SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 25,September 24, 1994
Commission File Number 0-3701
VALMONT INDUSTRIES, INC.
Incorporated under the laws of the State of Delaware
I.R.S. Employer Identification Number 47-0351813
Valley, Nebraska 68064
Registrant's telephone number, including area code (402) 359-2201
Indicate by check mark whether the registrant (1) has filed all
reports to be filed by section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve months, and (2) has been
subject to such filing requirements for the past ninety days.
Yes__X__ No_____
As of August 1,October 17, 1994 there were outstanding 11,571,89211,543,426 common shares
of the registrant.
Page 1
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands except per share amounts)
(Unaudited)
June 25,September 24, December 25,
ASSETS 1994 1993
- - ----------------------------------------- ------- -------
Current assets:
Cash and cash equivalents $ 25,78429,728 14,018
Receivables, net 67,17873,069 70,159
Deferred income taxes 7,6207,667 9,740
Inventories 59,30555,586 69,913
Prepaid expenses 1,6341,020 1,942
------- -------
Total current assets 161,521167,070 165,772
------- -------
Other assets:
Investments in nonconsolidated affiliates 3,288 261
Other 4,4564,669 7,785
------- -------
Total other assets 7,7447,957 8,046
------- -------
Net property, plant and equipment 77,61280,722 72,831
------- -------
Total assets $ 246,877255,749 246,649
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
- - -----------------------------------------
Current liabilities:
Accounts and notes payable $ 41,05247,176 42,404
Other current liabilities 36,07535,520 41,063
------- -------
Total current liabilities 77,12782,696 83,467
------- -------
Deferred income taxes 7,6318,963 8,593
Long-term debt, excl. current installments 38,68137,598 38,419
Minority interest in consolidated
subsidiaries 450463 536
Other noncurrent liabilities 2,4422,539 2,242
Shareholders' equity:
Preferred stock of $1 par value.
Authorized 500,000 shares; none issued -- --
Common stock of $1 par value.
Authorized 36,000,000 shares;
issued 12,000,000 shares 12,000 12,000
Additional paid-in capital 1,8281,829 1,101
Retained earnings 105,480108,473 99,880
Currency translation adjustment 1,3551,960 557
------- -------
Less: 120,663124,262 113,538
Cost of common shares in treasury--
414,708456,574 in 1994 (463,602 in 1993) 26686 29
Unearned restricted stock 9186 117
------- -------
Total shareholders' equity 120,546123,490 113,392
------- -------
Total liabilities and shareholders'
equity $ 246,877255,749 246,649
======= =======
Page 2
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Dollars in thousands except per share amounts)
(Unaudited)
Thirteen Weeks Ended Twenty-sixThirty-nine Weeks Ended
-------------------- ---------------------------------------------
JuneSeptember 24, September 25, June 26, JuneSeptember 24, September 25, June 26,
1994 1993 1994 1993
------- ------- ------- -------
Net sales $121,967 115,979 233,152 222,888$109,852 107,212 343,004 330,100
Cost of sales 94,393 89,469 181,221 171,03683,593 83,174 264,814 254,210
------- ------- ------- -------
Gross profit 27,574 26,510 51,931 51,85226,259 24,038 78,190 75,890
Selling, general and administrative
expenses 19,580 19,567 38,249 39,19119,965 18,467 58,214 57,658
------- ------- ------- -------
Operating income 7,994 6,943 13,682 12,6616,294 5,571 19,976 18,232
------- ------- ------- -------
Other income (deductions):
Interest expense (1,263) (1,467) (2,575) (3,141)(1,306) (1,270) (3,881) (4,411)
Interest income 142 168 250 331189 220 439 551
Miscellaneous,
3 249 334 302including sale of property 859 (370) 1,193 (68)
------- ------- ------- -------
(1,118) (1,050) (1,991) (2,508)(258) (1,420) (2,249) (3,928)
------- ------- ------- -------
Earnings before income taxes,
discontinued operations and
cumulative effect of accounting change 6,876 5,893 11,691 10,1536,036 4,151 17,727 14,304
------- ------- ------- -------
Income tax expense:
Current 2,371 976 2,792 2,4812,853 1,105 5,645 3,586
Deferred 182 1,087 1,563 1,041(675) 373 888 1,414
------- ------- ------- -------
2,553 2,063 4,355 3,5222,178 1,478 6,533 5,000
------- ------- ------- -------
Earnings from continuing operations 4,323 3,830 7,336 6,6313,858 2,673 11,194 9,304
Earnings (loss) from
discontinued operations, net of tax -- 4,283(333) -- 4,9704,637
Cumulative effect of accounting change -- -- -- (4,910)
------- ------- ------- -------
Net earnings $ 4,323 8,113 7,336 6,6913,858 2,340 11,194 9,031
======= ======= ======= =======
Earnings (loss) per share:
Continuing operations $ 0.37 0.33 0.63 0.570.23 0.96 0.80
Discontinued operations -- 0.36(0.03) -- 0.420.39
Cumulative effect of accounting change -- -- -- (0.42)
------- ------- ------- -------
Net earnings $ 0.37 0.69 0.63 0.570.33 0.20 0.96 0.77
======= ======= ======= =======
Cash dividends per share $ 0.075 0.075 0.150 0.1400.225 0.215
======= ======= ======= =======
Weighted average number of shares of
common stock outstanding (000 omitted) 11,664 11,643 11,673 11,716 11,678 11,73311,671
======= ======= ======= =======
Page 3
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Twenty-sixThirty-nine Weeks Ended
-----------------------------------------------
JuneSeptember 24, September 25, June 26,
1994 1993
------- -------
Net cash provided (used) by operations $ 22,146 (6,763)32,521 (15,856)
------- -------
Cash flows from investment activities:
Purchase of property, plant & equipment (10,824) (5,887)(15,502) (10,091)
Proceeds from sale of Inacom -- 47,557
Additions to other assets (379) (801)(389) (1,067)
Proceeds from sale, net of gain,
of property and equipment 2,501 1,8932,564 2,243
Other, net 177 604243 357
------- -------
Net cash provided by (used in)
investment activities (8,525) 43,366(13,084) 38,999
------- -------
Cash flows from financing activities:
Net borrowings under short-term agreements (141) (1,419)(829) (1,825)
Proceeds from long-term borrowings 2,251 --
Principal payments and retirement of
long-term obligations (389) (21,247)(2,297) (21,441)
Dividends paid (1,732) (1,489)(2,601) (2,351)
Proceeds from exercise of employee
stock plans 451 740465 917
Purchase of common treasury shares (44) (356)(716) (525)
------- -------
Net cash used in financing activities (1,855) (23,771)(3,727) (25,225)
------- -------
Net increase (decrease) in
cash and cash equivalents 11,766 12,83215,710 (2,082)
Cash and cash equivalents--beginning of
period 14,018 12,747
------- -------
Cash and cash equivalents--end of period $25,784 25,579$29,728 10,665
======= =======
Page 4
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Dollars in thousands)
(Unaudited)
1. Condensed Consolidated Financial Statements
-------------------------------------------
The Condensed Consolidated Balance Sheet as of June 25,September 24, 1994
and the Condensed Consolidated Statements of Operations for the
thirteen week and twenty-sixthirty-nine week periods ended June 25,September 24,
1994 and June 26,September 25, 1993 and the Condensed Consolidated
Statements of Cash Flows for the twenty-sixthirty-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 position at June 25,September 24, 1994 and for all periods
presented.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
These Condensed Consolidated Financial Statements should be read
in conjunction with the financial statements and notes thereto
included in the Company's December 25, 1993 Annual Report to
shareholders. The results of operations for the period ended
June 25,September 24, 1994 are not necessarily indicative of the
operating results for the full year.
2. Cash Flows
----------
For purposes of the Condensed Consolidated Statements of Cash
Flows, the Company considers cash and cash investments with a
maturity of three months or less when purchased, to be cash
equivalents. Interest paid was $2,025$3,050 and $2,698$3,718 for the twenty-
sixthirty-
nine week periods ended June 25,September 24, 1994 and June 26,September 25,
1993, respectively. Income taxes paid, net of refunds, were
$129$1,832 and $1,792$12,780 for the twenty-sixthirty-nine week periods ended
June 25,September 24, 1994 and June 26,September 25, 1993, respectively.
3. Earnings Per Share
------------------
Earnings per share are based on the weighted average number
of common shares outstanding and equivalent common shares from
dilutive stock options.
Page 5
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis
of
Financial Condition and Results of Operations
Results of Operations
- - ---------------------
For the secondthird quarter of 1994 net sales were $122.0$109.9 million, an
increase of 5%3% over the $116.0$107.2 million for the same period last year.
Net sales for this year'sthe first halfthree quarters of 1994 were $233.2$343.0 million
versus $222.9$330.1 million in the same period last year. Sales of
Irrigation products increased in the secondthird quarter and first half ofthe year-to-
date 1994 versus the same periods in 1993 as a result of strong demand
in the North American market. This demand was driven by water conservation, good commodity
prices andincreased net
farm income, relatively low interest rates.rates and an increased emphasis
on water conservation and environmental awareness. Sales to
international markets for the secondthird quarter and first halfthree quarters
of 1994 were aboutdeclined mainly from the same asreduction of sales to the Saudi
Arabian market and the absence in 1994 of a year ago as declining shipmentslarge project shipped in
the third quarter of 1993. Irrigation's international sales are
geographically diverse and management does not expect the significant
decrease in sales to Saudi Arabia were offset
by orders from other partsto have a material adverse effect on
this segment's results.
Sales in the Industrial Products segment increased in the third
quarter of 1994 compared to the world.
Thesame period in 1993. Year-to-date
1994, the Industrial Products segment recorded lower overall sales,
primarily from reduced volume in the ballast business and as a result
of the 1993 sale and closing of the steel reinforcing bar operations
and divestiture of the cathodic protection operation. For the secondthird
quarter and first half,three quarters, net sales in the North American pole
and tubing operations increased in 1994 versus the same periods in
1993. As economic conditions improved, European pole sales declined dueincreased
in the third quarter of 1994 compared to slow economic conditionsthe same period in that region.1993.
Year-to-date European sales in 1994 were comparable to the levels
attained in 1993. The ballast business reflected lower sales in the
secondthird quarter and first halfthree quarters of 1994 compared to the same
periods in 1993 due to lower market
prices as the result of excess inventory positions by industry
manufacturers and distributors.distributors earlier in the year and the resultant
lower market prices.
Gross profit as a percent of sales was 22.6%23.9% and 22.9%22.4% for the secondthird
quarter of 1994 and 1993, respectively. Year-to-date gross profit was
22.3%22.8% compared to 23.3%23.0% for 1994 and 1993, respectively. The third
quarter 1994 gross profit increased in the ballast and pole and tubing
businesses compared to the same period in 1993 due to improvements in
operations. The decrease in 1994's year-to-date gross profit
percentages results primarily results from the lower market prices experienced in
the ballast business and reduced prices on irrigation orders taken in
the last quarter of 1993 but shipped in early 1994.
Selling, general and administrative (SG&A) expenses were $19.6$20.0 million
for secondthird quarter of 1994 and $18.5 million for the same period of
1993; and, as a percent of sales, SG&A expenses for boththe respective
quarters was 16.1%were 18.2% and 16.9%17.2%. SG&A expenses for the first halfthree
quarters of 1994 and 1993 were $38.2$58.2 million and $39.2$57.7 million,
respectively. Year-to-date SG&A expenses, as a percent of sales, were
16.4%17.0% for 1994 and 17.6%17.5% for 1993. SG&A expenses throughincreased in 1994
primarily due to the first half of 1994 declined becausegrowth in sales volume as well as expenditures to
enhance the long-term performance of the 1993 saleCompany.
Page 6
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Management's Discussion and closingAnalysis
of
Financial Condition and Results of Operations (Continued)
For both the steel reinforcing bar operations and divestiture of the
cathodic protection operation.
For the secondthird quarter of 1994 and 1993, interest expense was $1.3
million. Year-to-date, interest expense was $3.9 million and $1.5$4.4
million respectively. For the first half ofin 1994 and 1993, interest expense was $2.6 million and $3.1 million, respectively. The decrease in 1994 results
primarily from lower debt levels.
The effective income tax rates for the first halfthree quarters of 1994
and 1993 were 37.3%36.9% and 34.7%35.0%, respectively, which do not vary
significantly from the expected statutory rate for the periods.
Page 6
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Management's DiscussionThe miscellaneous caption of other income (deductions) in the
condensed consolidated statements of operations contains gains and
Analysislosses which are of Financial Conditionan unusual or infrequent nature. In the third
quarter and Resultsyear-to-date 1994 miscellaneous income of Operations (Continued)$0.9 million and
$1.2 million, respectively, substantially exceeded the amounts from
the comparable periods of 1993 and resulted primarily from a gain on
disposal of an excess property.
As a result of the aforementioned operating factors and general
business conditions, earnings from continuing operations increased to
$7.3$11.2 million in the first halfthirty-nine weeks of 1994 from $6.6$9.0 million
in the same period in 1993. For the secondthird quarter, earnings from
continuing operations were $4.3$3.9 million in 1994 versus $3.8$2.7 million in
1993. Earnings per share from continuing operations were $0.63$0.96 and
$0.57$0.80 for the first halfthirty-nine weeks of 1994 and 1993, respectively
and $0.37$0.33 and $0.33$0.23 for the secondthird quarter of 1994 and 1993,
respectively.
During the second quarter ofIn May 1993 Valmont sold its investment in Inacom Corp. in an
underwritten public offering. As a result of this transaction a net
gain from discontinued operation of $4.3$3.9 million or $0.36$0.33 per share
was realized in the second quarter of 1993.realized. Valmont's share of Inacom's 1993 net earnings of $0.7
million or $0.08$0.06 per share, when combined with the gain from sale of
this investment, amounted to $5.0$4.6 million or $0.42$0.39 per share for the
sixnine month period of 1993.
Effective with the beginning of Valmont's 1993 fiscal year, the
Company adopted SFAS Statement No. 109, "Accounting for Income Taxes."
The cumulative effect of this accounting change decreased 1993 net
earnings by $4.9 million or $0.42 per share.
For the reasons described in the two preceding paragraphs, Valmont's
net earnings for 1993 differed from its earnings from continuing
operations for the periods presented. Valmont's net earnings were
$7.3$11.2 million or $0.63$0.96 per share infor the first halfthree quarters of 1994
versus $6.7$9.0 million or $0.57
in$0.77 during the first halfsame period of 1993. For the
secondthird quarter of 1994, net earnings were $4.3$3.9 million or $0.37$0.33 per
share compared to $8.1$2.3 million or $0.69$0.20 per share.
Liquidity and Capital Resources
- - -------------------------------
Net working capital at June 25,September 24, 1994 amounted to $84.4 million
compared to $82.3 million at December 25, 1993. The ratio of current
assets to current liabilities was 2.1:2.0:1 at June 25,September 24, 1994 compared to
2.0:1and at
December 25, 1993.
Page 7
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis
of
Financial Condition and Results of Operations (Continued)
Expenditures for property, plant and equipment for the twenty-sixthirty-nine
week period ended June 25,September 24, 1994 were approximately $10.8$15.5 million,
while depreciation of property, plant & equipment was $4.7$7.0 million.
Available lines of credit total $56$50 million of which approximately $53$47
million was unused at June 25,September 24, 1994. Long-term debt was 25.7%25.4% of
total capitalization at June 25,September 24, 1994 versus 26.5% at December
25, 1993. Valmont's objective is to maintain long-term debt in the
range of 32% to 40% of total capital employed. In 1993, the proceeds
from the sale of Valmont's investment in Inacom Corp. were used to
reduce debt and invest in cash equivalents and working capital.
Overall, the Company believes the cash flow from operations, the
credit facilities and capital structure now in place will be adequate
to satisfy 1994 capital expenditures, dividends and other financial
commitments.
Page 78
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
Valmont's annual shareholders' meeting was held on April 18,
1994. Information concerning matters voted on at the
meeting was included in Valmont's 10-Q Report for the
quarter ended March 26, 1994.
Item 5. OTHER INFORMATION
-----------------
On June 28, 1994, the Company issued a press release
announcing that the Board of Directors has authorized the
Company to repurchase up to 575,000 shares of its
outstanding common stock to be added to treasury stock and
used for stock options, incentive plans and other corporate
purposes.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
A. Exhibits
--------
(None)10.1 - Valmont Industries, Inc. 1994 Incentive Bonus Plan
B. Reports on Form 8-K
-------------------
The Company filed no reports on Form 8-K during the
past fiscal quarter.
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 Undersignedundersigned hereunto duly authorized.
VALMONT INDUSTRIES, INC.
By /s/Terry J. McClain
_______________________
Terry J. McClain
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated this __5th____18th__ day of August,October, 1994.
Page 89