)%
Operating income	22.1			16.2			36.4	%	65.0			48.2			34.9	%	20.3			2.1			866.7	%	61.4			46.3			32.6	%
Coatings
Net sales	$	67.7		$	60.0		12.8	%	$	191.6		$	182.2		5.2	%	$	76.9		$	74.5		3.2	%	$	228.3		$	217.5		5.0	%
Gross profit	20.3			17.9			13.4	%	58.5			59.1			(1.0	)%	24.0			23.8			0.8	%	71.7			68.6			4.5	%
SG&A expense	5.8			6.2			(6.5	)%	22.5			22.0			2.3	%	10.1			9.4			7.4	%	32.7			27.5			18.9	%
Operating income	14.5			11.7			23.9	%	36.0			37.1			(3.0	)%	13.9			14.4			(3.5	)%	39.0			41.1			(5.1	)%
Irrigation
Net sales	$	145.1		$	125.5		15.6	%	$	496.7		$	432.8		14.8	%	$	142.7		$	137.8		3.6	%	$	446.6		$	484.4		(7.8	)%
Gross profit	42.1			38.1			10.5	%	153.6			141.4			8.6	%	42.9			44.0			(2.5	)%	133.0			153.2			(13.2	)%
SG&A expense	23.9			22.7			5.3	%	70.4			66.1			6.5	%	24.7			22.7			8.8	%	73.1			70.3			4.0	%
Operating income	18.2			15.4			18.2	%	83.2			75.3			10.5	%	18.2			21.3			(14.6	)%	59.9			82.9			(27.7	)%
Other
Net sales																	$	—		$	—		NM		$	—		$	23.1		(100.0	)%
Gross profit																	—			—			NM		—			0.8			(100.0	)%
SG&A expense																	—			—			NM		—			1.7			(100.0	)%
Operating income																	—			—			NM		—			(0.9		)	(100.0	)%
Adjustment to LIFO inventory valuation method
Gross profit	$	(1.6	)	$	(2.1	)	NM		$	(2.8	)	$	(3.2	)	NM		$	2.8		$	(2.8	)	NM		$	5.5		$	(5.5	)	NM
Operating income	(1.6		)	(2.1		)	NM		(2.8		)	(3.2		)	NM		2.8			(2.8		)	NM		5.5			(5.5		)	NM
Net corporate expense
Gross profit	$	—		$	0.3		NM		$	—		$	1.1		NM
SG&A expense	11.0			12.4			(11.3	)%	33.6			33.8			(0.6	)%	$	13.2		$	13.1		0.8	%	$	38.4		$	34.3		12.0	%
Operating loss	(11.0		)	(12.1		)	9.1	%	(33.6		)	(32.7		)	(2.8	)%	(13.2		)	(13.1		)	(0.8	)%	(38.4		)	(34.3		)	(12.0	)%

NM=Not meaningful

Overview

On a consolidated basis, ~~the increase in~~ net sales were higher in the third quarter of ~~fiscal 2017,~~2019, as compared to 2018, due to higher sales in the ESS, Coatings, and Irrigation segments and lower sales for the Utility segment. Net sales were higher in the first three quarters of 2019, as compared with the ~~third quarter of fiscal 2016, reflected~~same period in 2018, due to higher sales in ~~all reportable~~the ESS, Utility, and Coatings segments ~~except for the Energy & Mining segment. On a year-to-date basis, higher consolidated~~that were offset by lower sales in ~~2017, as compared to 2016, reflected increases across all reportable~~the Irrigation and Other segments. The ~~changes~~change in net sales in the third quarter and first three quarters of fiscal ~~2017,~~2019, as compared with the same periods in fiscal ~~2016, were~~2018, is as follows:


	Third quarter														Third quarter
	Total		ESS			E&M			Utility		Coatings		Irrigation		Total			ESS			Utility			Coatings			Irrigation			Other
Sales - 2016	$	610.2	$	193.1		$	81.2		$	150.4	$	60.0	$	125.5
Sales - 2018															$	678.7		$	248.4		$	218.0		$	74.5		$	137.8		$	—
Volume	29.7		15.9			(6.9		)	1.6		1.5		17.6		(9.8		)	15.0			(27.7		)	(6.1		)	9.0			—
Pricing/mix	31.7		(3.5		)	2.0			26.5		5.6		1.1		12.6			0.5			12.8			2.8			(3.5		)	—
Acquisitions	1.6		1.6			—			—		—		—
Acquisition/(divestiture)															17.4			8.4			2.1			6.9			—			—
Currency translation	7.6		2.7			3.4			—		0.6		0.9		(8.6		)	(5.8		)	(1.0		)	(1.2		)	(0.6		)	—
Sales - 2017	$	680.8	$	209.8		$	79.7		$	178.5	$	67.7	$	145.1
Sales - 2019															$	690.3		$	266.5		$	204.2		$	76.9		$	142.7		$	—


	Year-to-date															Year-to-date
	Total		ESS			E&M			Utility		Coatings			Irrigation		Total			ESS			Utility			Coatings			Irrigation			Other
Sales - 2016	$	1,847.1	$	554.9		$	231.3		$	445.9	$	182.2		$	432.8
Sales - 2018																$	2,059.8		$	710.4		$	624.4		$	217.5		$	484.4		$	23.1
Volume	110.4		20.4			(4.9		)	48.2		(5.6		)	52.3		(77.4		)	28.0			(48.0		)	(18.7		)	(38.7		)	—
Pricing/mix	63.1		(2.2		)	5.1			42.4		14.5			3.3		70.5			18.1			40.1			9.4			2.9			—
Acquisitions	1.6		1.6			—			—		—			—
Acquisition/(divestiture)																70.4			20.3			43.9			25.1			4.2			(23.1		)
Currency translation	8.8		(3.4		)	3.4			—		0.5			8.3		(39.9		)	(24.8		)	(3.9		)	(5.0		)	(6.2		)	—
Sales - 2017	$	2,031.0	$	571.3		$	234.9		$	536.5	$	191.6		$	496.7
Sales - 2019																$	2,083.4		$	752.0		$	656.5		$	228.3		$	446.6		$	—

Volume effects are estimated based on a physical production or sales measure. Since products we sell are not uniform in nature, pricing and mix relate to a combination of changes in sales prices and the attributes of the product sold. Accordingly, pricing and mix changes do not necessarily ~~directly~~ result in operating income changes.

Average steel ~~index~~ prices for both hot rolled coil and plate were ~~higher~~lower in North America and China in the third quarter ~~and first three quarters~~ of ~~2017,~~2019, as compared to ~~the same periods in 2016, resulting in higher average~~2018, contributing to lower cost of ~~material. We expect that average selling prices will increase over time to offset the decrease in~~sales and improved gross ~~profit realized from the higher cost of steel for the Company.~~profit.

In the third quarter of 2017, the two hurricanes in the continental United States negatively impacted 10 of our facilities by interrupting production and delivery schedules. This impacted certain locations in the ESS, Coatings, and Utility segments. The Company acquired ~~a highway business~~the following businesses during 2018 and 2019:

A majority ownership stake in ~~India~~Torrent Engineering and Equipment ("~~Aircon"~~Torrent") in the first quarter of 2018 (Irrigation).

Derit Infrastructure Pvt. Ltd. ("Derit") in the third quarter of ~~2017 that is included~~2018, which operates a lattice steel manufacturing facility located in ~~our ESS segment.~~India (Utility and Coatings).

A majority ownership stake in Convert Italia SpA ("Convert") in the third quarter of 2018, a provider of engineered solar tracker solutions (Utility).

Walpar in the third quarter of 2018, a domestic manufacturer of overhead sign structures (ESS).

CSP Coating Systems ("CSP Coatings") in the fourth quarter of 2018, a coatings provider in New Zealand (Coatings).

Larson Camouflage ("Larson") in the first quarter of 2019, an industry leading provider of architectural and camouflage concealment solutions for the wireless telecommunication market (ESS).

United Galvanizing ("United") in the first quarter of 2019, a domestic coatings provider (Coatings).

Connect-It Wireless, Inc. ("Connect-It") in the second quarter of 2019, a domestic communication components business (ESS).

The Company divested of its grinding media business, which was reported in Other, during the second quarter of 2018.

Restructuring Plan

In ~~July 2016,~~February 2018, the Company ~~identified~~announced a restructuring plan related to certain operations in ~~Australia/New Zealand~~2018, primarily in the ESS and Utility segments, through consolidation and other cost-reduction activities (the ~~"2016~~"2018 Plan") ~~focused primarily on closing and consolidating locations within the Energy and Mining and Coatings segments.~~. The Company incurred pre-tax expenses from the ~~2016~~2018 Plan of ~~$2.1~~$6.2 million and $17.7 million in the third quarter and first three quarters of ~~2016.~~2018. The Energy and Mining segment incurred approximately $1.6 million, the Coatings segment incurred approximately $0.3 million, and Corporate incurred approximately $0.2 million of restructuring expenses duringdecrease in the third quarter and first three quarters of ~~2016.~~2018 gross profit and operating income due to restructuring expense by segment is as follows:



Gross Profit	Total		ESS		Utility		Corporate
Third quarter	$	3.9	$	3.4	$	0.5	$	—

Year-to-date	$	10.8	$	8.0	$	2.8	$	—



Operating Income	Total		ESS		Utility		Corporate
Third quarter	$	6.2	$	5.7	$	0.5	$	—

Year-to-date	$	17.7	$	14.8	$	2.8	$	0.1

Currency Translation

In the third quarter and first three quarters of ~~fiscal 2017,~~2019, we realized ~~an increase~~a decrease in operating profit, as compared with ~~fiscal 2016,~~2018, due in part to currency translation ~~effects. The~~effects associated with a stronger U.S. dollar ~~primarily weakened~~ against ~~the Brazilian real and South African rand, resulting in more operating profit in U.S. dollar terms.~~most foreign currencies. The breakdown of this effect by segment was as

follows:


	Total		ESS		E&M		Utility		Coatings			Irrigation		Corporate		Total			ESS			Coatings			Irrigation			Corporate
Third quarter	$	0.4	$	0.2	$	0.1	$	—	$	0.1		$	—	$	—	$	(0.7	)	$	(0.5	)	$	(0.1	)	$	(0.1	)	$	—

Year-to-date	$	1.3	$	0.1	$	0.1	$	—	$	(0.1	)	$	1.2	$	—	$	(2.2	)	$	(1.2	)	$	(0.4	)	$	(0.7	)	$	0.1

Gross Profit, SG&A, and Operating Income

At a consolidated level, ~~the reduction in~~ gross margin (gross profit as a percent of sales) was higher in the third quarter and first three quarters of ~~2017,~~2019, as compared with the same periods in ~~2016, was primarily due~~2018 attributed to ~~higher~~lower raw material costs across the Company and improved selling prices across ~~most~~our infrastructure businesses. In the third quarter and first three quarters of ~~our businesses. Gross~~2019, gross profit increased for the ESS, Utility, and Coatings segments and decreased for the Irrigation segment. On a year-to-date basis, lower sales volumes and associated operating deleverage of fixed costs led to the decline for the Irrigation segment.

SG&A expenses decreased in the third quarter and first three quarters of ~~2017,~~2019, as compared to the same periods in ~~2016,~~2018. The decrease was due to ~~increased sales volumes~~impairment of the goodwill and trade name of the Offshore business in ~~most operating segments. The Irrigation~~the third quarter of 2018 of $15.8 million and ~~Utility segments realized increases~~restructuring costs incurred in the third quarter and first three quarters of ~~2017, while ESS~~2018 totaling $2.3 million and ~~Energy & Mining realized a decrease in gross profit primarily due to sales pricing that did not fully recover~~$6.9 million, respectively. These decreases were partially offset by SG&A expenses from acquired businesses and higher ~~raw material costs and~~deferred compensation expense (offset by an ~~unfavorable sales mix. The Coatings segment realized higher gross profit in the third quarter, but lower gross profit in the first three quarters~~increase of ~~2017 as compared to~~ the same ~~periods~~amount in ~~fiscal 2016.~~other income).

~~The Company saw an increase in SG&A in~~In the third quarter and first three quarters of ~~fiscal 2017,~~2019, as compared to the same periods in 2016, due to higher incentive expenses related to improved business operations. In addition, the Company incurred higher deferred compensation expenses in the first three quarters of 2017 of $1.7 million, which was offset by the same amount of other income.

~~In the third quarter of 2017, as compared to 2016, operating income for all operating segments were higher except for the ESS and Energy & Mining segments. On a year-to-date basis,~~2018, operating income was higher in ~~2017 for~~ the ~~Utility~~ESS and ~~Irrigation~~Utility segments and lower ~~for~~in the ~~ESS~~Irrigation and Coatings segments. The overall increase in operating income in the third quarter and first three quarters of ~~2017, as compared to the same periods in 2016,~~2019 is primarily attributable to ~~increased sales volumes~~the Offshore goodwill and tradename impairment and restructuring costs incurred in ~~the Utility~~2018 and ~~Irrigation segments.~~a lower cost structure resulting from those activities in 2019.

Net Interest Expense and Debt

Net interest expense in the third quarter and first three quarters of ~~2017,~~2019, as compared to 2018, was lower due to a refinancing related to retiring $250.2 million senior unsecured notes due 2020 at 6.625% in the third quarter of 2018 and issuing new senior unsecured notes of $200.0 million due 2044 and $55.0 million due 2054 at 5.0% and 5.25%, respectively. Costs associated with the ~~same periods~~refinancing of debt in ~~2016,~~the third quarter of 2018 totaled $14.8 million. In addition, the Company entered into certain cross currency swaps in 2018, which effectively swaps the Company's U.S. denominated debt for euro and Danish kroner debt at lower interest rates that resulted in lower interest expense. Interest income was ~~consistent~~lower in the first three quarters of 2019, as compared to 2018, due to ~~minimal changes in short and long-term borrowings. Interest income increased due to more~~having less cash on hand to invest.

Other Income/~~Expense~~Expenses

The change in other income/~~expense~~expenses in the third quarter ~~and first three quarters~~ of ~~2017,~~2019, as compared ~~with the same periods in 2016,~~to 2018, was ~~primarily~~ due to athe change in valuation of deferred compensation ~~assets. This change~~assets which resulted in ~~lower~~less other income of $0.7 million. On a year-to-date basis, deferred compensation assets resulted in ~~the third quarter of $0.4 million but increased~~additional other income ~~for the first three quarters~~ of ~~$1.7~~$3.6 million. ~~This amount is~~The change related to deferred compensation assets are offset by an opposite change of the same amount in SG&A expense. The ~~change in the market value of the Company's shares held of Delta EMD was a $0.6 million smaller loss on a year-to-date basis when comparing 2017 to 2016. The~~ remaining change was due to fluctuations in foreign currency transaction ~~gains or~~ gains/losses.

Income Tax Expense

Our effective income tax rate in the third quarter and first three quarters of ~~2017~~2019 was ~~27.5%~~24.5% and ~~28.9%~~24.7%, ~~respectively,~~ compared to ~~32.6%~~56.5% and ~~31.7%~~30.5% in the third quarter and first three quarters of ~~2016, respectively. A $1.9 million reversal~~2018. The decrease in effective tax rate results from the impairment of ~~a valuation allowance against certain foreign net operating loss carryforwards~~goodwill and trade name of the Offshore business that are not tax deductible and restructuring activities recognized in ~~third quarter of 2017 contributed to the lower~~2018.

~~tax rate. In addition, the Company recorded $1.8 million of deferred income tax expense related to decreased future corporate tax rates in the United Kingdom in the third quarter of 2016.~~

Earnings attributable to noncontrolling interests was ~~consistent~~lower in the third quarter and first three quarters of ~~2017,~~2019, as compared to ~~the same periods in 2016.~~2018, due to lower earnings of certain less than 100%-owned subsidiaries.

Cash Flows from Operations

Our cash flows provided by operations was ~~$134.4~~$239.2 million in the first three quarters of fiscal ~~2017,~~2019, as compared with ~~$127.3~~$68.1 million provided by operations in the first three quarters of ~~2016.~~2018. The increase in operating cash flow in the first three quarters of ~~fiscal 2017,~~2019, as compared with ~~2016,~~2018, was due to improved working capital management. The lower working capital is primarily ~~the result~~attributed to a larger liability for customer billings in excess of ~~improved net~~costs and earnings ~~mostly~~(accrued expenses). This was partially offset by ~~higher net working capital tied to increased sales volumes.~~the 2019 Delta pension plan contribution (the 2018 annual payment was contributed early in December 2017) which is a use of cash flows from operations.

~~Engineered Support Structures (ESS)~~ESS segment

The increase in sales in the third quarter and first three quarters of ~~fiscal 2017,~~2019, as compared with the same periods ~~of 2016,~~in 2018, was due to ~~improved roadway product~~ sales ~~volumes~~volume increase, higher sales prices, and ~~higher communication product line~~recent acquisitions. The sales ~~volumes.~~increase was partially offset by $5.8 million and $24.8 million of unfavorable currency translation effects, respectively.

Global lighting and traffic, and ~~roadway~~highway safety product sales in the third quarter and first three quarters of ~~2017 were~~2019 was higher by $8.1 million and $7.5 million, as compared to the same periods in fiscal ~~2016, primarily due to increased sales volumes in roadway product sales, which is a product line outside of North America.~~2018. In the third quarter and first three quarters of ~~2017,~~2019, as compared to 2016, sales volumes in the U.S. were lower across commercial and transportation markets. The 2015 long-term U.S. highway bill has not yet provided a meaningful uplift for our North America structures business. Sales in Europe were higher in the third quarter but lower in the first three quarters of 2017 compared to the same periods in ~~fiscal 2016. The domestic~~2018, sales pricing improved in North America across commercial and transportation markets and volume increased. Lower sales volumes mainly due to the ceasing of operations in ~~general remain subdued in Europe. The increase in sales volume was partially offset by~~Morocco and unfavorable currency translation effects ~~on a year-to-date basis.~~

~~Communication~~contributed to lower sales in Europe. Highway safety product ~~line~~ sales ~~were higher~~volumes decreased in the third quarter and first three quarters of ~~fiscal 2017,~~2019, as compared to 2018, due primarily to a slowdown in government spending in Australia and India.

Communication product line sales were higher by $12.4 million and $29.0 million in the third quarter and first three quarters of 2019, as compared with ~~the same periods in fiscal 2016.~~2018. In ~~both~~ North America, component and ~~Asia-Pacific, communication~~ structure sales volumes increased in the third quarter and ~~component sales increased~~first three quarters of 2019 due to higher demand from the ~~continued~~ network expansion by ~~providers.~~providers and the sales

contribution from the acquisition of Larson Camouflage and Connect-It. In Asia-Pacific, sales volumes decreased due to lower demand in China and Australia.

Access Systems product line net sales decreased in the third quarter and first three quarters of 2019, as compared to 2018, by $4.0 million and $6.6 million, respectively. Sales volume declines and unfavorable foreign currency translation for the Australia business drove the decrease in sales.

Gross profit, as a percentage of sales, and operating income for the segment were higher in the third quarter and first three quarters of 2019, as compared to 2018, due to improved sales pricing, restructuring costs incurred in 2018, and recent acquisitions. These improvements in profitability were partially offset in the third quarter of 2019 by an approximately $7 million loss recognized on certain access systems projects. SG&A spending was lower in the third quarter and first three quarters of 2017, as compared with the same periods in 2016, due to margin contraction from higher raw material costs that the business was not able to fully recover through higher sales pricing. SG&A spending was higher in the third quarter of 2017, as compared to 2016,2019 due to foreign currency translation ~~effects.~~effects, restructuring costs incurred in 2018 and benefits realized in 2019 related to those activities. The SG&A ~~spending was lower~~expenses from acquisitions completed in the first three quarters of 2017, as compared to 2016, due primarily to lower commissions owed on communication product line sales, reduced incentives due to decreased operating performance, and currency translation effects.

~~Energy & Mining (E&M) segment~~

~~The~~previous twelve months partially offset the decrease in ~~net sales~~SG&A in the third quarter of 2017, as compared to 2016, was due primarily to lower sales volumes that were partially offset by higher sales pricing and favorable currency translation effects. The increase in net sales in the first three quarters of 2017, as compared to 2016, was due to higher sales pricing and favorable currency translation effects.

~~Access systems product line net sales in~~2019. In the third quarter and first three quarters of ~~2017 were higher than~~2018, the ~~same periods in 2016 due to higher~~segment incurred $3.4 million and $8.0 million of restructuring costs within product cost of sales ~~pricing~~ and ~~favorable currency translation effects. The increase was partially offset by lower external sales volumes in Asia.~~$2.3 million and $6.8 million within SG&A expenses, respectively.

~~Offshore and other complex structures~~Utility segment

In the Utility segment, sales decreased in the third quarter of ~~2017,~~2019, as compared ~~to the same period in 2016,~~with 2018, due to lower volumes and currency translation effects that were partially offset by ~~favorable currency translation effects. Sales decreased~~an increase in ~~the first three quarters of 2017, as compared to 2016, due to lower~~average sales ~~pricing that was partially offset by volume improvements primarily in the wind tower product line.~~

Grinding media sales were down slightly in the third quarter and first three quarters of 2017, as compared to the same periods in 2016. A decrease in sales volumes was offset by higher sales pricing and favorable currency translation effects.

Operating income for the segment in the third quarter of 2017, as compared to 2016, was lower primarily due to sales pricing that did not fully recover higher material costs in the grinding media business. Operating income was comparable in the first three quarters of 2017 as compared to 2016, due to benefits realized in Access Systems from the 2016 restructuring activities offsetting the lower gross profit realized from higher material costs. SG&A expense was flat in the third quarter and first three quarters of 2017, as compared to the same periods in 2016. Restructuring costs incurred in the third quarter of 2016 and lower compensation costs were offset by currency translation effects in 2017.

~~Utility Support Structures (Utility) segment~~

~~In the Utility segment, sales increased in the third quarter of 2017, as compared with 2016, due to the higher costs of steel and a favorable sales mix. A number~~prices. Most of our sales contracts in North America contain provisions that tie the sales price to published steel index pricing at the time our customer issues their purchase order. ~~For the first three quarters of 2017, as compared~~Specific to ~~2016, improved sales demand in~~ North America, ~~resulted in increased~~the average sales price increase was partially offset by lower sales volumes ~~in tons~~ for steel utility ~~structures also contributed to the increase in sales. Sales volumes in tons for~~structures; concrete utility ~~structures~~structure sales volumes were ~~also~~ higher in the third quarter and first three quarters of ~~2017,~~2019, as compared to the same periods in ~~2016. International utility~~2018 due to good demand. The 2018 acquisitions of Convert and Derit contributed $43.9 million of sales increases in the first three quarters of 2019, as compared with 2018.

Offshore and other complex structures sales decreased in ~~2017~~the third quarter 2019, as compared to 2018, due to lower ~~volumes.~~volumes and unfavorable currency translation effects. Sales were flat on a year-to-date basis due to higher volumes that were offset by less favorable sales pricing and currency translation effects.

Gross profit ~~as a percentage of sales~~ increased in the third quarter and first three quarters of ~~2017,~~2019, as compared to ~~the same periods in 2016,~~2018, due to recent acquisitions and improved sales mix and pricing ~~and sales mix.~~for the North America utility business. The increase in gross profit for the first three quarters of 2019, as compared to 2018, was partially offset by $3.0 million of second quarter 2019 inspection costs to finalize the requirements from a 2015 commercial settlement. SG&A expense was ~~higher~~lower in the third quarter and first three quarters of ~~2017,~~2019, as compared with ~~the same periods in 2016,~~2018, due to the 2018 goodwill and trade name impairment of the Offshore business of $15.8 million, expenses of Derit and Convert and higher ~~incentive expense~~sales commissions. Excluding the goodwill and ~~commission expense attributed to the increased sales volumes. Operating~~trade name impairment and inspection costs, operating income increased in the third quarter and first three quarters of ~~2017, as compared with 2016,~~2019 due to ~~the increased sales volumes and~~ improved sales ~~pricing.~~mix and pricing in North America and restructuring activities undertaken in 2018.

Coatings segment

Coatings segment sales increased in the third quarter and first three quarters of ~~2017,~~2019, as compared to the same periods in ~~2016,~~2018, due ~~primarily~~ to ~~increased~~higher sales prices ~~to recover higher zinc costs globally. External sales volumes~~and recent acquisitions. Sales volume demand decreased in North America ~~increased in the third quarter but were lower year-to-date, while intercompany volumes increased~~ in the third quarter and first three ~~quarters.~~quarters of 2019, as compared to 2018, but was more than offset by price actions and revenue contributions from the United acquisition. In the Asia-Pacific region, the acquisition of Derit and CSP Coatings and price increases to recover zinc cost increases drove improved ~~demand/volume provided an increase~~sales in ~~net sales.~~the third quarter and first three quarters of 2019.

SG&A expense was higher in the third quarter and first three quarters of 2019, as compared to 2018, due to SG&A expenses of recent acquisitions and approximately $3.0 million of one-time expenses associated with a legal settlement in the second quarter of 2019. Operating income was lower in the third quarter ~~of 2017, as compared to 2016, due to restructuring actions undertaken in 2016 to reduce the cost structure in Australia. SG&A expense was comparable in the~~and first three quarters of ~~2017, as~~2019, compared to ~~2016. Operating income was higher~~the same periods in ~~the third quarter of 2017 compared to 2016,~~2018, due to volume decreases globally and non-recurring legal expenses. The decrease was partially offset by contributions from the acquisition of United and CSP Coatings and improved sales ~~pricing and restructuring actions undertaken in 2016. Operating income was lower in the first three quarters of 2017, as compared with 2016, due to costs incurred to start up our facility in Texas.~~pricing.

Irrigation segment

The increase in Irrigation segment net sales in the third quarter of ~~2017,~~2019, as compared to ~~2016, was~~2018, is primarily due to sales volume increases ~~for international irrigation.~~in North America. On a year-to-date basis, the decrease in ~~2017 as compared~~Irrigation segment net sales is due to ~~2016, the~~lower sales ~~increase is driven~~volumes in North America and international markets and unfavorable currency translation effects, partially offset by improved ~~volumes for both the domestic~~sales pricing. Continued low commodity prices and ~~international~~uncertainty around trade disputes with China caused growers to

delay irrigation ~~businesses. In North America, when comparing 2017~~purchases. However, sales of technology-related products and services continue to ~~the same periods~~grow, as growers are increasing adoption of ~~2016,~~technology to reduce costs and enhance profitability. International sales volumes were comparable in the third quarter but increased year-to-date primarily driven by markets outside the traditional corn-belt. In addition, higher equipment running times due to weather conditions resulted in higherof irrigation and service parts ~~sales on a year-to-date basis. International sales increased~~decreased in the third quarter and first three quarters of ~~2017,~~2019, as compared to the same periods in ~~2016,~~2018, due to ~~volume increases across most regions~~reduced volumes and ~~favorable foreign~~unfavorable currency translation ~~effects for Brazil and South Africa.~~effects.

SG&A was higher in the third quarter and the first three quarters of ~~fiscal 2017,~~2019, as compared ~~with the same periods in 2016. The increase can primarily be attributed~~ to ~~higher incentive costs~~2018, due to ~~improved business results~~2018 acquisitions and ~~currency translation effects related to the international irrigation business.~~higher product development expenses. Operating income for the segment ~~increased~~decreased in the third quarter and first three quarters of ~~fiscal 2017~~2019 over the same periods in ~~2016, primarily~~2018, due to ~~North America~~lower tubing and international irrigation sales ~~volume increases, productivity improvements,~~volumes and ~~favorable foreign currency translation effects.~~associated operating deleverage of fixed factory and SG&A costs.

Other

At the end of April 2018, the Company completed the sale of Donhad, a mining consumable business with operations in Australia. There are no remaining businesses recorded within Other.

LIFO expense

Unit costs of raw materialsin the U.S. decreased in the first three quarters of 2019, as compared to the end of 2018, resulting in a LIFO benefit during 2019. In the first three quarters of 2018, unit costs of raw materials in the U.S. increased, as compared to the end of 2017, resulting in LIFO expense in 2018.

Net corporate expense

Corporate SG&A expense ~~was lower~~ in the third quarter of ~~2017,~~2019 approximated the amount recognized in the same quarter of 2018. Corporate SG&A expense was higher in the first three quarters of 2019, as compared to the same period in ~~2016,~~2018, due to ~~$0.4 million lower pension expense for the Delta Pension Plan and $0.4~~$3.6 million of ~~lower~~increased appreciation of deferred compensation ~~expenses that~~plan assets. The increase in deferred compensation plan assets is offset by the same amount in other ~~expense. Net corporate expense slightly increased in the first three quarters of 2017 as~~

compared to 2016, due to $1.7 million of higher deferred compensation expenses that is offset by a reduction of the same amount in other expense. This increase was partially offset by $1.0 million of lower pension expenses for the Delta Pension Plan.income/expenses.

Liquidity and Capital Resources

Cash Flows

Working Capital and Operating Cash Flows-Net working capital was ~~$1,034.7~~$857.5 million at September ~~30, 2017~~,28, 2019, as compared to ~~$903.4~~$931.6 million at December ~~31, 2016~~.29, 2018. The ~~increase~~decrease in net working capital in ~~2017 mainly resulted from increased receivables, cash on hand, and inventory, partially offset by~~2019 is attributed to higher accrued expenses primarily due to a higher balance in customer billings in excess of costs and ~~accounts payable.~~earnings. Cash flow provided by operations was ~~$134.4~~$239.2 million in the first three quarters of ~~2017,~~2019, as compared with ~~$127.3~~$68.1 million in first three quarters of ~~2016.~~2018. The increase in operating cash ~~flow~~flows in the first three quarters of ~~2017,~~2019, as compared to ~~2016,~~2018, was primarily the result of ~~higher net earnings tied to increased sales volumes and pricing that was mostly offset by a corresponding increase in~~improved working ~~capital.~~capital management this year.

Investing Cash Flows-Capital spending in the first three quarters of fiscal ~~2017~~2019 was ~~$39.9~~$72.0 million, as compared to ~~$42.2~~$48.9 million for the same period in ~~2016~~.2018. The increase in investing cash outflows in the first three quarters of 2019, as compared to 2018, can be attributed to lower proceeds from the sale of assets due to the sale of our mining consumable business in 2018. Capital spending projects in ~~2017~~2019 and ~~2016~~2018 related to certain facility expansions and investments in machinery and equipment across all businesses. We expect our capital spending for the ~~2017~~2019 fiscal year to be approximately ~~$60~~$90 to $100 million.

Financing Cash Flows-Our total interest‑bearing debt ~~decreased slightly to~~ ~~$755.3~~was $784.6 million at September ~~30, 2017~~ ~~from~~ ~~$756.4 million~~28, 2019 and $753.3 at December ~~31, 2016~~.29, 2018. Financing cash flows changed from ~~a use~~an outflow of ~~approximately $82.4~~$136.7 million in the first three quarters of ~~fiscal 2016~~2018 to ~~a use~~an outflow of ~~$22.0~~$82.7 million infor the first three quarters of ~~fiscal 2017.~~2019. The ~~reduction of~~decrease in financing cash outflows in the first three quarters of ~~2017,~~2019, as compared to ~~2016,~~2018, was due to ~~the Company purchasing $46.6 million~~higher net borrowings and lower purchases of treasury shares under our share repurchase program ~~and the purchase of certain noncontrolling interests totaling $11.0 million~~ in ~~2016.~~2019.

Financing and Capital

~~We have an open~~The Board of Directors authorized the purchase of $250 million ~~authorized share purchase program~~of the Company's shares without an expiration ~~date.~~date in October 2018. The share purchases will be funded from available working capital and short-term borrowings and will be made subject to market and economic conditions. We are not obligated to make any share repurchases under the share repurchase program and we may discontinue the share repurchase program at any time. NoWe acquired 126,734 treasury shares ~~were repurchased~~

for approximately $16.8 million under our share repurchase program during the ~~first three quarters~~third quarter of ~~2017.~~2019. As of September ~~30, 2017,~~28, 2019, we have approximately ~~$132.2~~$212.2 million open under this authorization to repurchase shares in the future.

Our capital allocation philosophy announcement included our intention to manage our capital structure to maintain our investment grade debt rating. Our most recent ~~rating~~ratings were Baa3 by Moody's Investors Services, Inc., BBB- rating by Fitch Rating Services, and BBB+ rating by Standard and Poor's Rating Services. We expect to maintain a leverage ratio which will support our current investment grade debt rating.

Our debt financing at September ~~30, 2017~~28, 2019 is primarily long-term debt consisting of:

$~~250.2~~450 million face value ($~~253.0 million carrying value) of senior unsecured notes that bear interest at 6.625% per annum and are due in April 2020.~~

~~$250 million face value ($248.9~~436.3 million carrying value) of senior unsecured notes that bear interest at 5.00% per annum and are due in October 2044.

$~~250~~305 million face value ($~~246.8~~297.5 million carrying value) of unsecured notes that bear interest at 5.25% per annum and are due in October 2054.

We are allowed to repurchase the notes at specified prepayment premiums. ~~All three~~Both tranches of these notes are guaranteed by certain of our subsidiaries.

On October 18, 2017, we amended and restated our revolving credit facility with JP Morgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto. The credit facility provides for $600 million of committed unsecured revolving credit loans. We may increase the credit facility by up to an additional $200 million at any time, subject to lenders increasing the amount of their commitments. Our wholly-owned subsidiaries Valmont Industries Holland B.V. and Valmont Group Pty. Ltd., along with the Company, are borrowers under the credit facility. The obligations arising under the credit facility are guaranteed by the Company and its wholly-owned subsidiaries PiRod, Inc., Valmont Coatings, Inc., Valmont Newmark, Inc. and Valmont Queensland Pty. Ltd.

~~The amendments to the credit facility, which are adopted in the amended and restated credit agreement, include:~~

~~an extension of the maturity date of the credit facility from October 17, 2019 to October 18, 2022;~~

~~an increase in the available borrowings in foreign currencies from $200 million to $400 million;~~

a decrease in the range of commitment fees payable from 10 to 27.5 basis points to 10 to 25 basis points (the specific commitment fees payable on the average daily unused portion of the commitments under the credit facility depend on the credit rating of the Company's senior, unsecured, long-term debt);

~~a modification of the definition of "EBITDA" to add-back non-recurring cash and non-cash restructuring costs in an amount that does not exceed $75 million in any trailing twelve month period;~~

~~a modification of the leverage ratio permitting it to increase from 3.5X to 3.75X for the four consecutive fiscal quarters after certain material acquisitions;~~

~~implementing beneficial changes to certain of the baskets and exceptions in the negative covenants of the credit facility; and~~

~~updating the credit facility with certain market provisions.~~

At September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, we had no$28.4 million and $5.7 million outstanding borrowings under our revolving credit ~~agreement.~~agreement, respectively. The revolving credit agreement contains certain financial covenants that may limit our additional borrowing capability under the agreement. At September ~~30, 2017,~~28, 2019, we had the ability to borrow ~~$585.2~~$557.0 million under this facility, after consideration of standby letters of credit of ~~$14.8~~$14.6 million associated with certain insurance obligations and international sales commitments. We also maintain certain short-term bank lines of credit totaling ~~$113.0~~$131.3 million, ~~$112.8~~$112.0 million of which was unused at September ~~30, 2017.~~28, 2019.

Our senior unsecured notes and revolving credit agreement each contain cross-default provisions which permit the acceleration of our indebtedness to them if we default on other indebtedness that results in, or permits, the acceleration of such other indebtedness.

The debt agreements contain covenants that require us to maintain certain coverage ratios and may limit us with respect to certain business activities, including capital expenditures. The debt agreements allow us to add estimated EBITDA from acquired businesses for periods we did not own the acquired business. The debt agreements also provide for an adjustment to EBITDA, subject to certain limitations, for non-cash charges or gains that are non-recurring in nature. ~~For 2017, our covenant calculations do not include any estimated EBITDA from acquired businesses.~~

Our key debt covenants are as follows:


•	Leverage ratio - Interest-bearing debt is not to exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior four quarters; and


•	Interest earned ratio - Adjusted EBITDA over the prior four quarters must be at least 2.5X our interest expense over the same period.

~~Interest-bearing debt is not to exceed 3.5X Adjusted EBITDA of the prior four quarters; and~~

~~Adjusted EBITDA over the prior four quarters must be at least 2.5X our interest expense over the same period.~~

At September ~~30, 2017,~~28, 2019, we were in compliance with all covenants related to the debt agreements. The key covenant calculations at September ~~30, 2017~~28, 2019 were as ~~follows:~~follows (in 000's):



Interest-bearing debt	$	784,593
Adjusted EBITDA-last four quarters	327,014
Leverage ratio	2.40

Adjusted EBITDA-last four quarters	$	327,014
Interest expense-last four quarters	40,389
Interest earned ratio	8.10

Interest-bearing debt $ 755,348
Adjusted EBITDA-last four quarters 345,590
Leverage ratio 2.19

Adjusted EBITDA-last four quarters $ 345,590
Interest expense-last four quarters 44,445
Interest earned ratio 7.78

The calculation of Adjusted EBITDA-last four quarters (September ~~25, 2016~~30, 2018 through September ~~30, 2017)~~28, 2019) is as ~~follows:~~follows. The last four quarters information ended September 28, 2019 is calculated by taking the full fiscal year ended December 29, 2018, subtracting the first three quarters ended September 29, 2018, and adding the first three quarters ended September 28, 2019.


Net cash flows from operations	$	226,318		$	324,185
Interest expense	44,445			40,389
Income tax expense	42,666			47,258
Impairment of property, plant and equipment	(481		)	(803		)
Loss on investment	(8		)
Change in fair value of contingent consideration	(285		)
Gain on investment				48
Deferred income tax benefit	22,072			(4,625		)
Noncontrolling interest	(5,292		)	(4,534		)
Stock-based compensation	(10,659		)	(11,205		)
Increase in restricted cash - pension plan trust	(12,568		)
Pension plan expense	(865		)	920
Contribution to pension plan	26,840			17,408
Changes in assets and liabilities	29,167			(104,815		)
Other	350			338
EBITDA	361,700			304,564
Reversal of contingent liability	(16,591		)
Cash restructuring expenses				15,566
EBITDA from acquisitions (months not owned)				2,411
Impairment of property, plant and equipment	481			4,473
Adjusted EBITDA	$	345,590		$	327,014


Net earnings attributable to Valmont Industries, Inc.	$	189,915		$	135,684
Interest expense	44,445			40,389
Income tax expense	42,666			47,258
Depreciation and amortization expense	84,674			81,233
EBITDA	361,700			304,564
Reversal of contingent liability	(16,591		)
Cash restructuring expenses				15,566
EBITDA from acquisitions (months not owned)				2,411
Impairment of property, plant, and equipment	481			4,473
Adjusted EBITDA	$	345,590		$	327,014

Our businesses are cyclical, but we have diversity in our markets from a product, customer and a geographical standpoint. We have demonstrated the ability to effectively manage through business cycles and maintain liquidity. We have consistently generated operating cash flows in excess of our capital expenditures. Based on our available credit facilities, recent issuance of senior unsecured notes and our history of positive operational cash flows, we believe that we have adequate liquidity to meet our needs.

~~We have not made any provision~~At the end of the third quarter of 2019, the unremitted foreign earnings were approximately $312.3 million as a result of dividends that were paid. While the tax on these foreign earnings resulted in the reduction of the excess of the amount for ~~U.S. income taxes~~financial reporting over the tax basis in ~~our financial statements on approximately $437.8 million of undistributed earnings of~~ our foreign subsidiaries, ~~as we intend~~an actual repatriation from our non-U.S. subsidiaries may still be subject to ~~reinvest those earnings.~~foreign withholding taxes and U.S. state income taxes. Our earnings in our non-U.S. subsidiaries are not indefinitely reinvested. Of our cash balances of ~~$493.5~~$327.2 million at September ~~30, 2017,~~28, 2019, approximately ~~$370.5~~$139.0 million is held in ~~entities outside the United States. If we need to repatriate foreign cash balances to the United States to meet~~ our ~~cash needs,~~non-U.S. subsidiaries. We recorded deferred income taxes ~~would be paid to the extent that those cash repatriations were undistributed earnings of our~~for foreign ~~subsidiaries. The determination of the additional~~withholding taxes and U.S. ~~federal and~~ state income taxes ~~or foreign withholding taxes have not been provided, as the determination is not practicable.~~of $3.3 million and $0.6 million, respectively.

Financial Obligations and Financial Commitments

There have been no material changes to our financial obligations and financial commitments as described on page 3634-35 in our Form 10-K for the fiscal year ended December ~~31, 2016.~~29, 2018.

Off Balance Sheet Arrangements

There have been no changes in our off balance sheet arrangements as described on page 3735 in our Form 10-K for the fiscal year ended December ~~31, 2016.~~29, 2018.

Critical Accounting Policies

There ~~have been~~were no changes in our critical accounting policies as described on pages ~~38-42~~37-40 in our Form 10-K for the fiscal year ended December ~~31, 2016~~29, 2018 during the ~~quarter~~nine months ended September ~~30, 2017.~~28, 2019.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes in the company's market risk during the quarter ended September ~~30, 2017~~.28, 2019. For additional information, refer to the section "Risk Management" in our Form 10-K for the fiscal year ended December ~~31, 2016~~.29, 2018.

Item 4. Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934 is (1) accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

No changes in the Company's internal control over financial reporting occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Period Total Number of
Shares Purchased Average Price
paid per share Total Number of
Shares Purchased
as Part of Publicly
Announced Plans or
Programs Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program (1)
July 2, 2017 to July 29, 2017 —
$ —
—
$ 132,172,000
July 30, 2017 to September 2, 2017 —
—
—
132,172,000
September 3, 2017 to September 30, 2017 —
—
—
132,172,000
Total —
$ —
—
$ 132,172,000



Period	Total Number of Shares Purchased	Average Price paid per share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program (1)
June 30, 2019 to July 27, 2019	30,430	$	127.78	37,375	$	225,128,000
July 28, 2019 to August 31, 2019	56,178	132.28		153,791	217,697,000
September 1, 2019 to September 28, 2019	40,126	137.14		45,157	212,194,000
Total	126,734	$	132.74	236,323	$	212,194,000

(1) On May 13, 2014, we announced a new capital allocation philosophy which included a share repurchase program. Specifically, the Board of Directors authorized the purchase of up to $500 million of the Company's outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. On February 24, 2015 and again on October 31, 2018, the Board of Directors authorized an additional purchase of up to $250 million of the Company's outstanding common stock with no stated expiration date. As of September ~~30, 2017,~~28, 2019, we have acquired ~~4,588,131~~5,864,872 shares for approximately ~~$617.8~~$787.8 million under this share repurchase program.

Item 6. Exhibits


(a)	Exhibits



Exhibit No.		Description
31.1		Section 302 Certificate of Chief Executive Officer
31.2		Section 302 Certificate of Chief Financial Officer
32.1		Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
101		The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended September ~~30, 2017,~~28, 2019, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.
104		Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf and by the undersigned hereunto duly authorized.



	VALMONT INDUSTRIES, INC. (Registrant)
	/s/ MARK C. JAKSICH
	Mark C. Jaksich Executive Vice President and Chief Financial Officer

Dated this ~~1st~~31st day of ~~November, 2017~~October, 2019.

~~Index of Exhibits~~



~~Exhibit No.~~		~~Description~~
~~31.1~~		~~Section 302 Certificate of Chief Executive Officer~~
~~31.2~~		~~Section 302 Certificate of Chief Financial Officer~~
~~32.1~~		~~Section 906 Certifications of Chief Executive Officer and Chief Financial Officer~~
~~101~~		The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.



	Thirteen Weeks Ended				Thirty-nine Weeks Ended
	2017		2016		2017		2016
United States	$	28,886	$	21,550	$	115,082	$	105,390
Foreign	21,675		22,239		59,210		51,486
	$	50,561	$	43,789	$	174,292	$	156,876



			Fair Value Measurement Using:
	Carrying Value December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading Securities	$	37,800	$	37,800	$	—	$	—



	Balance at December 31, 2016		Recognized Restructuring Expense		Costs Paid or Otherwise Settled			Balance at September 30, 2017
Severance	$	1,597	$	—	$	(1,597	)	$	—
Other cash restructuring expenses	4,581		—		(3,377		)	1,204
Total	$	6,178	$	—	$	(4,974	)	$	1,204



	December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	191,316	$	111,342	13 years
Proprietary Software & Database	3,616		3,056		8 years
Patents & Proprietary Technology	6,434		3,420		11 years
Other	3,713		3,668		3 years
	$	205,079	$	121,486



	Estimated Amortization Expense
2017	$	15,823
2018	14,492
2019	13,718
2020	12,608
2021	10,474



	Engineered Support Structures Segment		Energy & Mining Segment		Utility Support Structures Segment		Coatings Segment		Irrigation Segment		Total
Balance at December 31, 2016	$	94,314	$	72,212	$	75,404	$	59,569	$	19,611	$	321,110
Foreign currency translation	4,568		6,704		—		951		94		12,317
Acquisitions	3,327		—		—		—		—		3,327
Balance at September 30, 2017	$	102,209	$	78,916	$	75,404	$	60,520	$	19,705	$	336,754



Interest-bearing debt	$	755,348
Adjusted EBITDA-last four quarters	345,590
Leverage ratio	2.19

Adjusted EBITDA-last four quarters	$	345,590
Interest expense-last four quarters	44,445
Interest earned ratio	7.78