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~~26, 2020

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) 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

Trading Symbol(s)

Name of each 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. Yes x 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). Yes x 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~~21,252,810

Outstanding shares of common stock as of October ~~23, 2017~~22, 2020

VALMONT INDUSTRIES, INC.

INDEX TO FORM 10-Q


		Page No.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Statements of Earnings for the thirteen and thirty-nine
	weeks ended September 26, 2020 and September 28, 2019	3
	Condensed Consolidated Statements of Comprehensive Income for the thirteen
	and thirty-nine weeks ended September 26, 2020 and September 28, 2019	4
	Condensed Consolidated Balance Sheets as of September 26, 2020 and December 28,
	2019	5
	Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended
	September 26, 2020 and September 28, 2019	6
	Condensed Consolidated Statements of Shareholders' Equity for the thirteen and
	thirty-nine weeks ended September 26, 2020 and September 28, 2019	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34

	PART II. OTHER INFORMATION
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 6.	Exhibits	36
Signatures		38

Page No.
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements (unaudited):

Condensed Consolidated Statements of Earnings for the thirteen and thirty-nine weeks

ended September 30, 2017 and September 24, 2016
3

Condensed Consolidated Statements of Comprehensive Income for the thirteen

and thirty-nine weeks ended September 30, 2017 and September 24, 2016
4
Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31,
2016
5
Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended
September 30, 2017 and September 24, 2016
6
Condensed Consolidated Statements of Shareholders' Equity for the thirty-nine
weeks ended September 30, 2017 and September 24, 2016
7
Notes to Condensed Consolidated Financial Statements
8
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
31
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
40
Item 4.
Controls and Procedures
40

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

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
	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Product sales	$	657,703	$	605,439	$	1,874,199	$	1,829,919
Services sales	76,267		84,901		222,779		253,431
Net sales	733,970		690,340		2,096,978		2,083,350
Product cost of sales	494,812		460,549		1,392,595		1,398,775
Services cost of sales	48,411		56,504		143,450		168,485
Total cost of sales	543,223		517,053		1,536,045		1,567,260
Gross profit	190,747		173,287		560,933		516,090
Selling, general and administrative expenses	129,268		112,223		372,481		338,950
Impairment of goodwill and trade names	0		0		16,638		0
Operating income	61,479		61,064		171,814		177,140
Other income (expenses):
Interest expense	(10,454)		(9,976)		(30,566)		(29,971)
Interest income	430		969		1,931		2,815
Gain on investments (unrealized)	900		402		1,102		4,754


Other	233		768		1,349		1,938
	(8,891)		(7,837)		(26,184)		(20,464)
Earnings before income taxes	52,588		53,227		145,630		156,676
Income tax expense (benefit):
Current	14,968		11,675		42,922		31,668
Deferred	(2,884)		1,388		(3,750)		7,098
	12,084		13,063		39,172		38,766
Earnings before equity in earnings of nonconsolidated subsidiaries	40,504		40,164		106,458		117,910
Equity in loss of nonconsolidated subsidiaries	(276)		0		(755)		0
Net earnings	40,228		40,164		105,703		117,910
Less: earnings attributable to noncontrolling interests	(886)		(2,119)		(825)		(4,042)
Net earnings attributable to Valmont Industries, Inc.	$	39,342	$	38,045	$	104,878	$	113,868
Earnings per share:
Basic	$	1.85	$	1.76	$	4.91	$	5.24
Diluted	$	1.84	$	1.75	$	4.89	$	5.22

Thirteen Weeks Ended Thirty-nine Weeks Ended
September 30,
2017 September 24,
2016 September 30,
2017 September 24,
2016
Product sales $ 602,080
$ 544,828
$ 1,807,539
$ 1,648,530
Services sales 78,699
65,419
223,450
198,571
Net sales 680,779
610,247
2,030,989
1,847,101
Product cost of sales 462,854
409,003
1,366,875
1,220,567
Services cost of sales 54,331
46,221
152,635
135,425
Total cost of sales 517,185
455,224
1,519,510
1,355,992
Gross profit 163,594

155,023

511,479

491,109
Selling, general and administrative expenses 103,671
101,783
308,764
303,698
Operating income 59,923
53,240
202,715
187,411
Other income (expenses):
Interest expense (11,190 ) (11,100 ) (33,312 ) (33,276 )
Interest income 1,311
771
3,205
2,289
Other 517
878
1,684
452
(9,362 ) (9,451 ) (28,423 ) (30,535 )
Earnings before income taxes 50,561
43,789
174,292
156,876
Income tax expense:
Current 21,163
18,017
50,264
51,276
Deferred (7,268 ) (3,749 ) 79
(1,534 )
13,895
14,268
50,343
49,742
Net earnings 36,666
29,521
123,949
107,134
Less: Earnings attributable to noncontrolling interests (1,458 ) (1,348 ) (4,098 ) (3,966 )
Net earnings attributable to Valmont Industries, Inc. $ 35,208
$ 28,173
119,851
103,168
Earnings per share:
Basic $ 1.56
$ 1.25
$ 5.33
$ 4.56
Diluted $ 1.55
$ 1.24
$ 5.28
$ 4.54
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
	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Net earnings	40,228		40,164		105,703		117,910
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss)	14,391		(23,781)		(16,102)		(20,466)

Gain (loss) on hedging activities:
Net investment hedges	0		2,580		7,284		3,360
Cash flow hedges	(26)		0		344		0

Amortization cost included in interest expense	(16)		(16)		(48)		(48)

Commodity hedges	0		(21)		0		(2,130)
Realized gain on commodity hedges recorded in earnings	0		1,329		0		1,329
Cross currency swaps	(3,725)		5,443		570		3,771



Other comprehensive income (loss)	10,624		(14,466)		(7,952)		(14,184)
Comprehensive income	50,852		25,698		97,751		103,726
Comprehensive income attributable to noncontrolling interests	(1,358)		(1,297)		(1,785)		(3,390)
Comprehensive income attributable to Valmont Industries, Inc.	$	49,494	$	24,401	$	95,966	$	100,336

Thirteen Weeks Ended Thirty-nine Weeks Ended
September 30,
2017 September 24,
2016 September 30,
2017 September 24,
2016
Net earnings $ 36,666
$ 29,521
$ 123,949
$ 107,134
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Unrealized translation gain (loss) 19,530
770
60,471
(1,938 )
Gain/(loss) on hedging activities:
Net investment hedge (740 ) 1,972
(1,816 ) 4,897
Amortization cost included in interest expense 19
18
56
56
Other comprehensive income (loss) 18,809
2,760
58,711
3,015
Comprehensive income 55,475
32,281
182,660
110,149
Comprehensive loss (income) attributable to noncontrolling interests (2,570 ) (1,618 ) (4,552 ) (5,732 )
Comprehensive income attributable to Valmont Industries, Inc. $ 52,905
$ 30,663
$ 178,108
$ 104,417

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 26, 2020		December 28, 2019
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	493,490		$	399,948		Cash and cash equivalents	$	443,055	$	353,542
Receivables, net	492,842			439,342			Receivables, net	502,004		480,000
Inventories	403,234			350,028			Inventories	448,088		418,370
Prepaid expenses, restricted cash, and other assets	50,064			57,297
Contract assets							Contract assets	113,254		141,322
Prepaid expenses and other assets							Prepaid expenses and other assets	51,745		32,043
Refundable income taxes	8,493			6,601			Refundable income taxes	0		6,947
Total current assets	1,448,123			1,253,216			Total current assets	1,558,146		1,432,224
Property, plant and equipment, at cost	1,169,854			1,105,736			Property, plant and equipment, at cost	1,295,639		1,245,261
Less accumulated depreciation and amortization	647,430			587,401			Less accumulated depreciation and amortization	722,286		687,132
Net property, plant and equipment	522,424			518,335			Net property, plant and equipment	573,353		558,129

Goodwill	336,754			321,110			Goodwill	421,947		428,864
Other intangible assets, net	142,090			144,378			Other intangible assets, net	167,681		175,742
Other assets	160,780			154,692			Other assets	202,783		212,257
Total assets	$	2,610,171		$	2,391,731		Total assets	$	2,923,910	$	2,807,216

LIABILITIES AND SHAREHOLDERS’ EQUITY							LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:							Current liabilities:
Current installments of long-term debt	$	949		$	851		Current installments of long-term debt	$	1,922	$	760
Notes payable to banks	197			746			Notes payable to banks	14,227		21,774
Accounts payable	216,104			177,488			Accounts payable	269,113		197,957
Accrued employee compensation and benefits	81,494			72,404			Accrued employee compensation and benefits	114,310		83,528
Accrued expenses	106,238			89,914
Contract liabilities							Contract liabilities	116,470		117,945
Other accrued expenses							Other accrued expenses	97,539		83,736
Income taxes payable							Income taxes payable	724		0

Dividends payable	8,478			8,445			Dividends payable	9,614		8,079
Total current liabilities	413,460			349,848			Total current liabilities	623,919		513,779
Deferred income taxes	28,183			35,803			Deferred income taxes	51,280		58,906
Long-term debt, excluding current installments	754,202			754,795			Long-term debt, excluding current installments	779,788		764,944
Defined benefit pension liability	199,562			209,470			Defined benefit pension liability	113,380		140,007
Operating lease liabilities							Operating lease liabilities	77,705		85,817
Deferred compensation	48,612			44,319			Deferred compensation	42,587		45,114
Other noncurrent liabilities	13,557			14,910			Other noncurrent liabilities	45,587		8,904
Shareholders’ equity:							Shareholders’ equity:
Preferred stock of $1 par value -
Authorized 500,000 shares; none issued	—			—

Common stock of $1 par value -							Common stock of $1 par value -
Authorized 75,000,000 shares; 27,900,000 issued	27,900			27,900			Authorized 75,000,000 shares; 27,900,000 issued	27,900		27,900
Additional paid in capital							Additional paid in capital	8,493		0
Retained earnings	1,974,601			1,874,722			Retained earnings	2,219,182		2,173,802
Accumulated other comprehensive loss	(288,102		)	(346,359		)	Accumulated other comprehensive loss	(322,334)		(313,422)
Treasury stock	(601,565		)	(612,781		)	Treasury stock	(770,802)		(743,942)
Total Valmont Industries, Inc. shareholders’ equity	1,112,834			943,482			Total Valmont Industries, Inc. shareholders’ equity	1,162,439		1,144,338
Noncontrolling interest in consolidated subsidiaries	39,761			39,104			Noncontrolling interest in consolidated subsidiaries	27,225		45,407
Total shareholders’ equity	1,152,595			982,586			Total shareholders’ equity	1,189,664		1,189,745
Total liabilities and shareholders’ equity	$	2,610,171		$	2,391,731		Total liabilities and shareholders’ equity	$	2,923,910	$	2,807,216

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
	September 26, 2020		September 28, 2019
Cash flows from operating activities:
Net earnings	$	105,703	$	117,910
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization	61,523		60,424
Noncash loss (gain) on trading securities	39		(48)
Impairment of property, plant and equipment	2,811		0
Impairment of goodwill & intangible assets	16,638		0

Stock-based compensation	8,736		8,889

Defined benefit pension plan benefit	(5,401)		(382)
Contribution to defined benefit pension plan	(17,398)		(17,426)
Gain on sale of property, plant and equipment	(60)		(465)
Equity in loss in nonconsolidated subsidiaries	755		0
Deferred income taxes	(3,750)		7,098
Changes in assets and liabilities:
Receivables	(26,298)		(21,117)
Inventories	(32,992)		9,502
Prepaid expenses and other assets	(19,157)		(14,451)
Contract assets	28,597		(7,850)
Accounts payable	63,627		(19,256)
Accrued expenses	61,122		10,928
Contract liabilities	(1,475)		118,973
Other noncurrent liabilities	20,982		(4,563)
Income taxes payable/refundable	9,044		(8,936)
Net cash flows from operating activities	273,046		239,230
Cash flows from investing activities:
Purchase of property, plant and equipment	(70,960)		(71,981)
Proceeds from sale of assets	911		1,325
Acquisitions, net of cash acquired	(15,862)		(81,841)

Settlement of net investment hedges	11,983		11,184
Other, net	2,543		2,117
Net cash flows from investing activities	(71,385)		(139,196)
Cash flows from financing activities:
Proceeds from short-term agreements	4,251		14,392
Payments on short-term agreements	(10,713)		(5,108)
Proceeds from long-term borrowings	88,872		31,000
Principal payments on long-term borrowings	(76,417)		(10,578)


Dividends paid	(27,316)		(24,554)
Dividends to noncontrolling interest	(5,642)		(6,549)
Purchase of noncontrolling interest	(55,916)		(27,845)
Purchase of treasury shares	(28,006)		(55,172)
Proceeds from exercises under stock plans	980		3,211
Purchase of common treasury shares—stock plan exercises	(77)		(1,456)
Net cash flows from financing activities	(109,984)		(82,659)
Effect of exchange rate changes on cash and cash equivalents	(2,164)		(3,385)
Net change in cash and cash equivalents	89,513		13,990
Cash, cash equivalents, and restricted cash—beginning of year	353,542		313,210
Cash, cash equivalents, and restricted cash—end of period	$	443,055	$	327,200

Thirty-nine Weeks Ended
September 30,
2017 September 24,
2016
Cash flows from operating activities:
Net earnings $ 123,949
$ 107,134
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization 63,500
61,242
Noncash loss on trading securities 395
973
Impairment of assets - restructuring activities —
618
Stock-based compensation 7,300
6,572
Change in fair value of contingent consideration —
(3,527 )
Defined benefit pension plan expense 481
1,486
Contribution to defined benefit pension plan (26,064 ) (712 )
Change in restricted cash - pension plan trust 12,568
(13,652 )
(Gain)/loss on sale of property, plant and equipment (732 ) 250
Deferred income taxes 79
(1,534 )
Changes in assets and liabilities:
Receivables (39,584 ) 16,436
Inventories (41,545 ) (34,413 )
Prepaid expenses and other assets (11,636 ) (10,624 )
Accounts payable 28,895
(11,338 )
Accrued expenses 20,157
3,272
Other noncurrent liabilities (1,627 ) 240
Income taxes refundable (1,732 ) 4,831
Net cash flows from operating activities 134,404
127,254
Cash flows from investing activities:
Purchase of property, plant and equipment (39,898 ) (42,233 )
Proceeds from sale of assets 1,575
3,938
Acquisitions, net of cash acquired (5,362 ) —
Proceeds from settlement of net investment hedge 5,123
—
Other, net (3,462 ) (2,824 )
Net cash flows from investing activities (42,024 ) (41,119 )
Cash flows from financing activities:
Net borrowings under short-term agreements (549 ) (128 )
Principal payments on long-term borrowings (658 ) (1,563 )
Dividends paid (25,386 ) (25,604 )
Dividends to noncontrolling interest (3,895 ) (2,527 )
Purchase of noncontrolling interest —
(11,009 )
Purchase of treasury shares —
(46,581 )
Proceeds from exercises under stock plans 12,446
6,509
Purchase of common treasury shares—stock plan exercises (3,929 ) (1,453 )
Net cash flows from financing activities (21,971 ) (82,356 )
Effect of exchange rate changes on cash and cash equivalents 23,133
(3,478 )
Net change in cash and cash equivalents 93,542
301
Cash and cash equivalents—beginning of year 399,948
349,074
Cash and cash equivalents—end of period $ 493,490
$ 349,375

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 6/29/2019 (1)	$	27,900	$	0	$	2,123,754	$	(303,072)	$	(728,680)	$	45,272	$	1,165,174
Net earnings	—		—		38,045		—		—		2,119		40,164
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; 12,586 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 9/28/2019 (1)	$	27,900	$	0	$	2,155,904	$	(316,717)	$	(744,335)	$	44,480	$	1,167,232
Balance at June 27, 2020	$	27,900	$	0	$	2,194,916	$	(332,486)	$	(763,495)	$	25,867	1,152,702
Net earnings	—		—		39,342		—		—		886		40,228
Other comprehensive income (loss)	—		—		—		10,152		—		472		10,624
Cash dividends declared ($0.45 per share)	—		—		(9,614)		—		—		—		(9,614)





Purchase of treasury shares; 60,645 shares acquired	—		—		—		—		(7,525)		—		(7,525)
Stock plan exercises; 580 shares acquired	—		—		—		—		(72)		—		(72)
Stock options exercised; 2,616 shares issued	—		5,461		(5,462)		—		257		—		256

Stock option expense	—		686		—		—		—		—		686
Stock awards; 253 shares issued	—		2,346		—		—		33		—		2,379
Balance at September 26, 2020	$	27,900	$	8,493	$	2,219,182	$	(322,334)	$	(770,802)	$	27,225	$	1,189,664

(1) The retained earnings balance has been revised from the amounts previously reported as a result of the change in inventory valuation method from LIFO to FIFO. Refer to Note 1 for additional information.

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 12/29/2018 (1)	$	27,900	$	0	$	2,067,811	$	(303,185)	$	(692,549)	$	75,761	$	1,175,738
Net earnings	—		—		113,868		—		—		4,042		117,910
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)
Impact of ASC 842 adoption	—		—		(8,886)		—		—		—		(8,886)


Purchase of noncontrolling interest	—		277		—		—		—		(28,122)		(27,845)
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 9/28/2019 (1)	$	27,900	$	0	$	2,155,904	$	(316,717)	$	(744,335)	$	44,480	$	1,167,232
Balance at 12/28/2019 (1)	$	27,900	$	0	$	2,173,802	$	(313,422)	$	(743,942)	$	45,407	$	1,189,745
Net earnings	—		—		104,878		—		—		825		105,703
Other comprehensive income (loss)	—		—		—		(8,912)		—		960		(7,952)
Cash dividends declared ($1.35 per share)	—		—		(28,837)		—		—		—		(28,837)
Dividends to noncontrolling interests	—		—		—		—		—		(5,642)		(5,642)
Purchase of noncontrolling interest	—		0		(30,661)		—		—		(19,450)		(50,111)


Addition of noncontrolling interest	—		—		—		—		—		5,125		5,125
Purchase of treasury shares; 251,136 shares acquired	—		—		—		—		(28,006)		—		(28,006)
Stock plan exercises; 617 shares acquired	—		—		—		—		(77)		—		(77)
Stock options exercised; 4,100 shares issued	—		244		—		—		736		—		980

Stock option expense	—		1,909		—		—		—		—		1,909
Stock awards; 8,957 shares issued	—		6,340		—		—		487		—		6,827
Balance at 9/26/2020 (1)	$	27,900	$	8,493	$	2,219,182	$	(322,334)	$	(770,802)	$	27,225	$	1,189,664

See accompanying notes to the 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~~,26, 2020, the Condensed Consolidated Statements of Earnings, ~~and~~ Comprehensive Income, and Shareholders' Equity for the thirteen and thirty-nine weeks ended September ~~30, 2017~~26, 2020 and September ~~24, 2016~~,28, 2019, 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~~26, 2020 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~~.28, 2019. 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~~.28, 2019 with the exception of the change in method of accounting for certain inventory, previously accounted for on the LIFO basis, so that now all inventory is valued on the FIFO basis. In addition, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326)and early adopted Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant's Securities as released by the Securities and Exchange Commission that are discussed further at the end of footnote 1. The results of operations for the period ended September ~~30, 2017~~26, 2020 are not necessarily indicative of the operating results for the full year.

Inventories

~~Approximately~~ ~~36%~~ ~~and 38% 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~~ ~~and~~ ~~December 31, 2016. All other inventory~~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 and $38,047 at September 30, 2017 and~~ ~~December 31, 2016, respectively.~~

Inventories consisted of the following:


	September 30, 2017		December 31, 2016			September 26, 2020		December 28, 2019
Raw materials and purchased parts	$	175,222	$	143,659	Raw materials and purchased parts	$	153,708	$	158,314
Work-in-process	35,126		27,291		Work-in-process	25,335		38,088
Finished goods and manufactured goods	233,772		217,125		Finished goods and manufactured goods	269,045		221,968
Subtotal	444,120		388,075
Less: LIFO reserve	40,886		38,047
	$	403,234	$	350,028		448,088		418,370

Effective December 29, 2019, the first day of fiscal 2020, the Company changed its method of accounting for certain of its inventory, previously accounted for on the LIFO basis, so that now all inventory is valued on the FIFO basis. The Company believes this change is preferable as it provides a better matching of costs with the physical flow of goods, more accurately reflects the current value of inventory presented on the Company’s Condensed Consolidated Balance Sheets, and standardizes the Company’s inventory valuation methodology.

In accordance with ASC 250, Accounting Changes and Error Corrections, this change in method of accounting for certain inventories has been retrospectively applied to the earliest period presented. As a result of the retrospective change, the cumulative effect to retained earnings as of December 29, 2018 and December 28, 2019 was an increase of $40,215 and $32,854, respectively. This change did not affect the Company's previously reported cash flows from operating, investing, or financing activities.

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~~

The impact of the change from LIFO to FIFO on the Company’s Condensed Consolidated Statements of Earnings ~~before income taxes~~ and ~~equity in earnings of nonconsolidated subsidiaries~~Comprehensive Income for the thirteen and thirty-nine weeks ended September ~~30, 2017~~28, 2019 is as follows:


	Thirteen weeks ended			Thirty-nine weeks ended
(in 000's, except earnings per share)	As Previously Reported	Retrospectively Adjusted	Adjustment	As Previously Reported	Retrospectively Adjusted	Adjustment
Cost of sales	514,254	517,053	2,799	1,561,721	1,567,260	5,539
Operating income	63,863	61,064	(2,799)	182,679	177,140	(5,539)
Income tax expense	13,763	13,063	(700)	40,151	38,766	(1,385)
Net earnings attributed to Valmont Industries, Inc	40,144	38,045	(2,099)	118,022	113,868	(4,154)
Comprehensive (loss) income	27,797	25,698	(2,099)	107,880	103,726	(4,154)
Net earnings per diluted share	1.85	1.75	(0.10)	5.41	5.22	(0.19)

The Company applied this change retrospectively to the earliest period presented. The resulting impact to the Condensed Consolidated Balance Sheet as of December 28, 2019 is as follows:


	December 28, 2019
Consolidated Balance Sheet	As Previously Reported	Adjustment	Retrospectively Adjusted
Inventory	374,565	43,805	418,370
Deferred income tax liability	47,955	10,951	58,906
Retained earnings	2,140,948	32,854	2,173,802

Income Taxes

Earnings before income taxes for the thirteen and thirty-nine weeks ended September 26, 2020 and September ~~24, 2016~~,28, 2019, were as follows:


	Thirteen weeks ended				Thirty-nine weeks ended
	2020		2019		2020		2019
United States	$	33,610	$	42,098	$	141,347	$	128,878
Foreign	18,978		11,129		4,283		27,798
	$	52,588	$	53,227	$	145,630	$	156,676

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

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

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~~26, 2020 and September ~~24, 2016~~28, 2019 were as follows:


	Thirteen weeks ended				Thirty-nine weeks ended
Net periodic (benefit) expense:	2020		2019		2020		2019
Interest cost	$	3,285	$	4,075	$	9,569	$	12,602
Expected return on plan assets	(5,887)		(4,815)		(17,149)		(14,893)
Amortization of actuarial loss	748		617		2,179		1,909
Net periodic (benefit) expense	$	(1,854)	$	(123)	$	(5,401)	$	(382)

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~~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~~26, 2020, 1,189,407 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~~26, 2020 and September ~~24, 2016~~,28, 2019, respectively, were as follows:


	Thirteen Weeks Ended				Thirty-nine Weeks Ended					Thirteen weeks ended				Thirty-nine weeks ended
	2017		2016		2017		2016			2020		2019		2020		2019
Compensation expense	$	1,290	$	1,399	$	3,868	$	4,358	Compensation expense	$	3,065	$	2,519	$	8,736	$	8,889
Income tax benefits	496		539		1,489		1,678		Income tax benefits	766		630		2,184		2,222

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.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

ASC 820 establishes a ~~three‑level~~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 at September 26, 2020 of ~~$39,283~~$33,709 ($~~35,784~~36,290 at December ~~31, 2016)~~28, 2019) 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~~$172 and ~~$2,016~~$210 as of September ~~30, 2017~~26, 2020 and December ~~31, 2016,~~28, 2019, 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.


			Fair Value Measurement Using:
	Carrying Value September 26, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Trading Securities	$	33,881	$	33,881	$	0	$	0
Derivative financial instruments, net	3,548		0		3,548		0


			Fair Value Measurement Using:
	Carrying Value December 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	$	36,500	$	36,500	$	0	$	0
Derivative financial instruments, net	3,247		0		3,247		0

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

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)
Assets:
Trading Securities $ 41,062
$ 41,062
$ —
$ —
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 4 to these condensed consolidated financial statements contain additional information related to goodwill and intangible asset impairments recognized in fiscal 2020.

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
$ —
$ —

Comprehensive Income (Loss)

Comprehensive income (loss) 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~~26, 2020 and December ~~31, 2016:~~28, 2019:


	Foreign Currency Translation Adjustments		Gain on Hedging Activities		Defined Benefit Pension Plan		Accumulated Other Comprehensive Loss
Balance at December 28, 2019	$	(232,575)	$	14,076	$	(94,923)	$	(313,422)
Current-period comprehensive income (loss)	(17,062)		8,150		0		(8,912)

Balance at September 26, 2020	$	(249,637)	$	22,226	$	(94,923)	$	(322,334)

Revenue Recognition

The Company determines the appropriate revenue recognition for our contracts by analyzing the type, terms and conditions 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 period in which the sale is recognized. Contract revenues are classified as product when the performance obligation is related to the manufacturing of goods. Contract revenues are classified as service when the performance obligation is the performance of a service. Service revenue is primarily related to the Coatings segment.

Customer acceptance provisions exist only in the design stage of our products and acceptance of the design by the customer is required before the project is manufactured and delivered to the customer. The Company is not entitled to any compensation solely based on design of the 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.

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)~~

~~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 poundsSegment 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 on 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,~~ Product Line Revenue Recognition.

The ~~new revenue recognition standard~~ ~~requires entities to recognize the amount of revenue to which it expects to be entitled~~global Utility segment revenues are derived from manufactured steel and concrete structures for the ~~transfer of promised goods or services to customers. This standard is effective for interim~~North America utility industry and ~~annual reporting periods beginning after December 15, 2017,~~offshore and ~~can be adopted either retrospectively or as a cumulative effect adjustment as~~other complex structures used in energy generation and distribution outside of the ~~date of adoption. Early adoption is permitted for interim~~United States. Steel 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 of revenue recognition for the Company’s product lines thatconcrete utility structures are ~~custom~~ engineered to ~~a single customer’s~~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 on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. External sales agents are used in certain sales of steel and concrete structures; the 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 ~~asset can be used~~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 specifications for ~~another customer. These product lines reside in the Utility and Engineered Support Structures segments.~~communication structures. When the ~~terms and conditions allow~~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 ~~Company~~remaining wireless communication product line customers which do not provide a contractual right to bill ~~a customer~~ for ~~full compensation~~work completed on a canceled order, ~~for the performance completed to date,~~ revenue ~~will be~~is recognized ~~over the production period and not the current practice which is~~ upon shipment or ~~time~~delivery of ~~delivery~~the goods to the ~~customer.~~customer which is the same point in time that the customer is billed.

The ~~Company~~global Coatings segment revenues are derived by providing coating services to customers’ products, which include galvanizing, anodizing, and powder coating. Revenue is ~~also evaluating~~recognized once the ~~necessary changes~~coating service has been performed and the goods are ready to ~~its internal control processes~~be picked up or delivered to ~~recognize revenue over~~the customer which is the same time ~~using an inputs based model after adoption. Based on~~that the ~~current status~~customer is billed.

The global Irrigation segment revenues are derived from the manufacture of agricultural irrigation equipment and related parts and services for the ~~evaluation, the adoption of the standard is not expected to have a material effect on the amounts or timing of revenue~~agricultural industry and tubular products for industrial customers. Revenue recognition for the ~~Company’s other segments. The Company expects to adopt~~irrigation segment is generally upon shipment of the ~~new standard using the modified retrospective approach effective January 1, 2018.~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~, 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 will be equalgoods to the ~~present value of lease payments. For income statement purposes,~~customer which is the ~~FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result~~same point 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 criteriatime that the customer is billed. The remote monitoring subscription services are ~~largely similar to those applied in current lease accounting, but without explicit bright lines. ASU 2016-02~~primarily billed annually and revenue is ~~effective for interim and annual reporting periods beginning after December 15, 2018 and is to be applied~~recognized on a ~~modified retrospective transition.~~ ~~The Company~~straight-line basis over the subsequent twelve months.

Disaggregation of revenue by product line is ~~currently evaluating~~disclosed in the ~~effect~~Segment footnote. A breakdown by segment of ~~adopting this new accounting guidance but expects~~revenue recognized over time and at a point in time for the ~~adoption will result in a significant increase in total assets~~thirteen and ~~liabilities.~~thirty-nine weeks ended September 26, 2020 and September 28, 2019 is as follows:

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)


	Point in Time		Over Time		Point in Time		Over Time
	Thirteen weeks ended September 26, 2020		Thirteen weeks ended September 26, 2020		Thirty-nine weeks ended September 26, 2020		Thirty-nine weeks ended September 26, 2020
Utility Support Structures	$	43,287	$	229,192	$	56,830	$	667,070
Engineered Support Structures	244,785		10,160		697,491		33,693
Coatings	68,698		0		199,955		0
Irrigation	133,999		3,849		430,729		11,210

Total	$	490,769	$	243,201	$	1,385,005	$	711,973

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



	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		0		228,242		0
Irrigation	139,093		3,635		436,907		9,710

Total	$	471,934	$	218,406	$	1,422,365	$	660,985

The Company's contract asset as of September 26, 2020 and December 28, 2019 was $113,254 and $141,322,

respectively. Both steel and concrete utility customers are generally invoiced upon shipment or delivery of the goods to the customer's specified location with few customers that make 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.

At September 26, 2020 and December 28, 2019, the contract liabilities for revenue recognized over time was $153,619 and $117,945, respectively. At September 2020, $116,470 is recorded as contract liabilities and $37,149 is recorded as other noncurrent liabilities on the condensed consolidated balance sheets. During the thirteen and thirty-nine weeks ended September 26, 2020, the Company recognized $16,333 and$55,610 of revenue that was included in the liability as of December 28, 2019. In ~~August~~the thirteen and thirty-nine weeks ended September 28, 2019, the Company recognized $314 and $2,242 of revenue that was included in the liability as of December 29, 2018. The revenue recognized was due to applying advance payments received for performance obligations completed during the period.

Recently Adopted Accounting Pronouncements and Guarantors Disclosures

In June 2016, the FASB issued ASU ~~2016-15,~~ ~~Classification~~No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of ~~Certain Cash Receipts and Cash Payments~~Credit Losses on Financial Instruments. The standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update was intended to provide financial statement users with more decision-useful information about the ~~Statement of Cash Flows~~, which provides more specific guidance on cash flow presentation for certain transactions. ASU 2016-15 is effective for interim periods and fiscal years beginning after December 15, 2017, with early adoption permitted.expected credit losses. The Company ~~does not expect the provisions of this new standard will have a material impact on the consolidated financial statements and plans to adopt it in the first quarter of 2018.~~

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Simplifying the Test 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 the third quarter of 2017 which is the same period as it performs the annual goodwill impairment testing.~~

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Presentation of Net Periodic Benefit Cost Related to Defined Benefit Plans,~~ which amends the income statement presentation requirements for the components 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 permitted as of the beginning 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.~~

~~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.2020. The ~~Company does not believe the~~ adoption of ~~this~~the ASU ~~will~~No. 2016-13 did not have a ~~material~~significant impact on the condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

The Company early adopted Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities rules as released by the Securities and Exchange Commission on March 2, 2020, which simplify the disclosure requirements related to the Company’s registered debt securities, guaranteed by certain of its subsidiaries, under Rule 3-10 and Rule 13-01 of Regulation S-X. The final rules permit the simplified disclosures to be provided either in a footnote to the Company’s consolidated financial statements or in management’s discussion and analysis of financial condition and results of operations. The Company has elected to provide the simplified disclosure within Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(2) ACQUISITIONS

On ~~July 31, 2017,~~May 29, 2020, the Company ~~purchased Aircon Guardrails Private Limited~~acquired 55% of Energia Solar do Brasil ("~~Aircon"~~Solbras") for ~~$5,362 in cash, net~~$4,308. Approximately $646 of ~~cash acquired, plus assumed liabilities. Aircon produces highway safety systems including guardrails, structural metal products,~~the purchase price is contingent on seller representations and warranties that will be settled within 12 months of the acquisition date. Solbras is a leading provider of solar ~~structural products in India with annual sales of approximately $10,000.~~energy solutions for agriculture. In the preliminary purchase price allocation, goodwill of ~~$3,327~~$3,341 and ~~$2,109 of~~ customer relationships of $3,718 were recorded and ~~other intangible assets were recorded.~~the remainder is net working capital. Goodwill is not deductible for tax ~~purposes. This business is included~~purposes and the customer relationship will be amortized over 8 years. The acquisition of Solbras, located in Brazil, allows the Company to expand its product offerings in the ~~Engineered Support Structures~~Irrigation segment to include not only pivots, but also a sustainable and ~~was acquired~~low-cost energy source to ~~expand~~provide electricity to the ~~Company's geographic presence in the Asia-Pacific region.~~units. The Company expects to finalize the purchase price allocation in the fourth quarter of ~~2017.~~2020. Proforma disclosures were omitted as this business does not have a significant impact on the Company's financial results.

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 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 finalized the purchase price allocation in the fourth quarter of 2019.

On February 11, 2019, the Company acquired the outstanding shares of United Galvanizing ("United"), a provider of coatings services with an agreed upon purchase price of $28,000, with $2,000 being contingent on seller representations and warranties that was settled in the first quarter of 2020 for $1,522. On December 31, 2018, the Company acquired the assets of Larson Camouflage ("Larson"), an industry leading provider of architectural and camouflage concealment solutions for the wireless telecommunication market with an agreed upon purchase price of $34,562, with 10% being held back for seller representations and warranties that was settled in the first quarter of 2020 for $3,481.

Acquisitions of Noncontrolling Interests

In ~~April 2016,~~February 2020, the Company acquired the remaining ~~30%~~49% of ~~IGC Galvanizing Industries (M) Sdn Bhd~~AgSense that it did not own for ~~$5,841.~~$43,983, which includes a holdback payment of $2,200 that was made in the second quarter of 2020. The Company finalized the accounting for owning 100% of AgSense in the second quarter of 2020 which resulted in the recognition of a deferred tax asset of approximately $7,700. In ~~June 2016,~~the first quarter of 2020, the Company acquired ~~5.2%~~16% of the remaining ~~10%~~25% that it did not own of Convert Italia for a cash payment of $11,750. The purchase agreement also settled the escrow funds which the Company had paid at date of acquisition. In April 2019, the Company acquired the remaining 4.8% of Valmont SM that it did not own for ~~$5,168.~~ $4,763.

As these transactions were for ~~acquisitions~~the acquisition of ~~part~~all or ~~all~~part of the remaining shares of a consolidated ~~subsidiaries~~subsidiary with no change in control, they were recorded within shareholders' equity and as a financing ~~cash flow~~activity in the Condensed Consolidated Statements of Cash Flows.

~~3) RESTRUCTURING ACTIVITIES~~

In April 2015, 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.

~~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)

(3) RESTRUCTURING ACTIVITIES

The Company is executing a restructuring program focused on certain regional restructuring activities (the "2020 Plan") of up to $20,000 expected to occur across all segments to reduce employment levels (including a U.S. specific early retirement program for administrative employees) and exit under-performing locations.

The following pre-tax expenses were recognized during the third quarter of 2020:


	ESS		Utility		Coatings		Corporate		Total
Severance	$	0	$	0	$	289	$	0	$	289
Other cash restructuring expenses	0		267		564		0		831
Asset impairments	0		312		241		0		553
Total cost of sales	0		579		1,094		0		1,673

Severance	0		0		30		0		30
Other cash restructuring expenses	902		0		160		145		1,207

Total selling, general and administrative expenses	902		0		190		145		1,237
Consolidated total	$	902	$	579	$	1,284	$	145	$	2,910

In the first nine-months of 2020, the Company recognized the following pre-tax restructuring expenses:


	ESS		Utility		Coatings		Corporate		Total
Severance	$	399	$	0	$	424	$	0	$	823
Other cash restructuring expenses	48		1,070		596		0		1,714
Asset impairments	0		2,570		241		0		2,811
Total cost of sales	447		3,640		1,261		0		5,348

Severance	242		613		85		221		1,161
Other cash restructuring expenses	1,675		0		160		145		1,980

Total selling, general and administrative expenses	1,917		613		245		366		3,141
Consolidated total	$	2,364	$	4,253	$	1,506	$	366	$	8,489

Liabilities recorded for the restructuring plans were as follows:


	Recognized Restructuring Expense		Costs Paid or Otherwise Settled		Balance at September 26, 2020
Severance	$	1,984	$	1,984	$	0
Other cash restructuring expenses	3,694		2,891		803
Total	$	5,678	$	4,875	$	803

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

(4) GOODWILL AND INTANGIBLE ASSETS

Amortized Intangible Assets

The components of amortized intangible assets at September ~~30, 2017~~26, 2020 and December ~~31, 2016~~28, 2019 were as follows:


	September 30, 2017						September 26, 2020
	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life		Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	200,269	$	126,845	13 years	Customer Relationships	$	232,511	$	148,198	13 years
Proprietary Software & Database	3,687		3,111		8 years

Patents & Proprietary Technology	6,633		3,859		11 years	Patents & Proprietary Technology	25,240		7,699		14 years
Other	4,807		4,032		3 years	Other	7,492		6,553		4 years
	$	215,396	$	137,847			$	265,243	$	162,450


	December 31, 2016						December 28, 2019
	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life		Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	191,316	$	111,342	13 years	Customer Relationships	$	237,626	$	149,720	13 years
Proprietary Software & Database	3,616		3,056		8 years

Patents & Proprietary Technology	6,434		3,420		11 years	Patents & Proprietary Technology	24,068		6,358		14 years
Other	3,713		3,668		3 years	Other	8,054		7,035		5 years
	$	205,079	$	121,486			$	269,748	$	163,113

Amortization expense for intangible assets for the thirteen and thirty-nine weeks ended September ~~30, 2017~~26, 2020 and September ~~24, 2016~~,28, 2019, respectively was as follows:

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


Thirteen weeks ended				Thirty-nine weeks ended
2020		2019		2020		2019
$	4,518	$	4,484	$	13,621	$	13,506

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

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


	Estimated Amortization Expense
2020	$	17,687
2021	15,005
2022	13,027
2023	11,086
2024	9,446

The useful lives assigned to ~~finite‑lived~~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.

Non-amortized intangible assets

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

~~(4) 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~~26, 2020 and December ~~31, 2016~~ ~~were~~28, 2019 are as follows:


	September 26, 2020		December 28, 2019		Year Acquired
Newmark	$	11,111	$	11,111	2004
Webforge	7,489		9,143		2010
Convert Italia S.p.A	8,721		8,378		2018
Valmont SM	8,317		7,966		2014
Ingal EPS/Ingal Civil Products	7,261		7,454		2010
Walpar	3,500		3,500		2018
Shakespeare	4,000		4,000		2014
Other	14,489		17,555
	$	64,888	$	69,107

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,~~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.~~2020. The values of each trade name was determined using the relief-from-royalty method. Based on this evaluation, no0 trade names were determined to be impaired. In conjunction with an interim second quarter 2020 goodwill impairment test, impairment indicators were noted for the Webforge and Locker trade names requiring an interim impairment test. As a result, an impairment charge of approximately $3,900 was recognized against these 2 trade names in fiscal 2020.

Goodwill

The carrying amount of goodwill by segment as of September ~~30, 2017~~26, 2020 and December ~~31, 2016~~28, 2019 was as follows:


	Engineered Support Structures Segment		Utility Support Structures Segment		Coatings Segment		Irrigation Segment		Total
Gross Balance December 28, 2019	$	228,634	$	130,594	$	93,747	$	25,136	$	478,111
Accumulated impairment losses	(18,670)		(14,355)		(16,222)		0		(49,247)
Balance at December 28, 2019	209,964		116,239		77,525		25,136		428,864
Acquisitions	0		1,100		0		5,038		6,138
Asset impairment	(12,575)		0		0		0		(12,575)

Foreign currency translation	(1,605)		1,629		(409)		(95)		(480)
Balance at September 26, 2020	$	195,784	$	118,968	$	77,116	$	30,079	$	421,947

The Company’s annual impairment test of goodwill was performed during the third quarter of 2020, using primarily the discounted cash flow method. The estimated fair value of all of our reporting units exceeded their respective carrying value, so 0 goodwill was impaired.

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) GOODWILL AND INTANGIBLE ASSETS (Continued)~~

~~The Company’s annual impairment test~~In April 2020, the price of ~~goodwill was~~a barrel of oil began a large decline and various economic forecasts show the lower price of oil will continue into the next few years. This lower price for oil and a revised assessment of the Australian market performed ~~during~~in conjunction with the ~~third quarter of 2017, using the discounted cash flow method. As a result of that testing,~~executed restructuring activities required the Company ~~determined that its goodwill was not impaired, as~~to re-assess the ~~valuation~~financial projections for the Access Systems reporting unit. This resulted in lower projected net sales, operating income, and cash flows for this reporting unit, resulting in the need for an interim impairment test. The results of the ~~reporting units exceeded their respective carrying values. The Company's offshore and other complex steel structures reporting unit with $14,645 of goodwill, is~~test showed that the reporting ~~unit with the smallest cushion between~~unit's carrying value was higher than its estimated fair ~~value and its carrying~~ value. ~~Sales and profitability amounts for~~Accordingly, the ~~first nine months~~Company recorded a $12,575 impairment of ~~2017 approximated the amounts~~access system's goodwill 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, the Company will perform an interim impairment test for goodwill. The Company also tracks changes in the global economy that could impact future operating resultssecond quarter of ~~any of its reporting units.~~2020.

(5) 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~~26, 2020 and September ~~24, 2016~~28, 2019 were as follows:


	2020		2019
Interest	$	20,298	$	19,440
Income taxes	35,803		39,850

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) 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 26, 2020:
Net earnings attributable to Valmont Industries, Inc.	$	39,342	$	0	$	39,342
Weighted average shares outstanding (000's)	21,309		107		21,416
Per share amount	$	1.85	$	(0.01)	$	1.84
Thirteen weeks ended September 28, 2019:
Net earnings attributable to Valmont Industries, Inc.	$	38,045	$	0	$	38,045
Weighted average shares outstanding (000's)	21,556		128		21,684
Per share amount	$	1.76	$	(0.01)	$	1.75
Thirty-nine weeks ended September 26, 2020
Net earnings attributable to Valmont Industries, Inc.	$	104,878	$	0	$	104,878
Weighted average shares outstanding (000's)	21,358		95		21,453
Per share amount	$	4.91	$	(0.02)	$	4.89
Thirty-nine weeks ended September 28, 2019:
Net earnings attributable to Valmont Industries, Inc.	$	113,868	$	0	$	113,868
Weighted average shares outstanding (000's)	21,725		101		21,826
Per share amount	$	5.24	$	(0.02)	$	5.22

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,~~26, 2020 and September 28, 2019, there were ~~378,566~~296,966 and 177,153 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) DERIVATIVE FINANCIAL INSTRUMENTS

~~(7)~~ 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 26, 2020 and December 28, 2019 are as follows:


Derivatives designated as hedging instruments:	Balance sheet location	September 26, 2020		December 28, 2019


Foreign currency forward contracts	Prepaid expenses and other assets	$	1,021	$	2,119

Cross currency swap contracts	Prepaid expenses and other assets	2,527		1,128

		$	3,548	$	3,247

Gains (losses) on derivatives recognized in the condensed consolidated statements of earnings for the thirteen and thirty-nine weeks ended September 26, 2020 and September 28, 2019 are as follows:


		Thirteen weeks ended				Thirty-nine weeks ended
	Statements of earnings location	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Commodity forward contracts	Product cost of sales	$	0	$	(1,329)	$	0	$	(1,425)
Foreign currency forward contracts	Other income	116		123		146		827
Foreign currency forward contracts	Product sales	1,017		0		1,169		0
Interest rate hedge amortization	Interest expense	(16)		(16)		(48)		(48)
Cross currency swap contracts	Interest expense	649		769		2,111		2,096
		$	1,766	$	(453)	$	3,378	$	1,450

Cash Flow Hedges

In 2019, 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. 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. 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.

In May 2020, a Brazilian subsidiary with a Real functional currency entered into foreign currency forward contracts to mitigate foreign currency risk related to a customer order with components purchased in Euros. The forward contract, which qualifies as a cash flow hedge, has a final maturity date of December 2020 and a notional amount to buy 4,500 euros in exchange for a stated amount of Brazilian Real. In March 2020, a subsidiary with a Euro functional currency entered into foreign currency forward contracts to mitigate foreign currency risk related to a large customer order denominated in U.S. dollars. The forward contract, which qualifies as a cash flow hedge, has a final maturity date of June 2021 and a notional amount to sell $27,500 in exchange for a stated amount of Euros.

Net Investment Hedges

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

In the second quarter of 2020, the Company early settled their Australian dollar denominated forward currency contracts and received proceeds of $11,983. In the second quarter of 2019, all existing net investment hedges were early settled and the Company received proceeds of $11,184. The proceeds/gain from these settlements will remain in Other Comprehensive Income (OCI) until either the sale or substantially complete liquidation of the related subsidiaries.

In the second quarter of 2019, the Company entered into 2 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 2 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.

(8) BUSINESS SEGMENTS

The ~~accounting principles used~~Company has 4 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 and distribution 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, substations, and renewable energy generation equipment;

COATINGS: This segment consists of galvanizing, painting, and anodizing services to preserve and ~~powder coating services on a global~~protect metal products; and

~~basis; and~~

IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment, ~~and related~~

parts, ~~and~~ services ~~for the global agricultural industry~~ and tubular products, water management solutions, and technology for ~~industrial customers.~~precision agriculture.

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) BUSINESS SEGMENTS (Continued)~~

Summary by Business


	Thirteen weeks ended				Thirty-nine weeks ended
	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
SALES:
Engineered Support Structures segment:
Lighting, Traffic, and Highway Safety Products	$	181,571	$	191,262	$	534,585	$	530,021
Communication Products	50,677		48,391		139,759		138,710
Access Systems	23,408		28,405		65,439		88,363
Engineered Support Structures segment	255,656		268,058		739,783		757,094
Utility Support Structures segment:
Steel	156,082		153,433		482,430		460,309
Concrete	39,215		28,011		120,653		88,415
Engineered Solar Tracker Solutions	43,287		3,418		56,830		43,642
Offshore and Other Complex Steel Structures	35,809		20,096		71,265		66,343
Utility Support Structures segment	274,393		204,958		731,178		658,709
Coatings segment	87,886		92,957		255,976		278,142
Irrigation segment:
North America	75,803		82,840		281,397		294,127
International	63,406		61,340		165,171		158,054
Irrigation segment	139,209		144,180		446,568		452,181

Total	757,144		710,153		2,173,505		2,146,126
INTERSEGMENT SALES:
Engineered Support Structures segment	711		1,564		8,599		5,066
Utility Support Structures segment	1,914		762		7,278		2,246
Coatings segment	19,188		16,035		56,021		49,900
Irrigation segment	1,361		1,452		4,629		5,564

Total	23,174		19,813		76,527		62,776
NET SALES:
Engineered Support Structures segment	254,945		266,494		731,184		752,028
Utility Support Structures segment	272,479		204,196		723,900		656,463
Coatings segment	68,698		76,922		199,955		228,242
Irrigation segment	137,848		142,728		441,939		446,617

Total	$	733,970	$	690,340	$	2,096,978	$	2,083,350

OPERATING INCOME:
Engineered Support Structures segment	$	25,434	$	21,825	$	46,183	$	55,152
Utility Support Structures segment	25,881		20,362		75,255		61,443
Coatings segment	12,416		13,865		33,618		39,037
Irrigation segment	14,687		18,204		60,701		59,868


Corporate	(16,939)		(13,192)		(43,943)		(38,360)
Total	$	61,479	$	61,064	$	171,814	$	177,140

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) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION~~

The Company has three 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~~

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

~~CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS~~

~~For the Thirty-nine 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

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

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

~~CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS~~

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

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

~~CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS~~

~~For the Thirty-nine 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

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

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

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

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

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 September 30, 2017~~

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

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

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

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 September 24, 2016~~

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

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~September 30, 2017~~

Parent Guarantors Non-
Guarantors Eliminations Total
ASSETS
Current assets:
Cash and cash equivalents $ 118,499
$ 4,167
$ 370,824
$ —
$ 493,490
Receivables, net 152,290
69,781
270,771
—
492,842
Inventories 141,774
46,747
219,046
(4,333 ) 403,234
Prepaid expenses, restricted cash, and other assets 8,903
1,023
40,138
—
50,064
Refundable income taxes 8,493
—
—
—
8,493
Total current assets 429,959
121,718
900,779
(4,333 ) 1,448,123
Property, plant and equipment, at cost 558,484
158,087
453,283
—
1,169,854
Less accumulated depreciation and amortization 369,620
82,708
195,102
—
647,430
Net property, plant and equipment 188,864
75,379
258,181
—
522,424
Goodwill 20,108
110,562
206,084
—
336,754
Other intangible assets 144
32,204
109,742
—
142,090
Investment in subsidiaries and intercompany accounts 1,392,533
1,180,732
1,029,831
(3,603,096 ) —
Other assets 47,613
—
113,167
—
160,780
Total assets $ 2,079,221
$ 1,520,595
$ 2,617,784
$ (3,607,429 ) $ 2,610,171
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt $ —
$ —
$ 949
$ —
$ 949
Notes payable to banks —
—
197
—
197
Accounts payable 59,467
8,032
148,605
—
216,104
Accrued employee compensation and benefits 40,760
8,293
32,441
—
81,494
Accrued expenses 44,896
9,222
52,120
—
106,238
Dividends payable 8,478
—
—
—
8,478
Total current liabilities 153,601
25,547
234,312
—
413,460
Deferred income taxes 15,617
—
12,566
—
28,183
Long-term debt, excluding current installments 750,933
185,674
10,060
(192,465 ) 754,202
Defined benefit pension liability —
—
199,562
—
199,562
Deferred compensation 43,077
—
5,535
—
48,612
Other noncurrent liabilities 3,159
5
10,393
—
13,557
Shareholders’ equity:
Common stock of $1 par value 27,900
457,950
648,682
(1,106,632 ) 27,900
Additional paid-in capital —
166,789
1,107,536
(1,274,325 ) —
Retained earnings 1,974,601
684,532
636,283
(1,320,815 ) 1,974,601
Accumulated other comprehensive income (loss) (288,102 ) 98
(286,906 ) 286,808
(288,102 )
Treasury stock (601,565 ) —
—
—
(601,565 )
Total Valmont Industries, Inc. shareholders’ equity 1,112,834
1,309,369
2,105,595
(3,414,964 ) 1,112,834
Noncontrolling interest in consolidated subsidiaries —
—
39,761
—
39,761
Total shareholders’ equity 1,112,834
1,309,369
2,145,356
(3,414,964 ) 1,152,595
Total liabilities and shareholders’ equity $ 2,079,221
$ 1,520,595
$ 2,617,784
$ (3,607,429 ) $ 2,610,171

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

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

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~December 31, 2016~~

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

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

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

Parent Guarantors Non-
Guarantors Eliminations Total
Cash flows from operating activities:
Net earnings $ 119,851
$ 37,784
$ 67,029
$ (100,715 ) $ 123,949
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization 19,600
11,130
32,770
—
63,500
Noncash loss on trading securities —
—
395
—
395
Stock-based compensation 7,300
—
—
—
7,300
Defined benefit pension plan expense —
—
481
—
481
Contribution to defined benefit pension plan —
—
(26,064 ) —
(26,064 )
Decrease in restricted cash - pension plan trust —
—
12,568
—
12,568
Loss (gain) on sale of property, plant and equipment (725 ) 59
(66 ) —
(732 )
Equity in earnings in nonconsolidated subsidiaries (85,274 ) (15,281 ) —
100,555
—
Deferred income taxes 2,065
—
(1,986 ) —
79
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
Other noncurrent liabilities (381 ) —
(1,246 ) —
(1,627 )
Income taxes payable (refundable) (11,403 ) 802
8,869
—
(1,732 )
Net cash flows from operating activities 45,320
11,130
77,935
19
134,404
Cash flows from investing activities:
Purchase of property, plant and equipment (14,046 ) (5,952 ) (19,900 ) —
(39,898 )
Proceeds from sale of assets 745
(48 ) 878
—
1,575
Acquisitions, net of cash acquired —
—
(5,362 ) —
(5,362 )
Proceeds from settlement of net investment hedge 5,123
—
—
—
5,123
Other, net 15,714
(8,985 ) (10,172 ) (19 ) (3,462 )
Net cash flows from investing activities 7,536
(14,985 ) (34,556 ) (19 ) (42,024 )
Cash flows from financing activities:
Net borrowings under short-term agreements —
—
(549 ) —
(549 )
Principal payments on long-term borrowings

—
(658 ) —
(658 )
Dividends paid (25,386 ) —
—
—
(25,386 )
Dividends to noncontrolling interest —

(3,895 ) —
(3,895 )
Intercompany dividends 22,662
—
(22,662 ) —
—
Intercompany interest on long-term note —
(5,669 ) 5,669
—
—
Intercompany capital contribution (7,375 ) 7,375
—
—
—
Proceeds from exercises under stock plans 12,446
—
—
—
12,446
Purchase of common treasury shares - stock plan exercises (3,929 ) —
—
—
(3,929 )
Net cash flows from financing activities (1,582 ) 1,706
(22,095 ) —
(21,971 )
Effect of exchange rate changes on cash and cash equivalents —
245
22,888
—
23,133
Net change in cash and cash equivalents 51,274
(1,904 ) 44,172
—
93,542
Cash and cash equivalents—beginning of year 67,225
6,071
326,652
—
399,948
Cash and cash equivalents—end of period $ 118,499
$ 4,167
$ 370,824
$ —
$ 493,490

~~VALMONT INDUSTRIES, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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

~~(Unaudited)~~

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

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

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

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~~forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These ~~forward‑looking~~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~~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~~forward-looking statements. These factors include, among other things, the continuing and developing effects of COVID-19 including the effects of the outbreak on the general economy and the specific effects on the Company's business and that of its customers and suppliers, 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~~.28, 2019. Segment net sales in the table below and elsewhere are presented net of intersegment sales. See Note 8 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
September 30, 2017 September 24, 2016 % Incr. (Decr.) September 30, 2017 September 24, 2016 % Incr. (Decr.)
Consolidated
Net sales $ 680.8
$ 610.2
11.6 % $ 2,031.0
$ 1,847.1
10.0 %
Gross profit 163.6
155.0
5.5 % 511.5
491.1
4.2 %
as a percent of sales
24.0 % 25.4 % 25.2 % 26.6 %
SG&A expense 103.7
101.8
1.9 % 308.8
303.7
1.7 %
as a percent of sales
15.2 % 16.7 % 15.2 % 16.4 %
Operating income 59.9
53.2
12.6 % 202.7
187.4
8.2 %
as a percent of sales
8.8 % 8.7 % 10.0 % 10.1 %
Net interest expense 9.9
10.3
(3.9 )% 30.1
31.0
(2.9 )%
Effective tax rate 27.5 % 32.6 % 28.9 % 31.7 %
Net earnings $ 35.2
$ 28.2
24.8 % $ 119.9
$ 103.2
16.2 %
Diluted earnings per share $ 1.55
$ 1.24
25.0 % $ 5.28
$ 4.54
16.3 %
Engineered Support Structures (ESS)
Net sales $ 209.8
$ 193.1
8.6 % $ 571.3
$ 554.9
3.0 %
Gross profit 50.9
54.3
(6.3 )% 145.2
156.9
(7.5 )%
SG&A expense 34.6
34.0
1.8 % 99.5
103.3
(3.7 )%
Operating income 16.3
20.3
(19.7 )% 45.7
53.6
(14.7 )%
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 %
Gross profit 39.4
31.8
23.9 % 115.4
94.2
22.5 %
SG&A expense 17.3
15.6
10.9 % 50.4
46.0
9.6 %
Operating income 22.1
16.2
36.4 % 65.0
48.2
34.9 %
Coatings
Net sales $ 67.7
$ 60.0
12.8 % $ 191.6
$ 182.2
5.2 %
Gross profit 20.3
17.9
13.4 % 58.5
59.1
(1.0 )%
SG&A expense 5.8
6.2
(6.5 )% 22.5
22.0
2.3 %
Operating income 14.5
11.7
23.9 % 36.0
37.1
(3.0 )%
Irrigation
Net sales $ 145.1
$ 125.5
15.6 % $ 496.7
$ 432.8
14.8 %
Gross profit 42.1
38.1
10.5 % 153.6
141.4
8.6 %
SG&A expense 23.9
22.7
5.3 % 70.4
66.1
6.5 %
Operating income 18.2
15.4
18.2 % 83.2
75.3
10.5 %
Adjustment to LIFO inventory valuation method
Gross profit $ (1.6 ) $ (2.1 ) NM $ (2.8 ) $ (3.2 ) NM
Operating income (1.6 ) (2.1 ) NM (2.8 ) (3.2 ) 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 )%
Operating loss (11.0 ) (12.1 ) 9.1 % (33.6 ) (32.7 ) (2.8 )%

~~NM=Not meaningful~~


	Thirteen weeks ended								Thirty-nine weeks ended
	September 26, 2020			September 28, 2019			% Incr. (Decr.)		September 26, 2020			September 28, 2019			% Incr. (Decr.)
Consolidated
Net sales	$	734.0		$	690.3		6.3	%	$	2,097.0		$	2,083.4		0.7	%
Gross profit	190.7			173.3			10.0	%	560.9			516.1			8.7	%
as a percent of sales	26.0		%	25.1		%			26.7		%	24.8		%
SG&A expense (1)	129.3			112.2			15.2	%	389.1			$	339.0		14.8	%
as a percent of sales	17.6		%	16.3		%			18.6		%	16.3		%
Operating income	61.5			61.1			0.7	%	171.8			177.1			(3.0)	%
as a percent of sales	8.4		%	8.9		%			8.2		%	8.5		%
Net interest expense	10.0			9.0			11.1	%	28.6			27.2			5.1	%

Effective tax rate	23.0		%	24.5		%			26.9		%	24.7		%
Net earnings	$	39.3		$	38.0		3.4	%	$	104.9		$	113.9		(7.9)	%
Diluted earnings per share	$	1.84		$	1.75		5.1	%	$	4.89		$	5.22		(6.3)	%
Engineered Support Structures (ESS)
Net sales	$	255.0		$	266.5		(4.3)	%	$	731.2		$	752.0		(2.8)	%
Gross profit	71.3			62.4			14.3	%	201.4			177.8			13.3	%
SG&A expense	45.8			40.5			13.1	%	155.2			122.6			26.6	%
Operating income	25.5			21.9			16.4	%	46.2			55.2			(16.3)	%
Utility Support Structures (Utility)
Net sales	$	272.5		$	204.2		33.4	%	$	723.9		$	656.5		10.3	%
Gross profit	54.7			44.0			24.3	%	156.1			133.6			16.8	%
SG&A expense	28.8			23.7			21.5	%	80.8			72.2			11.9	%
Operating income	25.9			20.3			27.6	%	75.3			61.4			22.6	%
Coatings
Net sales	$	68.7		$	76.9		(10.7)	%	$	200.0		$	228.3		(12.4)	%
Gross profit	22.6			24.0			(5.8)	%	64.2			71.7			(10.5)	%
SG&A expense	10.2			10.1			1.0	%	30.6			32.7			(6.4)	%
Operating income	12.4			13.9			(10.8)	%	33.6			39.0			(13.8)	%
Irrigation
Net sales	$	137.8		$	142.7		(3.4)	%	$	441.9		$	446.6		(1.1)	%
Gross profit	42.2			42.9			(1.6)	%	139.2			133.0			4.7	%
SG&A expense	27.5			24.7			11.3	%	78.5			73.1			7.4	%
Operating income	14.7			18.2			(19.2)	%	60.7			59.9			1.3	%








Net corporate expense
SG&A	$	17.0		$	13.2		28.8	%	$	44.0		$	38.4		14.6	%
Operating loss	(17.0)			(13.2)			(28.8)	%	(44.0)			(38.4)			(14.6)	%

(1) The thirty-nine weeks ended September 26, 2020 includes impairment of goodwill and intangible assets.

Overview

On a consolidated basis, ~~the increase in~~ net sales were higher in the third quarter and first three quarters of ~~fiscal 2017,~~2020, as compared ~~with~~to the ~~third quarter of fiscal 2016, reflected~~same periods in 2019, due to higher sales in ~~all reportable segments except for~~ the ~~Energy & Mining segment. On a year-to-date basis, higher consolidated~~Utility segment that was partially offset by lower sales in ~~2017, as compared to 2016, reflected increases across all reportable~~ESS, Coatings, and Irrigation segments. The ~~changes~~change in net sales in the third quarter and first three quarters of fiscal ~~2017,~~2020, as compared with ~~fiscal 2016, were~~the same periods in 2019, is as follows:


	Third quarter
	Total		ESS		Utility		Coatings		Irrigation
Sales - 2019	$	690.3	$	266.5	$	204.2	$	76.9	$	142.7
Volume	60.0		(17.2)		83.2		(8.9)		2.9
Pricing/mix	(16.8)		2.5		(17.2)		—		(2.1)
Acquisition/(divestiture)	2.3		—		1.7		—		0.6
Currency translation	(1.8)		3.2		0.6		0.7		(6.3)
Sales - 2020	$	734.0	$	255.0	$	272.5	$	68.7	$	137.8

Third quarter
Total ESS E&M Utility Coatings Irrigation
Sales - 2016 $ 610.2
$ 193.1
$ 81.2
$ 150.4
$ 60.0
$ 125.5
Volume 29.7
15.9
(6.9 ) 1.6
1.5
17.6
Pricing/mix 31.7
(3.5 ) 2.0
26.5
5.6
1.1
Acquisitions 1.6
1.6
—
—
—
—
Currency translation 7.6
2.7
3.4
—
0.6
0.9
Sales - 2017 $ 680.8
$ 209.8
$ 79.7
$ 178.5
$ 67.7
$ 145.1


	Year-to-date
	Total		ESS		Utility		Coatings		Irrigation
Sales - 2019	$	2083.4	$	752.0	$	656.5	$	228.3	$	446.6
Volume	50.9		(20.8)		76.2		(22.3)		17.8
Pricing/mix	(16.2)		5.7		(11.9)		(3.6)		(6.4)
Acquisition/(divestiture)	4.6		2.6		3.5		—		(1.5)
Currency translation	(25.7)		(8.3)		(0.4)		(2.4)		(14.6)
Sales - 2020	$	2,097.0	$	731.2	$	723.9	$	200.0	$	441.9

Year-to-date
Total ESS E&M Utility Coatings Irrigation
Sales - 2016 $ 1,847.1
$ 554.9
$ 231.3
$ 445.9
$ 182.2
$ 432.8
Volume 110.4
20.4
(4.9 ) 48.2
(5.6 ) 52.3
Pricing/mix 63.1
(2.2 ) 5.1
42.4
14.5
3.3
Acquisitions 1.6
1.6
—
—
—
—
Currency translation 8.8
(3.4 ) 3.4
—
0.5
8.3
Sales - 2017 $ 2,031.0
$ 571.3
$ 234.9
$ 536.5
$ 191.6
$ 496.7

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,~~2020, as compared to ~~the same periods in 2016, resulting in higher average~~2019, 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 in India~~the following businesses:

•In the first quarter of 2020, we acquired the remaining 49% of AgSense that the Company did not own(Irrigation).

•In the first quarter of 2020, we acquired 16% of the remaining 25% of Convert Italia that the Company did not own (Utility).

•Energia Solar Do Brasil ("~~Aircon"~~Solbras") in the ~~third~~second quarter of ~~2017~~2020, a leading provider of solar energy solutions for agriculture (Irrigation).

COVID-19 Impact on Financial Results and Liquidity

We are considered an essential business because of the products and services that ~~is included~~serve critical infrastructure sectors as defined by many governments around the world. All our manufacturing facilities are open and fully operational as of September 26, 2020. Our manufacturing facilities in ~~our ESS segment.~~

~~Restructuring Plan~~

~~In July 2016, the Company identified a restructuring plan in Australia/~~Argentina, France, Malaysia, New Zealand, ~~(the "2016 Plan") focused primarily~~Philippines, and South Africa were temporarily closed for part of of the first half of 2020 due to government mandates. We continue to monitor incidence of COVID-19 on ~~closing~~a continuous basis, particularly in areas reporting recent increases in infection. To protect the

safety, health and ~~consolidating locations within the Energy~~well-being of employees, customers, suppliers and ~~Mining~~communities, CDC and ~~Coatings segments. The Company incurred pre-tax expenses~~WHO guidelines are being followed in all facilities.

We generated strong cash flows from the 2016 Plan of $2.1 million in the third quarter of 2016. 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 expensesoperating activities during the ~~third quarter~~first three quarters of ~~2016.~~2020 and expect cash flows from operating activities, net of capital expenditures, to be in excess of net earnings for the full fiscal 2020 year. Our main focus is to maintain liquidity to support the working capital needs of our operations and maintain our investment grade credit rating.

The ultimate magnitude of COVID-19, including the extent of its impact on the Company’s financial and operational results, cash balances and available borrowings on our line of credit, will be determined by the length of time the pandemic continues, its effect on the demand for the Company’s products and services and supply chain, as well as the effect of governmental regulations imposed in response to the pandemic.

Currency Translation

In the third quarter and first three quarters of ~~fiscal 2017,~~2020, we realized ~~an increase~~a decrease in operating profit, as compared with ~~fiscal 2016,~~2019, 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		Utility		Coatings		Irrigation		Corporate
Third quarter	$	0.4	$	0.2	$	0.1	$	—	$	0.1		$	—	$	—	Third quarter	$	(1.4)	$	—	$	(0.2)	$	0.1	$	(1.3)	$	—

Year-to-date	$	1.3	$	0.1	$	0.1	$	—	$	(0.1	)	$	1.2	$	—	Year-to-date	$	(2.7)	$	(0.6)	$	—	$	(0.2)	$	(1.9)	$	—

Gross Profit, SG&A, and Operating Income

At a consolidated level, ~~the reduction in~~ gross ~~margin (gross~~ profit as a percent of ~~sales)~~sales was higher in the third quarter and first three quarters of ~~2017,~~2020, as compared with the same periods in ~~2016, was primarily~~2019, due to ~~higher~~lower raw material costs across the Company, improved selling prices across ~~most~~our infrastructure businesses, and improved volumes for the Irrigation segment and associated operating leverage of ~~our businesses. Gross~~fixed costs. In the third quarter of 2020 as compared to 2019, gross profit was higher for ESS and Utility but lower for Coatings and Irrigation. On a year-to-date basis, gross profit improved for the ESS, Utility, and Irrigation segments in 2020, but was lower for Coatings due to lower sales volumes.

SG&A expenses increased in the third quarter and first three quarters of ~~2017,~~2020, as compared to the same periods in ~~2016,~~2019. The increase was due to ~~increased~~recording a partial impairment of goodwill and tradename for the Access Systems business, higher compensation related costs including sales ~~volumes in most operating segments. The Irrigation and Utility segments realized increases in~~commissions for the ~~third quarter and first three quarters of 2017, while ESS and Energy & Mining realized a decrease in gross profit primarily~~North American infrastructure businesses, higher incentives due to ~~sales pricing that did not fully recover higher raw material~~improved operations, and restructuring activities. These increases were partially offset by lower travel costs, foreign currency translation effects, and ~~an unfavorable sales mix. The Coatings segment realized higher gross profit in the third quarter, but lower gross profit~~reduced SG&A deferred compensation expense in the first three quarters of ~~2017 as compared to the same periods in fiscal 2016.~~

~~The Company saw~~2020 (offset by an increase ~~in SG&A in the third quarter and first three quarters~~ of fiscal 2017, 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 ofin other ~~income.~~expense).

In the third quarter of ~~2017,~~2020, 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,~~third quarter of 2019, operating income was higher in ~~2017 for~~ the Utility and ~~Irrigation~~ESS segments and lower for the ~~ESS~~Irrigation and Coatings segments. The overall increase in operating income in the third quarter can be attributed to higher utility sales volumes and an approximate $7.0 million loss recognized on certain access systems projects in 2019 that did not recur. Operating income decreased in the first three quarters of ~~2017,~~2020 as compared to the same ~~periods~~period in ~~2016, is primarily attributable~~2019, due to ~~increased~~the goodwill and tradename impairment for the Access Systems business, certain restructuring activities, and lower volumes for the Coatings businesses. The decrease was partially offset by lower raw material costs and improved sales volumes in the ~~Utility~~Irrigation and ~~Irrigation~~Utility segments.

Net Interest Expense and Debt

Net interest expense in the third quarter and first three quarters of ~~2017, as compared with~~2020 was higher than the same periods in ~~2016, was consistent due to minimal changes in short and long-term borrowings.~~2019. Interest income ~~increased due to more cash on hand to invest.~~

~~Other Income/Expense~~

~~The change in other income/expense~~was lower in the third quarter and first three quarters of ~~2017,~~2020, as compared ~~with the same periods in 2016, was primarily~~to 2019, due to alower interest rates.

Other Income/Expenses

The change in other income/expenses in the third quarter and first three quarters of 2020, as compared to 2019, was due to the change in valuation of deferred compensation ~~assets. This change~~assets which resulted in ~~lower~~additional other income ~~in the third quarter~~ of ~~$0.4~~$0.5 million ~~but increased~~and reduced other income ~~for the first three quarters~~ of ~~$1.7 million.~~$3.7 million, respectively. This amount is shown as "Gain on investments (unrealized)" on the condensed consolidated statements of earnings. 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 losses.~~gains/losses that was less favorable in 2020.

Income Tax Expense

Our effective income tax rate in the third quarter and first three quarters of ~~2017~~2020 was ~~27.5%~~23.0% and ~~28.9%~~26.9%, ~~respectively,~~ compared to ~~32.6%~~24.5% and ~~31.7%~~24.7% in the third quarter and first three quarters of ~~2016, respectively. A $1.9 million reversal~~2019. On a year-to-date basis, the increase in the effective tax rate is a result of ~~a valuation allowance against certain foreign net operating loss carryforwards~~the partial impairment of goodwill and tradename for the Access Systems business that is not fully tax deductible. An increase in ~~third quarter of 2017 contributed to~~ the ~~lower~~

~~tax rate. In addition, the Company recorded $1.8 million of deferred income tax expense related to decreased future~~U.K. corporate tax ~~rates in the United Kingdom~~rate effective in the third quarter of ~~2016.~~2020 provided a one time deferred tax benefit of $1.5 million reducing the effective tax rate.

Earnings attributable to noncontrolling interests was ~~consistent~~lower in the third quarter and first three quarters of ~~2017,~~2020, as compared to 2019. The decrease can be attributed to the ~~same periods~~acquisition of the remaining noncontrolling interests of AgSense and partial acquisition of the noncontrolling interest of Convert in ~~2016.~~the first quarter of 2020.

Cash Flows from Operations

Our cash flows provided by operations was ~~$134.4~~ $273.0 million in the first three quarters of fiscal ~~2017,~~2020, as compared with ~~$127.3~~$239.2 million provided by operations in the first three quarters of ~~2016.~~2019. The increase in operating cash flow in the first three quarters of ~~fiscal 2017,~~2020, as compared with ~~2016,~~2019, was ~~primarily the result of~~due to improved ~~net earnings mostly offset by higher net~~ working capital ~~tied~~management. Working capital is higher primarily due to ~~increased sales volumes.~~

~~Engineered Support Structures (ESS) segment~~

~~The~~an increase in cash balances.

ESS segment

Net sales were lower in the third quarter and first three quarters of ~~fiscal 2017,~~2020 as compared ~~with~~to 2019, primarily driven by lower sales volumes. Lighting, traffic, and highway safety product sales and access systems sales volumes were lower in the ~~same periods~~third quarter of ~~2016, was due~~2020 as compared to ~~improved roadway~~2019, while communication product sales volumes were higher. In the first three quarters of 2020, sales were higher for the lighting, traffic, and ~~higher~~highway safety and communication ~~product line sales volumes.~~products businesses and lower for access systems.

Global lighting, ~~and~~ traffic, and ~~roadway~~highway safety product sales in the third quarter and first three quarters of ~~2017 were~~2020 was modestly lower by $9.7 million and higher by $4.6 million, as compared to the same periods in fiscal ~~2016, primarily due~~2019. Sales volumes decreased in North America in the third quarter of 2020, attributable to ~~increased~~higher shipments in the third quarter of 2019 resulting from the recovery from a flood event in early 2019 at one of our facilities. On a year-to-date basis, sales volumes in ~~roadway~~North America increased due to strong backlogs in transportation markets. Europe sales volumes were lower in the third quarter and first three quarters due to the ceasing of operations in Morocco, the temporary plant shutdown and continued slower markets in France due to COVID-19, and unfavorable foreign currency translation effects. Lighting, traffic, and highway safety product sales ~~which is a product line outside of North America. In~~in the Asia-Pacific region decreased in the third quarter and first three quarters of ~~2017,~~2020, as compared to ~~2016, sales volumes~~2019, due primarily to continued market weakness 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 comparedIndia attributed to the same periods in fiscal 2016. The domestic markets in general remain subdued in Europe. The increase in sales volume was partially offset by unfavorable currency translation effects on a year-to-date basis.COVID-19.

Communication product line sales were higher by $2.3 million and $1.1 million in the third quarter and first three quarters of 2020, as compared with the same periods in 2019. Communication product sales in Europe improved due to an increase in volume in the U.K. and Asia-Pacific sales volumes increased marginally. In North America, communication product sales volumes decreased in the third quarter and first three quarters of 2020 due to lower demand for communication components.

Access Systems product line net sales decreased in the third quarter and first three quarters of 2020, as compared to 2019, by $5.0 million and $22.9 million. The product line exited selling detention center systems and portions of the industrial product line which contributed to the sales decline along with unfavorable foreign currency translation effects. For the first half of 2020, subdued construction spending in Australia also contributed to a decrease in sales volume.

Gross profit was higher in the third quarter and first three quarters of ~~fiscal 2017,~~2020, as compared ~~with the same periods in fiscal 2016. In both North America and Asia-Pacific, communication structure and component sales increased~~to 2019, due to ~~higher demand from the continued network expansion by providers.~~

~~Gross profit, as a percentage~~lower cost of ~~sales, and operating income for~~raw materials across the segment ~~were lower~~and an approximate $7.0 million loss recognized on certain access systems projects 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~~2019 that ~~the business was~~did not ~~able to fully recover through higher sales pricing.~~recur. SG&A spending was higher in the third quarter of ~~2017, as compared to 2016,~~2020 versus 2019 due to ~~foreign currency translation effects. SG&A spending was lower~~higher sales commissions and incentives due to improved operations in North America. For the first three quarters of ~~2017, as compared to 2016, due primarily to lower commissions owed on communication product line sales, reduced incentives~~2020, SG&A also increased due to ~~decreased operating performance,~~recording a partial goodwill and ~~currency translation effects.~~

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

~~The decrease in net sales in~~tradename impairment for the ~~third quarter~~Access Systems business 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 the third quarter and first three quarters of 2017 were higher than the same periods in 2016 due to higher sales pricing and favorable currency translation effects. The increase was partially offset by lower external sales volumes in Asia.

Offshore and other complex structures sales decreased in the third quarter of 2017, as compared to the same period in 2016, due to lower volumes that were partially offset by favorable currency translation effects. Sales$16.6 million, Operating income decreased in the first three quarters of ~~2017, as compared to 2016,~~2020 due to ~~lower sales pricing that was~~the goodwill and tradename impairment of the Access Systems business, partially offset by ~~volume improvements primarily~~lower raw material costs for all businesses and a loss recorded on certain access systems projects 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 2017.2019.

Utility ~~Support Structures (Utility)~~ segment

In the Utility segment, sales increased in the third quarter and first three quarters of ~~2017,~~2020, as compared with ~~2016,~~2019, due to large project work for the ~~higher costs of~~international solar tracking solutions product line and improved sales volumes for steel and ~~a favorable sales mix.~~concrete structures in North America. A number 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 to 2016, improved sales demand in North America~~This resulted in ~~increased sales volumes in tons~~a decrease to the average selling prices for our steel utility structures ~~also contributed to the increase in sales. Sales volumes in tons~~product line for ~~concrete utility structures were also higher in~~ the third quarter and first three quarters of ~~2017,~~2020, as compared ~~to the same periods in 2016. International utility structures sales decreased in 2017 due to lower volumes.~~with 2019.

~~Gross profit as a percentage of~~ Offshore and solar tracking solutions sales increased in the third quarter and first three quarters of ~~2017,~~2020, as compared to ~~the same periods in 2016,~~2019, due to ~~improved pricing~~a large increase in sales volumes in the third quarter. The increase for both businesses can be attributed to large projects in the third quarter of 2020.

Gross profit increased in the third quarter and first three quarters of 2020, as compared to 2019, due to higher sales ~~mix.~~volumes and its associated operating leverage of fixed costs. In addition, the business incurred approximately $3.0 million of inspection costs during 2019 to finalize the requirements from a 2015 commercial settlement. Partially offsetting that 2019 charge was a $2.8 million impairment of a facility in 2020 that is classified as an asset held for sale. SG&A expense was higher in the third quarter and first three quarters of ~~2017,~~2020, as compared with ~~the same periods in 2016,~~2019, due to higher ~~incentive expense~~incentives due to improved operating results in North America and ~~commission expense~~a $2.7 million allowance recognized in third quarter 2020 against an international accounts receivable. The increase in operating income for the third quarter 2020, as compared with 2019, is primarily due to higher sales volumes. The improvement in operating income margin in 2020 versus 2019 is also attributed to disciplined product pricing; gross profit margins increased as lower raw material costs was slightly more than the ~~increased~~effect on net sales ~~volumes. Operating income increased~~from lower average selling prices.

Coatings segment

Coatings segment sales decreased in the third quarter and first three quarters of ~~2017,~~2020, as compared ~~with 2016,~~to the same periods in 2019, due to ~~the increased~~lower volumes in North America and Asia, reduced sales pricing attributed to lower zinc costs, and unfavorable foreign currency translation. Sales volumes ~~and improved sales pricing.~~

~~Coatings segment~~

~~Coatings segment sales increased~~decreased in North America in the third quarter and first three quarters of ~~2017,~~2020, as compared to ~~the same periods in 2016,~~2019, due primarily to ~~increased~~decreased industrial production attributed largely to the economic impacts from COVID-19. In Asia-Pacific region, sales ~~prices~~volumes improved in Australia, which were more than offset by decreased volumes in Asia that were impacted by the continued slowdown caused by the economic impacts from COVID-19. Sales pricing also declined in Asia-Pacific due to ~~recover higher~~lower zinc costs ~~globally. External sales volumes in North America increased in~~and customer mix.

SG&A expense was flat for the third quarter ~~but were~~and lower ~~year-to-date, while intercompany volumes increased~~in the first three quarters of 2020, as compared to 2019, due to one-time expenses associated with a legal settlement in 2019. Operating income was lower in the third quarter and first three ~~quarters. In the Asia-Pacific region, improved demand/volume provided an increase in net sales.~~

~~SG&A expense was lower in the third quarter~~quarters of ~~2017, as~~2020, compared to ~~2016,~~the same periods in 2019, due to ~~restructuring actions undertaken~~sales volume decreases in ~~2016 to reduce~~North America and Asia and the ~~cost structure in Australia. SG&A expense was comparable in the first three quarters~~associated operating deleverage of 2017, as compared to 2016. Operating income was higher in the third quarter of 2017 compared to 2016, due to 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.fixed costs.

Irrigation segment

The ~~increase~~decrease in Irrigation segment net sales in the third quarter of 2017, as compared to 2016, was primarily due to sales volume increases for international irrigation. On a year-to-date basis in 2017 as compared to 2016, the sales increase is driven by improved volumes for both the domestic and international irrigation businesses. In North America, when comparing 2017 to the same periods of 2016, 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 higher service parts sales on a year-to-date basis. International sales increased in the third quarter and first three quarters of ~~2017,~~2020, as compared to ~~the same periods in 2016,~~2019, is primarily due to ~~volume increases across most regions and favorable~~unfavorable foreign currency translation effects (primarily Brazil real) that were partially offset by sales volume improvements in international markets. Brazil, Australia, and Argentina drove the sales volume improvements for international irrigation along with the acquisition of Solbras, which was partially offset by unfavorable currency translation effects from a weaker Brazil real and South ~~Africa.~~African rand. In North America, slightly higher sales volumes for systems was more than offset by decrease in sales volumes of other products, including industrial tubing. For the first three quarters of 2020, sales of technology-related products and services continue to increase, as growers continued adoption of technology to reduce costs and enhance profitability.

SG&A was higher in the third quarter and first three quarters of ~~fiscal 2017,~~2020, as compared ~~with the same periods in 2016. The increase can primarily be attributed~~to 2019, due to higher ~~incentive costs due to improved business results and currency translation effects related to the international irrigation business.~~product development expenses. Operating income for the segment decreased in the third quarter due to higher product development expenses and unfavorable currency translation effects. Operating income increased in the first three quarters of 2020 over 2019, as a result of lower raw material costs and higher sales volumes in international markets.

Net corporate expense

Corporate SG&A expense was higher in the third quarter and first three quarters of ~~fiscal 2017 over the same periods in 2016, primarily due~~2020, as compared to ~~North America and international irrigation sales volume increases, productivity improvements, and favorable foreign currency translation effects.~~

~~Net corporate expense~~

~~Corporate SG&A expense was lower in~~2019. The increase the third quarter is attributed to higher incentive accruals related to improved business performance. The increase in the first three quarters of ~~2017, as compared to the same period in 2016,~~2020 is due to ~~$0.4 million lower pension~~higher incentive expense, ~~for~~partially offset by the ~~Delta Pension Plan and $0.4 million~~change in valuation of ~~lower~~ deferred compensation ~~expenses that~~assets which resulted in lower expense of $3.7 million. The change 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~~income/expenses.

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.

Liquidity and Capital Resources

Cash Flows

Working Capital and Operating Cash Flows-Net working capital was ~~$1,034.7~~$934.2 million at September ~~30, 2017~~,26, 2020, as compared to ~~$903.4~~$918.4 million at December ~~31, 2016~~.28, 2019. The increase in net working capital in ~~2017 mainly resulted from increased receivables,~~2020 is attributed to an increase in cash ~~on hand, and inventory, partially offset by higher accrued expenses and accounts payable.~~balances. Cash flow provided by operations was ~~$134.4~~$273.0 million in the first three quarters of ~~2017,~~2020, as compared with ~~$127.3~~$239.2 million ~~in first three quarters of 2016. The increase in operating cash flow~~ in the first three quarters of ~~2017,~~2019. The increase in operating cash flows in 2020, as compared to ~~2016,~~2019, 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.

Investing Cash Flows-Capital spending in the first three quarters of fiscal ~~2017~~2020 was ~~$39.9~~$71.0 million, as compared to ~~$42.2~~$72.0 million for the same period in ~~2016. Capital spending projects~~2019. The decrease in ~~2017 and 2016 related~~investing cash outflows in the first three quarters quarter of 2020, as compared to ~~investments~~2019, can be attributed to a reduction in ~~machinery and equipment across all businesses.~~cash paid for acquisitions. We expect our capital ~~spending for the 2017 fiscal year~~expenditures to be ~~approximately $60 million.~~between $85.0 million and $95.0 million for fiscal 2020.

Financing Cash Flows-Our total ~~interest‑bearing~~interest-bearing debt ~~decreased slightly to~~ ~~$755.3~~was $795.9 million at September ~~30, 2017~~ ~~from~~ ~~$756.4~~26, 2020 and $787.5 million at December ~~31, 2016~~.28, 2019. Financing cash ~~flows changed from a use of approximately $82.4~~outflows were $110.0 million and $82.7 million in the first three quarters of ~~fiscal 2016 to a use of $22.0 million~~2020 and 2019, respectively. The increase in ~~the first three quarters of fiscal 2017. The reduction of~~ financing cash outflows in the first three quarters of ~~2017,~~2020, as compared to ~~2016,~~2019, was due to the ~~Company purchasing $46.6 million of treasury shares under our share repurchase program and the~~higher amounts paid to purchase ~~of certain~~ noncontrolling interests ~~totaling $11.0 million~~and lower net borrowings.

Guarantor Summarized Financial Information

We are providing the following information in ~~2016.~~compliance with Rule 3-10 and Rule 13-01 of Regulation S-X with respect to our two 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”). The Parent is the Issuer of the notes and consolidates all Guarantors.

The financial information of Issuer and Guarantors is presented on a combined basis with intercompany balances and transactions between Issuer and Guarantors eliminated. The Issuer’s or Guarantors' amounts due from, amounts due to, and transactions with non-guarantor subsidiaries are separately disclosed.

Combined financial information is as follows:

Supplemental Combined Parent and Guarantors Financial Information

For the thirteen and thirty-nine weeks ended September 26, 2020 and September 28, 2019


	Thirteen weeks ended				Thirty-nine weeks ended
Dollars in thousands	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Net sales	$	438,947	$	433,533	$	1,377,294	$	1,314,108
Gross Profit	115,116		114,538		385,314		340,645
Operating income	35,261		44,846		149,866		137,343
Net earnings	13,760		24,083		87,235		82,349
Net earnings attributable to Valmont Industries, Inc.	13,759		24,083		87,249		82,349

Supplemental Combined Parent and Guarantors Financial Information

September 26, 2020 and December 28, 2019


Dollars in thousands	September 26, 2020		December 28, 2019
Current assets	$	777,934	$	728,457
Noncurrent assets	374,796		354,173
Current liabilities	295,544		312,984
Noncurrent liabilities	1,121,280		1,076,491
Noncontrolling interest in consolidated subsidiaries	1,585		—

Included in noncurrent assets is a due from non-guarantor subsidiaries receivable of $83,977 and $54,915 at September 26, 2020 and December 28, 2019. Included in noncurrent liabilities is a due to non-guarantor subsidiaries payable of $262,680 and $249,056 at September 26, 2020 and December 28, 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. NoShare repurchases were temporarily suspended at the end of the first quarter of 2020 until September 2020 as a precaution to preserve liquidity. We acquired 251,136 treasury shares ~~were repurchased~~for approximately $28.0 million under our share repurchase program during the first three quarters of ~~2017.~~2020. As of September ~~30, 2017,~~26, 2020, we have approximately ~~$132.2~~$176.4 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~~26, 2020 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~~436.5 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~~297.6 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~~26, 2020 and December ~~31, 2016,~~28, 2019, we had no$41.9 million and $29.0 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,~~26, 2020, we had the ability to borrow ~~$585.2~~$542.6 million under this facility, after consideration of standby letters of credit of ~~$14.8~~$15.5 million associated with certain insurance obligations and international sales commitments. We also maintain certain short-term bank lines of credit totaling ~~$113.0~~$134.2 million, ~~$112.8~~$120.0 million of which was unused at September ~~30, 2017.~~26, 2020.

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.

At September ~~30, 2017,~~26, 2020, we were in compliance with all covenants related to the debt agreements. The key covenant calculations at September ~~30, 2017~~26, 2020 were as ~~follows:~~follows (in 000's):


Interest-bearing debt	$	795,937
Adjusted EBITDA-last four quarters	344,627
Leverage ratio	2.31

Adjusted EBITDA-last four quarters	$	344,627
Interest expense-last four quarters	40,748
Interest earned ratio	8.46

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~~(October 29, 2019 through September ~~30, 2017)~~26, 2020) is as ~~follows:~~follows. The last four quarters information ended September 26, 2020 is calculated by taking the full fiscal year ended December 28, 2019, subtracting the first three quarters ended September 28, 2019, and adding the first three quarters ended September 26, 2020.


Net cash flows from operations	$	341,430
Interest expense	40,748
Income tax expense	50,613
Impairment of property, plant and equipment	(2,811)
Impairment of goodwill and intangible assets	(16,638)
Change in investment	85
Deferred income tax benefit	6,908
Noncontrolling interest	(2,481)
Stock-based compensation	(11,434)
Pension plan expense	5,532
Contribution to pension plan	18,433
Changes in assets and liabilities	(112,236)
Other	1,351
EBITDA	319,500
Cash restructuring expenses	5,678

Impairment of goodwill and intangible assets	16,638
Impairment of property, plant and equipment	2,811

Adjusted EBITDA	$	344,627

Net cash flows from operations $ 226,318
Interest expense 44,445
Income tax expense 42,666
Impairment of property, plant and equipment (481 )
Loss on investment (8 )
Change in fair value of contingent consideration (285 )
Deferred income tax benefit 22,072
Noncontrolling interest (5,292 )
Stock-based compensation (10,659 )
Increase in restricted cash - pension plan trust (12,568 )
Pension plan expense (865 )
Contribution to pension plan 26,840
Changes in assets and liabilities 29,167
Other 350
EBITDA 361,700
Reversal of contingent liability (16,591 )
Impairment of property, plant and equipment 481
Adjusted EBITDA $ 345,590


Net earnings attributable to Valmont Industries, Inc.	$	144,778
Interest expense	40,748
Income tax expense	50,613
Depreciation and amortization expense	83,361
EBITDA	319,500
Cash restructuring expenses	5,678

Impairment of goodwill and intangible assets	16,638
Impairment of property, plant, and equipment	2,811
Adjusted EBITDA	$	344,627

Net earnings attributable to Valmont Industries, Inc. $ 189,915
Interest expense 44,445
Income tax expense 42,666
Depreciation and amortization expense 84,674
EBITDA 361,700
Reversal of contingent liability (16,591 )
Impairment of property, plant, and equipment 481
Adjusted EBITDA $ 345,590

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 for U.S. income taxes in our financial statements on approximately $437.8 million of undistributed earnings of our foreign subsidiaries, as we intend to reinvest those earnings. Of our cash balances of ~~$493.5~~$443.1 million at September ~~30, 2017,~~26, 2020, approximately ~~$370.5~~$221.7 million is held in ~~entities outside the United States.~~our non-U.S. subsidiaries. If we ~~need to repatriate~~distributed our foreign cash balances ~~to the United States to meet our cash needs, income~~certain taxes would be ~~paid to the extent that those cash repatriations were undistributed earnings of our~~applicable. At September 26, 2020, we have a liability 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 $0.8 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.~~28, 2019.

Off Balance Sheet Arrangements

There have been no material 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.~~28, 2019.

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~~28, 2019 during the ~~quarter~~nine months ended September ~~30, 2017.~~26, 2020, with the exception of the change in method of accounting for certain inventory, previously accounted for on the LIFO basis, so that now all inventory is valued on the FIFO basis.

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~~.26, 2020. For additional information, refer to the section "Risk Management" in our Form 10-K for the fiscal year ended December ~~31, 2016~~.28, 2019.

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 1A – Risk Factors

There have been no material changes from risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K. See the discussion of the Company’s risk factors under Part I, Item 1A in each of the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2019 and Quarterly Report on Form 10-Q for the quarter ended March 28, 2020.

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)
June 28, 2020 to July 25, 2020	—	$	—	—	$	176,445,000
July 26, 2020 to August 29, 2020	—	—		—	176,445,000
August 30, 2020 to September 26, 2020	60,645	124.08		60,645	176,445,000
Total	60,645	$	124.08	60,645	$	176,445,000

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)
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

(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,~~26, 2020, we have acquired ~~4,588,131~~6,173,590 shares for approximately ~~$617.8~~$823.6 million under this share repurchase program.

Item 6. Exhibits

(a) Exhibits


~~(a)~~	~~Exhibits~~



Exhibit No.						Description
22.1						List of Issuer and Guarantor Subsidiaries. This document was filed as Exhibit 22.1 to the Company's Quarterly Report on Form 10-Q (Commission file number 001-31429) for the quarter ended March 28, 2020 and is incorporated herein by this reference.
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,~~26, 2020, 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)

* Filed herewith

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~~AVNER M. APPLBAUM
			~~Mark C. Jaksich~~Avner M. Applbaum Executive Vice President and Chief Financial Officer

Dated this ~~1st~~27th day of ~~November, 2017~~.October, 2020.

~~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.



	Thirty-nine Weeks Ended
	September 30, 2017			September 24, 2016
Cash flows from operating activities:
Net earnings	$	123,949		$	107,134
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization	63,500			61,242
Noncash loss on trading securities	395			973
Impairment of assets - restructuring activities	—			618
Stock-based compensation	7,300			6,572
Change in fair value of contingent consideration	—			(3,527		)
Defined benefit pension plan expense	481			1,486
Contribution to defined benefit pension plan	(26,064		)	(712		)
Change in restricted cash - pension plan trust	12,568			(13,652		)
(Gain)/loss on sale of property, plant and equipment	(732		)	250
Deferred income taxes	79			(1,534		)
Changes in assets and liabilities:
Receivables	(39,584		)	16,436
Inventories	(41,545		)	(34,413		)
Prepaid expenses and other assets	(11,636		)	(10,624		)
Accounts payable	28,895			(11,338		)
Accrued expenses	20,157			3,272
Other noncurrent liabilities	(1,627		)	240
Income taxes refundable	(1,732		)	4,831
Net cash flows from operating activities	134,404			127,254
Cash flows from investing activities:
Purchase of property, plant and equipment	(39,898		)	(42,233		)
Proceeds from sale of assets	1,575			3,938
Acquisitions, net of cash acquired	(5,362		)	—
Proceeds from settlement of net investment hedge	5,123			—
Other, net	(3,462		)	(2,824		)
Net cash flows from investing activities	(42,024		)	(41,119		)
Cash flows from financing activities:
Net borrowings under short-term agreements	(549		)	(128		)
Principal payments on long-term borrowings	(658		)	(1,563		)
Dividends paid	(25,386		)	(25,604		)
Dividends to noncontrolling interest	(3,895		)	(2,527		)
Purchase of noncontrolling interest	—			(11,009		)
Purchase of treasury shares	—			(46,581		)
Proceeds from exercises under stock plans	12,446			6,509
Purchase of common treasury shares—stock plan exercises	(3,929		)	(1,453		)
Net cash flows from financing activities	(21,971		)	(82,356		)
Effect of exchange rate changes on cash and cash equivalents	23,133			(3,478		)
Net change in cash and cash equivalents	93,542			301
Cash and cash equivalents—beginning of year	399,948			349,074
Cash and cash equivalents—end of period	$	493,490		$	349,375



			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)
Assets:
Trading Securities	$	41,062	$	41,062	$	—	$	—



			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	$	—	$	—



	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	)



	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



	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



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



Net cash flows from operations	$	226,318
Interest expense	44,445
Income tax expense	42,666
Impairment of property, plant and equipment	(481		)
Loss on investment	(8		)
Change in fair value of contingent consideration	(285		)
Deferred income tax benefit	22,072
Noncontrolling interest	(5,292		)
Stock-based compensation	(10,659		)
Increase in restricted cash - pension plan trust	(12,568		)
Pension plan expense	(865		)
Contribution to pension plan	26,840
Changes in assets and liabilities	29,167
Other	350
EBITDA	361,700
Reversal of contingent liability	(16,591		)
Impairment of property, plant and equipment	481
Adjusted EBITDA	$	345,590



Net earnings attributable to Valmont Industries, Inc.	$	189,915
Interest expense	44,445
Income tax expense	42,666
Depreciation and amortization expense	84,674
EBITDA	361,700
Reversal of contingent liability	(16,591		)
Impairment of property, plant, and equipment	481
Adjusted EBITDA	$	345,590