Edgar Filing: VALMONT INDUSTRIES INC

QuickLinks -- Click here to rapidly navigate through this document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 29, 2007
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 (State or other jurisdiction of incorporation or organization)		47-0351813 (I.R.S. Employer Identification No.)
One Valmont Plaza, Omaha, Nebraska (Address of principal executive offices)		68154-5215 (Zip Code)

(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 ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý Accelerated filer o Non-accelerated filer 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 ý

25,882,450
Outstanding shares of common stock as of October 22, 2007

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 29, 2007 and September 30, 2006	3
	Condensed Consolidated Balance Sheets as of September 29, 2007 and December 30, 2006	4
	Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 29, 2007 and September 30, 2006	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	29
Item 4.	Controls and Procedures	29
PART II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 5.	Other Information	30
Item 6.	Exhibits	30
Signatures		31

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

		Thirteen Weeks Ended						Thirty-nine Weeks Ended
		Sept 29, 2007			Sept 30, 2006			Sept. 29, 2007			Sept. 30, 2006
Net sales		$	372,033		$	310,904		$	1,114,972		$	953,320
Cost of sales			274,461			230,234			819,719			711,895

	Gross profit		97,572			80,670			295,253			241,425
Selling, general and administrative expenses			59,858			51,651			179,573			158,920

	Operating income		37,714			29,019			115,680			82,505

Other income (deductions):
	Interest expense		(4,470	)		(4,328	)		(13,159	)		(12,815	)
	Interest income		666			549			1,796			1,497
	Miscellaneous		(319	)		113			(342	)		1,297

			(4,123	)		(3,666	)		(11,705	)		(10,021	)

Earnings before income taxes, minority interest and equity in earnings (losses) of nonconsolidated subsidiaries			33,591			25,353			103,975			72,484

Income tax expense (benefit):
	Current		8,506			9,636			30,857			33,629
	Deferred		(1,070	)		(2,141	)		553			(9,969	)

			7,436			7,495			31,410			23,660

Earnings before minority interest and equity in earnings (losses) of nonconsolidated subsidiaries			26,155			17,858			72,565			48,824
Minority interest			(700	)		(393	)		(1,355	)		(902	)
Equity in earnings (losses) of nonconsolidated subsidiaries			438			(2,403	)		372			(2,490	)

Net earnings		$	25,893		$	15,062		$	71,582		$	45,432

Earnings per share—Basic		$	1.01		$	0.60		$	2.81		$	1.82

Earnings per share—Diluted		$	0.99		$	0.58		$	2.74		$	1.76

Cash dividends per share		$	0.105		$	0.095		$	0.305		$	0.275

Weighted average number of shares of common stock outstanding (000 omitted)			25,570			25,255			25,500			25,027

Weighted average number of shares of common stock outstanding plus dilutive potential common shares (000 omitted)			26,207			25,851			26,096			25,743

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

(Unaudited)

			September 29, 2007			December 30, 2006
ASSETS
Current assets:
	Cash and cash equivalents		$	69,337		$	63,504
	Receivables, net			264,518			213,660
	Inventories			212,982			194,278
	Prepaid expenses			8,571			6,086
	Refundable and deferred income taxes			20,825			17,130

		Total current assets		576,233			494,658

Property, plant and equipment, at cost				572,344			522,244
	Less accumulated depreciation and amortization			345,981			321,634

		Net property, plant and equipment		226,363			200,610

Goodwill				116,337			108,328
Other intangible assets, net				58,889			56,333
Other assets				24,868			32,381

		Total assets	$	1,002,690		$	892,310

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt		$	22,616		$	18,353
	Notes payable to banks			14,890			13,114
	Accounts payable			113,357			103,319
	Accrued expenses			98,352			79,699
	Dividends payable			2,717			2,437

		Total current liabilities		251,932			216,922

Deferred income taxes				35,014			34,985
Long-term debt, excluding current installments				200,521			202,784
Other noncurrent liabilities				22,958			28,049
Minority interest in consolidated subsidiaries				9,367			8,289
Shareholders' equity:
	Preferred stock			—			—
	Common stock of $1 par value			27,900			27,900
	Retained earnings			473,882			405,567
	Accumulated other comprehensive income			12,995			3,626
	Treasury stock			(31,879	)		(35,812	)

		Total shareholders' equity		482,898			401,281

		Total liabilities and shareholders' equity	$	1,002,690		$	892,310

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands, except per share amounts)

(Unaudited)

				Thirty-nine Weeks Ended
				Sept. 29, 2007			Sept. 30, 2006
Cash flows from operations:
	Net earnings			$	71,582		$	45,432
	Adjustments to reconcile net earnings to net cash flows from operations:
		Depreciation and amortization			25,736			27,460
		Stock-based compensation			2,694			2,023
		(Gain) Loss on sale of assets			819			(376	)
		Equity in (earnings) losses in nonconsolidated subsidiaries			(372	)		2,490
		Minority interest			1,356			902
		Deferred income taxes			553			(9,969	)
		Other adjustments			693			(339	)
		Changes in assets and liabilities
			Receivables		(44,662	)		(36,102	)
			Inventories		(11,147	)		(16,936	)
			Prepaid expenses		(1,650	)		(5,256	)
			Accounts payable		7,582			11,920
			Accrued expenses		16,715			11,985
			Other noncurrent liabilities		(879	)		326
			Income taxes payable		(4,600	)		(4,519	)
		Payment of deferred compensation			(9,186	)		—

		Net cash flows from operations		$	55,234		$	29,041

Cash flows from investing activities:
	Purchase of property, plant & equipment				(42,901	)		(18,789	)
	Acquisitions, net of cash acquired				(16,163	)		—
	Investment in nonconsolidated subsidiary				—			(4,824	)
	Proceeds from sale of assets				9,371			3,316
	Dividends to minority interests				(715	)		(377	)
	Other, net				(1,417	)		(780	)

		Net cash flows from investing activities			(51,825	)		(21,454	)

Cash flows from financing activities:
	Net borrowings under short-term agreements				1,624			3,790
	Proceeds from long-term borrowings				12,463			475
	Principal payments on long-term obligations				(12,147	)		(8,679	)
	Dividends paid				(7,588	)		(6,658	)
	Proceeds from exercises under stock plans				6,287			26,543
	Excess tax benefits from stock option exercises				5,541			16,102
	Purchase of common treasury shares—stock plan exercises				(6,244	)		(31,367	)

		Net cash flows from financing activities			(64	)		206

Effect of exchange rate changes on cash and cash equivalents					2,488			589

		Net change in cash and cash equivalents			5,833			8,382
Cash and cash equivalents—beginning of period					63,504			46,867

Cash and cash equivalents—end of period				$	69,337		$	55,249

See accompanying notes to condensed consolidated financial statements.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(Unaudited)

1. Summary of Significant Accounting Policies

Condensed Consolidated Financial Statements

The Condensed Consolidated Balance Sheet as of September 29, 2007 and the Condensed Consolidated Statements of Operations for the thirteen and thirty-nine week periods ended September 29, 2007 and September 30, 2006 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 29, 2007 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 30, 2006. 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 30, 2006, except for the adoption of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, in fiscal 2007. The results of operations for the periods ended September 29, 2007 are not necessarily indicative of the operating results for the full year.

Inventories

At September 29, 2007, approximately 48.2% 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 $35,800 and $37,400 at September 29, 2007 and December 30, 2006, respectively.

Inventories consisted of the following:

		September 29, 2007		December 30, 2006
Raw materials and purchased parts		$	134,415	$	132,988
Work-in-process			21,322		20,825
Finished goods and manufactured goods			93,005		77,817

	Subtotal		248,742		231,630
LIFO reserve			35,760		37,352

Inventory		$	212,982	$	194,278

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

Stock and Deferred Compensation 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, nonqualified stock options, stock appreciation rights, non-vested stock awards and bonuses of common stock. At September 29, 2007, 1,236,257 shares of common stock remained available for issuance under the plans. Shares and options issued and available for issuance 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 recorded $367 and $1,264 of compensation expense (included in selling, general and administrative expenses) for the thirteen and thirty-nine weeks ended September 29, 2007, respectively and $444 and $1,157 of compensation expense for the thirty-nine weeks ended September 30, 2006. The associated tax benefits recorded for the thirteen and thirty-nine weeks ended September 29, 2007 were $141 and $487, respectively and the $171 and $445 for the thirteen and thirty-nine weeks ended September 30, 2006.

During the thirty-nine weeks ended September 29, 2007, $13,374 was distributed from the Company's non-qualified deferred compensation plan to participants under the transition rules of section 409A of the Internal Revenue Code. The distributions were made in the amounts of $9,186 in cash and $4,188 in-kind.

Income Taxes

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on December 31, 2006. The result of the implementation was immaterial to the financial statements. The gross amount of unrecognized tax benefits as of the date of adoption was $4,325. Included in this amount was an aggregate of $760 of interest and penalties. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $3,775 and $1,779 at December 30, 2006 and September 29, 2007, respectively. The Company's policy is to record interest and penalties directly related to income taxes as income tax expense in the Condensed Consolidated Statements of Operations. In the third quarter of 2007, the Company recorded a reduction of its unrecognized tax benefits of $2,696, with $2,388 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the United States.

The Company files income tax returns in the U.S. and various states as well as foreign jurisdictions. Tax years 2004 and forward remain open under U.S. statutes of limitation. Generally, tax years 2003 and forward remain open under state statutes of limitation. The Company has extended statutes of limitation for pending examinations in Nebraska for years prior to 2003.

There is approximately $630 of uncertain tax positions for which reversal is reasonably possible during the next 12 months due to the closing of the statute of limitation. The nature of these uncertain tax positions is generally the classification of a transaction as tax exempt or the computation of a tax deduction or tax credit.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

Recently Issued Accounting Pronouncements

In September 2006, the FASB issued Statement 157 ("SFAS 157"), Fair Value Measurements. This Statement establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. While SFAS 157 does not require any new fair value measurements, it may change the application of fair value measurements embodied in other accounting standards. SFAS 157 will be effective at the beginning of the Company's 2008 fiscal year. The Company is currently assessing the effect of this pronouncement on the consolidated financial statements.

2. Acquisition

On April 26, 2007, the Company acquired 70% of the outstanding shares of Tehomet Oy (Tehomet), a Finnish manufacturer of lighting poles. Tehomet's operations are included in the Company's condensed consolidated financial statement since the acquisition date. The total purchase price amounted to $12,336 in cash (including transaction costs). Goodwill of $5,990 was recognized as part of the purchase price allocation and was assigned to the Engineered Support Structures segment. The Company allocated the purchase price as follows: current assets, $4,834; current liabilities, $1,950; plant, property and equipment; $3,259, finite-lived intangible assets, $3,168; indefinite-lived intangible assets, $1,262; goodwill, $5,990 and long term liabilities, $4,227. The Company acquired Tehomet to expand its geographical presence in Europe and to leverage product lines offerings of both companies across the Company's collective market areas for lighting structures.

On July 13, 2007, the Company paid $3,827 in cash for the remaining 20% of the outstanding shares of its Canadian lighting structure manufacturing facility. The purchase price in excess of the $1,425 of net assets acquired was allocated as follows: plant, property and equipment, $116; finite-lived intangible assets, $556; indefinite-lived intangible assets, $172; goodwill, $1,828 and long term liabilities, $270.

3. Goodwill and Intangible Assets

Amortized Intangible Assets

The components of amortized intangible assets at September 29, 2007 and December 30, 2006 were as follows:

	As of September 29, 2007
	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	51,209	$	13,011	16 years
Proprietary Software & Database		2,609		2,124	6 years
Patents & Proprietary Technology		2,839		666	14 years
Non-compete Agreements		979		241	6 years

	$	57,636	$	16,042

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

	As of December 30, 2006
	Gross Carrying Amount		Accumulated Amortization		Weighted Average Life
Customer Relationships	$	48,133	$	10,737	18 years
Proprietary Software & Database		2,609		2,021	6 years
Patents & Proprietary Technology		2,839		517	14 years
Non-compete Agreements		331		165	5 years

	$	53,912	$	13,440

Amortization expense for intangible assets for the thirteen weeks ended September 29, 2007 and September 30, 2006 was $919 and $756, respectively. Amortization expense for intangible assets for the thirty-nine weeks ended September 29, 2007, and September 30, 2006 was $2,602 and $2,572, respectively. Estimated amortization expense related to finite-lived intangible assets is as follows:

	Estimated Amortization Expense
2007	$	3,650
2008		3,671
2009		3,640
2010		3,610
2011		3,610

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

Non-amortized intangible assets

Under the provisions of SFAS 142, intangible assets with indefinite lives are not amortized. The carrying value of the PiRod and Newmark trade names are $4,750 and $11,111 as of September 29, 2007 and December 30, 2006. These indefinite-lived intangible assets were tested for impairment separately from goodwill in the third quarter of 2007. The carrying value of the Tehomet and Feralux trade names were $1,262 and $172, respectively, as of September 29, 2007. The Newmark trade name arose from the 2004 acquisition, the PiRod trade name arose from the 2001 acquisition and the Tehomet and Feralux trade names arose from 2007 acquisitions. 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 29, 2007.

In its determination of these intangible assets as indefinite-lived, the Company considered such factors as its expected future use of the intangible asset, legal, regulatory, technological and competitive factors that may impact the useful life or value of the intangible asset and the expected costs to

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

maintain the value of the intangible asset. The Company has determined that these intangible assets are expected to maintain their value indefinitely and, therefore, these assets are not amortized.

Goodwill

The carrying amount of goodwill as of September 29, 2007 was as follows:

	Engineered Support Structures Segment		Utility Support Structures Segment		Coatings Segment		Irrigation Segment		Tubing Segment		Total
Balance December 30, 2006	$	19,956	$	44,065	$	42,192	$	1,853	$	262	$	108,328
Acquisitions		7,818		—		—		—		—		7,818
Foreign Currency Translation		191		—		—		—		—		191

Balance September 29, 2007	$	27,965		44,065		42,192		1,853		262	$	116,337

The Company's annual impairment testing on its reporting units was performed during the third quarter of 2007. As a result of that testing, it was determined the goodwill and other intangible assets on the Company's Condensed Consolidated Balance Sheet were not impaired.

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:

		Sept. 29, 2007			Sept. 30, 2006
Interest		$	10,852		$	10,358
Income Taxes			31,985			22,306

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

5. Earnings Per Share

The following table provides reconciles Basic and Diluted earnings per share:

		Basic EPS		Dilutive Effect of Stock Options		Diluted EPS
Thirteen weeks ended September 29, 2007:
	Net earnings	$	25,893	—		$	25,893
	Shares outstanding		25,570	637			26,207
	Per share amount	$	1.01	(.02	)	$	0.99
Thirteen weeks ended September 30, 2006:
	Net earnings	$	15,062	—		$	15,062
	Shares outstanding		25,255	596			25,851
	Per share amount	$	0.60	(.02	)	$	0.58
Thirty-nine weeks ended September 29, 2007:
	Net earnings	$	71,582	—		$	71,582
	Shares outstanding		25,500	596			26,096
	Per share amount	$	2.81	(.07	)	$	2.74
Thirty-nine weeks ended September 30, 2006:
	Net earnings	$	45,432	—		$	45,432
	Shares outstanding		25,027	716			25,743
	Per share amount	$	1.82	(.06	)	$	1.76

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 29, 2007 and September 30, 2006, respectively, were as follows:

	Thirteen Weeks Ended					Thirty-nine Weeks Ended
	Sept. 29, 2007		Sept. 29, 2006			Sept. 29, 2007		Sept. 30, 2006
Net earnings	$	25,893	$	15,062		$	71,582	$	45,432
Currency translation adjustment		4,712		(264	)		9,369		3,767

Total comprehensive income	$	30,605	$	14,798		$	80,951	$	49,199

7. Business Segments

The Company aggregates its operating segments into five reportable segments. Aggregation is based on similarity of operating segments as to economic characteristics, products, production processes, types or classes of customer and the methods of distribution. Net corporate expense is net of certain service-related expenses that are allocated to business units generally on the basis of employee headcounts and sales dollars.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

Reportable segments are as follows:

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 the manufacture 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. In the fourth quarter of 2006, the Company decided to suspend its efforts related to the wind energy industry.

The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its business segments based upon operating income and invested capital. The Company does not allocate 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 (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

			Thirteen Weeks Ended						Thirty-nine Weeks Ended
			Sept. 29, 2007			Sept. 30, 2006			Sept. 29 2007			Sept. 30 2006
Sales:
	Engineered Support Structures segment
		Lighting & Traffic	$	123,393		$	96,488		$	342,259		$	286,893
		Specialty		33,771			26,203			91,202			79,097
		Utility		7,604			10,577			17,137			20,440

				164,768			133,268			450,598			386,430
	Utility Support Structures segment
		Steel		60,780			51,622			189,314			154,782
		Concrete		18,282			14,718			59,878			54,024

				79,062			66,340			249,192			208,806
	Coatings segment			34,321			29,936			103,351			82,534
	Irrigation segment			84,822			67,803			285,301			242,527
	Tubing segment			24,106			22,997			76,652			70,134
	Other			5,253			4,328			16,660			13,397

				392,332			324,672			1,181,754			1,003,828
Intersegment Sales:
	Engineered Support Structures			7,124			2,222			24,897			17,624
	Utility Support Structures			69			306			705			1,749
	Coatings			7,523			6,172			23,115			16,258
	Irrigation			7			29			54			46
	Tubing			4,199			4,002			13,720			11,560
	Other			1,377			1,037			4,291			3,271

				20,299			13,768			66,782			50,508
Net Sales
	Engineered Support Structures			157,644			131,046			425,701			368,806
	Utility Support Structures			78,993			66,034			248,487			207,057
	Coatings			26,798			23,764			80,236			66,276
	Irrigation			84,815			67,774			285,247			242,481
	Tubing			19,907			18,995			62,932			58,574
	Other			3,876			3,291			12,369			10,126

Consolidated Net Sales			$	372,033		$	310,904		$	1,114,972		$	953,320

Operating Income
	Engineered Support Structures		$	16,679		$	14,469		$	42,102		$	32,547
	Utility Support Structures			10,045			6,710			31,640			22,804
	Coatings			6,117			5,917			17,217			13,180
	Irrigation			8,859			5,583			37,761			27,867
	Tubing			4,308			3,812			13,982			11,114
	Other			399			(373	)		954			(1,438	)
	Net corporate expense			(8,693	)		(7,099	)		(27,976	)		(23,569	)

Total Operating Income			$	37,714		$	29,019		$	115,680		$	82,505

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

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 OPERATIONS

For the Thirteen Weeks Ended September 29, 2007

		Parent			Guarantors			Non-Guarantors			Eliminations			Total
Net sales		$	223,203		$	61,195		$	116,654		$	(29,019	)	$	372,033
Cost of sales			166,532			47,719			88,998			(28,788	)		274,461

	Gross profit		56,671			13,476			27,656			(231	)		97,572
Selling, general and administrative expenses			34,235			8,385			17,238			—			59,858

	Operating income		22,436			5,091			10,418			(231	)		37,714

Other income (deductions):
	Interest expense		(3,966	)		(1	)		(590	)		87			(4,470	)
	Interest income		142			155			456			(87	)		666
	Miscellaneous		11			21			(351	)		—			(319	)

			(3,813	)		175			(485	)		—			(4,123	)
Earnings before income taxes, minority interest, and equity in earnings/(losses) of nonconsolidated subsidiaries			18,623			5,266			9,933			(231	)		33,591

Income tax expense:
	Current		3,740			2,034			2,732			—			8,506
	Deferred		323			(193	)		(1,200	)		—			(1,070	)

			4,063			1,841			1,532			—			7,436

Earnings before minority interest, and equity in earnings/(losses) of nonconsolidated subsidiaries			14,560			3,425			8,401			(231	)		26,155
Minority interest			—			—			(700	)		—			(700	)
Equity in earnings/(losses) of nonconsolidated subsidiaries			11,563			—			173			(11,298	)		438

	Net earnings	$	26,123		$	3,425		$	7,874		$	(11,529	)	$	25,893

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

For the Thirty-nine Weeks Ended September 29, 2007

		Parent			Guarantors			Non-Guarantors			Eliminations			Total
Net sales		$	692,121		$	182,173		$	323,225		$	(82,547	)	$	1,114,972
Cost of sales			511,058			145,226			245,365			(81,930	)		819,719

	Gross profit		181,063			36,947			77,860			(617	)		295,253
Selling, general and administrative expenses			103,638			25,774			50,161			—			179,573

	Operating income		77,425			11,173			27,699			(617	)		115,680

Other income (deductions):
	Interest expense		(11,975	)		(5	)		(1,602	)		423			(13,159	)
	Interest income		423			500			1,296			(423	)		1,796
	Miscellaneous		21			57			(420	)		—			(342	)

			(11,531	)		552			(726	)		—			(11,705	)
Earnings before income taxes, minority interest, and equity in earnings/(losses) of nonconsolidated subsidiaries			65,894			11,725			26,973			(617	)		103,975

Income tax expense:
	Current		19,087			4,554			7,216			—			30,857
	Deferred		2,026			(542	)		(931	)		—			553

			21,113			4,012			6,285			—			31,410

Earnings before minority interest, and equity in earnings/(losses) of nonconsolidated subsidiaries			44,781			7,713			20,688			(617	)		72,565
Minority interest			—			—			(1,355	)		—			(1,355	)
Equity in earnings/(losses) of nonconsolidated subsidiaries			27,417			—			198			(27,243	)		372

	Net earnings	$	72,198		$	7,713		$	19,531		$	(27,860	)	$	71,582

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Thirteen Weeks Ended September 30, 2006

		Parent			Guarantors			Non-Guarantors			Eliminations			Total
Net sales		$	191,740		$	52,635		$	87,953		$	(21,424	)	$	310,904
Cost of sales			146,183			39,165			66,468			(21,582	)		230,234

	Gross profit		45,557			13,470			21,485			158			80,670
Selling, general and administrative expenses			28,884			8,168			14,599			—			51,651

	Operating income		16,673			5,302			6,886			158			29,019

Other income (deductions):
	Interest expense		(4,052	)		(2	)		(282	)		8			(4,328	)
	Interest income		182			31			344			(8	)		549
	Miscellaneous		(2	)		16			99			—			113

			(3,872	)		45			161			—			(3,666	)
Earnings before income taxes, minority interest, and equity in earnings of nonconsolidated subsidiaries			12,801			5,347			7,047			158			25,353

Income tax expense:
	Current		5,229			2,087			2,320			—			9,636
	Deferred		(1,510	)		13			(644	)		—			(2,141	)

			3,719			2,100			1,676			—			7,495

Earnings before minority interest, and equity in earnings/(losses) of nonconsolidated subsidiaries			9,082			3,247			5,371			158			17,858
Minority interest			—			—			(393	)		—			(393	)
Equity in earnings/(losses) of nonconsolidated subsidiaries			5,822			142			143			(8,510	)		(2,403	)

	Net earnings	$	14,904		$	3,389		$	5,121		$	(8,352	)	$	15,062

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

For the Thirty-nine Weeks Ended September 30, 2006

		Parent			Guarantors			Non-Guarantors			Eliminations			Total
Net sales		$	592,035		$	167,942		$	251,959		$	(58,616	)	$	953,320
Cost of sales			453,916			128,973			187,731			(58,725	)		711,895

	Gross profit		138,119			38,969			64,228			109			241,425
Selling, general and administrative expenses			89,573			24,409			44,938			—			158,920

	Operating income		48,546			14,560			19,290			109			82,505

Other income (deductions):
	Interest expense		(12,135	)		(6	)		(697	)		23			(12,815	)
	Interest income		331			66			1,123			(23	)		1,497
	Miscellaneous		1,113			41			143			—			1,297

			(10,691	)		101			569			—			(10,021	)
Earnings before income taxes, minority interest, and equity in earnings of nonconsolidated subsidiaries			37,855			14,661			19,859			109			72,484

Income tax expense:
	Current		21,246			6,338			6,045			—			33,629
	Deferred		(7,746	)		(684	)		(1,539	)		—			(9,969	)

			13,500			5,654			4,506			—			23,660

Earnings before minority interest, and equity in earnings/(losses) of nonconsolidated subsidiaries			24,355			9,007			15,353			109			48,824
Minority interest			—			—			(902	)		—			(902	)
Equity in earnings/(losses) of nonconsolidated subsidiaries			20,968			—			300			(23,758	)		(2,490	)

	Net earnings	$	45,323		$	9,007		$	14,751		$	(23,649	)	$	45,432

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

CONDENSED CONSOLIDATED BALANCE SHEETS

September 29, 2007

			Parent			Guarantors		Non-Guarantors			Eliminations			Total
ASSETS
Current assets:
	Cash and cash equivalents		$	37,364		$	1,955	$	30,018		$	—		$	69,337
	Receivables, net			105,381			31,219		127,918			—			264,518
	Inventories			85,368			46,138		81,476			—			212,982
	Prepaid expenses			3,375			479		4,717			—			8,571
	Refundable and deferred income taxes			13,755			3,353		3,717			—			20,825

		Total current assets		245,243			83,144		247,846			—			576,233
Property, plant and equipment, at cost				355,179			78,251		138,914			—			572,344
	Less accumulated depreciation and amortization			232,724			33,488		79,769			—			345,981

	Net property, plant and equipment			122,455			44,763		59,145			—			226,363

Goodwill				20,371			73,375		22,591			—			116,337
Other intangible assets				684			51,268		6,937			—			58,889
Investment in subsidiaries and intercompany accounts				420,322			66,228		(33,878	)		(452,672	)		—
Other assets				17,083			—		7,785			—			24,868

		Total assets	$	826,158		$	318,778	$	310,426		$	(452,672	)	$	1,002,690

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt		$	20,216		$	31	$	2,369		$	—		$	22,616
	Notes payable to banks			—			—		14,890			—			14,890
	Accounts payable			42,746			12,114		58,497			—			113,357
	Accrued expenses			58,909			7,116		32,327			—			98,352
	Dividends payable			2,717			—		—			—			2,717

		Total current liabilities		124,588			19,261		108,083			—			251,932
Deferred income taxes				10,700			20,684		3,630			—			35,014
Long-term debt, excluding current installments				198,108			15		2,398			—			200,521
Minority interest in consolidated subsidiaries				—			—		9,367			—			9,367
Other noncurrent liabilities				20,027			—		2,931			—			22,958
Shareholders' equity:
	Common stock of $1 par value			27,900			14,249		3,492			(17,741	)		27,900
	Additional paid-in capital			—			159,082		71,412			(230,494	)		—
	Retained earnings			476,714			105,487		96,118			(204,437	)		473,882
	Accumulated other comprehensive loss			—			—		12,995			—			12,995
	Treasury stock			(31,879	)		—		—			—			(31,879	)

	Total shareholders' equity			472,735			278,818		184,017			(452,672	)		482,898

Total liabilities and shareholders' equity			$	826,158		$	318,778	$	310,426		$	(452,672	)	$	1,002,690

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

CONDENSED CONSOLIDATED BALANCE SHEETS

December 30, 2006

			Parent			Guarantors		Non-Guarantors			Eliminations			Total
ASSETS
Current assets:
	Cash and cash equivalents		$	25,438		$	2,962	$	35,104		$	—		$	63,504
	Receivables, net			88,295			32,836		92,577			(48	)		213,660
	Inventories			84,073			46,539		63,666			—			194,278
	Prepaid expenses			2,368			422		3,296			—			6,086
	Refundable and deferred income taxes			9,791			3,323		4,016			—			17,130

		Total current assets		209,965			86,082		198,659			(48	)		494,658

Property, plant and equipment, at cost				331,520			72,482		118,242			—			522,244
	Less accumulated depreciation and amortization			221,290			29,603		70,741			—			321,634

Net property, plant and equipment				110,230			42,879		47,501			—			200,610

Goodwill				20,370			73,375		14,583			—			108,328
Other intangible assets				724			53,475		2,134			—			56,333
Investment in subsidiaries and intercompany accounts				380,194			56,503		(17,241	)		(419,456	)		—
Other assets				25,666			—		7,315			(600	)		32,381

		Total assets	$	747,149		$	312,314	$	252,951		$	(420,104	)	$	892,310

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current installments of long-term debt		$	16,068		$	29	$	2,256		$	—		$	18,353
	Notes payable to banks			—			—		13,114			—			13,114
	Accounts payable			43,321			13,397		46,601			—			103,319
	Accrued expenses			47,239			6,549		25,959			(48	)		79,699
	Dividends payable			2,437			—		—			—			2,437

		Total current liabilities		109,065			19,975		87,930			(48	)		216,922

Deferred income taxes				11,392			21,196		2,397			—			34,985
Long-term debt, excluding current installments				201,615			38		1,731			(600	)		202,784
Other noncurrent liabilities				26,203			—		1,846			—			28,049
Minority interest in consolidated subsidiaries				—			—		8,289			—			8,289
Shareholders' equity:
	Common stock of $1 par value			27,900			14,249		3,492			(17,741	)		27,900
	Additional paid-in capital			—			159,082		67,055			(226,137	)		—
	Retained earnings			406,786			97,774		76,585			(175,578	)		405,567
	Accumulated other comprehensive income			—			—		3,626			—			3,626
	Treasury stock			(35,812	)		—		—			—			(35,812	)

	Total shareholders' equity			398,874			271,105		150,758			(419,456	)		401,281

		Total liabilities and shareholders' equity	$	747,149		$	312,314	$	252,951		$	(420,104	)	$	892,310

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Thirty-nine Weeks Ended September 29, 2007

				Parent			Guarantors			Non-Guarantors			Eliminations			Total
Cash flows from operations:
	Net earnings			$	72,198		$	7,713		$	19,531		$	(27,860	)	$	71,582
	Adjustments to reconcile net earnings to net cash flows from operations:
		Depreciation and amortization			13,126			6,548			6,062			—			25,736
		Stock based compensation			2,694			—			—			—			2,694
		(Gain)/ Loss on sale of property, plant and equipment			14			674			131			—			819
		Equity in (earnings)/losses of nonconsolidated subsidiaries			(174	)		—			(198	)		—			(372	)
		Minority interest			—			—			1,356			—			1,356
		Deferred income taxes			2,026			(542	)		(931	)		—			553
		Payment of deferred compensation			(9,186	)		—			—			—			(9,186	)
		Other adjustments			—			—			693			—			693
		Changes in assets and liabilities:
			Receivables		(17,085	)		1,618			(29,147	)		(48	)		(44,662	)
			Inventories		(1,295	)		401			(10,253	)		—			(11,147	)
			Prepaid expenses		(1,006	)		(57	)		(587	)		—			(1,650	)
			Accounts payable		1,191			(1,284	)		(7,675	)		—			7,582
			Accrued expenses		11,926			568			4,173			48			16,715
			Other noncurrent liabilities		(1,965	)		—			1,086			—			(879	)
			Income taxes payable		(2,416	)		—			(2,184	)		—			(4,600	)

		Net cash flows from operations			70,048			15,639			(2,593	)		(27,860	)		55,234

Cash flows from investing activities:
	Purchase of property, plant and equipment				(24,716	)		(6,940	)		(11,245	)		—			(42,901	)
	Investment in nonconsolidated subsidiary				—			—			—			—			—
	Acquisitions				—			—			(16,163	)		—			(16,163	)
	Dividends to minority interests				—			—			(715	)		—			(715	)
	Proceeds from sale of assets				9,204			42			125			—			9,371
	Proceeds from minority interests				—			—			—			—			—
	Other, net				(41,846	)		(9,726	)		22,295			27,860			(1,417	)

		Net cash flows from investing activities			(57,358	)		(16,624	)		(5,703	)		27,860			(51,825	)

Cash flows from financing activities:
	Net borrowings under short-term agreements				—			—			1,624			—			1,624
	Proceeds from long-term borrowings				12,087			—			376			—			12,463
	Principal payments on long-term obligations				(10,847	)		(22	)		(1,278	)		—			(12,147	)
	Dividends paid				(7,588	)		—			—			—			(7,588	)
	Proceeds from exercises under stock plans				6,287			—			—			—			6,287
	Excess tax benefits from stock option exercises				5,541			—			—			—			5,541
	Purchase of common treasury shares—stock plan exercises				(6,244	)		—			—			—			(6,244	)

		Net cash flows from financing activities			(764	)		(22	)		722			—			(64	)

	Effect of exchange rate changes on cash and cash equivalents				—			—			2,488			—			2,488

	Net change in cash and cash equivalents				11,926			(1,007	)		(5,086	)		—			5,833
	Cash and cash equivalents—beginning of year				25,438			2,962			35,104			—			63,504

	Cash and cash equivalents—end of year			$	37,364		$	1,955		$	30,018			—		$	69,337

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Thirty-nine Weeks Ended September 30, 2006

				Parent			Guarantors			Non-Guarantors			Eliminations			Total
Cash flows from operations:
	Net earnings			$	45,323		$	9,007		$	14,751		$	(23,649	)	$	45,432
	Adjustments to reconcile net earnings to net cash flows from operations:
		Depreciation and amortization			14,476			7,028			5,956			—			27,460
		Stock based compensation			2,023			—			—			—			2,023
		(Gain)/ Loss on sale of property, plant and equipment			(533	)		(42	)		199			—			(376	)
		Equity in (earnings)/losses of nonconsolidated subsidiaries			125			2,665			(300	)		—			2,490
		Minority interest			—			—			902			—			902
		Deferred income taxes			(7,746	)		(684	)		(1,539	)		—			(9,969	)
		Other adjustments			—			—			(339	)		—			(339	)
		Changes in assets and liabilities:
			Receivables		(27,708	)		6,780			(15,214	)		40			(36,102	)
			Inventories		(8,169	)		(1,746	)		(7,021	)		—			(16,936	)
			Prepaid expenses		(1,557	)		1,322			(5,021	)		—			(5,256	)
			Accounts payable		4,694			1,338			5,888			—			11,920
			Accrued expenses		7,347			(601	)		5,279			(40	)		11,985
			Other noncurrent liabilities		(355	)		—			681			—			326
			Income taxes payable		(4,779	)		—			260			—			(4,519	)

		Net cash flows from operations			23,141			25,067			4,482			(23,649	)		29,041

Cash flows from investing activities:
	Purchase of property, plant and equipment				(7,696	)		(4,069	)		(7,024	)		—			(18,789	)
	Investment in nonconsolidated subsidiary				(4,824	)		—			—			—			(4,824	)
	Dividends to minority interests				—			—			(377	)		—			(377	)
	Proceeds from sale of assets				3,057			77			182			—			3,316
	Proceeds from minority interests				—			—			—			—			—
	Other, net				(5,012	)		(21,613	)		2,196			23,649			(780	)

		Net cash flows from investing activities			(14,475	)		(25,605	)		(5,023	)		23,649			(21,454	)

Cash flows from financing activities:
	Net borrowings under short-term agreements				—			—			3,790			—			3,790
	Proceeds from long-term borrowings							—			475			—			475
	Principal payments on long-term obligations				(8,370	)		(20	)		(289	)		—			(8,679	)
	Dividends paid				(6,658	)		—			—			—			(6,658	)
	Proceeds from exercises under stock plans				26,543			—			—			—			26,543
	Excess tax benefits from stock option exercises				16,102			—			—			—			16,102
	Purchase of common treasury shares—stock plan exercises				(31,367	)		—			—			—			(31,367	)

		Net cash flows from financing activities			(3,750	)		(20	)		3,976			—			206

	Effect of exchange rate changes on cash and cash equivalents				—			—			589			—			589

	Net change in cash and cash equivalents				4,916			(558	)		4,024			—			8,382
	Cash and cash equivalents—beginning of year				16,875			1,898			28,094			—			46,867

	Cash and cash equivalents—end of year			$	21,791		$	1,340		$	32,118		$	—		$	55,249

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

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 30, 2006. We aggregate our businesses as five reportable segments. See Note 7 to the Condensed Consolidated Financial Statements.

Results of Operations

Dollars in thousands, except per share amounts

			Thirteen Weeks Ended								Thirty-nine Weeks Ended
			September 29, 2007			September 30, 2006			% Incr. (Decr.)		September 29, 2007			September 30, 2006			% Incr (Decr.)
Consolidated
	Net sales		$	372,033		$	310,904		19.7	%	$	1,114,972		$	953,320		17.0	%
	Gross profit			97,572			80,670		21.0	%		295,253			241,425		22.3	%
		as a percent of sales		26.2	%		25.9	%				26.5	%		25.3	%
	SG&A expense			59,858			51,651		15.9	%		179,573			158,920		13.0	%
		as a percent of sales		16.1	%		16.6	%				16.1	%		16.7	%
	Operating income			37,714			29,019		30.0	%		115,680			82,505		40.2	%
		as a percent of sales		10.1	%		9.3	%				10.4	%		8.7	%
	Net interest expense			3,804			3,779		0.7	%		11,363			11,318		0.4	%
	Effective tax rate			22.1	%		29.6	%				30.2	%		32.6	%
	Net earnings			25,893			15,062		71.9	%		71,582			45,432		57.6	%
	Earnings per share		$	0.99		$	0.58		70.7	%	$	2.74		$	1.76		55.7	%
Engineered Support Structures segment
		Net sales	$	157,644		$	131,046		20.3	%	$	425,701		$	368,806		15.4	%
		Gross profit		41,398			35,565		16.4	%		114,943			97,273		18.2	%
		SG&A expense		24,719			21,096		17.2	%		72,841			64,726		12.5	%
		Operating income		16,679			14,469		15.3	%		42,102			32,547		29.4	%
Utility Support Structures segment
		Net sales		78,993			66,034		19.6	%		248,487			207,057		20.0	%
		Gross profit		19,076			14,550		31.1	%		58,890			45,866		28.4	%
		SG&A expense		9,031			7,840		15.2	%		27,250			23,062		18.2	%
		Operating income		10,045			6,710		49.7	%		31,640			22,804		38.7	%
Coatings segment
		Net sales		26,798			23,764		12.8	%		80,236			66,276		21.1	%
		Gross profit		8,767			8,812		(0.5	)%		25,112			21,229		18.3	%
		SG&A expense		2,650			2,895		(8.5	)%		7,895			8,049		(1.9	)%
		Operating income		6,117			5,917		3.4	%		17,217			13,180		30.6	%
Irrigation segment
		Net sales		84,815			67,774		25.1	%		285,247			242,481		17.6	%
		Gross profit		20,635			15,738		31.1	%		71,957			58,636		22.7	%
		SG&A expense		11,776			10,155		16.0	%		34,196			30,769		11.1	%
		Operating income		8,859			5,583		58.7	%		37,761			27,867		35.5	%
Tubing segment
		Net sales		19,907			18,995		4.8	%		62,932			58,574		7.4	%
		Gross profit		5,936			5,270		12.6	%		18,912			15,647		20.9	%
		SG&A expense		1,628			1,458		11.7	%		4,930			4,533		8.8	%
		Operating income		4,308			3,812		13.0	%		13,982			11,114		25.8	%
Other
		Net sales		3,876			3,291		17.8	%		12,369			10,126		22.2	%
		Gross profit		1,470			1,202		22.3	%		4,830			3,647		32.4	%
		SG&A expense		1,071			1,575		(32.0	)%		3,876			5,085		(23.8	)%
		Operating income (loss)		399			(373	)	NM			954			(1,438	)	NM
Net Corporate expense
		Gross profit		290			(467	)	NM			609			(873	)	NM
		SG&A expense		8,983			6,632		35.4	%		28,585			22,696		25.9	%
		Operating income (loss)		(8,693	)		(7,099	)	(22.5	)%		(27,976	)		(23,569	)	(18.7	)%

NM = Not meaningful

Overview

The net sales increase for the thirteen week period ended September 29, 2007, as compared with the same period of 2006, was due to increased sales volumes in all reportable segments and selling price increases in our Utility Support Structures and Coatings segments offset to some extent by selling

price decreases in our Tubing segment. The year-to-date sales increase was due to increased volume in all reportable segments and sales price increases in all reportable segments except the Tubing segment. The improvement in gross profit for the thirteen and thirty-nine week periods ended September 29, 2007, as compared with the same periods of 2006, resulted from higher sales volumes and slightly lower material costs in 2007, as compared with 2006. The increases in selling, general and administrative (SG&A) expenses for the third quarter and year-to-date periods ended September 29, 2007, as compared with the same periods in 2006, mainly resulted from higher employee incentives related to improved operating performance (approximately $2.3 million and $5.2 million, respectively), increased salary and benefit costs to support the increase in sales activity (approximately $2.1 million and $5.2 million, respectively) higher sales commissions associated with the increased sales volumes (approximately $0.8 million and $3.2 million, respectively), acquisitions (approximately $0.9 million and $1.5 million, respectively) and currency fluctuations (approximately $0.8 million and $2.2 million, respectively).

All reportable segments contributed to the improved operating income in 2007 for the thirteen and thirty-nine weeks ended September 29, 2007, as compared with the same periods in 2006. In November 2006, we acquired the remaining 51% ownership in a previously non-consolidated Mexican manufacturing facility that is reported under the Utility Support Structures segment. In April 2007, we acquired 70% ownership in Tehomet Oy (Tehomet), a Finnish manufacturer of lighting structures that is reported under the Engineered Support Structures segment. In July 2007, we acquired the remaining 20% of our Canadian lighting structure manufacturing facility. The impact of these acquisitions on our operating results for the thirteen and thirty-nine week periods ended September 29, 2007 was not significant.

Net interest expense for the thirteen and thirty-nine weeks ended September 29, 2007 were comparable with the same periods in 2006, as average borrowing levels and interest rates in 2007 were similar to 2006.

Our effective tax rates for the third quarter and year-to-date periods ended September 29, 2007 were lower than the same periods in 2006. The most significant reason for the lower rates was approximately $2.2 million ($0.6 million in 2006) in certain unrecognized income tax benefits related to activities in prior tax years that were recorded as a reduction of income tax expense, due to the expiration of United States statutes of limitation. We had previously determined that these tax benefits were not likely to be realized and therefore had not recognized these benefits in prior years. In addition, our income tax rate in 2007 has been favorably impacted by our stronger earnings from international operations, which are generally taxed at lower rates than the U.S., and an increase in various tax credits and manufacturer's deductions that were available to us in 2007, as compared with 2006.

"Miscellaneous" income was lower for the thirty nine week period ended September 29, 2007, as compared to the same period in 2006, due to a $1.1 million settlement associated with a retirement plan of a former subsidiary in the first quarter of 2006. Our share of the profitability of our nonconsolidated subsidiaries was much improved in 2007, as compared with 2006, due mainly to a $2.1 million after-tax loss in our Mexican structures manufacturing operation in the third quarter of 2006. This entity is now 100% owned by us and is reported as part of the Utility Support Structures segment. Our cash flows provided by operations were $55.2 million for the thirty-nine weeks ended September 29, 2007, as compared with $29.0 million of cash provided by operations for the same period in 2006. The higher operating cash flows in 2007 primarily resulted from increased net earnings in 2007

Engineered Support Structures (ESS) segment

All geographic regions contributed to the improvement in ESS segment sales in the thirteen and thirty-nine week periods ended September 29, 2007, as compared with the same periods in 2006. In North America, lighting and traffic structure sales in 2007 were higher than 2006, due to a combination of increased volume and sales price increases. In the transportation market channel, sales were up modestly in 2007, as compared with 2006, primarily the result of sales price increases. We believe that delays in funding appropriations through federal highway legislation have contributed to some sluggishness in sales orders in this market channel in 2007. Sales in the commercial market channel in 2007 increased as compared with 2006 through expanded relationships with lighting fixture manufacturers and expansion into new markets, such as lighting structures for decorative applications. In Europe, improved sales volumes in traditional lighting structures more than offset lower sales of tramway structures. The acquisition of Tehomet in the second quarter 2007 also contributed to the increase in European lighting structure sales. Sales of lighting structures in China in 2007 were higher than 2006, on both a quarterly and year-to-date basis, mainly due to continued market expansion and increased sales efforts.

Sales of Specialty Structures products increased in 2007 as compared with 2006, on both a quarterly and year-to-date basis. In North America, structure sales were slightly better in the third quarter of 2007 as compared to 2006 and somewhat less year to date than in 2006. Weakness in wireless communication components and highway sign sales offset modest sales gains in the telecommunication tower product line in 2007, as compared with 2006. Sales of wireless communication poles in China continued to be very strong as Chinese wireless carriers continue the development of their wireless market.

The increases in operating income of the ESS segment for the thirteen and thirty-nine weeks ended September 29, 2007, as compared with the same periods in 2006, were related to the sales growth in all regions. Also, in the second quarter of 2006 there were charges related to a sign structure warranty claim and production equipment disposals in Europe ($1.1 million) and the write off of the Sigma trade name ($0.4 million) which contributed to the improvement in segment operating income for the thirty-nine weeks ended September 29, 2007, as compared with the same period in 2006. The main reasons for the increases in SG&A expense for the thirteen and thirty-nine weeks ended September 29, 2007, as compared with the same periods in 2006, were increased salary and employee benefits (approximately $1.0 million and $2.4 million, respectively), commissions related to higher sales volumes (approximately $0.8 million and $2.3 million, respectively), and foreign currency translation (approximately $0.7 million and $1.9 million, respectively).

Subsequent to the end of the third quarter of fiscal 2007, we are taking certain actions to consolidate our North American specialty structures operations to improve our cost competitiveness and enhance operational efficiency. We expect that most of these actions will be completed in the fourth quarter of 2007, with an anticipated pre-tax expense of $1 to $2 million to be recorded in the fourth quarter of 2007.

Utility Support Structures segment

In the Utility Support Structures segment, the sales increases for both the thirteen and thirty-nine weeks ended September 29, 2007, as compared with the same periods of 2006, were due to higher sales volumes and sales price increases to recover higher material costs. These increases were the result of improved demand for steel and concrete electrical transmission, substation and distribution pole structures by utility companies as they continue to improve the electrical transmission and distribution infrastructure in the U.S.

Gross profit increased for the thirteen and thirty-nine weeks ended September 29, 2007, as compared with 2006, due to improved operating leverage from the higher sales volumes and

improvement in sales prices. The improvement in gross profit in 2007, as compared with 2006, was also attributable to certain large orders that were at lower gross profit margins than normal in 2006.

The increase in SG&A spending for the thirteen and thirty-nine weeks ended September 29, 2007 was due to increased salary, benefits, incentive expenses and commissions related to the higher sales activity and profit levels ($0.5 million and $2.9 million, respectively) and the SG&A for our manufacturing facility in Mexico ($0.4 million and $0.8 million, respectively).

Coatings segment

Coatings segment sales for the thirteen and thirty-nine week periods ended September 29, 2007 were above 2006 levels, mainly due to higher sales prices and increased demand for galvanizing services during the third quarter and year-to-date periods ended September 29, 2007, as compared to 2006. In our galvanizing operations, pounds of steel galvanized in 2007 for the thirteen and thirty-nine weeks ended September 29, 2007 increased over the same periods in 2006 by approximately 6.8% and 9.2%, respectively. The volume increases were due to stronger industrial economic conditions in our market areas, including increased galvanizing services provided to our other operations in the U.S.

Operating income for the thirteen and thirty-nine weeks ended September 29, 2007 as compared with the same periods in 2006, increased due to higher production levels and improved production efficiencies, offset to a degree by a gain of $1.1 million on the sale of one of our facilities in the third quarter of 2006. Year-to-date operating income in 2007 was affected by a valuation charge of approximately $0.7 million related to the disposal of manufacturing equipment in our anodizing operation. SG&A spending in the third quarter and year-to-date periods ended September 29, 2007 was comparable to last year.

Irrigation segment

For the thirteen and thirty-nine weeks ended September 29, 2007 the sales increases in the Irrigation segment, as compared with the same periods in 2006, were predominantly due to higher sales volumes. In North America, generally higher farm commodity prices in 2007 resulted in improved demand for irrigation machines. In addition, relatively dry growing conditions during the third quarter of 2007 contributed to increased after-market parts sales in our major North American markets. International sales increased in 2007, as compared with 2006, on both a quarterly and year-to-date basis. The sales increases were mainly due to higher farm commodity prices, which resulted in improved demand for irrigation machines. On a regional basis, stronger third quarter 2007 sales in South Africa and Argentina more than offset weakness in sales in Brazil. On a year-to-date basis, the sales increase was due to improved sales volumes in most of our traditional markets, except Brazil, offset to a degree by lower sales this year in newly-developed irrigation markets.

Operating income for the thirteen and thirty-nine weeks ended September 29, 2007 increased substantially as compared with the same periods in 2006 due to improved sales volumes and factory utilization as well as effective control of SG&A spending. The increases in SG&A spending for the thirteen and thirty-nine weeks ended September 29, 2007, as compared with the same periods in 2006 were mainly attributable to increased employee incentives associated with improved operational performance ($0.2 million and $0.5 million, respectively), increased salary and benefit expense for additional administrative personnel ($0.5 million and $1.0 million, respectively) and increased spending for new product development ($0.4 million and $0.8 million, respectively).

Tubing segment

The increases in Tubing sales for the third quarter and the year-to-date periods ended September 29, 2007 as compared with the same periods in 2006 were due to improved demand for structural tubing products and large diameter products which more than offset lower selling prices.

Sales volume for these items increased 24% and 17% respectively for the thirteen and thirty nine weeks ended September 29, 2007. In particular, sales demand in 2007 has been stronger from agricultural equipment manufacturers for applications such as grain storage and handling. Volume increases were partially offset by price declines caused by decreasing steel prices. Operating income was significantly higher in 2007 due to improved operating efficiencies and leverage from increased production volumes.

The increase in SG&A expenses for the third quarter and year-to-date periods ended September 29, 2007, as compared with the same periods in 2006 was mainly due to increased employee incentive expense associated with improved operating performance.

Other

This includes our industrial fastener business, our machine tool accessories operation in France and the development costs associated with our wind energy structure initiative. We made the decision to suspend our wind energy initiative in the fourth quarter of 2006. The main reasons for the improvement in operating income this year was lower spending related to wind energy and improvement in sales and profitability of our machine tool accessory business.

Net corporate expense

The increases in net corporate expenses for the thirteen and thirty-nine weeks ended September 29, 2007, as compared with the same periods in 2006, were mainly related to increased employee incentives due to improved earnings and common stock price (which is used to value certain long-term management incentives) this year (approximately $1.7 million and $3.1 million, respectively).

Liquidity and Capital Resources

Cash Flows

Working Capital and Operating Cash Flows—Net working capital was $324.3 million at September 29, 2007, as compared with $277.7 million at December 30, 2006. The ratio of current assets to current liabilities was 2.29:1 at September 29, 2007, as compared with 2.28:1 at December 30, 2006. The increase in net working capital mainly relates to increased accounts receivable and inventories associated with higher sales activity in 2007, as compared with 2006. Cash flow provided by operations was $55.2 million for the thirty-nine week period ended September 29, 2007, as compared with $29.0 million provided by operations for the same period in 2006. The increase in operating cash flows in 2007, as compared with 2006, related primarily to increased net earnings and the timing of income taxes payable. In 2007, approximately $9.2 million was distributed from our non-qualified deferred compensation plan to participants under the transition rules of section 409A of the Internal Revenue Code.

Investing Cash Flows—Capital spending during the thirty-nine weeks ended September 29, 2007 was $43.8 million, as compared with $18.8 million for the same period in 2006. The main reason for the increased capital spending in 2007, as compared with 2006, was additional manufacturing capacity to serve the North America ESS markets and the Utility Support Structures segment. Our capital spending for the 2007 fiscal year is expected to be between $55 million and $60 million. In addition, we spent approximately $12.3 million (net of cash acquired) to acquire 70% of the outstanding stock of Tehomet Oy, a Finnish manufacturer of lighting structures, in the second quarter of 2007 and approximately $3.8 million for the remaining 20% of the outstanding shares of our Canadian lighting structure manufacturing facility. The cash used to pay the $9.2 million in distributions from our non-qualified deferred compensation plan was generated from the liquidation of investments, which was classified as "Proceeds from sale of assets" in the statement of cash flows for the thirty-nine week period ended September 29, 2007.

Financing Cash Flows—Our total interest-bearing debt in-flow increased from $234.3 million as of December 30, 2006 to $238.0 million as of September 29, 2007. The main reasons for the increase in borrowings relate to increased capital spending in 2007 and the Tehomet acquisition, which was funded through borrowings against our revolving credit agreement.

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 29, 2007, our long-term debt to invested capital ratio was 28.3%, as compared with 31.3% at December 30, 2006. 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. Subject to our level of acquisition activity and steel and zinc industry operating conditions (which could affect the levels of inventory we need to fulfill customer commitments), we plan to maintain this ratio below 40% in 2007.

Our debt financing at September 29, 2007 consisted primarily of long-term debt. We also maintain certain short-term bank lines of credit totaling $27.1 million, $16.2 million which was unused at September 29, 2007. 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 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). At September 29, 2007, there was $12.6 million outstanding balance under the revolving credit agreement at an interest rate of 5.0125% per annum. The revolving credit agreement has a termination date of May 4, 2009 and contains certain financial covenants that limit our additional borrowing capability under the agreement. At September 29, 2007, we had the ability to borrow an additional $128.3 million under this facility.
•: 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, and had an outstanding balance of $37.3 million at September 29, 2007. This loan requires quarterly principal payments through 2009. The annualized principal payments beginning in 2007 in millions are: $4.5, $20.9, and $11.9. The effective interest rate on this loan was 5.9375% per annum at September 29, 2007.

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 29, 2007 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 37 in our Form 10-K for the year ended December 30, 2006.

Off Balance Sheet Arrangements

There have been no changes in our off balance sheet arrangements as described on page 37 in our Form 10-K for the fiscal year ended December 30, 2006.

Critical Accounting Policies

There have been no changes in the Company's critical accounting policies during the quarter ended September 29, 2007. These policies are described on pages 39-42 in our Form 10-K for fiscal year ended December 30, 2006.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

There are no material changes in the company's market risk during the quarter ended September 29, 2007. For additional information, refer to the section "Risk Management" on pages 38-39 in our Form 10-K for the fiscal year ended December 30, 2006.

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. In the third quarter of fiscal 2007, the Company implemented various process and information systems enhancements, principally related to the implementation of enterprise resource planning software and related business improvements in the China operations that are reported as part 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 have been no changes in the Company's internal controls over financial reporting during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, such internal controls.

PART II. OTHER INFORMATION

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

Issuer Purchases of Equity Securities

		(a)	(b)		(c)	(d)
Period		Total Number of Shares Purchased	Average Price paid per share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2007 to July 28, 2007		34,531	$	84.74	—	—
July 29, 2007 to Sept 1, 2007		4,272		81.46	—	—
Sept 2, 2007 to Sept 29, 2007		—		—	—	—

	Total	38,803	$	84.38	—	—

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 11, 2007, the Company's Board of Directors declared a quarterly cash dividend on common stock of 10.5 cents per share, which was paid on October 15, 2007, to stockholders of record September 28, 2007. The indicated annual dividend rate is 42 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. McClain Senior Vice President and Chief Financial Officer (Principal Financial Officer)
Dated this 2^nd day of November, 2007.

QuickLinks

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

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Item 4. Controls and Procedures

PART II. OTHER INFORMATION

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

Issuer Purchases of Equity Securities

Item 5. Other Information

Item 6. Exhibits

SIGNATURES