-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BpkmsYhc6f+fVlJul/UH3yz3bzmwGfFFubxwrAuppDb6VW8LNAS+TxBPgTBhjiIL +lcL+Y/+tm2ZNfK0D3LOeg== 0000912057-99-002323.txt : 19991028 0000912057-99-002323.hdr.sgml : 19991028 ACCESSION NUMBER: 0000912057-99-002323 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990925 FILED AS OF DATE: 19991027 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VALMONT INDUSTRIES INC CENTRAL INDEX KEY: 0000102729 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED STRUCTURAL METAL PRODUCTS [3440] IRS NUMBER: 470351813 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-03701 FILM NUMBER: 99734375 BUSINESS ADDRESS: STREET 1: PO BOX 358 STREET 2: HWY 275 CITY: VALLEY STATE: NE ZIP: 68064 BUSINESS PHONE: 4023592201 MAIL ADDRESS: STREET 1: P O BOX 358 - HIGHWAY 275 CITY: VALLEY STATE: NE ZIP: 68064-0358 FORMER COMPANY: FORMER CONFORMED NAME: VALLEY MANUFACTURING CO DATE OF NAME CHANGE: 19680822 10-Q 1 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q (MARK ONE) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 25, 1999 OR / / 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 0-3701 ------------------------ VALMONT INDUSTRIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 47-0351813 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) ONE VALMONT PLAZA, OMAHA, NEBRASKA 68154-5215 (Address of principal executive offices) (Zip Code) 402-963-1000 (Registrant's telephone number, including area code) COMMON STOCK $1.00 PAR VALUE NASDAQ (SYMBOL VALM) Title of Class Name of each exchange on which registered
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 /X/ No / / 23,475,973 ------------------------------------------ Outstanding Common Shares as of October 25, 1999 Exhibit index is located on page 2. Total number of pages 13. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- VALMONT INDUSTRIES, INC. AND SUBSIDIARIES INDEX TO FORM 10-Q
PAGE NO. -------- PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements: Consolidated Statements of Operations for the thirteen and thirty-nine weeks ended September 25, 1999 and September 26, 1998................................................ 3 Consolidated Balance Sheets as of September 25, 1999 and December 26, 1998....................................... 4 Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 25, 1999 and September 26, 1998... 5 Notes to Consolidated Financial Statements................ 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 9-11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K.................... 12 SIGNATURES.................................................. 13
2 VALMONT INDUSTRIES, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THIRTY-NINE WEEKS THIRTEEN WEEKS ENDED ENDED --------------------- --------------------- SEPT. 25, SEPT. 26, SEPT. 25, SEPT. 26, 1999 1998 1999 1998 --------- --------- --------- --------- Net sales........................................... $138,848 $140,105 $456,010 $455,032 Cost of sales....................................... 98,845 105,199 332,015 338,818 -------- -------- -------- -------- Gross profit...................................... 40,003 34,906 123,995 116,214 Selling, general and administrative expenses........ 29,092 26,383 88,939 79,558 -------- -------- -------- -------- Operating income.................................. 10,911 8,523 35,056 36,656 -------- -------- -------- -------- Other income (deductions): Interest expense.................................. (1,944) (1,398) (5,805) (3,439) Interest income................................... 118 226 537 677 Miscellaneous..................................... 7 27 (633) 479 -------- -------- -------- -------- (1,819) (1,145) (5,901) (2,283) -------- -------- -------- -------- Earnings before income taxes...................... 9,092 7,378 29,155 34,373 -------- -------- -------- -------- Income tax expense: Current........................................... 4,100 3,200 13,000 12,500 Deferred.......................................... (700) (500) (2,200) 100 -------- -------- -------- -------- 3,400 2,700 10,800 12,600 -------- -------- -------- -------- Net Earnings...................................... $ 5,692 $ 4,678 $ 18,355 $ 21,773 ======== ======== ======== ======== Earnings per share: Basic........................................... $ 0.24 $ 0.18 $ 0.75 $ 0.80 ======== ======== ======== ======== Diluted......................................... $ 0.23 $ 0.18 $ 0.75 $ 0.79 ======== ======== ======== ======== Cash dividends per share.......................... $ 0.065 $ 0.065 $ 0.1950 $0.18625 ======== ======== ======== ======== Weighted average number of shares of common stock outstanding (000 omitted)......................... 24,209 26,029 24,345 27,132 ======== ======== ======== ======== Weighted average number of shares of common stock outstanding plus dilutive potential common shares (000 omitted)..................................... 24,505 26,388 24,612 27,585 ======== ======== ======== ========
See accompanying notes to consolidated financial statements. 3 VALMONT INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) ASSETS
SEPT. 25, DECEMBER 26, 1999 1998 ----------- ------------ (UNAUDITED) Current assets: Cash and cash equivalents................................. $ 12,818 $ 7,580 Receivables............................................... 108,561 115,843 Inventories............................................... 79,203 77,694 Prepaid expenses.......................................... 5,235 5,297 Refundable and deferred income taxes...................... 8,689 13,532 -------- -------- Total current assets.................................... 214,506 219,946 -------- -------- Property, plant and equipment, at cost...................... 324,249 292,944 Less accumulated depreciation and amortization............ 149,665 135,497 -------- -------- Net property, plant and equipment....................... 174,584 157,447 -------- -------- Goodwill and other assets................................... 24,568 29,564 -------- -------- Total assets............................................ $413,658 $406,957 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current installments of long-term debt.................... $ 5,607 $ 5,737 Notes payable to banks.................................... 25,762 25,494 Accounts payable.......................................... 51,296 45,996 Accrued expenses.......................................... 45,831 41,646 Dividends payable......................................... 1,573 1,607 -------- -------- Total current liabilities............................... 130,069 120,480 -------- -------- Deferred income taxes....................................... 10,016 11,984 Long-term debt, excl. current installments.................. 84,804 90,481 Minority interest in consolidated subsidiaries.............. 7,129 3,862 Other noncurrent liabilities................................ 4,418 4,237 Shareholders' equity: Preferred stock........................................... -- -- Common stock of $1 par value.............................. 27,900 27,900 Additional paid-in capital................................ 1,181 1,280 Retained earnings......................................... 214,014 200,393 Accumulated other comprehensive income.................... (6,558) (1,423) Treasury stock............................................ (59,269) (52,235) Unearned restricted stock................................. (46) (2) -------- -------- Total shareholders' equity.............................. 177,222 175,913 -------- -------- Total liabilities and shareholders' equity.............. $413,658 $406,957 ======== ========
See accompanying notes to consolidated financial statements. 4 VALMONT INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (UNAUDITED)
THIRTY-NINE WEEKS ENDED --------------------- SEPT. 25, SEPT. 26, 1999 1998 --------- --------- Net cash provided by operations............................. $ 52,010 $ 36,834 -------- -------- Cash flows from investing activities: Purchase of property, plant & equipment................... (31,004) (18,576) Acquisitions.............................................. (2,854) (28,257) Proceeds from sale of property and equipment.............. 114 3,011 Proceeds from investment by minority shareholder.......... 1,374 -- Proceeds from sale of nonconsolidated affiliate........... 8,294 -- Changes in investment in other assets..................... (316) (672) Other, net................................................ (2,460) (1,179) -------- -------- Net cash used in investing activities................... (26,852) (45,673) -------- -------- Cash flows from financing activities: Net borrowings (repayments) under short-term agreements... (2,497) 3,281 Proceeds from long-term borrowings........................ 25,206 58,267 Principal payments on long-term obligations............... (29,565) (5,223) Dividends paid............................................ (4,769) (5,002) Proceeds from exercises under stock plans................. 381 2,675 Purchase of common treasury shares: Stock repurchase program................................ (7,494) (48,002) Stock plan exercises.................................... (508) -- -------- -------- Net cash provided (used) by financing activities........ (19,246) 5,996 -------- -------- Effect of exchange rate changes on cash and and cash equivalents............................................... (674) -- -------- -------- Net increase (decrease) in cash and cash equivalents.... 5,238 (2,843) Cash and cash equivalents--beginning of period.............. 7,580 11,505 -------- -------- Cash and cash equivalents--end of period.................... $ 12,818 $ 8,662 ======== ========
See accompanying notes to consolidated financial statements. 5 VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (UNAUDITED) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The Condensed Consolidated Balance Sheet as of September 25, 1999 and the Condensed Consolidated Statements of Operations for the thirteen and thirty-nine week periods ended September 25, 1999 and September 26, 1998 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 25, 1999 and for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company's December 26, 1998 Annual Report to shareholders. 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 26, 1998. The results of operations for the period ended September 25, 1999 are not necessarily indicative of the operating results for the full year. 2. INVENTORIES At September 25, 1999, approximately 61% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method or market. The excess of replacement cost of inventories over the LIFO value is approximately $9,800 and $11,000 at September 25, 1999 and December 26, 1998, respectively. 3. 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) were as follows:
SEPT. 25, SEPT. 26, 1999 1998 --------- --------- Interest.................................................. $ 5,694 $ 2,766 Income taxes.............................................. 14,140 12,234
6 VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS) (UNAUDITED) 4. EARNINGS PER SHARE The following table provides a reconciliation between Basic and Diluted earnings per share:
BASIC DILUTIVE EFFECT DILUTED EPS OF STOCK OPTIONS EPS -------- ----------------- -------- 1998: Thirteen weeks ended September 26, 1998: Net earnings....................................... $ 4,678 -- $ 4,678 Shares outstanding................................. 26,029 359 26,388 Per share amount................................... $ 0.18 -- $ 0.18 Thirty-nine weeks ended September 26, 1998: Net earnings....................................... $21,773 -- $21,773 Shares outstanding................................. 27,132 453 27,585 Per share amount................................... $ 0.80 -- $ 0.79 1999: Thirteen weeks ended September 25, 1999: Net earnings....................................... $ 5,692 -- $ 5,692 Shares outstanding................................. 24,209 296 24,505 Per share amount................................... $ 0.24 -- $ 0.23 Thirty-nine weeks ended September 25, 1999: Net earnings....................................... $18,355 -- $18,355 Shares outstanding................................. 24,345 267 24,612 Per share amount................................... $ 0.75 -- $ 0.75
5. COMPREHENSIVE INCOME
THIRTEEN WEEKS THIRTY-NINE WEEKS ENDED ENDED --------------------- --------------------- SEPT. 25, SEPT. 26, SEPT. 25, SEPT. 26, 1999 1998 1999 1998 --------- --------- --------- --------- Net earnings............................................. $ 5,692 $4,678 $18,355 $21,773 Currency translation adjustments......................... (1,084) 667 (5,135) (152) ------- ------ ------- ------- Total comprehensive income............................. $ 4,608 $5,345 $13,220 $21,621 ======= ====== ======= =======
6. TREASURY STOCK During 1998, the Board of Directors authorized management to repurchase up to 5.4 million shares of the Company's common stock. Repurchased shares are recorded as "Treasury Stock" and result in a reduction of "Shareholders' Equity." When treasury shares are reissued, the Company uses the last-in, first-out method, and the difference between the repurchase cost and reissuance price is charged or credited to "Additional Paid-In Capital." As of September 25, 1999, a total of 550,200 shares had been purchased for $7.5 million during 1999. 7 VALMONT INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS) (UNAUDITED) 7. BUSINESS SEGMENTS
THIRTY-NINE WEEKS THIRTEEN WEEKS ENDED ENDED --------------------- --------------------- SEPT. 25, SEPT. 26, SEPT. 25, SEPT. 26, 1999 1998 1999 1998 --------- --------- --------- --------- Sales: Irrigation........................................ $ 47,158 $ 49,595 $193,210 $200,411 Infrastructure.................................... 87,285 83,669 250,689 235,128 Other............................................. 6,609 9,148 21,932 28,023 -------- -------- -------- -------- 141,052 142,412 465,831 463,562 Intersegment Sales: Irrigation........................................ $ 521 $ -- $ 2,183 $ -- Infrastructure.................................... 1,390 1,871 5,673 7,350 Other............................................. 293 436 1,965 1,180 -------- -------- -------- -------- 2,204 2,307 9,821 8,530 Net Sales: Irrigation........................................ $ 46,637 $ 49,595 $191,027 $200,411 Infrastructure.................................... 85,895 81,798 245,016 227,778 Other............................................. 6,316 8,712 19,967 26,843 -------- -------- -------- -------- Consolidated net sales.......................... $138,848 $140,105 $456,010 $455,032 ======== ======== ======== ======== Operating Income Irrigation operations............................. $ 2,660 $ 3,566 $ 20,854 $ 26,871 Gain on sale of investment........................ -- -- 2,823 -- -------- -------- -------- -------- Total Irrigation................................ 2,660 3,566 23,677 26,871 -------- -------- -------- -------- Infrastructure operations......................... 8,249 4,362 13,128 8,028 Impairment charge................................. -- -- (2,431) -- -------- -------- -------- -------- Total Infrastructure............................ 8,249 4,362 10,697 8,028 -------- -------- -------- -------- Other............................................. 2 595 682 1,757 -------- -------- -------- -------- Total Operating Income.......................... $ 10,911 $ 8,523 $ 35,056 $ 36,656 ======== ======== ======== ========
8. USE OF ESTIMATES Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed combined financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 8 VALMONT INDUSTRIES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's discussion and analysis contains forward looking statements which reflect management's current view and estimates of future economic and market circumstances, industry conditions, company performance and financial results. The statements are based on many assumptions and factors including operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, actions and policy changes of domestic and foreign governments and other risks described from time to time in the Company's reports to the Securities and Exchange Commission. Any changes in such assumptions or factors could produce significantly different results. RESULTS OF OPERATIONS CONSOLIDATED Net sales for the third quarter of 1999 were $138.8 million, a decrease of 0.9% from $140.1 million for the same period last year. For the thirty-nine weeks ended September 25, 1999, sales increased 0.2% to $456.0 million from $455.0 million a year ago. The decrease in the third quarter of 1999 was attributable to declines in the irrigation segment and other sales that were somewhat offset by increased sales in the infrastructure segments. For the thirty-nine weeks ended September 25, 1999, the sales increase in the infrastructure segment more than offset the decreased sales in the irrigation segment and other sales. Gross profit margin was 28.8% for the thirteen week period ended September 25, 1999 compared to 24.9% for the same period of 1998. For the thirty-nine week period ended September 25, 1999, gross profit margin was 27.2% up from 25.5% for the same period last year. The increases were primarily a result of improved margins in the infrastructure segment while the irrigation segment gross profit margins remained approximately the same. Selling, general and administrative (SG&A) expenses increased from $79.6 million (17.5% of sales) in the first three quarters of 1998 to $88.9 million (19.5% of sales) for the first three quarters of 1999. SG&A was up due to: acquisitions made in the last half of 1998 and thus far in 1999; acceleration of investments in management information systems for manufacturing and human resource applications to prepare for future growth and expansion; and increased commission expense on infrastructure segment sales. Operating income for the third quarter of 1999 was $10.9 million, up from $8.5 million for the same period in 1998. For the thirty-nine weeks ended September 25, 1999, operating income decreased to $35.1 million from $36.7 last year. Net interest expense was $5.3 million for the thirty-nine weeks of 1999 up from the $2.8 million incurred in 1998, reflecting the higher average borrowings as a result of the stock repurchase plan. Decreased tax benefits from exports resulted in the effective tax rate being increased week period in 1999 to 37.0% from 36.7% for the same period in 1998. As a result of the aforementioned operating factors and general business conditions, net year-to-date earnings decreased 15.7% to $18.4 million and diluted earnings per share decreased 5.0% to $0.75. For the third quarter, net earnings increased 21.7% to $5.7 million and diluted earnings per share increased 27.7% to $0.23. The differences in the percentage changes in earnings per share and net earnings are attributable to the Company's repurchase of shares during 1998 and 1999. IRRIGATION SEGMENT The Irrigation segment net sales for the third quarter decreased 6.0% in 1999 compared to 1998 and year-to-date sales decreased 4.7%. Domestically, sales decreased as a result of a continued weak farm economy with low commodity prices. General weakness in agricultural markets lowered the Company's 9 tubing sales to farm machinery manufacturers; however tubing sales to grain-handling equipment manufacturers were at the Company's historical levels in anticipation of a large grain crop. International sales in the irrigation segment were relatively unchanged. The Company's strategy of expanding local manufacturing and distribution achieved good growth and diversity in its international sales mix. For the third quarter operating income declined 25.4% from $3.6 million to $2.7 million. For the 39 week period ended September 25, 1999, operating income declined 11.9% from $26.9 million to $23.7 million. Operating income for the segment was lower due to the reduced sales volumes, more competitive market conditions and a shift in the sales mix. Cost reductions and productivity improvements partially offset the lower absorption of fixed costs due to reduced manufacturing levels. Included in this year's year-to-date operating income is a gain from the sale of an investment of $2.8 million. INFRASTRUCTURE SEGMENT Net sales for the third quarter in the Infrastructure segment increased 5.0% to $85.9 million in 1999 from $81.8 million in 1998. For the first three quarters of 1999, net sales rose 7.6% to $245.0 million from $227.8 million. Sales improved for poles and structures for lighting, traffic, and utility markets as well as for coating services. Domestically, better market conditions for lighting, due to higher levels of government spending for infrastructure and a growing construction demand, led to increased sales. Sales of utility poles and structures were higher as electric utilities continue to invest in greater transmission and distribution capacity to compete in a deregulating industry. Coatings sales grew due to acquisition and sales growth at existing facilities. Although business conditions improved during the quarter, sales of communication poles, tower and components remained substantially below 1998 levels. Recent strong order rates and a backlog growth may be signaling a recovery within this industry. Internationally, sales were higher than last year. Higher lighting and communication sales in Europe were aided by improvement in the French and Benelux economies. In China, lighting and communication pole sales were also higher during the quarter. For the third quarter of 1999, the Infrastructure segment reported operating profit of $8.2 million compared to operating profit of $4.4 million in 1998. For the thirty-nine week period ended September 25, 1999, operating profit increased from $8.0 million a year earlier to $10.7 million. The 1999 operating income included an impairment charge of $2.4 million to adjust the asset values and record severance costs related to a reduction in size of a communication tower facility in France. In addition to the volume increase, a continuous effort to reduce costs and improve productivity increased operating income for the infrastructure segment. LIQUIDITY AND CAPITAL RESOURCES Net working capital at September 25, 1999 was $84.4 million compared to $99.5 million at December 26, 1998. The ratio of current assets to current liabilities was 1.7:1 at September 25, 1999, versus 1.8:1 at December 26, 1998. Expenditures for property, plant and equipment for the thirty-nine week period ended September 25, 1999 were approximately $31.0 million. Included in these expenditures are the new irrigation facility in McCook, NE. and the new coatings facility in Tulsa, OK. An additional $2.9 million was invested in the acquisition of two retail irrigation outlets. During the first three quarters of fiscal 1999, the Company repurchased 550,200 shares of its common stock for $7.5 million. The aggregate shares purchased under the program commenced in 1998 were 3.7 million shares, costing $60.7 million. Depreciation of property, plant and equipment was $15.6 million for the first three quarters of 1999 compared to $13.8 million a year ago. Available lines of credit total $43.7 million (of which approximately $27.6 million was unused) at September 25, 1999. Longterm debt was 28.7% of total capitalization at September 25, 1999, versus 30.3% at December 26, 1998. The Company converted $25.0 million of variable-rate long-term debt into fixed- rate long-term debt during the quarter. The Company believes cash flow from operations, available credit 10 facilities, and the present capital structure will be adequate for 1999 planned capital expenditures, dividends, continuing the common share repurchase plan, pursuing of opportunities to expand its markets and businesses and other financial commitments. YEAR 2000 The "Year 2000 issue" arose because many existing computer programs use only the last two digits to refer to a year. Therefore, these computer programs do not properly recognize a year that begins with "20" instead of the familiar "19". If not corrected, many computer applications could fail or create erroneous results. The Company has been constantly addressing the Year 2000 issue since 1997. The Company's plan has included remediation of its mainframe systems, upgrades to packaged systems, implementation of new Enterprise Resource Planning (ERP) systems in certain business units, examination and resolution of administrative and production equipment that contains embedded chips, evaluation of network equipment and personal computers, and evaluation of the Year 2000 readiness of key suppliers. The Company has completed most of its Year 2000 preparedness by the end of the third quarter of 1999. Some minor network and personal computer equipment activities and the implementation of a new ERP business system in Holland will not be completed until the end of November, 1999. The Company believes it has no significant exposure to contingencies related to the Year 2000 issue for the products it has sold. The total cost for the Company's Year 2000 Project is expected to be approximately $10 million. To date, $9.5 million has been spent and the remaining estimated costs of $0.5 million are expected to be spent by the end of 1999. Included in these amounts was the cost of installing new ERP systems, which are undertaken to improve business and processes in addition to addressing Year 2000 issues. The Company believes its primary Year 2000 risk is that suppliers will not be able to deliver products and/or services in a timely fashion. The Company developed contingency plans to identify alternative vendors and is considering the stockpiling of critical inventory items. Availability of electrical power and telecommunications is required for the Company to operate effectively. These services for the most part are beyond the Company's control and alternate sources are not readily available. Since the Company has tested its major business systems or is installing new systems, the Company believes all systems will be Year 2000 compliant; however, the Company has discussed contingency plans to cover key business functions for a short period of time. These plans will be developed and refined during the fourth quarter of 1999. The cost of this project and the date on which the Company believes it will complete the Year 2000 modifications are based on management's best estimates, which were derived utilizing numerous assumptions of events. However, there can be no guarantee that these estimates will be achieved and actual results could differ materially from those anticipated. Specific factors that might cause such material differences include, but are not limited to, the availability and cost of personnel trained in this area, the ability to locate and correct all relevant computer codes and similar and dissimilar uncertainties. 11 VALMONT INDUSTRIES, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8K (a) Exhibits 27--Financial Data Schedule (b) Reports on Form 8-K The Company filed no reports on Form 8-K during the past fiscal quarter. 12 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) By: /s/ TERRY J. MCCLAIN ----------------------------------------- Terry J. McClain VICE PRESIDENT AND CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL OFFICER)
Dated this 27th day of October, 1999. 13 EX-27.1 2 EX-27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-25-1999 DEC-27-1998 SEP-25-1999 12,818 0 108,561 0 79,203 214,506 324,249 149,665 413,658 130,069 0 0 0 27,900 149,322 413,658 456,010 456,010 332,015 332,015 88,939 0 5,805 29,155 10,800 18,355 0 0 0 18,355 0.75 0.75
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