UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 24, 2005
Or
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
(I.R.S. Employer
incorporation or organization)
Identification No.)
One Valmont Plaza,
68154-5215
Omaha, Nebraska
(Zip Code)
(Address of principal executive offices)
(Registrant’s telephone number, including area code)402-963-1000
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 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 þ No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes þ No 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 þ
24,531,749
Outstanding shares of common stock as of October 20, 2005
Index is located on page 2.
Total number of pages 34.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
Page No.
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements:
Condensed Consolidated Statements of Operations for the thirteen and thirty-nine weeks ended September 24, 2005 and September 25, 2004
3
Condensed Consolidated Balance Sheets as of September 24, 2005 andDecember 25, 2004
4
Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 24, 2005 and September 25, 2004
5
Notes to Condensed Consolidated Financial Statements
6-21
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
22-29
Item 3.
Quantitative and Qualitative Disclosure About Market Risk
30
Item 4.
Controls and Procedures
PART II. OTHER INFORMATION
Unregistered Sales of Equity Securities and Use of Proceeds
31
Item 5.
Other Information
Item 6.
Exhibits
Signatures
32
2
VALMONT INDUSTRIES, INC. AND SUBSIDIARIESPART I. FINANCIAL INFORMATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per share amounts)(Unaudited)
Thirteen Weeks Ended
Thirty-nine Weeks Ended
Sept. 24,2005
Sept. 25,2004
Product sales
$242,626
$
240,615
734,640
679,216
Services sales
23,316
22,275
62,177
65,584
Net sales
265,942
262,890
796,817
744,800
Product cost of sales
178,849
184,905
551,598
516,492
Services cost of sales
17,483
16,885
46,355
49,848
Cost of sales
196,332
201,790
597,953
566,340
Gross profit
69,610
61,100
198,864
178,460
Selling, general and administrative expenses
47,579
45,268
139,520
131,870
Operating income
22,031
15,832
59,344
46,590
Other income (deductions):
Interest expense
(5,002
)
(4,639
(14,713
(11,104
Interest income
408
687
1,237
1,382
Debt prepayment expenses
—
(9,860
Miscellaneous
(462
(23
(577
(283
(5,056
(3,975
(14,053
(19,865
Earnings before income taxes, minority interest and equity in earnings of nonconsolidated subsidiaries
16,975
11,857
45,291
26,725
Income tax expense (benefit):
Current
8,239
3,885
15,980
15,811
Deferred
(1,780
422
748
(6,048
6,459
4,307
16,728
9,763
Earnings before minority interest and equity in earnings of nonconsolidated subsidiaries
10,516
7,550
28,563
16,962
Minority interest
(480
(668
(1,142
(1,841
Equity in earnings of nonconsolidated subsidiaries
170
222
38
296
Net earnings
10,206
7,104
27,459
15,417
Earnings per share—Basic
0.42
0.30
1.13
0.65
Earnings per share—Diluted
0.40
0.29
1.09
0.63
Cash dividends per share
0.085
0.080
0.250
0.240
Weighted average number of shares of common stock outstanding (000 omitted)
24,382
23,887
24,262
23,866
Weighted average number of shares of common stock outstanding plus dilutive potential common shares (000 omitted)
25,380
24,464
25,197
24,465
See accompanying notes to condensed consolidated financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
September 24,2005
December 25,2004
ASSETS
Current assets:
Cash and cash equivalents
33,941
30,210
Receivables, net
182,431
188,512
Inventories
164,070
186,988
Prepaid expenses
9,148
8,408
Refundable and deferred income taxes
12,840
14,387
Total current assets
402,430
428,505
Property, plant and equipment, at cost
515,404
493,997
Less accumulated depreciation and amortization
308,029
288,342
Net property, plant and equipment
207,375
205,655
Goodwill
105,429
106,022
Other intangible assets, net
60,633
63,337
Other assets
32,152
32,589
Total assets
808,019
836,108
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt
8,542
7,962
Notes payable to banks
5,214
4,682
Accounts payable
72,208
69,979
Accrued expenses
65,337
66,506
Dividends payable
2,086
1,932
Total current liabilities
153,387
151,061
Deferred income taxes
44,227
42,639
Long-term debt, excluding current installments
255,211
314,813
Minority interest in consolidated subsidiaries
11,215
10,107
Other noncurrent liabilities
24,078
22,833
Shareholders’ equity:
Preferred stock
Common stock of $1 par value
27,900
Retained earnings
350,317
324,748
Accumulated other comprehensive income
375
3,499
Treasury stock
(56,710
(59,200
Unearned restricted stock
(1,981
(2,292
Total shareholders’ equity
319,901
294,655
Total liabilities and shareholders’ equity
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operations:
Adjustments to reconcile net earnings to net cash flows from operations:
Depreciation and amortization
30,205
28,616
Loss on sale of assets
353
371
Equity in earnings in nonconsolidated subsidiaries
(38
(296
1,142
1,841
Other adjustments
427
523
Changes in assets and liabilities, net of business acquisitions:
Receivables
4,117
(18,809
19,804
(62,435
(535
(33
(495
12,647
(248
11,811
1,244
(99
Income taxes payable
6,752
(76
Net cash flows from operations
90,935
(16,570
Cash flows from investing activities:
Purchase of property, plant & equipment
(29,991
(12,343
Acquisitions, net of cash acquired
(125,438
Investment in nonconsolidated subsidiary
(2,450
Proceeds from sale of assets
733
1,436
Dividends to minority interests
(318
(1,357
Other, net
152
(1,523
Net cash flows from investing activities
(29,424
(141,675
Cash flows from financing activities:
Net borrowings (payments) under short-term agreements
747
(9,678
Proceeds from long-term borrowings
16,500
263,171
Principal payments on long-term obligations
(75,513
(87,976
Dividends paid
(5,954
(5,741
Proceeds from exercises under stock plans
9,441
1,681
Debt issuance costs
(5,520
Purchase of common treasury shares—stock plan exercises
(2,717
(626
Net cash flows from financing activities
(57,496
155,311
Effect of exchange rate changes on cash and cash equivalents
(284
146
Net change in cash and cash equivalents
3,731
(2,788
Cash and cash equivalents—beginning of period
33,345
Cash and cash equivalents—end of period
30,557
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 24, 2005 and the Condensed Consolidated Statements of Operations for the thirteen and thirty-nine week periods ended September 24, 2005 and September 25, 2004 and the Condensed Consolidated Statements of Cash Flows 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 24, 2005 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 25, 2004. 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 25, 2004. The results of operations for the periods ended September 24, 2005 are not necessarily indicative of the operating results for the full year.
At September 24, 2005, approximately 48.7% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market. All other inventory is valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market. Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured finished goods. The excess of replacement cost of inventories over the LIFO value was approximately $25,800 and $30,700 at September 24, 2005 and December 25, 2004, respectively.
Inventories consisted of the following:
Raw materials and purchased parts
97,697
121,484
Work-in-process
16,898
20,696
Finished goods and manufactured goods
75,255
75,526
Subtotal
189,850
217,706
LIFO reserve
25,780
30,718
Net inventory
Stock Plans
The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Compensation Committee of the Board of Directors may grant incentive stock options,
6
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in thousands, except per share amounts) (Unaudited)
nonqualified stock options, stock appreciation rights, restricted stock awards and bonuses of common stock. At September 24, 2005, 1,177,090 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 market price at the time of the grant. Options vest beginning on the first anniversary of the grant in equal amounts over three to six years or on the fifth anniversary of the grant. Expiration of grants is from six to ten years from the date of grant.
The Company accounts for those plans under the recognition and measurement principles of APB Opinion 25, Accounting for Stock Issued to Employees, and related Interpretations. No compensation cost associated with stock options is reflected in net income, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.
Net earnings as reported
Add:
Stock-based employee compensation expense included in reported net income, net of related tax effects
115
135
346
238
Deduct:
Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related tax
effects
190
530
1,003
1,445
Pro forma net earnings
10,131
6,709
26,802
14,210
Earnings per share
As reported:
Basic
Diluted
Pro forma:
0.28
1.10
0.60
0.27
1.06
0.58
Recently Issued Accounting Pronouncements
On December 16, 2004, the FASB issued Statement No. 123 (revised 2004) (“SFAS No. 123R”), Share-Based Payment. SFAS No. 123R will require the Company to measure the cost of all employee stock-based compensation awards based on the grant date fair value of those awards and to record that cost as compensation expense over the period during which the employee is required to perform service in exchange for the award (generally over the vesting period of the award). Excess tax benefits, as defined by this Statement, will be recognized as an addition to paid-in capital. SFAS No. 123R is effective at the beginning of the Company’s first quarter of fiscal 2006. The Company is currently evaluating the expected impact that the adoption of SFAS No. 123R will have on results of operations and cash flows.
7
2. Acquisitions
On April 16, 2004, the Company acquired all the outstanding shares of Newmark International, Inc. and the results of Newmark are included in the condensed consolidated financial statements of the Company since that date.
On May 24, 2004, the Company acquired all the outstanding shares of W.J. Whatley, Inc and Whatley’s operations are included in the Company’s condensed consolidated financial statements since the acquisition date.
On August 2, 2004, the Company acquired substantially all the net assets of Sigma Industries, Inc. and Sigma’s operations are included in the Company’s condensed consolidated financial statements since the acquisition date.
The Company’s summary proforma results of operations for the thirteen and thirty-nine weeks ended September 25, 2004, assuming that these transactions occurred at the beginning of the periods presented are as follows:
Thirteen WeeksEnded
Thirty-nine WeeksEnded
263,390
778,723
Net income
7,293
16,591
Earnings per share—diluted
0.68
3. Goodwill and Intangible Assets
The Company’s annual impairment testing on its reporting units was performed during the third quarter of 2005. The Company’s other intangible assets were also evaluated separately from goodwill. As a result of that testing, it was determined the goodwill and other intangible assets on the Company’s Consolidated Balance Sheet at September 24, 2005 were not impaired.
8
Amortized Intangible Assets
The components of amortized intangible assets at September 24, 2005 and December 25, 2004 were as follows:
As of September 24, 2005
GrossCarryingAmount
AccumulatedAmortization
WeightedAverageLife
Customer Relationships
47,691
7,067
18 years
Proprietary Software & Database
2,609
1,685
6 years
Patents & Proprietary Technology
2,839
269
14 years
Non-compete Agreements
331
82
5 years
53,470
9,103
As of December 25, 2004
4,911
1,335
120
33
6,399
Amortization expense for intangible assets for the thirteen weeks ended September 24, 2005 and September 25, 2004, was $901 and $858, respectively. Amortization expense for intangible assets for the thirty-nine weeks ended September 24, 2005, and September 25, 2004 was $2,704 and $1,951, respectively. Estimated amortization expense related to amortized intangible assets is as follows:
EstimatedAmortizationExpense
2005
3,606
2006
3,359
2007
3,276
2008
2009
3,244
2010
3,210
9
Non-amortized intangible assets
Under the provisions of SFAS 142, intangible assets with indefinite lives are not amortized. The carrying value of the PiRod, Newmark, and Sigma trade names are $4,750, $11,111, and $405 respectively, as of September 24, 2005 and December 25, 2004.
The indefinite lived intangible assets were tested for impairment separately from goodwill in the third quarter of 2005. The values of the trade names were determined using the relief-from-royalty method. Based on this evaluation, the Company determined that its trade names were not impaired as of September 24, 2005.
The carrying amount of goodwill as of September 24, 2005 was as follows:
EngineeredSupportStructuresSegment
UtilitySupportStructuresSegment
CoatingsSegment
IrrigationSegment
TubingSegment
Total
Balance December 25, 2004
19,959
42,628
42,192
981
262
Divestiture
(398
Foreign currency translation
(195
Balance September 24, 2005
19,764
583
In June 2005, the Company divested of its ownership in a retail operation located in Greeley, Colorado, resulting in a $398 reduction of goodwill in the Irrigation Segment.
4. Cash Flows
The Company considers all highly liquid temporary cash investments purchased with a maturity of three months or less to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the thirty-nine weeks ended were as follows:
Interest
$12,060
7,352
Income Taxes
8,156
18,179
10
5. Earnings Per Share
The following table provides a reconciliation between Basic and Diluted earnings per share:
Basic EPS
Dilutive Effect ofStock Options
Diluted EPS
Thirteen weeks ended September 24, 2005:
Shares outstanding
998
Per share amount
(.02
Thirteen weeks ended September 25, 2004:
577
(.01
Thirty-nine weeks ended September 24, 2005:
935
(.04
Thirty-nine weeks ended September 25, 2004:
599
6. Comprehensive Income
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. The Company’s other comprehensive income for the thirteen and thirty-nine weeks ended September 24, 2005 and September 25, 2004, respectively, were as follows:
Currency translation adjustment
1,686
1,313
(3,124
54
Total comprehensive income
11,892
8,417
24,335
15,471
11
7. Business Segments
The Company reports its businesses as five reportable segments:
Engineered Support Structures: This segment consists of the manufacture of engineered metal structures and components for the lighting and traffic and wireless communication industries, certain international utility industries and for other specialty applications;
Utility Support Structures: This segment consists of engineered steel and concrete structures primarily for the North American utility industry;
Coatings: This segment consists of galvanizing, anodizing and powder coating services;
Irrigation: This segment consists of the manufacture of agricultural irrigation equipment and related parts and services; and
Tubing: This segment consists of the manufacture of tubular products for industrial customers.
In addition to these five reportable segments, the Company has other businesses that individually are not more than 10% of consolidated sales. These businesses, which include wind energy development, machine tool accessories and industrial fasteners, are reported in the “Other” category.
12
In the fourth quarter of fiscal 2004, the Company reorganized its management reporting structure to better serve the electrical utility structure market. The Company’s North American Utility business, formerly included within the Utility product line in the Engineered Support Structures segment, was combined with the Concrete Support Structures segment and is collectively referred to as the Utility Support Structures segment. Figures for 2004 have been reclassified to conform to the 2005 presentation.
Sales:
Engineered Support Structures segment:
Lighting & Traffic
92,090
93,096
266,891
239,184
Specialty
27,079
24,266
68,772
65,205
Utility
6,211
2,074
18,961
10,085
125,380
119,436
354,624
314,474
Utility Support Structures segment
Steel
36,380
39,579
109,485
88,813
Concrete
14,918
16,224
43,754
28,358
51,298
55,803
153,239
117,171
Coatings segment
22,196
22,486
62,392
68,710
Irrigation segment
55,467
62,593
190,838
230,274
Tubing segment
20,386
21,990
65,196
63,409
Other
4,558
14,007
12,980
279,285
286,425
840,296
807,018
Intersegment Sales:
Engineered Support Structures
4,754
11,127
16,829
28,530
Utility Support Structures
1,258
4,830
2,843
7,744
Coatings
3,511
3,897
10,662
11,459
Irrigation
14
175
Tubing
2,814
2,926
10,212
11,592
743
2,919
2,718
13,343
23,535
43,479
62,218
Net Sales
120,626
108,309
337,795
285,944
50,040
50,973
150,396
109,427
18,685
18,589
51,730
57,251
55,464
62,581
190,824
230,099
17,572
19,064
54,984
51,817
3,555
3,374
11,088
10,262
Consolidated Net Sales
$796,817
Operating Income
13,160
7,438
29,492
17,470
4,888
3,558
12,859
2,689
2,584
1,471
5,458
4,538
4,870
4,533
19,614
28,386
3,725
4,152
10,881
9,658
(532
(1,247
(1,948
(2,332
Net corporate expense
(6,664
(4,073
(17,012
(13,819
Total Operating Income
13
8. Guarantor/ Non-Guarantor Financial Information
On May 4, 2004, the Company completed a $150,000,000 offering of 67¤8% Senior Subordinated Notes. The Notes are guaranteed, jointly, severally, fully and unconditionally, on a senior subordinated basis by certain of the Company’s current and future direct and indirect domestic 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.
Condensed consolidated financial information for the Company (“Parent”), the Guarantor subsidiaries and the Non-Guarantor subsidiaries is as follows:
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSFor the Thirteen Weeks Ended September 24, 2005
Parent
Guarantors
Non-Guarantors
Eliminations
141,769
40,386
75,293
(14,822
242,626
Service sales
13,919
8,790
3,055
(2,448
155,688
49,176
78,348
(17,270
106,012
31,638
55,809
(14,610
Service cost of sales
10,686
6,630
2,615
116,698
38,268
58,424
(17,058
38,990
10,908
19,924
(212
27,485
7,401
12,693
11,505
3,507
7,231
(4,708
(3
(297
399
(6
(477
(4,694
(375
Earnings before income taxes, minority interest, and equity in earnings/(losses) of nonconsolidated subsidiaries
6,811
3,520
6,856
Income tax expense:
4,791
1,157
2,291
(1,750
(361
3,041
1,488
1,930
Earnings before minority interest, and equity in earnings/(losses) of nonconsolidated subsidiaries
3,770
2,032
4,926
Equity in earnings/(losses) of nonconsolidated subsidiaries
6,648
108
(6,586
10,418
4,554
(6,798
For the Thirty-nine Weeks Ended September 24, 2005
443,381
117,653
217,794
(44,188
38,997
24,494
8,285
(9,599
482,378
142,147
226,079
(53,787
337,766
94,690
163,684
(44,542
30,548
19,436
5,970
368,314
114,126
169,654
(54,141
114,064
28,021
56,425
354
77,779
22,740
39,001
36,285
5,281
17,424
(14,124
(19
(619
49
67
15
1,204
(49
(139
27
(465
(14,196
23
22,089
5,304
17,544
8,055
1,914
6,011
977
338
(567
9,032
2,252
5,444
13,057
3,052
12,100
14,048
87
(14,097
27,105
$ 3,052
11,045
(13,743
For the Thirteen Weeks Ended September 25, 2004
144,748
$43,131
70,688
(17,952
13,459
8,694
4,019
(3,897
158,207
51,825
74,707
(21,849
114,333
34,052
54,011
(17,491
10,360
7,636
2,786
124,693
41,688
56,797
(21,388
33,514
10,137
17,910
(461
25,505
7,229
12,534
8,009
2,908
5,376
(4,330
(4
(320
48
1
653
(15
(2,052
2,025
(4,278
(2,055
2,358
853
7,734
1,893
(376
2,368
(377
945
(146
1,516
569
2,222
2,215
284
5,512
5,350
(5,128
7,565
4,844
(5,589
16
For the Thirty-nine Weeks Ended September 25, 2004
429,270
90,723
202,554
(43,331
38,612
26,421
12,010
(11,459
467,882
117,144
214,564
(54,790
334,836
72,584
151,995
(42,923
29,888
22,633
8,786
364,724
95,217
160,781
(54,382
103,158
21,927
53,783
(408
75,520
18,118
38,232
27,638
3,809
15,551
(10,360
(14
(824
94
132
1,342
(94
(1,959
1,690
(20,102
(1,971
2,208
7,536
1,838
17,759
9,862
(519
6,468
(6,909
1,487
2,953
968
5,842
4,583
870
11,917
Equity in (earnings)/losses of nonconsolidated subsidiaries
11,242
(10,946
15,825
10,076
(11,354
17
CONDENSED CONSOLIDATED BALANCE SHEETSSeptember 24, 2005
446
834
32,661
75,499
29,718
77,224
(10
65,914
44,342
53,814
3,568
821
4,759
7,738
2,956
2,146
153,165
78,671
170,604
343,791
74,831
96,782
215,696
29,709
62,624
128,095
45,122
34,158
20,370
73,374
11,685
Other intangible assets
792
57,317
2,524
Investment in subsidiaries and intercompany accounts
357,727
41,786
(6,088
(393,425
30,992
1,760
(600
691,141
296,270
214,643
(394,035
LIABILITIES ANDSHAREHOLDERS’ EQUITY
6,764
26
1,752
26,736
11,463
34,009
40,795
6,279
18,273
76,381
17,768
59,248
18,607
21,861
3,759
253,999
74
1,738
22,982
1,096
14,248
10,344
(24,592
Additional paid-in capital
159,082
71,825
(230,907
349,963
83,237
55,043
(137,926
Accumulated other comprehensive loss
319,172
256,567
137,587
$691,141
18
December 25, 2004
$ 966
$ 3,694
$ 25,550
$ —
$ 30,210
79,280
28,310
80,975
(53
95,922
38,488
53,802
(1,224
2,382
915
5,111
9,389
3,042
1,956
187,939
74,449
167,394
(1,277
321,074
72,727
100,196
201,559
24,403
62,380
119,515
48,324
37,816
73,375
12,277
832
59,771
2,734
352,291
35,367
(8,566
(379,092
32,554
41
1,894
(1,900
$ 713,501
$ 291,327
$ 213,549
$ (382,269
$ 836,108
$ 4,860
$ 26
$ 3,076
$ 7,962
21,382
10,312
38,285
41,692
5,771
19,096
69,866
16,109
65,139
16,854
21,610
4,175
313,368
3,251
21,600
1,233
325,405
80,184
43,976
(124,817
291,813
253,514
129,644
(380,316
19
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Thirty-nine Weeks Ended September 24, 2005
$ 27,105
$ 11,045
$ (13,743
$ 27,459
7,766
5,610
(Gain)/ Loss on sale of property, plant and equipment
339
(87
145
(2
Changes in assets and liabilities:
3,782
(1,407
1,750
(8
30,008
(5,855
(4,349
(1,186
557
1,205
1,151
(2,851
(1,057
508
293
(138
6,577
85,829
5,646
13,203
Purchase of property, plant and equipment
(24,073
(2,124
(3,794
21
699
Proceeds from minority interests
(5,602
(6,375
(314
12,443
(29,654
(8,486
(3,727
Net borrowings (repayments) under short-term agreements
(73,965
(20
(2,828
1,300
(56,695
(2,081
(520
(2,860
7,111
Cash and cash equivalents—beginning ofyear
966
3,694
25,550
Cash and cash equivalents—end of year
$ 446
$ 834
$ 32,661
$ 33,941
20
17,224
6,170
5,222
438
(70
(6,908
(627
245
278
(17,622
2,351
(3,460
(78
(41,122
(10,692
(10,621
327
481
(841
15,351
(784
(1,920
10,230
(1,199
2,702
78
1,119
(1,218
711
326
(1,113
(4,478
(987
249
(8,085
(1,445
(2,813
Proceeds from sale of property, plant and equipment
64
1,372
(30,024
14,410
4,237
9,854
(165,933
12,965
1,439
Net repayments under short-term agreements
6,400
(11,388
(4,690
263,100
71
(84,745
(167
(4,564
1,500
174,549
(11,555
(9,183
4,138
423
(7,349
Cash and cash equivalents—beginning of year
1,982
612
30,751
6,120
1,035
23,402
PART 1. FINANCIAL INFORMATION
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements are based on assumptions that management has made in light of experience in the industries in which the Company operates, as well as management’s perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions. Many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, risk factors described from time to time in the Company’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, and actions and policy changes of domestic and foreign governments.
This discussion should be read in conjunction with the financial statements and the 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 25, 2004. We report our businesses as five reportable segments. See Note 7 to the Condensed Consolidated Financial Statements. In the fourth quarter of fiscal 2004, we reorganized our management reporting structure to better serve the electrical utility structure market. Our North American Utility business, formerly included within the Utility product line in the Engineered Support Structures segment, was combined with the Concrete Support Structures segment and is collectively referred to as the Utility Support Structures segment. Figures for 2004 have been reclassified to conform to the 2005 presentation.
22
Results of Operations
Dollars in thousands, except per share amounts
% Incr.(Decr.)
% Incr.(Decr)
Consolidated
1.2
%
7.0
13.9
11.4
as a percent of sales
26.2
23.2
25.0
24.0
SG&A expense
5.1
5.8
17.9
17.2
17.5
17.7
39.2
27.4
8.3
6.0
7.4
6.3
Net interest expense
4,594
3,952
16.2
13,476
9,722
38.6
Effective tax rate
38.1
36.3
36.9
36.5
43.7
78.1
37.9
73.0
Engineered Support Structures Segment
18.1
33,297
25,717
29.5
88,726
72,882
21.7
20,137
18,279
10.2
59,234
55,412
6.9
76.9
68.8
-1.8
37.4
11,731
10,229
14.7
32,810
19,098
71.8
6,843
6,671
2.6
19,951
16,409
21.6
NM
0.5
-9.6
4,848
3,891
24.6
12,339
11,960
3.2
2,264
2,420
-6.4
6,881
7,422
-7.3
75.7
20.3
-11.4
-17.1
13,508
14,194
-4.8
46,223
57,442
-19.5
8,638
9,661
-10.6
26,609
29,056
-8.4
-30.9
-7.8
6.1
5,235
6,127
-14.6
15,693
15,219
3.1
1,510
1,975
-23.5
4,812
5,561
-13.5
-10.3
12.7
5.4
8.0
1,112
942
18.0
3,337
3,216
3.8
1,644
2,189
-24.9
5,285
5,548
-4.7
Operating income (loss)
57.3
16.5
Net Corporate expense
(121
(264
6,543
4,075
60.6
16,748
12,462
34.4
-63.6
-23.1
NM = Not meaningful
Overview
In 2004, we completed the acquisitions of Newmark International, Inc. (Newmark), a manufacturer of concrete and steel pole structures mainly for the utility industry, W.J. Whatley, Inc. (Whatley), a manufacturer of fiberglass poles principally for outdoor lighting applications and the assets of Sigma Industries, Inc. (Sigma), a manufacturer of overhead sign structures mainly serving the eastern United States. Newmark is reported as part of the Utility Support Structures segment and Whatley and Sigma are reported as part of the Engineered Support Structures (ESS) segment. The results of these operations were included in our consolidated results starting on the closing dates of the acquisitions. The Newmark and Whatley acquisitions were completed in the second quarter of 2004 and the Sigma acquisition was completed in the third quarter of 2004.
Consolidated net sales for the third quarter of fiscal 2005 were slightly higher than for the same period in 2004, as higher selling prices associated with higher steel costs were partially offset by lower sales volumes, particularly in the Irrigation and ESS segments, in 2005. For the thirty-nine weeks ended September 24, 2005, the increase in net sales as compared with the same period in 2004 resulted from acquisitions completed in 2004 (approximately $37 million) and higher selling prices due to increased steel costs. In 2004, we experienced unprecedented increases in our cost of steel and steel-related products. In response to these conditions, we increased our selling prices to recover as much of these cost increases as possible. As of the end of the third quarter of 2005, steel prices have decreased somewhat, but not to the levels prior to the 2004 increases.
Gross profit as a percent of sales for the thirteen and thirty-nine weeks ended September 24, 2005 was higher as compared with the same period in 2004, despite generally lower sales volumes. In 2004, sales price increases somewhat lagged the rapid rise in the cost of steel, which contributed to weaker gross profit margins in 2004, as compared with 2003. Steel prices were more stable in 2005, which has allowed us to recover some gross profit. In the third quarter of 2005, gross margins were further enhanced by approximately $2.6 million due to improved factory productivity across all segments. The increase in selling, general and administrative (SG&A) spending in the third quarter of 2005, as compared with the same period in 2004, primarily related to increased employee incentives due to improved earnings in 2005. On a year-to-date basis, the increase in SG&A spending was principally due to the businesses acquired in 2004 (approximately $5.1 million) and increased employee incentives (approximately $2.0 million).
Interest expense in 2005 was higher than 2004, for the third quarter and on a year-to-date basis. While average borrowing levels in the third quarter of 2005 were lower than for the same period in 2004, interest expense rose, due to higher interest rates on our variable rate debt in 2005. As of the end of the third quarter, average borrowings on a year-to-date basis were higher in 2005 as compared with 2004, due mainly to the Newmark, Whatley and Sigma acquisitions. These acquisitions were completed in the second and third quarter of 2004 and were financed through increased borrowings of approximately $138 million, including $12.6 million of debt assumed as part of the acquisitions. “Minority interest” expenses were lower in 2005 than 2004, both for the third quarter and on a year-to-date basis. This reduction is related to lower earnings in our Irrigation segment operations in Brazil and South Africa, both of which are less than 100% owned. The increase in net earnings for year-to-date 2005, as compared with the same period in 2004, was due in part to a $9.9 million pre-tax expense (approximately $6.1 million after taxes) associated with the restructuring of our long-term debt in the second quarter of 2004.
24
Engineered Support Structures (ESS) Segment
In the ESS segment, sales increased for the third quarter and on a year-to-date basis in 2005, as compared with 2004, due mainly to the impact of the 2004 acquisitions (approximately $1.0 and $11.2 million, respectively) and sales price increases in response to higher steel costs.
In North America, lighting and traffic sales in the third quarter of 2005 increased as compared with 2004, due to sales price increases in response to steel prices, offset by an approximate 10% decrease in sales volume. Sales volumes for 2005 were also down slightly as compared with 2004 on a year-to-date basis. Orders and shipments relating to lighting and traffic projects funded by government programs lagged behind 2004, due to delays in the enactment of new federal highway legislation. We believe that, without specific funding guidelines in place, projects were delayed, resulting in lower demand for lighting and traffic products. In the third quarter of 2005, new federal highway funding legislation was enacted, which should result in improved market conditions going forward. However, we do not expect this legislation to have a significant impact on sales in the fourth quarter of 2005. Commercial lighting sales for the third quarter and on a year-to-date basis in 2005 likewise lagged 2004 levels. We believe this decrease was attributable to lower commercial construction spending in 2005 than in 2004 and was also impacted by rising costs of construction materials. In Europe, lighting sales were higher than 2004, for the third quarter and on a year-to-date basis, due to a combination of higher selling prices to offset higher steel costs, some improvement in economic conditions in our main market areas and sales attributable to new products developed this year.
Sales of Specialty Structures products increased for the third quarter and on a year-to-date basis, as compared with 2004. In North America, market conditions for sales of structures and components for the wireless communication market for the third quarter and on a year-to-date basis were similar to the same periods in 2004. Sign structure sales for the thirteen and thirty-nine weeks ended September 24, 2005 increased over the same periods in 2004, principally due to the Sigma acquisition (approximately $1.3 and $6.7 million, respectively). Sales of wireless communication poles in China in the third quarter of 2005 were comparable to the same period in 2004, while year-to-date sales in 2005 lagged 2004 by approximately $ 5 million. While sales were below record 2004 levels, demand has been steady and we believe China will continue to expand and improve its wireless networks over time to accommodate growing demand for wireless communication services. Stronger sales of utility structures in China, including sales exported to other regions of the world, enhanced third quarter and year-to-date sales in 2005, as compared with the same periods in 2004 and offset the year-to-date drop in wireless communication structure sales. We believe that, as China develops its electrical infrastructure, there will be a solid demand in the future for steel transmission, substation and distribution structures to help transport and distribute electrical power to users.
The increase in the profitability of the ESS segment for the thirteen and thirty-nine weeks ended September 24, 2005 as compared with the same periods in 2004 was the result of stronger earnings in North America, Europe and China. In North America, improved pricing in all product lines contributed to the increase in earnings for the segment, as sales price increases implemented throughout 2004 generally lagged steel cost increases. In Europe, earnings improved by $0.9 and $5.2 million as compared with the third quarter and year-to-date of 2004, respectively. This profitability improvement was the result of cost structure reductions implemented in 2004 and improved sales volumes. In China, year-to-date earnings
25
were comparable to 2004, while third quarter 2005 operating income improved by approximately $1.8 million, as compared with the same period in 2004. The improvement in third quarter earnings in China, as compared with the same period in 2004, was attributable to higher sales volumes (partially due to export utility orders) and improved product pricing. The most significant reason for the increases in SG&A spending for the segment for the thirteen and thirty-nine weeks ended September 24, 2005 as compared with 2004 related mainly to increased employee incentives due to improved operating results this year, which approximated $2 million in the third quarter and on a year-to-date basis.
This segment includes the operations of Newmark since its acquisition on April 16, 2004 and the North American utility structure operations that were previously part of the ESS segment. For the thirteen weeks ended September 24, 2005, sales price increases essentially offset the impact of lower sales volumes. The hurricanes that struck the Gulf Coast and Texas during the third quarter resulted in shipping delays for our steel and concrete utility structures, as construction crews that normally install new structures were diverted to restoring electrical power to those affected by the hurricanes. On a year-to-date basis, the increase in sales in 2005, as compared with 2004, resulted from the Newmark acquisition (approximately $26 million) in April 2004 and increased selling prices to offset higher steel costs. As a result of the shipping delays encountered in the third quarter of 2005, our backlogs have grown to approximately $81 million, up from approximately $74 million at the end of the third quarter of 2004.
The improvement in third quarter operating income for this segment, as compared with 2004, resulted from improved product pricing this year. On a year-to-date basis, the increase in 2005 operating income, as compared with 2004, was due to the acquisition of Newmark in 2004 (approximately $2.3 million) and improved product pricing. In the first half of 2004, we experienced low margins due to significant competitive pricing pressures that existed throughout most of 2003 and the beginning of 2004. The pricing environment improved thereafter, which resulted in improved gross margins for the segment in 2005. Year-to-date SG&A spending increased in 2005, as compared with 2004, primarily due to the acquisition of Newmark in April 2004.
Coatings Segment
Net sales were unchanged for the thirteen weeks ended September 24, 2005, as compared with the same period in 2004. In the galvanizing operations, sales dollars were comparable to 2004, on both a quarterly and year-to-date basis, as price increases offset an approximate 7% decrease in pounds galvanized. The decrease in pounds galvanized included lower internal volumes from other segments. In the Irrigation and ESS segments, sales volumes are down this year, which resulted in lower internal demand for coatings services. Galvanizing services provided to the Utility segment are down due to lower volumes and a shift in the product mix to weathering steel, which does not require galvanizing. Despite lower volumes, third quarter and year-to-date operating income increased, as compared with 2004, mainly related to cost reductions to offset lower sales volumes. Additional workers’ compensation costs in our California anodizing operation of approximately $0.6 million were recorded in the third quarter of 2004. As a result of improved safety procedures and changes in California workers’ compensation laws, these costs were not incurred in 2005. Year-to-date SG&A spending for the third quarter and on a year-to-date
basis was down in 2005 as compared with 2004, which mostly related to reduced compensation and incentive costs.
Irrigation Segment
Sales in 2005 were down for the third quarter and on a year-to-date basis as compared with the same periods in 2004, due to lower sales volumes in domestic and international markets, offset to an extent by higher selling prices to offset higher steel costs. Fiscal 2005 third quarter and year-to-date global sales volumes of irrigation machines were down approximately 15% and 30%, respectively, as compared with the relatively strong 2004 sales volume levels. In North America, sales of irrigation machines were down modestly from the 2004 fiscal third quarter, but sales of service parts was relatively strong. Generally hot and dry growing conditions in many of our major markets resulted in increased utilization of center pivot irrigation and drove sales of service parts. The favorable mix impact of higher parts sales helped sustain gross profit levels despite lower overall sales. Most of the sales volume decrease in the third quarter occurred in the international markets. We believe lower farm commodity prices and higher farm input costs (especially energy and fertilizer) contributed to reduced demand for irrigation machines in most of our key markets around the world. In our international markets, we believe the increased relative strength of foreign currencies in relation to the U.S. dollar has also negatively impacted the net farm income of our customers and, accordingly, market demand in our key international regions, such as Brazil and South Africa, for the third quarter and on a year-to-date basis in 2005, as compared with 2004.
In the third quarter of 2005, operating income increased modestly, despite lower sales volumes. Third quarter operating income was positively impacted by lower SG&A expenses in 2005, as compared with 2004. Spending plans were reduced in the second quarter of 2005 in light of market conditions, which led to the decrease in expense levels in the third quarter of 2005. Spending decreases realized in the third quarter of 2005 were mainly in compensation and employee incentives. On a year-to-date basis, the lower operating income this year was principally due to the sharp decrease in sales volumes this year, which also impacted factory utilization, offset to a degree by lower SG&A spending. The operating income impact of reduced factory utilization was approximately $3.0 million for the year-to-date period ended September 24, 2005, as compared with the same period in 2004. The decrease in SG&A spending for the year-to-date period ended September 24, 2005 was primarily due to lower employee incentives (approximately $0.9 million) and the reversal of a $0.8 million doubtful account receivable provision for a receivable that was recovered in the second quarter of 2005.
Tubing Segment
In the Tubing segment, 2005 third quarter sales volumes were up approximately 20% over the same period in 2004, which was more than offset by generally lower sales prices resulting from lower steel costs. We believe the increased sales volume in this segment was the result of the timing of sales orders placed by some of our customers, as year-to-date sales volumes in 2005 were comparable to 2004. Accordingly, the increase in year-to-date sales was due to the carryover effect of higher sales price due to rising steel costs in 2004. The modest decrease in operating income in the third quarter of 2005 was due mainly to a more price competitive market, which hampered gross margins, offset to a degree by lower SG&A spending and improved factory productivity (approximately $1.2 million). For the thirty-nine week period ended
September 24, 2005, the improvement in operating income was largely the result of lower SG&A spending as compared with 2004. Quarterly and year-to-date SG&A spending decreases in 2005 as compared with 2004 resulted from reduced employee incentives in 2005 (approximately $0.3 million and $0.7 million, respectively).
The “Other” category includes our industrial fastener business, our machine tool accessories operation in France and the development costs associated with our wind energy structure initiative. The main reason for the third quarter 2005 increase in operating income, as compared with 2004, related to lower wind energy spending and some improvement in the machine tool accessory business. On a year-to-date basis, spending on the wind energy initiative was comparable to 2004.
The main reasons for increased net corporate SG&A expense for the thirteen and thirty-nine weeks ended September 24, 2005 as compared with the same periods in 2004 were certain non-recurring expenses related to the acquisition of a new corporate aircraft (approximately $0.7 and $1.2 million, respectively) and higher employee incentives due to improved operating results this year (approximately $0.9 million and $1.2 million, respectively).
Liquidity and Capital Resources
Cash Flows
Working Capital and Operating Cash Flows—Net working capital was $249.0 million at September 24, 2005, as compared with $277.4 million at December 25, 2004. The ratio of current assets to current liabilities was 2.62:1 at September 24, 2005, as compared with 2.84:1 at December 25, 2004. Operating cash flow was a net inflow of $90.9 million for the thirty-nine week period ended September 24, 2005, as compared with a net outflow of $16.6 million for the same period in 2004. The main reasons for the improvement in operating cash flows from 2004 to 2005 were increased net earnings this year, increased depreciation and amortization expenses in 2005 (due mainly to fixed assets and finite-lived intangible assets recognized as part of the acquisitions completed in 2004) and lower working capital levels. Our inventories increased throughout most of 2004, which resulted from steel price increases and increased quantities of steel that were purchased due to shortages and extended lead times. Inventories peaked in the third quarter of 2004 and decreased somewhat in the fourth quarter of 2004. We further reduced inventory levels in the first three quarters of 2005 and plan to continue reducing inventories over the remainder of 2005. The speed of any future inventory reductions will be a function of factors such as market conditions in our businesses and the operating conditions in the steel industry.
Investing Cash Flows—Capital spending during the thirty-nine weeks ended September 24, 2005 was $30.0 million, as compared with $12.3 million for the same period in 2004. The main reason for the increase in capital spending was the purchase of a corporate aircraft for approximately $16.5 million. Our existing aircraft is currently for sale and we believe the sale will be completed during the 2005 fiscal year.
28
Our capital spending for the 2005 fiscal year is expected to be between $35 million and $40 million. In 2004, we spent $125.4 million related to the Newmark, Whatley and Sigma acquisitions.
Financing Cash Flows—Our total interest-bearing debt decreased from $327.5 million as of December 25, 2004 to $269.0 million as of September 24, 2005. The decrease in borrowings was related to the operating cash flows generated during 2005, less capital expenditures.
Sources of Financing and Capital
We have historically funded our growth, capital spending and acquisitions through a combination of operating cash flows and debt financing. We have an internal long-term objective to maintain long-term debt as a percent of capital at or below 40%. At September 24, 2005, our long-term debt to invested capital ratio was 39.5%, as compared with 46.3% at December 25, 2004. The decrease in our interest-bearing debt was achieved through our stronger operating cash flows this year, which were used to pay down the outstanding balance of our revolving debt while meeting our other debt payment obligations. Our internal objective of 40% is exceeded from time to time in order to take advantage of opportunities to grow and improve our businesses, such as the Newmark, Whatley and Sigma acquisitions that were completed in 2004. We believe these acquisitions were appropriate opportunities to expand our product offerings and market coverage and generate earnings growth.
Our debt financing at September 24, 2005 consisted primarily of long-term debt. We also maintain certain short-term bank lines of credit totaling $22.9 million, $19.2 million which was unused at September 24, 2005. Our long-term debt principally consists of:
· $150 million of senior subordinated notes that bear interest at 6.875% per annum and are due in May 2014. We may repurchase the notes starting in May 2009 at specified prepayment premiums. These notes are guaranteed by certain of our U.S. subsidiaries.
· $150 million revolving credit agreement with a group of banks that accrues interest at our option at (a) the higher of the prime lending rate and the Federal Funds rate plus 50 basis points or (b) an interest rate spread over the LIBOR of 62.5 to 137.5 basis points (inclusive of facility fees), depending on our ratio of debt to earnings before taxes, interest, depreciation and amortization (EBITDA). In addition, this agreement provides that another $50 million may be added to the total credit agreement at our request at any time prior to May 31, 2007, subject to the group of banks increasing their current commitment. At September 24, 2005, we had $14.5 million outstanding under the revolving credit agreement at an interest rate of 4.625% per annum. The revolving credit agreement contains certain financial covenants that limit our additional borrowing capability under the agreement. At September 24, 2005, we had the ability to borrow an additional $130 million under this facility.
· $75 million term loan with a group of banks that accrues interest at our option at (a) the higher of the prime lending rate and the Federal Funds rate plus 50 basis points or (b) LIBOR plus a spread of 62.5 to 137.5 basis points, depending on our debt to EBITDA ratio. This loan requires quarterly principal payments beginning in 2005 through 2009. The annualized principal payments beginning in 2005 in millions are: $3.8, $11.2, $18.8, $26.2, and $15.0. The effective interest rate on this loan at September 24, 2005 was 4.875% per annum.
29
Under these debt agreements, we are obligated by covenants that require us to maintain certain coverage ratios and may limit us with respect to certain business activities. At September 24, 2005 we were in compliance with all covenants related to these debt agreements.
FINANCIAL OBLIGATIONS AND FINANCIAL COMMITMENTS
There have been no material changes to our financial obligations and financial commitments as described on page 31 in our Form 10-K for the year ended December 25, 2004.
Off Balance Sheet Arrangements
There have been no changes in our off balance sheet arrangements as described on pages 31-32 in our Form 10-K for the fiscal year ended December 25, 2004.
Critical Accounting Policies
There have been no changes in the Company’s critical accounting policies during the quarter ended September 24, 2005. These policies are described on pages 33-35 in our Form 10-K for the fiscal year ended December 25, 2004.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
There are no material changes in the Company’s market risk during the second quarter ended September 24, 2005. For additional information, refer to the section “Risk Management” on page 33 of our Form 10-K for the fiscal year ended December 25, 2004.
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 provide reasonable assurance that such disclosure controls and procedures are effective in timely providing them with material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic Securities and Exchange Commission filings. Subsequent to the second quarter of fiscal 2005, the company implemented various process and information systems enhancements, principally related to the implementation of IFS software and related business improvements in the Specialty Structures unit of the Engineered Support Structures segment. These process and information system enhancements resulted in modifications to internal controls over sales, customer service, inventory management, accounts receivable, and accounts payable processes. Aside from such change, there were no significant changes to the company’s internal control over financial reporting during the third quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
(a)
(b)
(c)
(d)
Total Number of
Maximum Number
Shares Purchased as
of Shares that May
Part of Publicly
Yet Be Purchased
Average Price
Announced Plans or
Under the Plans or
Period
Shares Purchased
Paid per Share
Programs
June 26, 2005 to July 23, 2005
2,089
$24.98
July 24, 2005 to August 27, 2005
76,879
27.05
August 28, 2005 to September 24, 2005
1,287
$26.20
80,255
26.98
During the third quarter, the only shares reflected above were those delivered to the Company by employees as part of stock option exercises, either to cover the purchase price of the option or the related taxes payable by the employee as part of the option exercise. The price paid per share was the market price at the date of exercise.
Item 5. Other Information
On September 14, 2005, the Company’s Board of Directors declared a quarterly cash dividend on common stock of 8.5 cents per share, payable October 14, 2005, to stockholders of record September 30, 2005. The indicated annual dividend rate is 34 cents per share.
Item 6. Exhibits
(a) Exhibits
Exhibit No.
Description
31.1
Section 302 Certificate of Chief Executive Officer
31.2
Section 302 Certificate of Chief Financial Officer
32.1
Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
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/ TERRY J. MCCLAIN
Terry J. McClainSenior Vice President and Chief Financial Officer(Principal Financial Officer)
Dated this 24th day of October, 2005.