Valmont Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 28, 2019 and December 29, 2018
(Dollars in thousands, except shares and per share amounts)
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
$
|
353,542
|
|
|
$
|
313,210
|
|
Receivables, less allowance of $9,548 in 2019 and $8,277 in 2018
|
480,000
|
|
|
483,963
|
|
Inventories
|
374,565
|
|
|
383,566
|
|
Contract asset - costs and profits in excess of billings
|
141,322
|
|
|
112,525
|
|
Prepaid expenses, restricted cash, and other assets
|
32,043
|
|
|
42,800
|
|
Refundable income taxes
|
6,947
|
|
|
4,576
|
|
Total current assets
|
1,388,419
|
|
|
1,340,640
|
|
Property, plant and equipment, at cost
|
1,245,261
|
|
|
1,160,865
|
|
Less accumulated depreciation and amortization
|
687,132
|
|
|
646,873
|
|
Net property, plant and equipment
|
558,129
|
|
|
513,992
|
|
Goodwill
|
428,864
|
|
|
385,207
|
|
Other intangible assets, net
|
175,742
|
|
|
175,956
|
|
Other assets
|
212,257
|
|
|
114,479
|
|
Total assets
|
$
|
2,763,411
|
|
|
$
|
2,530,274
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Current installments of long-term debt
|
$
|
760
|
|
|
$
|
779
|
|
Notes payable to banks
|
21,774
|
|
|
10,678
|
|
Accounts payable
|
197,957
|
|
|
218,115
|
|
Accrued employee compensation and benefits
|
83,528
|
|
|
79,291
|
|
Accrued expenses
|
201,681
|
|
|
91,942
|
|
Dividends payable
|
8,079
|
|
|
8,230
|
|
Total current liabilities
|
513,779
|
|
|
409,035
|
|
Deferred income taxes
|
47,955
|
|
|
43,489
|
|
Long-term debt, excluding current installments
|
764,944
|
|
|
741,822
|
|
Defined benefit pension liability
|
140,007
|
|
|
143,904
|
|
Operating lease liabilities
|
85,817
|
|
|
—
|
|
Deferred compensation
|
45,114
|
|
|
46,107
|
|
Other noncurrent liabilities
|
8,904
|
|
|
10,394
|
|
Shareholders’ equity:
|
|
|
|
Preferred stock of $1 par value -
|
|
|
|
|
|
Authorized 500,000 shares; none issued
|
—
|
|
|
—
|
|
Common stock of $1 par value -
|
|
|
|
|
|
Authorized 75,000,000 shares; 27,900,000 issued
|
27,900
|
|
|
27,900
|
|
Additional paid-in capital
|
—
|
|
|
—
|
|
Retained earnings
|
2,140,948
|
|
|
2,027,596
|
|
Accumulated other comprehensive income (loss)
|
(313,422
|
)
|
|
(303,185
|
)
|
Cost of treasury stock, common shares of 6,356,103 in 2019 and 5,951,971 in 2018
|
(743,942
|
)
|
|
(692,549
|
)
|
Total Valmont Industries, Inc. shareholders’ equity
|
1,111,484
|
|
|
1,059,762
|
|
Noncontrolling interest in consolidated subsidiaries
|
45,407
|
|
|
75,761
|
|
Total shareholders’ equity
|
1,156,891
|
|
|
1,135,523
|
|
Total liabilities and shareholders’ equity
|
$
|
2,763,411
|
|
|
$
|
2,530,274
|
|
See accompanying notes to consolidated financial statements.
Valmont Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three-year period ended December 28, 2019 (Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Cash flows from operating activities:
|
|
|
|
|
|
Net earnings
|
$
|
159,466
|
|
|
$
|
100,306
|
|
|
$
|
122,319
|
|
Adjustments to reconcile net earnings to net cash flows from operations:
|
|
|
|
|
|
Depreciation and amortization
|
82,264
|
|
|
82,827
|
|
|
84,957
|
|
Noncash loss on trading securities
|
(172
|
)
|
|
(62
|
)
|
|
237
|
|
Contribution to defined benefit pension plan
|
(18,461
|
)
|
|
(1,537
|
)
|
|
(40,245
|
)
|
Impairment of property, plant and equipment
|
—
|
|
|
5,000
|
|
|
—
|
|
Impairment of goodwill & intangible assets
|
—
|
|
|
15,780
|
|
|
—
|
|
Loss on divestiture of grinding media business
|
—
|
|
|
6,084
|
|
|
—
|
|
Stock-based compensation
|
11,587
|
|
|
10,392
|
|
|
10,706
|
|
Defined benefit pension plan expense (benefit)
|
(513
|
)
|
|
(2,251
|
)
|
|
648
|
|
(Gain) loss on sale of property, plant and equipment
|
(2,513
|
)
|
|
(225
|
)
|
|
(3,924
|
)
|
Deferred income taxes
|
3,940
|
|
|
(1,659
|
)
|
|
39,755
|
|
Changes in assets and liabilities (net of acquisitions):
|
|
|
|
|
|
Receivables
|
5,408
|
|
|
12,571
|
|
|
(49,112
|
)
|
Inventories
|
12,313
|
|
|
(13,774
|
)
|
|
(57,442
|
)
|
Prepaid expenses
|
4,413
|
|
|
(11,048
|
)
|
|
(6,214
|
)
|
Contract asset - costs and profits in excess of billings
|
(29,274
|
)
|
|
(32,932
|
)
|
|
176
|
|
Accounts payable
|
(21,410
|
)
|
|
(1,486
|
)
|
|
39,405
|
|
Accrued expenses
|
108,784
|
|
|
49
|
|
|
(1,998
|
)
|
Other noncurrent liabilities
|
(1,274
|
)
|
|
(10,888
|
)
|
|
(7,228
|
)
|
Income taxes payable (refundable)
|
(6,944
|
)
|
|
(4,139
|
)
|
|
1,108
|
|
Net cash flows from operating activities
|
307,614
|
|
|
153,008
|
|
|
133,148
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchase of property, plant and equipment
|
(97,425
|
)
|
|
(71,985
|
)
|
|
(55,266
|
)
|
Proceeds from sale of assets
|
5,556
|
|
|
63,103
|
|
|
8,185
|
|
Acquisitions, net of cash acquired
|
(81,841
|
)
|
|
(143,020
|
)
|
|
(5,362
|
)
|
Proceeds from settlement of net investment hedge
|
11,184
|
|
|
(1,621
|
)
|
|
5,123
|
|
Investments in nonconsolidated subsidiaries
|
(6,169
|
)
|
|
—
|
|
|
—
|
|
Other, net
|
545
|
|
|
(1,922
|
)
|
|
(2,295
|
)
|
Net cash flows used in investing activities
|
(168,150
|
)
|
|
(155,445
|
)
|
|
(49,615
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
Borrowings (payments) under short-term agreements
|
11,327
|
|
|
10,543
|
|
|
(585
|
)
|
Proceeds from long-term borrowings
|
31,000
|
|
|
251,655
|
|
|
—
|
|
Principal payments on long-term borrowings
|
(10,768
|
)
|
|
(262,191
|
)
|
|
(887
|
)
|
Settlement of financial derivatives
|
—
|
|
|
(2,467
|
)
|
|
—
|
|
Debt issuance costs
|
—
|
|
|
(2,322
|
)
|
|
—
|
|
Dividends paid
|
(32,642
|
)
|
|
(33,726
|
)
|
|
(33,862
|
)
|
Dividends to noncontrolling interest
|
(7,737
|
)
|
|
(7,055
|
)
|
|
(5,674
|
)
|
Purchase of noncontrolling interest
|
(27,845
|
)
|
|
(5,510
|
)
|
|
—
|
|
Proceeds from exercises under stock plans
|
13,619
|
|
|
7,357
|
|
|
35,159
|
|
Purchase of treasury shares
|
(62,915
|
)
|
|
(114,805
|
)
|
|
—
|
|
Purchase of common treasury shares—stock plan exercises
|
(12,989
|
)
|
|
(3,589
|
)
|
|
(26,161
|
)
|
Net cash flows used in financing activities
|
(98,950
|
)
|
|
(162,110
|
)
|
|
(32,010
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
(182
|
)
|
|
(15,048
|
)
|
|
27,682
|
|
Net change in cash and cash equivalents
|
40,332
|
|
|
(179,595
|
)
|
|
79,205
|
|
Cash, cash equivalents, and restricted cash—beginning of year
|
313,210
|
|
|
492,805
|
|
|
413,600
|
|
Cash, cash equivalents, and restricted cash—end of year
|
$
|
353,542
|
|
|
$
|
313,210
|
|
|
$
|
492,805
|
|
See accompanying notes to consolidated financial statements.
Valmont Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Three-year period ended December 28, 2019
(Dollars in thousands, except shares and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
Additional
paid-in
capital
|
|
Retained
earnings
|
|
Accumulated
other
comprehensive
income (loss)
|
|
Treasury
stock
|
|
Noncontrolling
interest in
consolidated
subsidiaries
|
|
Total
shareholders’
equity
|
Balance at December 31, 2016
|
$
|
27,900
|
|
|
$
|
—
|
|
|
$
|
1,874,722
|
|
|
$
|
(346,359
|
)
|
|
$
|
(612,781
|
)
|
|
$
|
39,104
|
|
|
$
|
982,586
|
|
Net earnings
|
—
|
|
|
—
|
|
|
116,240
|
|
|
—
|
|
|
—
|
|
|
6,079
|
|
|
122,319
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
67,337
|
|
|
—
|
|
|
(550
|
)
|
|
66,787
|
|
Cash dividends declared ($1.50 per share)
|
—
|
|
|
—
|
|
|
(33,927
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,927
|
)
|
Dividends to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,674
|
)
|
|
(5,674
|
)
|
Stock plan exercises; 154,437 shares acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,161
|
)
|
|
—
|
|
|
(26,161
|
)
|
Stock options exercised; 284,574 shares issued
|
—
|
|
|
(4,666
|
)
|
|
(2,691
|
)
|
|
—
|
|
|
42,516
|
|
|
—
|
|
|
35,159
|
|
Stock option expense
|
—
|
|
|
5,137
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,137
|
|
Stock awards; 42,846 shares issued
|
—
|
|
|
(471
|
)
|
|
—
|
|
|
—
|
|
|
6,040
|
|
|
—
|
|
|
5,569
|
|
Balance at December 30, 2017
|
27,900
|
|
|
—
|
|
|
1,954,344
|
|
|
(279,022
|
)
|
|
(590,386
|
)
|
|
38,959
|
|
|
1,151,795
|
|
Net earnings
|
—
|
|
|
—
|
|
|
94,351
|
|
|
—
|
|
|
—
|
|
|
5,955
|
|
|
100,306
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,163
|
)
|
|
—
|
|
|
2,629
|
|
|
(21,534
|
)
|
Cash dividends declared ($1.50 per share)
|
—
|
|
|
—
|
|
|
(33,426
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,426
|
)
|
Dividends to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,055
|
)
|
|
(7,055
|
)
|
Purchase of noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,510
|
)
|
|
(5,510
|
)
|
Cumulative impact of ASC 606 adoption
|
—
|
|
|
—
|
|
|
9,771
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,771
|
|
Impact of ASU 2016-16 adoption
|
—
|
|
|
—
|
|
|
1,038
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,038
|
|
Addition of noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,783
|
|
|
40,783
|
|
Purchase of treasury shares; 843,278 shares acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(114,805
|
)
|
|
—
|
|
|
(114,805
|
)
|
Stock plan exercises; 27,555 shares acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,589
|
)
|
|
—
|
|
|
(3,589
|
)
|
Stock options exercised; 63,717 shares issued
|
—
|
|
|
(2,397
|
)
|
|
1,518
|
|
|
—
|
|
|
8,236
|
|
|
—
|
|
|
7,357
|
|
Stock option expense
|
—
|
|
|
4,064
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,064
|
|
Stock awards; 61,208 shares issued
|
—
|
|
|
(1,667
|
)
|
|
—
|
|
|
—
|
|
|
7,995
|
|
|
—
|
|
|
6,328
|
|
Balance at December 29, 2018
|
27,900
|
|
|
—
|
|
|
2,027,596
|
|
|
(303,185
|
)
|
|
(692,549
|
)
|
|
75,761
|
|
|
1,135,523
|
|
Net earnings
|
—
|
|
|
—
|
|
|
153,769
|
|
|
—
|
|
|
—
|
|
|
5,697
|
|
|
159,466
|
|
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,237
|
)
|
|
—
|
|
|
(192
|
)
|
|
(10,429
|
)
|
Cash dividends declared ($1.50 per share)
|
—
|
|
|
—
|
|
|
(32,503
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,503
|
)
|
Dividends to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,737
|
)
|
|
(7,737
|
)
|
Purchase of noncontrolling interest
|
—
|
|
|
277
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,122
|
)
|
|
(27,845
|
)
|
Impact of ASU 842 adoption
|
—
|
|
|
—
|
|
|
(8,886
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,886
|
)
|
Purchase of treasury shares; 491,045 shares acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62,915
|
)
|
|
—
|
|
|
(62,915
|
)
|
Stock plan exercises; 90,868 shares acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,989
|
)
|
|
—
|
|
|
(12,989
|
)
|
Stock options exercised; 119,789 shares issued
|
—
|
|
|
(3,756
|
)
|
|
972
|
|
|
—
|
|
|
16,403
|
|
|
—
|
|
|
13,619
|
|
Stock option expense
|
—
|
|
|
2,772
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,772
|
|
Stock awards; 60,021 shares issued
|
—
|
|
|
707
|
|
|
—
|
|
|
—
|
|
|
8,108
|
|
|
—
|
|
|
8,815
|
|
Balance at December 28, 2019
|
$
|
27,900
|
|
|
$
|
—
|
|
|
$
|
2,140,948
|
|
|
$
|
(313,422
|
)
|
|
$
|
(743,942
|
)
|
|
$
|
45,407
|
|
|
$
|
1,156,891
|
|
See accompanying notes to consolidated financial statements.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Valmont Industries, Inc. and its wholly and majority‑owned subsidiaries (the Company). Investments in 20% to 50% owned affiliates and joint ventures are accounted for by the equity method. Investments in less than 20% owned affiliates are accounted for by the cost method. All intercompany items have been eliminated.
Cash overdrafts
Cash book overdrafts totaling $13,971 and $8,888 were classified as accounts payable at December 28, 2019 and December 29, 2018, respectively. The Company’s policy is to report the change in book overdrafts as an operating activity in the Consolidated Statements of Cash Flows.
Segments
The Company has four reportable segments based on its management structure. Each segment is global in nature with a manager responsible for segment operational performance and allocation of capital within the segment. Reportable segments are as follows:
ENGINEERED SUPPORT STRUCTURES: This segment consists of the manufacture and distribution of engineered metal and composite poles, towers, and components for global lighting, traffic, and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products;
UTILITY SUPPORT STRUCTURES: This segment consists of the manufacture of engineered steel and concrete structures for global utility transmission, distribution, substations, and renewable energy generation equipment;
COATINGS: This segment consists of galvanizing, painting, and anodizing services to preserve and protect metal products; and
IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment, parts, services, tubular products, water management solutions, and technology for precision agriculture.
In addition to these four reportable segments, there are other businesses and activities which are not more than 10% of consolidated sales, operating income or assets. This includes the manufacture of forged steel grinding media for the mining industry and is reported in the "Other" category until its divestiture in 2018.
Fiscal Year
The Company operates on a 52 or 53 week fiscal year with each year ending on the last Saturday in December. Accordingly, the Company’s fiscal years ended December 28, 2019, December 29, 2018 and December 30, 2017 consisted of 52 weeks.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
Accounts receivable are reported on the balance sheet net of any allowance for doubtful accounts. Allowances are maintained in amounts considered to be appropriate in relation to the outstanding receivables based on age of the receivable,
economic conditions and customer credit quality. As the Company’s international Irrigation business has grown, the exposure to potential losses in international markets has also increased. These exposures can be difficult to estimate, particularly in areas of political instability, or with governments with which the Company has limited experience, or where there is a lack of transparency as to the current credit condition of governmental units. The Company’s allowance for doubtful accounts related to current accounts receivable was $9,548 at December 28, 2019.
Inventories
Approximately 41% and 37% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of December 28, 2019 and December 29, 2018, respectively. 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 and finished goods. The excess of replacement cost of inventories over the LIFO value is approximately $43,805 and $53,619 at December 28, 2019 and December 29, 2018, respectively.
Long-Lived Assets
Property, plant and equipment are recorded at historical cost. The Company generally uses the straight-line method in computing depreciation and amortization for financial reporting purposes and accelerated methods for income tax purposes. The annual provisions for depreciation and amortization have been computed principally in accordance with the following ranges of asset lives: buildings and improvements 15 to 40 years, machinery and equipment 3 to 12 years, transportation equipment 3 to 24 years, office furniture and equipment 3 to 7 years and intangible assets 5 to 20 years. Depreciation expense in fiscal 2019, 2018 and 2017 was $64,177, $67,499 and $69,046, respectively.
An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset. A recognized impairment loss reduces the carrying amount of the asset to its estimated fair value. Upon adoption of ASC 842 in 2019, the Company impaired the right-of-use (lease) asset for one of its galvanizing facilities in Australia as it will not generate sufficient cash flows to recover the carrying value. Impairment losses were recorded in 2018 as facilities were closed and future plans for certain fixed assets changed in connection with the Company's restructuring plans.
The Company evaluates its reporting units for impairment of goodwill during the third fiscal quarter of each year, or when events or changes in circumstances indicate the carrying value may not be recoverable. Reporting units are evaluated using after-tax operating cash flows (less capital expenditures) discounted to present value. Indefinite‑lived intangible assets are assessed separately from goodwill as part of the annual impairment testing, using a relief-from-royalty method. If the underlying assumptions related to the valuation of a reporting unit’s goodwill or an indefinite‑lived intangible asset change materially before or after the annual impairment testing, the reporting unit or asset is evaluated for potential impairment. In these evaluations, management considers recent operating performance, expected future performance, industry conditions and other indicators of potential impairment. See footnote 8 for details of impairments recognized during 2018.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company uses the asset and liability method to calculate deferred income taxes. Deferred tax assets and liabilities are recognized on temporary differences between financial statement and tax bases of assets and liabilities using enacted tax rates. The effect of tax rate changes on deferred tax assets and liabilities is recognized in income during the period that includes the enactment date.
Warranties
The Company's provision for product warranty reflects management's best estimate of probable liability under its product warranties. Estimated future warranty costs are recorded at the time a sale is recognized. Future warranty liability is determined based on applying historical claim rate experience to units sold that are still within the warranty period. In addition, the Company records provisions for known warranty claims.
Pension Benefits
Certain expenses are incurred in connection with a defined benefit pension plan. In order to measure expense and the related benefit obligation, various assumptions are made including discount rates used to value the obligation, expected return on plan assets used to fund these expenses and estimated future inflation rates. These assumptions are based on historical experience as well as current facts and circumstances. An actuarial analysis is used to measure the expense and liability associated with pension benefits.
Derivative Instruments
The Company may enter into derivative financial instruments to manage risk associated with fluctuation in interest rates, foreign currency rates or commodities. Where applicable, the Company may elect to account for such derivatives as either a cash flow, fair value, or net investment hedge.
Comprehensive Income (Loss)
Comprehensive income (loss) includes net income, currency translation adjustments, certain derivative-related activity and changes in net actuarial gains/losses from a pension plan. Results of operations for foreign subsidiaries are translated using the average exchange rates during the period. Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates. The components of accumulated other comprehensive income (loss) consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Translation Adjustments
|
|
Gain on Hedging Activities
|
|
Defined Benefit Pension Plan
|
|
Accumulated Other Comprehensive Income (Loss)
|
Balance at December 29, 2018
|
$
|
(230,261
|
)
|
|
$
|
11,171
|
|
|
$
|
(84,095
|
)
|
|
$
|
(303,185
|
)
|
Current-period comprehensive income (loss)
|
(2,314
|
)
|
|
2,905
|
|
|
(10,828
|
)
|
|
(10,237
|
)
|
Balance at December 28, 2019
|
$
|
(232,575
|
)
|
|
$
|
14,076
|
|
|
$
|
(94,923
|
)
|
|
$
|
(313,422
|
)
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition
On December 31, 2017, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASC 606). The Company elected to use the modified retrospective approach for the adoption of the new revenue standard.
The Company determines the appropriate revenue recognition for our contracts by analyzing the type, terms and conditions of each contract or arrangement with a customer. Contracts with customers for all businesses are fixed-price with sales tax excluded from revenue, and do not include variable consideration. Discounts included in contracts with customers, typically early pay discounts, are recorded as a reduction of net sales in the period in which the sale is recognized. Contract revenues are classified as product when the performance obligation is related to the manufacturing of goods. Contract revenues are classified as service when the performance obligation is the performance of a service. Service revenue is primarily related to the Coatings segment.
Customer acceptance provisions exist only in the design stage of our products and acceptance of the design by the customer is required before the project is manufactured and delivered to the customer. The Company is not entitled to any compensation solely based on design of the product and does not recognize revenue associated with the design stage. There is one performance obligation for revenue recognition. No general rights of return exist for customers once the product has been delivered and the Company establishes provisions for estimated warranties. The Company does not sell extended warranties for any of its products.
Shipping and handling costs associated with sales are recorded as cost of goods sold. The Company elected to use the practical expedient of treating freight as a fulfillment obligation instead of a separate performance obligation and ratably recognize freight expense as the structure is being manufactured, when the revenue from the associated customer contract is being recognized over time. With the exception of the Utility segment and the wireless communication structures product line, the Company’s inventory is interchangeable for a variety of each segment’s customers. The Company elected the practical expedient to not disclose the partially satisfied performance obligation at the end of the period when the contract has an original expected duration of one year or less. The Company did not have any significant contracts with an original expected duration of more than one year at December 28, 2019. In addition, the Company elected the practical expedient to not adjust the amount of consideration to be received in a contract for any significant financing component if payment is expected within twelve months of transfer of control of goods or services; the Company expects all consideration to be received in one year or less at contract inception.
Segment and Product Line Revenue Recognition
The global Utility segment revenues are derived from manufactured steel and concrete structures for the North America utility industry and offshore and other complex structures used in energy generation and distribution outside of the United States. Steel and concrete utility structures are engineered to customer specifications resulting in limited ability to sell the structure to a different customer if an order is canceled after production commences. The continuous transfer of control to the customer is evidenced either by contractual termination clauses or by our rights to payment for work performed to-date plus a reasonable profit as the products do not have an alternative use to the Company. Since control is transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment. For our steel and concrete utility and wireless communication structure product lines, we generally recognize revenue on an inputs basis, using total production hours incurred to-date for each order as a percentage of total hours estimated to produce the order. The completion percentage is applied to the order’s total revenue and total estimated costs to determine reported revenue, cost of goods sold and gross profit. Production of an order, once started, is typically completed within three months. Revenue from the offshore and other complex structures business is also recognized using an inputs method, based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. External sales agents are used in certain sales of steel and concrete structures; the Company has chosen to use the practical expedient to expense estimated commissions owed to third parties by recognizing them proportionately as the goods are manufactured.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The global ESS segment revenues are derived from the manufacture and distribution of engineered metal, composite structures and components for lighting and traffic and roadway safety, engineered access systems, and wireless communication. For the lighting and traffic and roadway safety product lines, revenue is recognized upon shipment or delivery of goods to the customer depending on contract terms, which is the same point in time that the customer is billed. For Access Systems, revenue is generally recognized upon delivery of goods to the customer which is the same point in time that the customer is billed. The wireless communication monopole product line has large regional customers who have unique product specifications for these larger communication structures. When the customer contract includes a cancellation clause that would require them to pay for work completed plus a reasonable margin if an order was canceled, revenue is recognized over time based on hours worked as a percent of total estimated hours to complete production. For the remaining wireless communication product line customers which do not provide a contractual right to bill for work completed on a canceled order, revenue is recognized upon shipment or delivery of the goods to the customer which is the same point in time that the customer is billed. For wireless communication towers and components, revenue is recognized upon shipment or delivery of goods to the customer depending on contract terms, which is the same point in time that the customer is billed.
The global Coatings segment revenues are derived by providing coating services to customers’ products, which include galvanizing, anodizing, and powder coating. Revenue is recognized once the coating service has been performed and the goods are ready to be picked up or delivered to the customer which is the same time that the customer is billed.
The global Irrigation segment revenues are derived from the manufacture of agricultural irrigation equipment and related parts and services for the agricultural industry and tubular products for industrial customers. Revenue recognition for the irrigation segment is generally upon shipment of the goods to the customer which is the same point in time that the customer is billed. The remote monitoring subscription services are primarily billed annually and revenue is recognized on a straight-line basis over the subsequent twelve months.
Disaggregation of revenue by product line is disclosed in the Segment footnote. A breakdown by segment of revenue recognized over time and revenue recognized at a point in time for the fiscal years ended December 28, 2019 and December 29, 2018 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Point in Time
|
|
Over Time
|
|
Point in Time
|
|
Over Time
|
|
Fiscal year ended December 28, 2019
|
|
Fiscal year ended December 28, 2019
|
|
Fiscal year ended December 29, 2018
|
|
Fiscal year ended December 29, 2018
|
Utility Support Structures
|
$
|
47,450
|
|
|
$
|
838,158
|
|
|
$
|
16,760
|
|
|
$
|
838,446
|
|
Engineered Support Structures
|
952,056
|
|
|
50,020
|
|
|
922,677
|
|
|
44,681
|
|
Coatings
|
300,640
|
|
|
—
|
|
|
286,739
|
|
|
—
|
|
Irrigation
|
564,918
|
|
|
13,734
|
|
|
612,385
|
|
|
12,376
|
|
Other
|
—
|
|
|
—
|
|
|
23,080
|
|
|
—
|
|
Total
|
$
|
1,865,064
|
|
|
$
|
901,912
|
|
|
$
|
1,861,641
|
|
|
$
|
895,503
|
|
The Company's contract asset as of December 28, 2019 and December 29, 2018 was $141,322 and $112,525, respectively. Both steel and concrete utility customers in North America are generally invoiced upon shipment or delivery of the goods to the customer's specified location and there are typically no up-front or progress payments. The increase in the contract asset in 2019 is attributed to an increase in finished structures that had not yet been shipped to the customers.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
At December 28, 2019 and December 29, 2018, the liability for revenue recognized over time was $117,945 and $4,906. The liability for customer billings in excess of costs and earnings is included in Accrued Expenses on the Consolidated Balance Sheets. During the fiscal year ended December 28, 2019 and December 29, 2018, the Company recognized $3,921 and $5,222 of revenue that was included in the liability as of December 29, 2018 and December 30, 2017. The revenue recognized was due to applying advance payments received for projects completed during the period.
Use of Estimates
Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the reported amounts of revenue and expenses and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.
Equity Method Investments
The Company has equity method investments in non-consolidated subsidiaries which are recorded within "Other assets" on the Consolidated Balance Sheets.
Treasury 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 re-issuance price is charged or credited to “Additional Paid-In Capital.”
In May 2014, the Company announced a capital allocation philosophy which covered a share repurchase program. Specifically, the Board of Directors at that time authorized the purchase of up to $500,000 of the Company's outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately-negotiated transactions. In February 2015 and again in October 2018, the Board of Directors authorized an additional purchase of up to $250,000 of the Company's outstanding common stock with no stated expiration date. As of December 28, 2019, the Company has acquired 5,922,454 shares for approximately $795,549 under this share repurchase program.
Research and Development
Research and development costs are charged to operations in the year incurred. These costs are a component of “Selling, general and administrative expenses” on the Consolidated Statements of Earnings. Research and development expenses were approximately $13,900 in 2019, $11,500 in 2018, and $11,600 in 2017.
Recently Adopted Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases, which provides revised guidance on leases requiring lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The Company adopted this ASU in the first quarter of 2019. The Company made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet for all classes of underlying assets. In addition, the Company elected certain practical expedients not to reassess whether existing contracts are or contain leases, to not reassess the lease classification of any existing leases, to not reassess initial direct costs for any existing leases, and to not separate lease components for all classes of underlying assets. The Company did not to recast its comparative periods in transition (the “Comparatives Under 840 Option”) as allowed under ASU 2018-11.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update is intended to provide financial statement users with more decision-useful information about the expected credit losses. The effective date of ASU No. 2016-13 will be the first quarter of the Company’s fiscal 2020. The Company does not expect the impact of the adoption of ASU No. 2016-13 to be significant on its consolidated financial statements.
(2) ACQUISITIONS
Acquisitions of Businesses
On May 13, 2019, the Company acquired the assets of Connect-It Wireless, Inc. ("Connect-It") for $6,034 in cash. Connect-It operates in Florida and is a manufacturer and distributor of wireless site components and safety products. In the purchase price allocation, goodwill of $3,299 and customer relationships of $828 were recorded and the remainder is net working capital. A portion of the goodwill is deductible for tax purposes. Connect-It is included in the ESS segment and was acquired to expand the Company's wireless component distribution network. The purchase price allocation was finalized in the fourth quarter of 2019.
On February 11, 2019, the Company acquired the outstanding shares of United Galvanizing ("United"), a provider of coatings services for $26,000 in cash. The agreed upon purchase price was $28,000, with $2,000 being contingent on seller representations and warranties that was settled in the first quarter of 2020. The acquisition of United, located in Houston, Texas further expands the Company's galvanizing footprint in North America and will be reported in the Coatings segment.
The fair values assigned were $12,374 for goodwill, $3,170 for customer relationships, trade name of $894, $10,987 for property, plant, and equipment, and the remainder is net working capital. Goodwill is not deductible for tax purposes and the customer relationship will be amortized over 10 years. The trade name has an indefinite life. The Company finalized the purchase price allocation in the fourth quarter of 2019.
On December 31, 2018, the Company acquired the assets of Larson Camouflage ("Larson"), an industry leading provider of architectural and camouflage concealment solutions for the wireless telecommunication market for $31,106 in cash. The agreed upon purchase price was $34,562, with 10% being held back for seller representations and warranties (paid in the first quarter of 2020). Larson was acquired to grow our product offerings in the wireless communication market and will be reported in the ESS segment. The fair values assigned were $16,223 for customer relationships, $15,346 for goodwill, $1,151 for property, plant, and equipment and the remainder is net working capital. Goodwill is deductible for tax purposes and the customer relationships will be amortized over 12 years. The purchase price allocation was finalized in the fourth quarter of 2019.
On October 18, 2018, the Company acquired CSP Coatings Systems of Auckland, New Zealand, a provider of a wide range of coatings services for approximately $17,711. The acquisition further strengthens the Company's Asia-Pacific market position and will be reported in the Coatings segment. The preliminary fair values assigned were $7,373 to property, plant, and equipment, $3,113 for customer relationships, $5,120 for goodwill, with the remainder net working capital. Goodwill is not deductible for tax purposes and the customer relationships will be amortized over 10 years. The Company finalized the purchase price allocation in the second quarter of 2019.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(2) ACQUISITIONS (Continued)
On August 3, 2018, the Company purchased approximately 72% of the outstanding shares of Walpar, LLC ("Walpar") for $57,805 in cash. Walpar is an industry leader in the design, engineering and manufacturing of overhead sign structures for the North America transportation market. Walpar is located in Birmingham, Alabama and its operations are reported in the ESS segment. The transaction was funded with cash on hand. The acquisition of Walpar was completed to expand the Company's product offering in the sign structure market. Customer relationships will be amortized over 12 years and the trade name has an indefinite life. Goodwill is not deductible for tax purposes.
In January 2019, the 28% non-controlling interest shares of Walpar, LLC were acquired for $23,082. During the third quarter of 2019, the Company finalized its purchase price allocation including its assessment of the value of intangibles on the opening balance sheet. As a result of updated cash flow projections it was determined that a $3,500 reduction in customer relationships, along with an offsetting increase in goodwill less deferred tax, was necessary to adjust the allocation of fair value to assets acquired and liabilities assumed. The following table summarizes the fair values of the assets acquired and liabilities assumed of Walpar as of the date of acquisition:
|
|
|
|
|
|
|
|
At August 3, 2018
|
Current assets
|
|
$
|
13,210
|
|
Customer relationships
|
|
28,500
|
|
Trade name
|
|
3,500
|
|
Goodwill
|
|
45,453
|
|
Total fair value of assets acquired
|
|
$
|
90,663
|
|
Current liabilities
|
|
2,197
|
|
Deferred taxes
|
|
7,579
|
|
Total fair value of liabilities assumed
|
|
$
|
9,776
|
|
Non-controlling interests
|
|
23,082
|
|
Net assets acquired
|
|
$
|
57,805
|
|
On August 3, 2018, the Company acquired 75% of the outstanding shares of Convert Italia SpA ("Convert") for $43,504 in cash. In the second quarter of 2019, the Company paid the former owners approximately $18,700 additional purchase price which was reflected in the contingent consideration liability on the fair value of assets and liabilities assumed on acquisition. Convert is a designer and provider of engineered solar tracker solutions that is headquartered in Italy, with offices in Brazil and Argentina. The Company acquired Convert to grow market adjacencies in the Utility Support Structures segment.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(2) ACQUISITIONS (Continued)
Patents and proprietary technology will be amortized over 15 years and the trade name has an indefinite life. Goodwill is not deductible for tax purposes. The fair value measurement process and purchase price allocation was finalized in the third quarter of 2019. The following table summarizes the fair values of the assets acquired and liabilities assumed of Convert at the date of acquisition:
|
|
|
|
|
|
|
|
At August 3, 2018
|
Current assets
|
|
$
|
18,349
|
|
Other assets
|
|
3,166
|
|
Patent and Proprietary Technology
|
|
16,554
|
|
Trade name
|
|
8,701
|
|
Goodwill
|
|
42,169
|
|
Total fair value of assets acquired
|
|
$
|
88,939
|
|
Current liabilities
|
|
5,376
|
|
Contingent consideration liability
|
|
19,497
|
|
Deferred taxes
|
|
6,061
|
|
Total fair value of liabilities assumed
|
|
$
|
30,934
|
|
Non-controlling interests
|
|
14,501
|
|
Net assets acquired
|
|
$
|
43,504
|
|
On August 1, 2018, the Company acquired the operational assets of Derit Infrastructure Pvt. Ltd. ("Derit") for $14,700 in cash, net of assumed liabilities. The Company acquired the net assets at fair value with no value assigned to intangible assets in the purchase price allocation. Derit has a manufacturing facility in India with production capabilities for steel lattice structures for power transmission, wireless communication, and a provider of zinc galvanizing services. Derit was acquired to provide the Company with lattice structure manufacturing capabilities and to further expand the geographic footprint of the galvanizing business. The majority of the business will be reported in the Utility Support Structures segment, while the galvanizing business will be reported in the Coatings segment. The purchase price allocation was finalized in the fourth quarter of 2018.
On January 26, 2018, the Company acquired 60% of the assets of Torrent Engineering and Equipment ("Torrent") for $4,800 in cash. Torrent operates in Indiana and is an integrator of prefabricated pump stations that involves designing high pressure water and compressed air process systems. Torrent has annual sales of approximately $9,000. In the purchase price allocation, goodwill of $3,922 and $4,020 of customer relationships and other intangible assets were recorded. A portion of the goodwill is deductible for tax purposes. Torrent is included in the Irrigation segment and was acquired to expand the Company's water management capabilities. The purchase price allocation was finalized in the second quarter of 2018.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(2) ACQUISITIONS (Continued)
The Company's Consolidated Statements of Earnings for the fiscal year ended December 28, 2019 included net sales from acquisitions of $117,296. In aggregate, these acquisitions did not contribute net earnings to the Company's consolidated 2019 results. The proforma effect of these acquisitions on the 2019, 2018, and 2017 Consolidated Statements of Earnings is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fifty-two Weeks Ended December 28, 2019
|
|
Fifty-two Weeks Ended December 29, 2018
|
|
Fifty-two Weeks Ended December 30, 2017
|
Net sales
|
|
$
|
2,772,150
|
|
|
$
|
2,842,162
|
|
|
$
|
2,818,035
|
|
Net earnings
|
|
154,302
|
|
|
98,292
|
|
|
122,407
|
|
Earnings per share-diluted
|
|
7.09
|
|
|
4.38
|
|
|
5.39
|
|
Acquisitions of Noncontrolling Interests
In April 2019, the Company acquired the remaining 4.8% of Valmont SM that it did not own for $4,763. In March 2018, the Company acquired the remaining 10% of Valmont Industria e Commercio Ltda. that it did not own for $5,510. As this transaction was for acquisitions of all of the remaining shares of consolidated subsidiaries with no change in control, it was recorded within shareholders' equity and as a financing cash flow in the Consolidated Statements of Cash Flows.
(3) DIVESTITURE
On April 30, 2018, the Company completed the sale of Donhad, its grinding media business in Australia, reported in the Other segment. The business was sold because it did not fit the long-term strategic plans for the Company. The grinding media business historical annual sales, operating profit, and net assets are not significant for discontinued operations presentation. The grinding media business had an operating loss of $913 for the year ended December 29, 2018, and operating income of $2,134 for the ended December 30, 2017. The Company received Australian $82,500 (U.S. $62,518).
The pre-tax loss from the divestiture is reported in other income (expense). The loss is comprised of the proceeds from buyer, less deal-related costs, less the net assets of the business which resulted in a gain of $4,334. Offsetting this amount is a $(10,418) realized loss on foreign exchange translation adjustments and net investment hedges previously reported in shareholders' equity.
|
|
|
|
|
|
|
Pre-tax gain from divestiture, before recognition of currency translation loss
|
$
|
4,334
|
|
Recognition of cumulative currency translation loss and hedges (out of OCI)
|
(10,418
|
)
|
Net pre-tax loss from divestiture of the grinding media business
|
$
|
(6,084
|
)
|
The transaction did not result in a taxable capital gain as the cash proceeds were less than the tax carrying value of the business. There is an insignificant tax benefit from the tax deductibility of deal related expenses.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(4) RESTRUCTURING ACTIVITIES
2018 Plan
During 2018, the Company executed certain regional restructuring activities (the "2018 Plan") primarily in the ESS and Utility segments to transform its operational business model including exiting certain local markets. The 2018 Plan included the closure of seven facilities, including three in China. The one Utility facility and one ESS facility in Europe ceased production in the second quarter of 2019. All other facilities were closed by December 29, 2018. The Company recorded the following pre-tax expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESS
|
|
Utility
|
|
Irrigation
|
|
Other/ Corporate
|
|
TOTAL
|
Severance
|
|
$
|
6,255
|
|
|
$
|
1,825
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,080
|
|
Other cash restructuring expenses
|
|
3,512
|
|
|
2,228
|
|
|
—
|
|
|
—
|
|
|
5,740
|
|
Impairments of fixed assets/net loss on disposals
|
|
4,560
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,560
|
|
Total cost of sales
|
|
14,327
|
|
|
4,053
|
|
|
—
|
|
|
—
|
|
|
18,380
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
10,654
|
|
|
1,100
|
|
|
129
|
|
|
—
|
|
|
11,883
|
|
Other cash restructuring expenses
|
|
3,151
|
|
|
—
|
|
|
51
|
|
|
126
|
|
|
3,328
|
|
Impairments of fixed assets/net loss on disposals
|
|
440
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
440
|
|
Total selling, general and administrative expenses
|
|
14,245
|
|
|
1,100
|
|
|
180
|
|
|
126
|
|
|
15,651
|
|
Consolidated total
|
|
$
|
28,572
|
|
|
$
|
5,153
|
|
|
$
|
180
|
|
|
$
|
126
|
|
|
$
|
34,031
|
|
In connection with exiting certain local markets as a result of the 2018 Plan, the Company also recorded $7,944 of impairments of current and other assets during fiscal 2018, primarily inventory.
Change in the liabilities recorded for the restructuring plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 29, 2018
|
|
Recognized Restructuring Expense
|
|
Costs Paid or Otherwise Settled
|
|
Balance at December 28, 2019
|
Severance
|
|
$
|
6,594
|
|
|
$
|
—
|
|
|
$
|
(6,594
|
)
|
|
$
|
—
|
|
Other cash restructuring expenses
|
|
3,462
|
|
|
—
|
|
|
(3,462
|
)
|
|
—
|
|
Total
|
|
$
|
10,056
|
|
|
$
|
—
|
|
|
$
|
(10,056
|
)
|
|
$
|
—
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(5) CASH FLOW SUPPLEMENTARY INFORMATION
The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash payments for interest and income taxes (net of refunds) for the fifty-two weeks ended December 28, 2019 and December 29, 2018, and December 30, 2017 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Interest
|
$
|
39,032
|
|
|
$
|
43,305
|
|
|
$
|
44,528
|
|
Income taxes
|
43,629
|
|
|
47,355
|
|
|
63,791
|
|
The 2019 acquisition of United and Larson included hold back payments contingent on seller representations and warranties of $2,000 and $3,456, respectively. The hold back payments were paid in the first quarter of 2020 and will be shown as an investing use of cash in the acquisitions line item of the consolidated statements of cash flows in 2020.
(6) INVENTORIES
Inventories consisted of the following at December 28, 2019 and December 29, 2018:
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
Raw materials and purchased parts
|
$
|
158,314
|
|
|
$
|
190,115
|
|
Work-in-process
|
38,088
|
|
|
35,566
|
|
Finished goods and manufactured goods
|
221,968
|
|
|
211,504
|
|
Subtotal
|
418,370
|
|
|
437,185
|
|
Less: LIFO reserve
|
43,805
|
|
|
53,619
|
|
|
$
|
374,565
|
|
|
$
|
383,566
|
|
(7) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost, consist of the following:
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
Land and improvements
|
$
|
111,091
|
|
|
$
|
99,797
|
|
Buildings and improvements
|
364,396
|
|
|
348,836
|
|
Machinery and equipment
|
584,447
|
|
|
549,311
|
|
Transportation equipment
|
23,650
|
|
|
24,380
|
|
Office furniture and equipment
|
85,130
|
|
|
85,239
|
|
Construction in progress
|
76,547
|
|
|
53,302
|
|
|
$
|
1,245,261
|
|
|
$
|
1,160,865
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(8) GOODWILL AND INTANGIBLE ASSETS
Amortized Intangible Assets
The components of amortized intangible assets at December 28, 2019 and December 29, 2018 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
December 28, 2019
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Weighted
Average
Life
|
Customer Relationships
|
$
|
237,626
|
|
|
$
|
149,720
|
|
|
13 years
|
Patents & Proprietary Technology
|
24,068
|
|
|
6,358
|
|
|
14 years
|
Other
|
8,054
|
|
|
7,035
|
|
|
5 years
|
|
$
|
269,748
|
|
|
$
|
163,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 29, 2018
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Weighted
Average
Life
|
Customer Relationships
|
$
|
219,508
|
|
|
$
|
132,180
|
|
|
13 years
|
Patents & Proprietary Technology
|
23,662
|
|
|
4,837
|
|
|
14 years
|
Other
|
7,971
|
|
|
6,891
|
|
|
5 years
|
|
$
|
251,141
|
|
|
$
|
143,908
|
|
|
|
Amortization expense for intangible assets was $18,087, $15,328 and $15,911 for the fiscal years ended December 28, 2019, December 29, 2018 and December 30, 2017, respectively.
Estimated annual amortization expense related to finite‑lived intangible assets is as follows:
|
|
|
|
|
|
Estimated
Amortization
Expense
|
2020
|
$
|
17,343
|
|
2021
|
15,298
|
|
2022
|
13,120
|
|
2023
|
11,345
|
|
2024
|
9,434
|
|
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.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(8) GOODWILL AND INTANGIBLE ASSETS (Continued)
Non-amortized intangible assets
Intangible assets with indefinite lives are not amortized. The carrying values of trade names at December 28, 2019 and December 29, 2018 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
December 28,
2019
|
|
December 29,
2018
|
|
Year Acquired
|
Newmark
|
$
|
11,111
|
|
|
$
|
11,111
|
|
|
2004
|
Webforge
|
9,143
|
|
|
8,872
|
|
|
2010
|
Valmont SM
|
7,966
|
|
|
8,155
|
|
|
2014
|
Ingal EPS/Ingal Civil Products
|
7,454
|
|
|
7,233
|
|
|
2010
|
Shakespeare
|
4,000
|
|
|
4,000
|
|
|
2014
|
Walpar
|
3,500
|
|
|
4,300
|
|
|
2018
|
Convert
|
8,378
|
|
|
8,580
|
|
|
2018
|
Other
|
17,555
|
|
|
16,472
|
|
|
|
|
$
|
69,107
|
|
|
$
|
68,723
|
|
|
|
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 maintain the value of the intangible asset. The Company expects that these intangible assets will maintain their value indefinitely. Accordingly, these assets are not amortized.
The Company's trade names were tested for impairment separately from goodwill in the third quarter of 2019. The value of each trade name was determined using the relief-from-royalty method. Based on this evaluation, no trade names were determined to be impaired. The Company recorded a charge of $1,425 in the third quarter of 2018 for the offshore and other complex steel structures (Valmont SM) trade name.
Goodwill
The carrying amount of goodwill by segment as of December 28, 2019 and December 29, 2018 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineered
Support Structures
Segment
|
|
Utility
Support
Structures
Segment
|
|
Coatings
Segment
|
|
Irrigation
Segment
|
|
Total
|
Gross balance at December 29, 2018
|
$
|
204,735
|
|
|
$
|
123,618
|
|
|
$
|
80,937
|
|
|
$
|
25,164
|
|
|
$
|
434,454
|
|
Accumulated impairment losses
|
(18,670
|
)
|
|
(14,355
|
)
|
|
(16,222
|
)
|
|
—
|
|
|
(49,247
|
)
|
Balance at December 29, 2018
|
186,065
|
|
|
109,263
|
|
|
64,715
|
|
|
25,164
|
|
|
$
|
385,207
|
|
Acquisitions
|
21,870
|
|
|
7,889
|
|
|
12,374
|
|
|
—
|
|
|
42,133
|
|
Foreign currency translation
|
2,029
|
|
|
(913
|
)
|
|
436
|
|
|
(28
|
)
|
|
1,524
|
|
Balance at December 28, 2019
|
$
|
209,964
|
|
|
$
|
116,239
|
|
|
$
|
77,525
|
|
|
$
|
25,136
|
|
|
$
|
428,864
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(8) GOODWILL AND INTANGIBLE ASSETS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineered
Support Structures
Segment
|
|
Utility
Support
Structures
Segment
|
|
Coatings
Segment
|
|
Irrigation
Segment
|
|
Other
|
|
Total
|
Gross balance at December 30, 2017
|
$
|
170,076
|
|
|
$
|
90,248
|
|
|
$
|
76,696
|
|
|
$
|
19,778
|
|
|
$
|
15,814
|
|
|
$
|
372,612
|
|
Accumulated impairment losses
|
(18,670
|
)
|
|
—
|
|
|
(16,222
|
)
|
|
—
|
|
|
—
|
|
|
(34,892
|
)
|
Balance at December 30, 2017
|
151,406
|
|
|
90,248
|
|
|
60,474
|
|
|
19,778
|
|
|
15,814
|
|
|
337,720
|
|
Acquisitions
|
42,216
|
|
|
34,280
|
|
|
5,120
|
|
|
5,503
|
|
|
—
|
|
|
87,119
|
|
Impairment
|
—
|
|
|
(14,355
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,355
|
)
|
Divestiture of grinding media
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,814
|
)
|
|
(15,814
|
)
|
Foreign currency translation
|
(7,557
|
)
|
|
(910
|
)
|
|
(879
|
)
|
|
(117
|
)
|
|
—
|
|
|
(9,463
|
)
|
Balance at December 29, 2018
|
$
|
186,065
|
|
|
$
|
109,263
|
|
|
$
|
64,715
|
|
|
$
|
25,164
|
|
|
$
|
—
|
|
|
$
|
385,207
|
|
The Company’s annual impairment test of goodwill was performed during the third quarter of 2019, using the discounted cash flow method. The estimated fair value of all of our reporting units exceeded their respective carrying value, so no goodwill was impaired. The access systems reporting unit with $45,727 of goodwill, is the reporting unit that did not have a substantial excess of estimated fair value over its carrying value. The model assumes geographic expansion of its architectural product lines with realized recent organic growth in its existing market. If architectural systems sales do not increase, the Company will be required to perform an interim test of goodwill. A hypothetical 1% change in the discount rate would increase/decrease the fair value of the reporting unit by approximately $15,000, which approximates the cushion between estimated fair value and carrying value. In the third quarter of 2018, the Company recognized a goodwill impairment totaling $14,355, which represented all of the goodwill of the offshore and other complex steel reporting unit.
(9) BANK CREDIT ARRANGEMENTS
The Company maintains various lines of credit for short-term borrowings totaling $132,849 at December 28, 2019. As of December 28, 2019 and December 29, 2018, $21,774 and $10,678 was outstanding and recorded as notes payable in the Consolidated Balance Sheets, respectively. The interest rates charged on these lines of credit vary in relation to the banks’ costs of funds. The weighted average interest rate on short-term borrowings was 2.54% at December 28, 2019. The unused and available borrowings under the lines of credit were $111,075 at December 28, 2019. The lines of credit can be modified at any time at the option of the banks. The Company pays no fees in connection with unused lines of credit.
(10) INCOME TAXES
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
United States
|
$
|
175,923
|
|
|
$
|
127,852
|
|
|
$
|
152,372
|
|
Foreign
|
33,750
|
|
|
15,589
|
|
|
76,092
|
|
|
$
|
209,673
|
|
|
$
|
143,441
|
|
|
$
|
228,464
|
|
In fiscal 2017, the Company estimated and recognized approximately $41,935 of tax expense for the 2017 Tax Act. The SEC staff issued SAB 118, which provided guidance on accounting for the tax effects of the 2017 Tax Act.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(10) INCOME TAXES (Continued)
The Company's accounting for the following element of the 2017 Tax Act was finalized as of December 30, 2017:
Reduction of U.S. federal corporate tax rate: The 2017 Tax Act reduces the corporate tax rate to 21 percent, effective January 1, 2018. Consequently, the Company recorded a decrease related to deferred taxes of $20,372, with a corresponding net adjustment to deferred income tax expense for the year ended December 30, 2017.
The Company's accounting for the following elements of the 2017 Tax Act were provisional estimates at December 30, 2017, and were finalized as of December 29, 2018 as follows:
Deemed Repatriation transition tax: The Deemed Repatriation transition tax (“Transition Tax”) is a tax on unremitted foreign earnings of certain foreign subsidiaries, which subjected the Company's unremitted foreign earnings of approximately $394,000 to tax at certain specified rates less associated foreign tax credits. The Company recorded a Transition Tax obligation of $9,890 during fiscal 2017 and reduced this expense by $550 in 2018 upon finalization. At December 28, 2019, $785 of the Transition Tax has not been paid and is due in fiscal 2024.
Indefinite reinvestment assertion: The Company position remains that unremitted foreign earnings subject to the Transition Tax are not indefinitely reinvested. The Company recorded foreign withholding taxes and U.S. state income taxes of $10,373 and $1,300. This expense was recorded in 2017 with a decrease of $140 recognized in 2018 as it was finalized. In addition, the Company has taken the position that on non-U.S. subsidiaries, unremitted foreign earnings are not indefinitely reinvested and it recorded additional foreign withholding taxes and U.S. state income taxes of $754 and $43, respectively during 2019.
Income tax expense (benefit) consists of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Current:
|
|
|
|
|
|
Federal
|
$
|
27,809
|
|
|
$
|
21,106
|
|
|
$
|
49,324
|
|
State
|
5,568
|
|
|
6,585
|
|
|
4,415
|
|
Foreign
|
13,130
|
|
|
17,559
|
|
|
12,880
|
|
|
46,507
|
|
|
45,250
|
|
|
66,619
|
|
Non-current:
|
(240
|
)
|
|
(456
|
)
|
|
(229
|
)
|
Deferred:
|
|
|
|
|
|
Federal
|
2,108
|
|
|
213
|
|
|
(9,626
|
)
|
State
|
553
|
|
|
9
|
|
|
(385
|
)
|
Foreign
|
1,279
|
|
|
(1,881
|
)
|
|
49,766
|
|
|
3,940
|
|
|
(1,659
|
)
|
|
39,755
|
|
|
$
|
50,207
|
|
|
$
|
43,135
|
|
|
$
|
106,145
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(10) INCOME TAXES (Continued)
The reconciliations of the statutory federal income tax rate and the effective tax rate follows:
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Statutory federal income tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State income taxes, net of federal benefit
|
2.5
|
|
|
3.5
|
|
|
1.4
|
|
Carryforwards, credits and changes in valuation allowances
|
(1.0
|
)
|
|
3.2
|
|
|
(1.4
|
)
|
Foreign tax rate differences
|
0.3
|
|
|
(1.0
|
)
|
|
(4.1
|
)
|
Changes in unrecognized tax benefits
|
(0.1
|
)
|
|
(0.3
|
)
|
|
(0.1
|
)
|
Domestic production activities deduction
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
Goodwill impairment
|
—
|
|
|
2.2
|
|
|
—
|
|
Effects of 2017 Tax Act
|
—
|
|
|
(0.5
|
)
|
|
18.4
|
|
Other
|
1.3
|
|
|
2.0
|
|
|
(0.6
|
)
|
|
24.0
|
%
|
|
30.1
|
%
|
|
46.5
|
%
|
Fiscal 2018 includes $3,171 of tax expense related to non-tax deductible goodwill and $6,756 of tax expense primarily related to restructuring charges for which no tax benefits have been recorded due to the increase in valuation allowance. Fiscal 2017 includes $41,935 of tax expense related to the 2017 Tax Act.
Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss and tax credit carryforwards. The tax effects of significant items comprising the Company’s net deferred income tax liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
Deferred income tax assets:
|
|
|
|
Accrued expenses and allowances
|
$
|
16,148
|
|
|
$
|
8,268
|
|
Tax credits and loss carryforwards
|
64,116
|
|
|
56,867
|
|
Defined benefit pension liability
|
35,539
|
|
|
36,328
|
|
Inventory allowances
|
5,599
|
|
|
3,320
|
|
Accrued compensation and benefits
|
14,122
|
|
|
13,122
|
|
Lease liabilities
|
21,763
|
|
|
—
|
|
Deferred compensation
|
15,174
|
|
|
16,228
|
|
Gross deferred income tax assets
|
172,461
|
|
|
134,133
|
|
Valuation allowance
|
(35,215
|
)
|
|
(33,228
|
)
|
Net deferred income tax assets
|
137,246
|
|
|
100,905
|
|
Deferred income tax liabilities:
|
|
|
|
Property, plant and equipment
|
31,628
|
|
|
25,477
|
|
Intangible assets
|
49,686
|
|
|
44,850
|
|
Lease assets
|
22,066
|
|
|
—
|
|
Other deferred tax liabilities
|
6,067
|
|
|
7,291
|
|
Total deferred income tax liabilities
|
109,447
|
|
|
77,618
|
|
Net deferred income tax asset
|
$
|
27,799
|
|
|
$
|
23,287
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(10) INCOME TAXES (Continued)
ASC 740 requires an entity to disclose the approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets. As a result, the 2018 component of Deferred compensation in the amount of $28,706 has been disaggregated into Deferred compensation and Accrued compensation and benefits in the amounts of $16,228 and $12,478, respectively. In addition, several components previously considered to be significant but no longer rise to a significant level have been aggregated. The 2018 components that have been aggregated are $3,914 of Accrued warranty aggregated with Accrued expenses and allowances, $644 of Accrued insurance aggregated with Accrued compensation and benefits, $1,064 of Work in progress aggregated with Inventory allowances, and $2,746 of Future repatriation of foreign earnings aggregated with Other deferred tax liabilities.
Deferred income tax assets (liabilities) are presented as follows on the Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
Balance Sheet Caption
|
2019
|
|
2018
|
Other assets
|
$
|
75,754
|
|
|
$
|
66,776
|
|
Deferred income taxes
|
(47,955
|
)
|
|
(43,489
|
)
|
Net deferred income tax asset
|
$
|
27,799
|
|
|
$
|
23,287
|
|
Management of the Company has reviewed recent operating results and projected future operating results. The Company's belief that realization of its net deferred tax assets is more likely than not is based on, among other factors, changes in operations that have occurred in recent years and available tax planning strategies. At December 28, 2019 and December 29, 2018 respectively, there were $64,116 and $56,867 relating to tax credits and loss carryforwards.
Valuation allowances have been established for certain losses that reduce deferred tax assets to an amount that will, more likely than not, be realized. The deferred tax assets at December 28, 2019 that are associated with tax loss and tax credit carryforwards not reduced by valuation allowances expire in periods starting 2023.
Uncertain tax positions included in other non-current liabilities are evaluated in a two-step process, whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than fifty percent likely to be realized upon ultimate settlement with the related tax authority.
The following summarizes the activity related to our unrecognized tax benefits in 2019 and 2018, in thousands:
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
Gross unrecognized tax benefits—beginning of year
|
$
|
2,599
|
|
|
$
|
3,196
|
|
Gross increases—tax positions in prior period
|
29
|
|
|
103
|
|
Gross decreases—tax positions in prior period
|
—
|
|
|
(199
|
)
|
Gross increases—current‑period tax positions
|
593
|
|
|
280
|
|
Settlements with taxing authorities
|
(150
|
)
|
|
(50
|
)
|
Lapse of statute of limitations
|
(771
|
)
|
|
(731
|
)
|
Gross unrecognized tax benefits—end of year
|
$
|
2,300
|
|
|
$
|
2,599
|
|
There are approximately $685 of uncertain tax positions for which reversal is reasonably possible during the next 12 months due to the closing of the statute of limitations. The nature of these uncertain tax positions is generally the computation of a tax deduction or tax credit. During 2019, the Company recorded a reduction of its gross unrecognized tax benefit of $771 with $609 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the United States. During 2018, the Company recorded a reduction of its gross unrecognized tax benefit of $731, with $577 recorded as a reduction of its income tax expense, due to the expiration of statutes of limitation in the United States. In
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(10) INCOME TAXES (Continued)
addition to these amounts, there was an aggregate of $178 and $196 of interest and penalties at December 28, 2019 and December 29, 2018, respectively. The Company’s policy is to record interest and penalties directly related to income taxes as income tax expense in the Consolidated Statements of Earnings.
The Company files income tax returns in the U.S. and various states as well as foreign jurisdictions. Tax years 2016 and forward remain open under U.S. statutes of limitation. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $2,224 and $2,536 at December 28, 2019 and December 29, 2018, respectively.
(11) LONG-TERM DEBT
Long-term debt is as follows:
|
|
|
|
|
|
|
|
|
|
December 28,
2019
|
|
December 29,
2018
|
5.00% senior unsecured notes due 2044(a)
|
$
|
450,000
|
|
|
$
|
450,000
|
|
5.25% senior unsecured notes due 2054(b)
|
305,000
|
|
|
305,000
|
|
Unamortized discount on 5.00% and 5.25% senior unsecured notes (a)(b)
|
(21,143
|
)
|
|
(21,468
|
)
|
Revolving credit agreement (c)
|
29,044
|
|
|
5,719
|
|
IDR Bonds(d)
|
8,500
|
|
|
8,500
|
|
Other notes
|
2,089
|
|
|
2,918
|
|
Debt issuance costs
|
(7,786
|
)
|
|
(8,068
|
)
|
Long-term debt
|
765,704
|
|
|
742,601
|
|
Less current installments of long-term debt
|
760
|
|
|
779
|
|
Long-term debt, excluding current installments
|
$
|
764,944
|
|
|
$
|
741,822
|
|
|
|
(a)
|
The 5.00% senior unsecured notes due 2044 include an aggregate principal amount of $450,000 on which interest is paid and an unamortized discount balance of $13,675 at December 28, 2019. The notes bear interest at 5.000% per annum and are due on October 1, 2044. The discount will be amortized and recognized as interest expense as interest payments are made over the term of the notes. The notes may be repurchased prior to maturity in whole, or in part, at any time at 100% of their principal amount plus a make-whole premium and accrued and unpaid interest. These notes are guaranteed by certain subsidiaries of the Company.
|
|
|
(b)
|
The 5.25% senior unsecured notes due 2054 include an aggregate principal amount of $305,000 on which interest is paid and an unamortized discount balance of $7,468 at December 28, 2019. The notes bear interest at 5.250% per annum and are due on October 1, 2054. The discount will be amortized and recognized as interest expense as interest payments are made over the term of the notes. The notes may be repurchased prior to maturity in whole, or in part, at any time at 100% of their principal amount plus a make-whole premium and accrued and unpaid interest. These notes are guaranteed by certain subsidiaries of the Company.
|
|
|
(c)
|
The amended and restated revolving credit facility with JP Morgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto has a maturity date of October 18, 2022. The credit facility provides for $600,000 of committed unsecured revolving credit loans with available borrowings thereunder to $400,000 in foreign currencies. We may increase the credit facility by up to an additional $200,000 at any time, subject to lenders increasing the amount of their commitments. The interest rate on the borrowings will be, at the Company's option, either:
|
|
|
(i)
|
LIBOR (based on a 1, 2, 3 or 6 month interest period, as selected by the Company) plus 100 to 162.5 basis points, depending on the credit rating of the Company's senior debt published by Standard & Poor's Rating Services and Moody's Investors Service, Inc., or;
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(11) LONG-TERM DEBT (Continued)
|
|
•
|
the prime lending rate,
|
|
|
•
|
the Federal Funds rate plus 50 basis points, and
|
|
|
•
|
LIBOR (based on a 1 month interest period) plus 100 basis points,
|
plus, in each case, 0 to 62.5 basis points, depending on the credit rating of the Company's senior debt published by Standard & Poor's Rating Services and Mood's Investors Service, Inc.
At December 28, 2019, the Company had $29,044 outstanding borrowings under the revolving credit facility. The revolving credit facility has a maturity date of October 18, 2022 and contains certain financial covenants that may limit additional borrowing capability under the agreement. At December 28, 2019, the Company had the ability to borrow $556,569 under this facility, after consideration of standby letters of credit of $14,608 associated with certain insurance obligations. We also maintain certain short-term bank lines of credit totaling $132,849, $111,075 of which was unused at December 28, 2019.
|
|
(d)
|
The Industrial Development Revenue Bonds were issued to finance the construction of a manufacturing facility in Jasper, Tennessee. Variable interest is payable until final maturity on June 1, 2025. The effective interest rates at December 28, 2019 and December 29, 2018 were 2.73% and 3.27% respectively.
|
The lending agreements include certain maintenance covenants, including financial leverage and interest coverage. The Company was in compliance with all financial debt covenants at December 28, 2019. The minimum aggregate maturities of long-term debt for each of the five years following 2019 are: $760, $761, $568, $0 and $0.
The obligations arising under the 5.00% senior unsecured notes due 2044, the 5.25% senior unsecured notes due 2054, and the revolving credit facility are guaranteed by the Company and its wholly-owned subsidiaries PiRod, Inc., Valmont Coatings, Inc., Valmont Newmark, Inc., and Valmont Queensland Pty. Ltd.
(12) STOCK-BASED COMPENSATION
The Company maintains stock‑based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and bonuses of common stock. At December 28, 2019, 1,208,223 shares of common stock remained available for issuance under the plans. Shares and options issued and available are subject to changes in capitalization. The Company’s policy is to issue shares upon exercise of stock options or vesting of restricted stock units or issuance of restricted stock from treasury shares held by the Company.
Under the stock option 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 years or on the fifth anniversary of the grant. Expiration of grants is seven years from the date of grant. Restricted stock units and awards generally vest in equal installments over three years beginning on the first anniversary of the grant. The Company recorded $11,587, $10,392 and $10,706 of compensation expense (included in selling, general and administrative expenses) in the 2019, 2018 and 2017 fiscal years for all share-based compensation programs, respectively. The associated tax benefits recorded in the 2019, 2018 and 2017 fiscal years was $2,897, $2,598 and $4,068, respectively.
At December 28, 2019, the amount of unrecognized stock option compensation expense, to be recognized over a weighted average period of 2.31 years, was approximately $4,979.
(12) STOCK-BASED COMPENSATION (Continued)
The Company uses a binomial option pricing model to value its stock options. The fair value of each option grant made in 2019, 2018 and 2017 was estimated using the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Expected volatility
|
33.13
|
%
|
|
33.39
|
%
|
|
33.76
|
%
|
Risk-free interest rate
|
1.69
|
%
|
|
2.67
|
%
|
|
2.12
|
%
|
Expected life from vesting date
|
3.0 yrs
|
|
|
3.0 yrs
|
|
|
3.0 yrs
|
|
Dividend yield
|
1.07
|
%
|
|
1.07
|
%
|
|
1.17
|
%
|
Following is a summary of the stock option activity during 2017, 2018 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
Outstanding at December 31, 2016
|
793,173
|
|
|
$
|
122.77
|
|
|
|
|
|
Granted
|
67,965
|
|
|
164.35
|
|
|
|
|
|
Exercised
|
(284,574
|
)
|
|
121.92
|
|
|
|
|
|
Forfeited
|
(5,942
|
)
|
|
104.26
|
|
|
|
|
|
Outstanding at December 30, 2017
|
570,622
|
|
|
$
|
128.34
|
|
|
4.66
|
|
$
|
21,806
|
|
Options vested or expected to vest at December 30, 2017
|
558,114
|
|
|
$
|
128.00
|
|
|
4.63
|
|
21,517
|
|
Options exercisable at December 30, 2017
|
351,794
|
|
|
$
|
123.90
|
|
|
3.94
|
|
15,005
|
|
The weighted average per share fair value of options granted during 2017 was $43.68.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
Outstanding at December 30, 2017
|
570,622
|
|
|
$
|
128.34
|
|
|
|
|
|
Granted
|
105,135
|
|
|
112.08
|
|
|
|
|
|
Exercised
|
(63,717
|
)
|
|
106.26
|
|
|
|
|
|
Forfeited
|
(33,627
|
)
|
|
129.52
|
|
|
|
|
|
Outstanding at December 29, 2018
|
578,413
|
|
|
$
|
127.74
|
|
|
4.35
|
|
$
|
909
|
|
Options vested or expected to vest at December 29, 2018
|
565,952
|
|
|
$
|
127.84
|
|
|
4.30
|
|
909
|
|
Options exercisable at December 29, 2018
|
405,128
|
|
|
$
|
126.61
|
|
|
3.47
|
|
909
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(12) STOCK-BASED COMPENSATION (Continued)
The weighted average per share fair value of options granted during 2018 was $30.48.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
Outstanding at December 29, 2018
|
578,413
|
|
|
$
|
127.74
|
|
|
|
|
|
Granted
|
57,648
|
|
|
147.31
|
|
|
|
|
|
Exercised
|
(119,789
|
)
|
|
113.02
|
|
|
|
|
|
Forfeited
|
(27,712
|
)
|
|
137.07
|
|
|
|
|
|
Outstanding at December 28, 2019
|
488,560
|
|
|
$
|
133.13
|
|
|
4.04
|
|
$
|
9,291
|
|
Options vested or expected to vest at December 28, 2019
|
478,575
|
|
|
$
|
133.21
|
|
|
3.99
|
|
9,078
|
|
Options exercisable at December 28, 2019
|
341,828
|
|
|
$
|
133.32
|
|
|
3.19
|
|
6,470
|
|
The weighted average per share fair value of options granted during 2019 was $37.85.
Following is a summary of the status of stock options outstanding at December 28, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and Exercisable By Price Range
|
Options Outstanding
|
|
Options Exercisable
|
Exercise Price
Range
|
|
Number
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
|
|
Number
|
|
Weighted
Average
Exercise
Price
|
$104.47 - 112.08
|
|
183,658
|
|
|
4.59 years
|
|
$
|
108.58
|
|
|
113,866
|
|
|
$
|
106.43
|
|
$123.87 - 132.84
|
|
70,396
|
|
|
1.95 years
|
|
132.70
|
|
|
70,396
|
|
|
132.70
|
|
$142.67 - 164.35
|
|
234,506
|
|
|
4.24 years
|
|
152.75
|
|
|
157,566
|
|
|
152.97
|
|
|
|
488,560
|
|
|
|
|
|
|
341,828
|
|
|
|
In accordance with shareholder-approved plans, the Human Resource Committee of the Board of Directors may grant stock under various stock‑based compensation arrangements, including restricted stock awards, restricted stock units, and stock issued in lieu of cash bonuses. Under such arrangements, stock is issued without direct cost to the employee. The restricted stock units are settled in Company stock when the restriction period ends. Restricted stock units and awards generally vest in equal installments over three years beginning on the first anniversary of the grant. During fiscal 2019, 2018 and 2017, the Company granted restricted stock units to directors and certain management employees as follows (which are not included in the above stock plan activity tables):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
Shares granted
|
78,318
|
|
|
88,127
|
|
|
62,160
|
|
Weighted‑average per share price on grant date
|
$
|
145.89
|
|
|
$
|
114.89
|
|
|
$
|
163.18
|
|
Recognized compensation expense
|
$
|
8,815
|
|
|
$
|
6,328
|
|
|
$
|
5,569
|
|
At December 28, 2019 the amount of deferred stock‑based compensation granted, to be recognized over a weighted‑average period of 1.70 years, was approximately $19,501.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(13) EARNINGS PER SHARE
The following table provides a reconciliation between Basic and Diluted earnings per share (EPS):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
Dilutive
Effect of
Stock
Options
|
|
Diluted EPS
|
2019:
|
|
|
|
|
|
Net earnings attributable to Valmont Industries, Inc.
|
$
|
153,769
|
|
|
$
|
—
|
|
|
$
|
153,769
|
|
Weighted average shares outstanding (000's)
|
21,659
|
|
|
110
|
|
|
21,769
|
|
Per share amount
|
$
|
7.10
|
|
|
$
|
0.04
|
|
|
$
|
7.06
|
|
2018:
|
|
|
|
|
|
Net earnings attributable to Valmont Industries, Inc.
|
$
|
94,351
|
|
|
$
|
—
|
|
|
$
|
94,351
|
|
Weighted average shares outstanding (000's)
|
22,306
|
|
|
140
|
|
|
22,446
|
|
Per share amount
|
$
|
4.23
|
|
|
$
|
0.03
|
|
|
$
|
4.20
|
|
2017:
|
|
|
|
|
|
Net earnings attributable to Valmont Industries, Inc.
|
$
|
116,240
|
|
|
$
|
—
|
|
|
$
|
116,240
|
|
Weighted average shares outstanding (000's)
|
22,520
|
|
|
218
|
|
|
22,738
|
|
Per share amount
|
$
|
5.16
|
|
|
$
|
0.05
|
|
|
$
|
5.11
|
|
Basic and diluted net earnings and earnings per share in fiscal 2018 was impacted by impairments of goodwill and intangible assets of $14,736 after-tax ($0.66 per share), restructuring expenses and non-recurring asset impairments arising from exiting certain local markets of $37,779 after-tax ($1.68 per share), refinancing of long-term debt expenses of $11,115 after-tax ($0.50 per share), and a loss from the divestiture of the grinding media business of $5,350 after-tax ($0.24 per share).
Basic and diluted net earnings and earnings per share in fiscal 2017 were impacted by the 2017 Tax Act enacted on December 22, 2017 by the U.S. government. We remeasured our U.S. deferred income tax assets using a blended rate of 25.0% recognizing deferred income tax expense of approximately $20,372 ($0.90 per share). We also recorded a provision charge of approximately $9,890 ($0.44 per share) of income tax expense for the deemed repatriation transition tax and $11,673 ($0.51 per share) of deferred expenses related to foreign withholding taxes and U.S. state income taxes.
Earnings per share are computed independently for each of the quarters. Therefore, the sum of the quarterly earnings per share may not equal the total for the year.
At the end of fiscal years 2019, 2018, and 2017 there were 130,704, 406,806, and 0 outstanding stock options, respectively, with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share, respectively.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(14) EMPLOYEE RETIREMENT SAVINGS PLAN
Established under Internal Revenue Code Section 401(k), the Valmont Employee Retirement Savings Plan (“VERSP”) is a defined contribution plan available to all eligible employees. Participants can elect to contribute up to 50% of annual pay, on a pretax and/or after-tax basis. The Company also makes contributions to the Plan and a non-qualified deferred compensation plan for certain Company executives. The 2019, 2018 and 2017 Company contributions to these plans amounted to approximately $12,600, $12,300 and $11,800 respectively.
The Company sponsors a fully‑funded, non-qualified deferred compensation plan for certain Company executives who otherwise would be limited in receiving company contributions into VERSP under Internal Revenue Service regulations. The invested assets and related liabilities of these participants were approximately $36,290 and $37,516 at December 28, 2019 and December 29, 2018, respectively. Such amounts are included in “Other assets” and “Deferred compensation” on the Consolidated Balance Sheets. Amounts distributed from the Company’s non-qualified deferred compensation plan to participants under the transition rules of section 409A of the Internal Revenue Code were approximately $8,335 and $2,352 at December 28, 2019 and December 29, 2018, respectively. All distributions were made in cash.
(15) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, receivables, accounts payable, notes payable to banks and accrued expenses approximate fair value because of the short maturity of these instruments. The fair values of each of the Company’s long-term debt instruments are based on the amount of future cash flows associated with each instrument discounted using the Company’s current borrowing rate for similar debt instruments of comparable maturity (Level 2). The fair value estimates are made at a specific point in time and the underlying assumptions are subject to change based on market conditions. At December 28, 2019, the carrying amount of the Company’s long-term debt was $765,704 with an estimated fair value of approximately $826,413. At December 29, 2018, the carrying amount of the Company’s long-term debt was $742,601 with an estimated fair value of approximately $683,602.
For financial reporting purposes, a three‑level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date is used. Inputs refers broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
|
|
•
|
Level 1: Quoted market prices in active markets for identical assets or liabilities.
|
|
|
•
|
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
|
|
|
•
|
Level 3: Unobservable inputs that are not corroborated by market data.
|
The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.
Trading Securities: The assets and liabilities recorded for the investments held in the Valmont Deferred Compensation Plan of $36,290 ($37,516 in 2018) represent mutual funds, invested in debt and equity securities, classified as trading securities, considering the employee’s ability to change investment allocation of their deferred compensation at any time. The Company's remaining ownership in Delta EMD Pty. Ltd. (JSE:DTA) of $210 ($2,508 in 2018) is recorded at fair value at December 28, 2019. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input. These securities are included in Other Assets on the Consolidated Balance Sheets.
Derivative Financial Instruments: The fair value of foreign currency and commodity forward and cross currency contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(15) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using:
|
|
Carrying Value December 28, 2019
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Assets:
|
|
|
|
|
|
|
|
Trading securities
|
$
|
36,500
|
|
|
$
|
36,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative financial instruments, net
|
3,247
|
|
|
—
|
|
|
3,247
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Using:
|
|
Carrying Value December 29, 2018
|
|
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
Assets:
|
|
|
|
|
|
|
|
Trading securities
|
$
|
40,024
|
|
|
$
|
40,024
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivative financial instruments, net
|
$
|
9,147
|
|
|
$
|
—
|
|
|
9,147
|
|
|
$
|
—
|
|
(16) DERIVATIVE FINANCIAL INSTRUMENTS
The Company manages interest rate risk, commodity price risk, and foreign currency risk related to foreign currency denominated transactions and investments in foreign subsidiaries. Depending on the circumstances, the Company may manage these risks by utilizing derivative financial instruments. Some derivative financial instruments are marked to market and recorded in the Company's consolidated statements of earnings, while others may be accounted for as fair value, cash flow, or net investment hedges. The Company had open foreign currency forward contracts that are marked to market at December 28, 2019, which are insignificant and thus excluded from the tables below. Derivative financial instruments have credit and market risk. The Company manages these risks of derivative instruments by monitoring limits as to the types and degree of risk that can be taken, and by entering into transactions with counterparties who are recognized, stable multinational banks.
Fair value of derivative instruments at December 28, 2019 and December 29, 2018 are as follows:
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments:
|
Balance sheet location
|
|
December 28, 2019
|
|
December 29, 2018
|
Commodity forward contracts
|
Prepaid expenses and other assets
|
|
$
|
—
|
|
|
$
|
(285
|
)
|
Foreign currency forward contracts
|
Prepaid expenses and other assets
|
|
2,119
|
|
|
8,357
|
|
Cross currency swap contracts
|
Prepaid expenses and other assets
|
|
1,128
|
|
|
1,075
|
|
|
|
|
$
|
3,247
|
|
|
$
|
9,147
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(16) DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
Gains (losses) on derivatives recognized in the consolidated statements of earnings for the years ended December 28, 2019, December 29, 2018, and December 30, 2017 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments:
|
Statements of earnings location
|
|
2019
|
|
2018
|
|
2017
|
Commodity forward contracts
|
Product cost of sales
|
|
$
|
(2,130
|
)
|
|
$
|
1,021
|
|
|
$
|
—
|
|
Foreign currency forward contracts
|
Loss from divestiture of grinding media business
|
|
—
|
|
|
(1,215
|
)
|
|
—
|
|
Foreign currency forward contracts
|
Other income (expense)
|
|
950
|
|
|
782
|
|
|
—
|
|
Interest rate contracts
|
Interest expense
|
|
(64
|
)
|
|
(423
|
)
|
|
(74
|
)
|
Cross currency swap contracts
|
Interest expense
|
|
2,823
|
|
|
828
|
|
|
—
|
|
|
|
|
$
|
1,579
|
|
|
$
|
993
|
|
|
$
|
(74
|
)
|
Cash Flow Hedges
In 2019 and 2018, the Company entered into steel hot rolled coil (HRC) forward contracts which qualified as a cash flow hedge of the variability in the cash flows attributable to future steel purchases. In 2019, the forward contracts had a notional amount of $12,128 for the purchase of 3,500 short tons for each month from May 2019 to September 2019. In 2018, the forward contracts entered into had a notional amount of $8,469 for the purchase of 3,500 short tons for each month from July 2018 to September 2018 and a notional amount of $15,563 for the purchase of 6,500 short tons for each month from October 2018 to December 2018. The gain (loss) realized upon settlement is recorded in product cost of sales in the consolidated statements of earnings over average inventory turns.
On June 19, 2018, the Company issued and sold $200,000 aggregate principal amount of the Company’s 5.00% senior notes due 2044 and $55,000 aggregate principal amount of the Company’s 5.25% senior notes due 2054. During the second quarter of 2018, the Company executed contracts to hedge the risk of potential fluctuations in the treasury rates on the 2044 Notes and 2054 Notes which would change the amount of net proceeds received from the debt offering. These contracts had a combined notional amount of $175,000. On June 8, 2018, these contracts were settled with the Company paying $2,467 to the counterparties which was recorded in OCI and will be amortized as an increase to interest expense over the term of the debt. Due to the retirement of the 2020 bonds in July 2018, the Company wrote off the remaining $411 unamortized loss on the related cash flow hedge.
Net Investment Hedges
In the second quarter of 2019, all net investment hedges incepted in 2018 were early settled and the Company received proceeds of $11,184, which will remain in OCI until either the sale or substantially complete liquidation of the related subsidiaries.
In the second quarter of 2019, the Company entered into a foreign currency forward contract to mitigate foreign currency risk of the Company's investment in its Australian dollar denominated businesses. The forward contract qualifies as a net investment hedge and has a maturity date of April 2021 and a notional amount to sell Australian dollars to receive $100,000. The Australian dollar forward contract effectiveness was assessed under the spot method with forward points excluded totaling $881, which the Company has elected to amortize in other income (expense) in the consolidated statements of earnings using the straight-line method over the remaining term of the contract.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(16) DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
In the second quarter of 2019, the Company entered into two fixed-for-fixed cross currency swaps ("CCS"), swapping U.S. dollar principal and interest payments on a portion of its 5.00% senior unsecured notes due 2044 for Danish krone (DKK) and euro denominated payments. The CCS were entered into in order to mitigate foreign currency risk on the Company's euro and DKK investments and to reduce interest expense. Interest is exchanged twice per year on April 1 and October 1.
Key terms of the two CCS are as follows:
|
|
|
|
|
|
|
|
Currency
|
Notional Amount
|
Termination Date
|
Swapped Interest Rate
|
Net Settlement Amount
|
Danish Krone (DKK)
|
$
|
50,000
|
|
April 1, 2024
|
2.68%
|
DKK 333,625
|
Euro
|
$
|
80,000
|
|
April 1, 2024
|
2.825%
|
€71,550
|
The Company designated the full notional amount of the three CCS ($130,000) as a hedge of the net investment in certain Danish and European subsidiaries under the spot method, with all changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) are recorded as cumulative foreign currency translation within OCI, and will remain in OCI until either the sale or substantially complete liquidation of the related subsidiaries. Net interest receipts will be recorded as a reduction of interest expense over the life of the CCS.
(17) GUARANTEES
The Company’s product warranty accrual reflects management’s best estimate of probable liability under its product warranties. Historical product claims data is used to estimate the cost of product warranties at the time revenue is recognized.
Changes in the product warranty accrual, which is recorded in “Accrued expenses”, for the years ended December 28, 2019 and December 29, 2018, were as follows:
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
Balance, beginning of period
|
$
|
17,008
|
|
|
$
|
20,109
|
|
Payments made
|
(17,484
|
)
|
|
(18,920
|
)
|
Change in liability for warranties issued during the period
|
16,080
|
|
|
13,566
|
|
Change in liability for pre-existing warranties
|
(2,072
|
)
|
|
2,253
|
|
Balance, end of period
|
$
|
13,532
|
|
|
$
|
17,008
|
|
(18) COMMITMENTS & CONTINGENCIES
Various claims and lawsuits are pending against Company and certain of its subsidiaries. The Company cannot fully determine the effect of all asserted and unasserted claims on its consolidated results of operations, financial condition, or liquidity. Where asserted and unasserted claims are considered probable and reasonably estimable, a liability has been recorded. We do not expect that any known lawsuits, claims, environmental costs, commitments, or contingent liabilities will have a material adverse effect on our consolidated results of operations, financial condition, or liquidity.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(19) DEFINED BENEFIT RETIREMENT PLAN
Delta Ltd., a wholly-owned subsidiary of the Company, is the sponsor of the Delta Pension Plan ("Plan"). The Plan provides defined benefit retirement income to eligible employees in the United Kingdom. Pension retirement benefits to qualified employees are 1.67% of final salary per year of service upon reaching the age of 65 years. This Plan has no active employees as members at December 28, 2019.
Funded Status
The Company recognizes the overfunded or underfunded status of the pension plan as an asset or liability. The funded status represents the difference between the projected benefit obligation (PBO) and the fair value of the plan assets. The PBO is the present value of benefits earned to date by plan participants, including the effect of assumed future salary increases (if applicable) and inflation. Plan assets are measured at fair value. Because the pension plan is denominated in British pounds sterling, the Company used exchange rates of $1.269/£ and $1.308/£ to translate the net pension liability into U.S. dollars at December 29, 2018 and December 28, 2019, respectively. The net funded status of $140,007 at December 28, 2019 is recorded as a noncurrent liability.
Projected Benefit Obligation and Fair Value of Plan Assets—The accumulated benefit obligation (ABO) is the present value of benefits earned to date, assuming no future compensation growth.
As there are no active employees in the plan, the ABO is equal to the PBO for all years presented. The underfunded ABO represents the difference between the PBO and the fair value of plan assets. On October 26, 2018, the High Court of Justice in the United Kingdom ruled that pension plans which offered guaranteed minimum pension ("GMP") benefits between 1990 and 1997 must ensure the benefit accrued between men and women were equal. The Company estimated the cost of GMP equalization at £9,500, which is being treated as a prior service cost at December 29, 2018.
Changes in the PBO and fair value of plan assets for the pension plan for the period from December 30, 2017 to December 29, 2018 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected
Benefit
Obligation
|
|
Plan
Assets
|
|
Funded
status
|
Fair Value at December 30, 2017
|
$
|
783,301
|
|
|
$
|
593,749
|
|
|
$
|
(189,552
|
)
|
Employer contributions
|
—
|
|
|
1,537
|
|
|
|
Interest cost
|
17,878
|
|
|
—
|
|
|
|
Prior service costs - GMP equalization
|
12,056
|
|
|
—
|
|
|
|
Actual return on plan assets
|
—
|
|
|
(32,120
|
)
|
|
|
Benefits paid
|
(28,207
|
)
|
|
(28,207
|
)
|
|
|
Actuarial (gain) loss
|
(95,480
|
)
|
|
—
|
|
|
|
Currency translation
|
(42,108
|
)
|
|
(31,423
|
)
|
|
|
Fair Value at December 29, 2018
|
$
|
647,440
|
|
|
$
|
503,536
|
|
|
$
|
(143,904
|
)
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(19) DEFINED BENEFIT RETIREMENT PLAN (Continued)
Changes in the PBO and fair value of plan assets for the pension plan for the period from December 29, 2018 to December 28, 2019 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected
Benefit
Obligation
|
|
Plan
Assets
|
|
Funded
status
|
Fair Value at December 29, 2018
|
$
|
647,440
|
|
|
$
|
503,536
|
|
|
$
|
(143,904
|
)
|
Employer contributions
|
—
|
|
|
18,461
|
|
|
|
Interest cost
|
16,923
|
|
|
—
|
|
|
|
Actual return on plan assets
|
—
|
|
|
86,081
|
|
|
|
Benefits paid
|
(20,769
|
)
|
|
(20,769
|
)
|
|
|
Actuarial (gain) loss
|
79,485
|
|
|
—
|
|
|
|
Currency translation
|
21,324
|
|
|
17,087
|
|
|
|
Fair Value at December 28, 2019
|
$
|
744,403
|
|
|
$
|
604,396
|
|
|
$
|
(140,007
|
)
|
Pre-tax amounts recognized in accumulated other comprehensive income (loss) as of December 28, 2019 and December 29, 2018 consisted of actuarial gains (losses):
|
|
|
|
|
Balance December 30, 2017
|
$
|
(168,250
|
)
|
Actuarial gain
|
44,760
|
|
Prior service costs - GMP equalization
|
(12,056
|
)
|
Currency translation gain (loss)
|
5,358
|
|
Balance December 29, 2018
|
(130,188
|
)
|
Actuarial gain (loss)
|
(10,839
|
)
|
Currency translation gain (loss)
|
(2,699
|
)
|
Balance December 28, 2019
|
$
|
(143,726
|
)
|
The estimated amount to be amortized from accumulated other comprehensive income into net periodic benefit cost in 2020 is approximately $3,008.
Assumptions—The weighted-average actuarial assumptions used to determine the benefit obligation at December 28, 2019 and December 29, 2018 were as follows:
|
|
|
|
|
|
|
Percentages
|
2019
|
|
2018
|
Discount rate
|
2.05
|
%
|
|
2.90
|
%
|
Salary increase
|
N/A
|
|
|
N/A
|
|
CPI inflation
|
2.15
|
%
|
|
2.20
|
%
|
RPI inflation
|
3.05
|
%
|
|
3.30
|
%
|
Expense
Pension expense is determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets. The expected long-term rate of return on plan assets is applied to the fair value of plan assets. Differences in actual experience in relation to assumptions are not recognized in net earnings immediately, but are deferred and, if necessary, amortized as pension expense.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(19) DEFINED BENEFIT RETIREMENT PLAN (Continued)
The components of the net periodic pension expense for the fiscal years ended December 28, 2019 and December 29, 2018 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
Net Periodic Benefit Cost:
|
|
|
|
Interest cost
|
$
|
16,923
|
|
|
$
|
17,878
|
|
Expected return on plan assets
|
(20,000
|
)
|
|
(23,175
|
)
|
Amortization of prior service cost
|
513
|
|
|
—
|
|
Amortization of actuarial loss
|
2,051
|
|
|
3,046
|
|
Net periodic benefit expense (benefit)
|
$
|
(513
|
)
|
|
$
|
(2,251
|
)
|
Assumptions—The weighted-average actuarial assumptions used to determine expense are as follows for fiscal 2019 and 2018:
|
|
|
|
|
|
|
|
Percentages
|
|
2019
|
|
2018
|
Discount rate
|
2.90
|
%
|
|
2.55
|
%
|
Expected return on plan assets
|
4.25
|
%
|
|
4.29
|
%
|
CPI Inflation
|
2.20
|
%
|
|
2.20
|
%
|
RPI Inflation
|
3.30
|
%
|
|
3.30
|
%
|
The discount rate is based on the yields of AA-rated corporate bonds with durational periods similar to that of the pension liabilities. The expected return on plan assets is based on our asset allocation mix and our historical return, taking into account current and expected market conditions. Inflation is based on expected changes in the consumer price index or the retail price index in the U.K. depending on the relevant plan provisions.
Cash Contributions
The Company completed negotiations with Plan trustees in 2019 regarding annual funding for the Plan. The annual contributions into the Plan are $17,132 (/£13,100) per annum as part of the Plan’s recovery plan, along with a contribution to cover the administrative costs of the Plan of approximately $1,700 (/£1,300) per annum.
Benefit Payments
The following table details expected pension benefit payments for the years 2020 through 2029:
|
|
|
|
|
|
2020
|
$
|
21,840
|
|
2021
|
22,494
|
|
2022
|
23,148
|
|
2023
|
23,802
|
|
2024
|
24,587
|
|
Years 2024 - 2029
|
134,442
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(19) DEFINED BENEFIT RETIREMENT PLAN (Continued)
Asset Allocation Strategy
The investment strategy for pension plan assets is to maintain a diversified portfolio consisting of
•Long-term fixed‑income securities that are investment grade or government‑backed in nature;
•Common stock mutual funds in U.K. and non-U.K. companies, and;
|
|
•
|
Diversified growth funds, which are invested in a number of investments, including common stock, fixed income funds, properties and commodities.
|
The Plan, as required by U.K. law, has an independent trustee that sets investment policy. The general strategy is to invest approximately 50% of the assets of the plan in common stock mutual funds and diversified growth funds, with the remainder of the investments in long-term fixed income securities, including corporate bonds and index-linked U.K. gilts. The trustees regularly consult with representatives of the plan sponsor and independent advisors on such matters.
The pension plan investments are held in a trust. The weighted‑average maturity of the corporate bond portfolio was 13 years at December 28, 2019.
Fair Value Measurements
The pension plan assets are valued at fair value. The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.
Leveraged inflation-linked gilts (LDIs)—LDIs are a combination of U.K. government-backed securities (such as bonds or other fixed income securities issued directly by the U.K. Treasury) money market instruments, and derivatives combined to give leveraged exposure to changes in the U.K. long-term interest and inflation rates. These funds are expected to offset a proportion of the impact changes in the long-term interest and inflation rates in the U.K. have on the pension plan's benefit plan obligation liability. The fair value recorded by the Plan is calculated using net asset value (NAV) for each investment.
Temporary Cash Investments– These investments consist of British pound sterling, reported in terms of U.S. dollars based on currency exchange rates readily available in active markets. These temporary cash investments are classified as Level 1 investments.
Corporate Bonds—Corporate bonds and debentures consist of fixed income securities issued by U.K. corporations. The fair value recorded by the Plan is calculated using NAV for each investment.
Corporate Stock—This investment category consists of common and preferred stock, including mutual funds, issued by U.K. and non-U.K. corporations. The fair value recorded by the Plan is calculated using NAV for each investment, except for one small holding that is actively traded (which is the level 1 investment).
Diversified growth funds - This investment category consists of diversified investment funds, whose holdings include common stock, fixed income funds, properties and commodities of U.K. and non-U.K. securities. The fair value recorded by the Plan is calculated using NAV for each investment.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(19) DEFINED BENEFIT RETIREMENT PLAN (Continued)
Secured income asset (SIA) funds - This investment category consists of holdings which will have a high level of expected inflation linkage. Examples of underlying assets classes are rental streams and infrastructure debt. Due to the private nature of these investments, pricing inputs are not readily observable. Asset valuations are developed by the fund manager. These valuations are based on the application of public market multiples to private company cash flows, market transactions that provide valuation information for comparable companies, and other methods. The fair value recorded by the Plan is calculated using NAV.
At December 31, 2019 and December 31, 2018, the pension plan assets measured at fair value on a recurring basis were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
Quoted Prices in
Active Markets
for Identical
Inputs (Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
Plan assets at fair value:
|
|
|
|
|
|
|
|
Temporary cash investments
|
$
|
38,388
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38,388
|
|
Corporate stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total plan net assets at fair value
|
$
|
38,388
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38,388
|
|
Plan assets at NAV:
|
|
|
|
|
|
|
|
Leveraged inflation-linked gilt funds
|
|
|
|
|
|
|
|
|
123,637
|
|
Corporate bonds
|
|
|
|
|
|
|
|
|
97,638
|
|
Corporate stock
|
|
|
|
|
|
|
|
|
234,612
|
|
Secured income asset funds
|
|
|
|
|
|
|
|
110,121
|
|
Total plan assets at NAV
|
|
|
|
|
|
|
566,008
|
|
Total plan assets
|
|
|
|
|
|
|
$
|
604,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
Quoted Prices in
Active Markets
for Identical
Inputs (Level 1)
|
|
Significant Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
Plan assets at fair value:
|
|
|
|
|
|
|
|
Temporary cash investments
|
$
|
61,040
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
61,040
|
|
Corporate stock
|
506
|
|
|
—
|
|
|
—
|
|
|
506
|
|
Total plan net assets at fair value
|
$
|
61,546
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
61,546
|
|
Plan assets at NAV:
|
|
|
|
|
|
|
|
Leveraged inflation-linked gilt funds
|
|
|
|
|
|
|
|
122,711
|
|
Corporate bonds
|
|
|
|
|
|
|
|
80,454
|
|
Corporate stock
|
|
|
|
|
|
|
|
183,750
|
|
Secured income asset funds
|
|
|
|
|
|
|
|
55,075
|
|
Total plan assets at NAV
|
|
|
|
|
|
|
441,990
|
|
Total plan assets
|
|
|
|
|
|
|
$
|
503,536
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(20) LEASES
The Company has operating leases for plant locations, corporate offices, sales offices, and certain equipment. Outstanding leases at December 28, 2019 have remaining lease terms of one year to fifteen years, some of which include options to extend leases for up to five years. The Company does not have any financing leases. The Company elected practical expedients not to reassess whether existing contracts are or contain leases, to not reassess the lease classification of any existing leases, to not reassess initial direct costs for any existing leases, to use hindsight in determining the lease term and in assessing impairment of the right-of-use asset, and to not separate lease and non-lease components for all classes of underlying assets.
The Company determines if an arrangement is a lease at inception. Operating leases are included in other assets, accrued expenses, and lease liabilities in our consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make future lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company used its collateralized incremental borrowing rate in determining the present value of future lease payments. The operating lease ROU asset also includes any lease payments made and excludes any lease incentives and impairments. Some of the Company's facility leases include options to extend the lease when it is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.
Lease cost and other information related to the Company's operating leases are as follows:
|
|
|
|
|
|
Fifty-Two weeks ended December 28, 2019
|
Operating lease cost
|
$
|
24,073
|
|
|
|
Operating cash outflows from operating leases
|
$
|
24,835
|
|
ROU assets obtained in exchange for lease obligations
|
$
|
13,474
|
|
Weighted average remaining lease term
|
10 years
|
|
Weighted average discount rate
|
3.8
|
%
|
Operating lease cost includes approximately $2,500 for short-term lease costs and approximately $2,000 for variable lease payments.
As part of the adoption of ASC 842, the Company evaluated at the historical and projected cash flow generation of the operations at each of its long-term leased facilities. One of those facilities, a galvanizing operation in Melbourne, Australia, will not generate sufficient cash flows on an undiscounted cash flow basis to recover the carrying value of the right of use asset. The Company then estimated a value for this operation using a discounted cash flow model. The result was an impairment of the right-of-use lease asset of approximately $12,063. The after-tax balance of $8,444 was recorded as a reduction to retained earnings for the transition adjustment of adoption.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(20) LEASES (Continued)
Supplemental balance sheet information related to operating leases as of December 28, 2019 is as follows:
|
|
|
|
|
|
|
Classification
|
December 28, 2019
|
Operating lease assets
|
Other assets
|
$
|
86,998
|
|
|
|
|
Operating lease short-term liabilities
|
Accrued expenses
|
15,226
|
|
Operating lease long-term liabilities
|
Operating lease liabilities
|
85,817
|
|
Total lease liabilities
|
|
$
|
101,043
|
|
Minimum lease payments under operating leases expiring subsequent to December 28, 2019 are as follows:
|
|
|
|
|
Fiscal year ending:
|
|
2020
|
$
|
18,744
|
|
2021
|
15,504
|
|
2022
|
12,706
|
|
2023
|
9,731
|
|
2024
|
8,453
|
|
Subsequent
|
58,015
|
|
Total minimum lease payments
|
$
|
123,153
|
|
Less: Interest
|
$
|
22,110
|
|
Present value of minimum lease payments
|
$
|
101,043
|
|
The below table as of December 29, 2018 is carried forward, including certain amounts that were historically included in the table as a result of the historical lease term conclusions but were not included in the initial ROU asset and lease liability measurement as of December 30, 2018 due to the Company's election of the hindsight practical expedient. The Company also determined one of its leases with escalating rent payments should be expensed using the straight-line method over a longer term and the result was an additional reduction to retained earnings of $442 for a transition adjustment. Minimum lease payments for operating leases under ASC 840 expiring subsequent to December 29, 2018 are as follows:
|
|
|
|
|
Fiscal year ending:
|
|
2019
|
$
|
18,757
|
|
2020
|
16,830
|
|
2021
|
13,992
|
|
2022
|
11,932
|
|
2023
|
8,866
|
|
Subsequent
|
76,438
|
|
Total minimum lease payments
|
$
|
146,815
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(21) BUSINESS SEGMENTS
The Company has four reportable segments based on its management structure. Each segment is global in nature with a manager responsible for segment operational performance and the allocation of capital within the segment. 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.
Reportable segments are as follows:
ENGINEERED SUPPORT STRUCTURES: This segment consists of the manufacture and distribution of engineered metal and composite poles, towers, and components for global lighting, traffic, and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products;
UTILITY SUPPORT STRUCTURES: This segment consists of the manufacture of engineered steel and concrete structures for global utility transmission, distribution, substations, and renewable energy generation equipment;
COATINGS: This segment consists of galvanizing, painting, and anodizing services to preserve and protect metal products; and
IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment, parts, services, tubular products, water management solutions, and technology for precision agriculture.
In addition to these four reportable segments, the Company had other businesses and activities that individually are not more than 10% of consolidated sales, operating income or assets. This includes the manufacture of forged steel grinding media for the mining industry and is reported in the "Other" category until its divestiture in 2018.
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 LIFO expense, interest expense, non-operating income and deductions, or income taxes to its business segments.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(21) BUSINESS SEGMENTS (Continued)
Summary by Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
SALES:
|
|
|
|
|
|
Engineered Support Structures segment:
|
|
|
|
|
|
Lighting, Traffic, and Highway Safety Products
|
$
|
708,853
|
|
|
$
|
706,582
|
|
|
$
|
633,178
|
|
Communication Products
|
188,912
|
|
|
149,817
|
|
|
171,718
|
|
Access Systems
|
114,525
|
|
|
130,481
|
|
|
133,206
|
|
Engineered Support Structures segment
|
1,012,290
|
|
|
986,880
|
|
|
938,102
|
|
Utility Support Structures segment:
|
|
|
|
|
|
Steel
|
630,892
|
|
|
637,979
|
|
|
658,604
|
|
Concrete
|
122,032
|
|
|
111,875
|
|
|
99,738
|
|
Engineered Solar Tracker Solutions
|
47,450
|
|
|
16,760
|
|
|
—
|
|
Offshore and Other Complex Steel Structures
|
90,206
|
|
|
92,559
|
|
|
100,773
|
|
Utility Support Structures segment
|
890,580
|
|
|
859,173
|
|
|
859,115
|
|
Coatings segment
|
367,835
|
|
|
353,351
|
|
|
318,891
|
|
Irrigation segment:
|
|
|
|
|
|
North America
|
378,613
|
|
|
386,683
|
|
|
369,832
|
|
International
|
206,583
|
|
|
246,983
|
|
|
282,598
|
|
Irrigation segment
|
585,196
|
|
|
633,666
|
|
|
652,430
|
|
Other
|
—
|
|
|
23,080
|
|
|
76,300
|
|
Total
|
2,855,901
|
|
|
2,856,150
|
|
|
2,844,838
|
|
INTERSEGMENT SALES:
|
|
|
|
|
|
Engineered Support Structures
|
10,214
|
|
|
19,522
|
|
|
25,862
|
|
Utility Support Structures
|
4,972
|
|
|
3,967
|
|
|
2,871
|
|
Coatings
|
67,195
|
|
|
66,612
|
|
|
62,080
|
|
Irrigation
|
6,544
|
|
|
8,905
|
|
|
8,058
|
|
Total
|
88,925
|
|
|
99,006
|
|
|
98,871
|
|
NET SALES:
|
|
|
|
|
|
Engineered Support Structures segment
|
1,002,076
|
|
|
967,358
|
|
|
912,240
|
|
Utility Support Structures segment
|
885,608
|
|
|
855,206
|
|
|
856,244
|
|
Coatings segment
|
300,640
|
|
|
286,739
|
|
|
256,811
|
|
Irrigation segment
|
578,652
|
|
|
624,761
|
|
|
644,372
|
|
Other
|
—
|
|
|
23,080
|
|
|
76,300
|
|
Total
|
$
|
2,766,976
|
|
|
$
|
2,757,144
|
|
|
$
|
2,745,967
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(21) BUSINESS SEGMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
OPERATING INCOME (LOSS):
|
|
|
|
|
|
Engineered Support Structures
|
$
|
65,627
|
|
|
$
|
34,776
|
|
|
$
|
62,960
|
|
Utility Support Structures
|
87,788
|
|
|
64,766
|
|
|
97,853
|
|
Coatings
|
51,008
|
|
|
55,325
|
|
|
50,179
|
|
Irrigation
|
71,687
|
|
|
97,722
|
|
|
101,498
|
|
Other
|
—
|
|
|
(913
|
)
|
|
2,134
|
|
Adjustment to LIFO inventory valuation method
|
9,815
|
|
|
(9,892
|
)
|
|
(5,680
|
)
|
Corporate
|
(48,205
|
)
|
|
(39,504
|
)
|
|
(41,864
|
)
|
Total
|
237,720
|
|
|
202,280
|
|
|
267,080
|
|
Interest expense, net
|
(36,211
|
)
|
|
(39,569
|
)
|
|
(39,908
|
)
|
Costs associated with refinancing of debt
|
—
|
|
|
(14,820
|
)
|
|
—
|
|
Loss from divestiture of grinding media business
|
—
|
|
|
(6,084
|
)
|
|
—
|
|
Other
|
8,164
|
|
|
1,634
|
|
|
1,292
|
|
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries
|
$
|
209,673
|
|
|
$
|
143,441
|
|
|
$
|
228,464
|
|
|
|
|
|
|
|
TOTAL ASSETS:
|
|
|
|
|
|
Engineered Support Structures
|
$
|
943,841
|
|
|
$
|
867,735
|
|
|
$
|
846,881
|
|
Utility Support Structures
|
742,194
|
|
|
700,915
|
|
|
597,231
|
|
Coatings
|
363,070
|
|
|
294,951
|
|
|
288,890
|
|
Irrigation
|
347,887
|
|
|
347,894
|
|
|
369,798
|
|
Other
|
—
|
|
|
—
|
|
|
68,934
|
|
Corporate
|
366,419
|
|
|
318,779
|
|
|
430,516
|
|
Total
|
$
|
2,763,411
|
|
|
$
|
2,530,274
|
|
|
$
|
2,602,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL EXPENDITURES:
|
|
|
|
|
|
Engineered Support Structures
|
$
|
25,344
|
|
|
$
|
26,783
|
|
|
$
|
16,433
|
|
Utility Support Structures
|
26,306
|
|
|
17,442
|
|
|
14,012
|
|
Coatings
|
23,610
|
|
|
10,320
|
|
|
11,080
|
|
Irrigation
|
15,644
|
|
|
7,249
|
|
|
7,055
|
|
Other
|
—
|
|
|
7
|
|
|
2,376
|
|
Corporate
|
6,521
|
|
|
10,184
|
|
|
4,310
|
|
Total
|
$
|
97,425
|
|
|
$
|
71,985
|
|
|
$
|
55,266
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(21) BUSINESS SEGMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
DEPRECIATION AND AMORTIZATION:
|
|
|
|
|
|
Engineered Support Structures
|
$
|
26,280
|
|
|
$
|
27,274
|
|
|
$
|
27,637
|
|
Utility Support Structures
|
23,779
|
|
|
23,618
|
|
|
25,079
|
|
Coatings
|
15,907
|
|
|
15,956
|
|
|
15,115
|
|
Irrigation
|
10,943
|
|
|
11,335
|
|
|
11,173
|
|
Other
|
—
|
|
|
775
|
|
|
2,486
|
|
Corporate
|
5,355
|
|
|
3,869
|
|
|
3,467
|
|
Total
|
$
|
82,264
|
|
|
$
|
82,827
|
|
|
$
|
84,957
|
|
Summary by Geographical Area by Location of Valmont Facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
NET SALES:
|
|
|
|
|
|
United States
|
$
|
1,872,840
|
|
|
$
|
1,771,390
|
|
|
$
|
1,702,826
|
|
Australia
|
255,271
|
|
|
325,553
|
|
|
356,959
|
|
Denmark
|
90,206
|
|
|
92,559
|
|
|
100,773
|
|
Other
|
548,659
|
|
|
567,642
|
|
|
585,409
|
|
Total
|
$
|
2,766,976
|
|
|
$
|
2,757,144
|
|
|
$
|
2,745,967
|
|
|
|
|
|
|
|
LONG-LIVED ASSETS:
|
|
|
|
|
|
United States
|
$
|
753,545
|
|
|
$
|
624,143
|
|
|
$
|
544,724
|
|
Australia
|
193,029
|
|
|
168,438
|
|
|
227,483
|
|
Denmark
|
58,435
|
|
|
64,497
|
|
|
90,372
|
|
Other
|
369,983
|
|
|
332,556
|
|
|
267,106
|
|
Total
|
$
|
1,374,992
|
|
|
$
|
1,189,634
|
|
|
$
|
1,129,685
|
|
No single customer accounted for more than 10% of net sales in 2019, 2018, or 2017. Net sales by geographical area are based on the location of the facility producing the sales and do not include sales to other operating units of the company. Australia accounted for approximately 9% of the Company's net sales in 2019; no other foreign country accounted for more than 4% of the Company’s net sales.
Operating income by business segment are based on net sales less identifiable operating expenses and allocations and includes profits recorded on sales to other operating units of the company. Long-lived assets consist of property, plant and equipment, net of depreciation, goodwill, other intangible assets and other assets. Long-lived assets by geographical area are based on location of facilities.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
The Company has two tranches of senior unsecured notes. All of the senior notes are guaranteed, jointly, severally, fully and unconditionally (subject to certain customary release provisions, including sale of the subsidiary guarantor, or sale of all or substantially all of its assets) by certain of the Company’s current and future direct and indirect domestic and foreign subsidiaries (collectively the “Guarantors”), 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. The Company is the issuer.
Consolidated financial information for the Company ("Parent"), the Guarantor subsidiaries and the Non-Guarantor subsidiaries is as follows:
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Year ended December 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
Net sales
|
$
|
1,207,865
|
|
|
$
|
563,935
|
|
|
$
|
1,242,812
|
|
|
$
|
(247,636
|
)
|
|
$
|
2,766,976
|
|
Cost of sales
|
887,403
|
|
|
420,287
|
|
|
1,014,071
|
|
|
(247,281
|
)
|
|
2,074,480
|
|
Gross profit
|
320,462
|
|
|
143,648
|
|
|
228,741
|
|
|
(355
|
)
|
|
692,496
|
|
Selling, general and administrative expenses
|
236,574
|
|
|
38,732
|
|
|
179,470
|
|
|
—
|
|
|
454,776
|
|
Operating income
|
83,888
|
|
|
104,916
|
|
|
49,271
|
|
|
(355
|
)
|
|
237,720
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest expense
|
(37,984
|
)
|
|
(11,150
|
)
|
|
(2,249
|
)
|
|
11,230
|
|
|
(40,153
|
)
|
Interest income
|
1,676
|
|
|
37
|
|
|
13,459
|
|
|
(11,230
|
)
|
|
3,942
|
|
Other
|
7,805
|
|
|
44
|
|
|
315
|
|
|
—
|
|
|
8,164
|
|
|
(28,503
|
)
|
|
(11,069
|
)
|
|
11,525
|
|
|
—
|
|
|
(28,047
|
)
|
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries
|
55,385
|
|
|
93,847
|
|
|
60,796
|
|
|
(355
|
)
|
|
209,673
|
|
Income tax expense (benefit):
|
|
|
|
|
|
|
|
|
|
Current
|
8,918
|
|
|
26,166
|
|
|
11,181
|
|
|
2
|
|
|
46,267
|
|
Deferred
|
(3,120
|
)
|
|
—
|
|
|
7,060
|
|
|
—
|
|
|
3,940
|
|
|
5,798
|
|
|
26,166
|
|
|
18,241
|
|
|
2
|
|
|
50,207
|
|
Earnings before equity in earnings of nonconsolidated subsidiaries
|
49,587
|
|
|
67,681
|
|
|
42,555
|
|
|
(357
|
)
|
|
159,466
|
|
Equity in earnings of nonconsolidated subsidiaries
|
104,182
|
|
|
7,900
|
|
|
—
|
|
|
(112,082
|
)
|
|
—
|
|
Net earnings
|
153,769
|
|
|
75,581
|
|
|
42,555
|
|
|
(112,439
|
)
|
|
159,466
|
|
Less: Earnings attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(5,697
|
)
|
|
—
|
|
|
(5,697
|
)
|
Net earnings attributable to Valmont Industries, Inc
|
$
|
153,769
|
|
|
$
|
75,581
|
|
|
$
|
36,858
|
|
|
$
|
(112,439
|
)
|
|
$
|
153,769
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Year ended December 29, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
Net sales
|
$
|
1,192,134
|
|
|
$
|
522,366
|
|
|
$
|
1,303,323
|
|
|
$
|
(260,679
|
)
|
|
$
|
2,757,144
|
|
Cost of sales
|
906,646
|
|
|
399,451
|
|
|
1,055,215
|
|
|
(262,448
|
)
|
|
2,098,864
|
|
Gross profit
|
285,488
|
|
|
122,915
|
|
|
248,108
|
|
|
1,769
|
|
|
658,280
|
|
Selling, general and administrative expenses
|
192,343
|
|
|
51,127
|
|
|
212,530
|
|
|
—
|
|
|
456,000
|
|
Operating income
|
93,145
|
|
|
71,788
|
|
|
35,578
|
|
|
1,769
|
|
|
202,280
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest expense
|
(42,524
|
)
|
|
(14,815
|
)
|
|
(1,713
|
)
|
|
14,815
|
|
|
(44,237
|
)
|
Interest income
|
791
|
|
|
82
|
|
|
18,610
|
|
|
(14,815
|
)
|
|
4,668
|
|
Other
|
(17,602
|
)
|
|
59
|
|
|
(1,727
|
)
|
|
—
|
|
|
(19,270
|
)
|
|
(59,335
|
)
|
|
(14,674
|
)
|
|
15,170
|
|
|
—
|
|
|
(58,839
|
)
|
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries
|
33,810
|
|
|
57,114
|
|
|
50,748
|
|
|
1,769
|
|
|
143,441
|
|
Income tax expense (benefit):
|
|
|
|
|
|
|
|
|
|
Current
|
6,310
|
|
|
14,948
|
|
|
23,290
|
|
|
246
|
|
|
44,794
|
|
Deferred
|
1,532
|
|
|
1,791
|
|
|
(4,982
|
)
|
|
—
|
|
|
(1,659
|
)
|
|
7,842
|
|
|
16,739
|
|
|
18,308
|
|
|
246
|
|
|
43,135
|
|
Earnings before equity in earnings of nonconsolidated subsidiaries
|
25,968
|
|
|
40,375
|
|
|
32,440
|
|
|
1,523
|
|
|
100,306
|
|
Equity in earnings of nonconsolidated subsidiaries
|
68,383
|
|
|
37,304
|
|
|
—
|
|
|
(105,687
|
)
|
|
—
|
|
Net earnings
|
94,351
|
|
|
77,679
|
|
|
32,440
|
|
|
(104,164
|
)
|
|
100,306
|
|
Less: Earnings attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(5,955
|
)
|
|
—
|
|
|
(5,955
|
)
|
Net earnings attributable to Valmont Industries, Inc
|
$
|
94,351
|
|
|
$
|
77,679
|
|
|
$
|
26,485
|
|
|
$
|
(104,164
|
)
|
|
$
|
94,351
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Year ended December 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
Net sales
|
$
|
1,200,181
|
|
|
$
|
485,448
|
|
|
$
|
1,312,214
|
|
|
$
|
(251,876
|
)
|
|
$
|
2,745,967
|
|
Cost of sales
|
898,799
|
|
|
375,383
|
|
|
1,042,199
|
|
|
(252,182
|
)
|
|
2,064,199
|
|
Gross profit
|
301,382
|
|
|
110,065
|
|
|
270,015
|
|
|
306
|
|
|
681,768
|
|
Selling, general and administrative expenses
|
192,182
|
|
|
47,955
|
|
|
174,551
|
|
|
—
|
|
|
414,688
|
|
Operating income
|
109,200
|
|
|
62,110
|
|
|
95,464
|
|
|
306
|
|
|
267,080
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest expense
|
(43,642
|
)
|
|
(13,866
|
)
|
|
(1,003
|
)
|
|
13,866
|
|
|
(44,645
|
)
|
Interest income
|
838
|
|
|
42
|
|
|
17,723
|
|
|
(13,866
|
)
|
|
4,737
|
|
Other
|
5,681
|
|
|
58
|
|
|
(4,447
|
)
|
|
—
|
|
|
1,292
|
|
|
(37,123
|
)
|
|
(13,766
|
)
|
|
12,273
|
|
|
—
|
|
|
(38,616
|
)
|
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries
|
72,077
|
|
|
48,344
|
|
|
107,737
|
|
|
306
|
|
|
228,464
|
|
Income tax expense (benefit):
|
|
|
|
|
|
|
|
|
|
Current
|
29,407
|
|
|
17,928
|
|
|
18,920
|
|
|
135
|
|
|
66,390
|
|
Deferred
|
10,307
|
|
|
—
|
|
|
29,448
|
|
|
—
|
|
|
39,755
|
|
|
39,714
|
|
|
17,928
|
|
|
48,368
|
|
|
135
|
|
|
106,145
|
|
Earnings before equity in earnings of nonconsolidated subsidiaries
|
32,363
|
|
|
30,416
|
|
|
59,369
|
|
|
171
|
|
|
122,319
|
|
Equity in earnings of nonconsolidated subsidiaries
|
83,877
|
|
|
22,146
|
|
|
—
|
|
|
(106,023
|
)
|
|
—
|
|
Net earnings
|
116,240
|
|
|
52,562
|
|
|
59,369
|
|
|
(105,852
|
)
|
|
122,319
|
|
Less: Earnings attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(6,079
|
)
|
|
—
|
|
|
(6,079
|
)
|
Net earnings attributable to Valmont Industries, Inc
|
$
|
116,240
|
|
|
$
|
52,562
|
|
|
$
|
53,290
|
|
|
$
|
(105,852
|
)
|
|
$
|
116,240
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Year ended December 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
Net earnings
|
$
|
153,769
|
|
|
$
|
75,581
|
|
|
$
|
42,555
|
|
|
$
|
(112,439
|
)
|
|
$
|
159,466
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
|
|
|
|
Unrealized translation gains (losses)
|
—
|
|
|
(1,564
|
)
|
|
(942
|
)
|
|
—
|
|
|
(2,506
|
)
|
Realized loss on divestiture of grinding media business recorded in earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Gain (loss) on hedging activities
|
2,905
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,905
|
|
Actuarial gain (loss) in defined benefit pension plan liability
|
—
|
|
|
—
|
|
|
(10,828
|
)
|
|
—
|
|
|
(10,828
|
)
|
Equity in other comprehensive income
|
(13,142
|
)
|
|
—
|
|
|
—
|
|
|
13,142
|
|
|
—
|
|
Other comprehensive income (loss)
|
(10,237
|
)
|
|
(1,564
|
)
|
|
(11,770
|
)
|
|
13,142
|
|
|
(10,429
|
)
|
Comprehensive income (loss)
|
143,532
|
|
|
74,017
|
|
|
30,785
|
|
|
(99,297
|
)
|
|
149,037
|
|
Comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(5,505
|
)
|
|
—
|
|
|
(5,505
|
)
|
Comprehensive income (loss) attributable to Valmont Industries, Inc.
|
$
|
143,532
|
|
|
$
|
74,017
|
|
|
$
|
25,280
|
|
|
$
|
(99,297
|
)
|
|
$
|
143,532
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Year ended December 29, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
Net earnings
|
$
|
94,351
|
|
|
$
|
77,679
|
|
|
$
|
32,440
|
|
|
$
|
(104,164
|
)
|
|
$
|
100,306
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
|
|
|
|
Unrealized translation gains (losses)
|
—
|
|
|
(6,509
|
)
|
|
(58,927
|
)
|
|
—
|
|
|
(65,436
|
)
|
Realized loss on divestiture of grinding media business recorded in earnings
|
—
|
|
|
—
|
|
|
9,203
|
|
|
—
|
|
|
9,203
|
|
Gain (loss) on hedging activities
|
4,814
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,814
|
|
Actuarial gain (loss) in defined benefit pension plan liability
|
—
|
|
|
—
|
|
|
29,885
|
|
|
—
|
|
|
29,885
|
|
Equity in other comprehensive income
|
(28,977
|
)
|
|
—
|
|
|
—
|
|
|
28,977
|
|
|
—
|
|
Other comprehensive income (loss)
|
(24,163
|
)
|
|
(6,509
|
)
|
|
(19,839
|
)
|
|
28,977
|
|
|
(21,534
|
)
|
Comprehensive income (loss)
|
70,188
|
|
|
71,170
|
|
|
12,601
|
|
|
(75,187
|
)
|
|
78,772
|
|
Comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(8,584
|
)
|
|
—
|
|
|
(8,584
|
)
|
Comprehensive income (loss) attributable to Valmont Industries, Inc.
|
$
|
70,188
|
|
|
$
|
71,170
|
|
|
$
|
4,017
|
|
|
$
|
(75,187
|
)
|
|
$
|
70,188
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Year ended December 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
Net earnings
|
$
|
116,240
|
|
|
$
|
52,562
|
|
|
$
|
59,369
|
|
|
$
|
(105,852
|
)
|
|
$
|
122,319
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments:
|
|
|
|
|
|
|
|
|
|
Unrealized translation gains (losses)
|
—
|
|
|
138,795
|
|
|
(59,516
|
)
|
|
—
|
|
|
79,279
|
|
Gain (loss) on hedging activities
|
(1,621
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,621
|
)
|
Actuarial gain (loss) in defined benefit pension plan liability
|
—
|
|
|
—
|
|
|
(10,871
|
)
|
|
—
|
|
|
(10,871
|
)
|
Equity in other comprehensive income
|
68,958
|
|
|
—
|
|
|
—
|
|
|
(68,958
|
)
|
|
—
|
|
Other comprehensive income (loss)
|
67,337
|
|
|
138,795
|
|
|
(70,387
|
)
|
|
(68,958
|
)
|
|
66,787
|
|
Comprehensive income
|
183,577
|
|
|
191,357
|
|
|
(11,018
|
)
|
|
(174,810
|
)
|
|
189,106
|
|
Comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(5,529
|
)
|
|
—
|
|
|
(5,529
|
)
|
Comprehensive income attributable to Valmont Industries, Inc.
|
$
|
183,577
|
|
|
$
|
191,357
|
|
|
$
|
(16,547
|
)
|
|
$
|
(174,810
|
)
|
|
$
|
183,577
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED BALANCE SHEETS
December 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
182,453
|
|
|
$
|
6,169
|
|
|
$
|
164,920
|
|
|
$
|
—
|
|
|
$
|
353,542
|
|
Receivables, net
|
134,972
|
|
|
94,090
|
|
|
250,938
|
|
|
—
|
|
|
480,000
|
|
Inventories
|
130,686
|
|
|
45,673
|
|
|
200,963
|
|
|
(2,757
|
)
|
|
374,565
|
|
Contra asset - costs and profits in excess of billings
|
65,528
|
|
|
47,402
|
|
|
28,392
|
|
|
—
|
|
|
141,322
|
|
Prepaid expenses, restricted cash, and other assets
|
13,820
|
|
|
717
|
|
|
17,506
|
|
|
—
|
|
|
32,043
|
|
Refundable income taxes
|
6,947
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,947
|
|
Total current assets
|
534,406
|
|
|
194,051
|
|
|
662,719
|
|
|
(2,757
|
)
|
|
1,388,419
|
|
Property, plant and equipment, at cost
|
635,322
|
|
|
175,862
|
|
|
434,077
|
|
|
—
|
|
|
1,245,261
|
|
Less accumulated depreciation and amortization
|
413,054
|
|
|
90,384
|
|
|
183,694
|
|
|
—
|
|
|
687,132
|
|
Net property, plant and equipment
|
222,268
|
|
|
85,478
|
|
|
250,383
|
|
|
—
|
|
|
558,129
|
|
Goodwill
|
20,108
|
|
|
141,581
|
|
|
267,175
|
|
|
—
|
|
|
428,864
|
|
Other intangible assets
|
763
|
|
|
43,933
|
|
|
131,046
|
|
|
—
|
|
|
175,742
|
|
Investment in subsidiaries and intercompany accounts
|
1,339,206
|
|
|
1,150,458
|
|
|
908,212
|
|
|
(3,397,876
|
)
|
|
—
|
|
Other assets
|
88,549
|
|
|
4,323
|
|
|
119,385
|
|
|
—
|
|
|
212,257
|
|
Total assets
|
$
|
2,205,300
|
|
|
$
|
1,619,824
|
|
|
$
|
2,338,920
|
|
|
$
|
(3,400,633
|
)
|
|
$
|
2,763,411
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Current installments of long-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
760
|
|
|
$
|
—
|
|
|
$
|
760
|
|
Notes payable to banks
|
—
|
|
|
—
|
|
|
21,774
|
|
|
—
|
|
|
21,774
|
|
Accounts payable
|
68,677
|
|
|
21,464
|
|
|
107,816
|
|
|
—
|
|
|
197,957
|
|
Accrued employee compensation and benefits
|
45,294
|
|
|
6,344
|
|
|
31,890
|
|
|
—
|
|
|
83,528
|
|
Accrued expenses
|
147,498
|
|
|
11,353
|
|
|
42,830
|
|
|
—
|
|
|
201,681
|
|
Dividends payable
|
8,079
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,079
|
|
Total current liabilities
|
269,548
|
|
|
39,161
|
|
|
205,070
|
|
|
—
|
|
|
513,779
|
|
Deferred income taxes
|
16,925
|
|
|
—
|
|
|
31,030
|
|
|
—
|
|
|
47,955
|
|
Long-term debt, excluding current installments
|
734,571
|
|
|
123,560
|
|
|
30,373
|
|
|
(123,560
|
)
|
|
764,944
|
|
Defined benefit pension liability
|
—
|
|
|
—
|
|
|
140,007
|
|
|
—
|
|
|
140,007
|
|
Other noncurrent liabilities
|
72,772
|
|
|
3,168
|
|
|
63,895
|
|
|
—
|
|
|
139,835
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock of $1 par value
|
27,900
|
|
|
457,950
|
|
|
648,957
|
|
|
(1,106,907
|
)
|
|
27,900
|
|
Additional paid-in capital
|
—
|
|
|
162,906
|
|
|
1,107,536
|
|
|
(1,270,442
|
)
|
|
—
|
|
Retained earnings
|
2,140,948
|
|
|
753,652
|
|
|
400,933
|
|
|
(1,154,585
|
)
|
|
2,140,948
|
|
Accumulated other comprehensive income (loss)
|
(313,422
|
)
|
|
79,427
|
|
|
(334,288
|
)
|
|
254,861
|
|
|
(313,422
|
)
|
Treasury stock
|
(743,942
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(743,942
|
)
|
Total Valmont Industries, Inc. shareholders’ equity
|
1,111,484
|
|
|
1,453,935
|
|
|
1,823,138
|
|
|
(3,277,073
|
)
|
|
1,111,484
|
|
Noncontrolling interest in consolidated subsidiaries
|
—
|
|
|
—
|
|
|
45,407
|
|
|
—
|
|
|
45,407
|
|
Total shareholders’ equity
|
1,111,484
|
|
|
1,453,935
|
|
|
1,868,545
|
|
|
(3,277,073
|
)
|
|
1,156,891
|
|
Total liabilities and shareholders’ equity
|
$
|
2,205,300
|
|
|
$
|
1,619,824
|
|
|
$
|
2,338,920
|
|
|
$
|
(3,400,633
|
)
|
|
$
|
2,763,411
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED BALANCE SHEETS
December 29, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
104,256
|
|
|
$
|
5,518
|
|
|
$
|
203,436
|
|
|
$
|
—
|
|
|
$
|
313,210
|
|
Receivables, net
|
134,943
|
|
|
75,204
|
|
|
273,816
|
|
|
—
|
|
|
483,963
|
|
Inventories
|
138,158
|
|
|
37,019
|
|
|
210,791
|
|
|
(2,402
|
)
|
|
383,566
|
|
Contra asset - costs and profits in excess of billings
|
50,271
|
|
|
35,200
|
|
|
27,054
|
|
|
—
|
|
|
112,525
|
|
Prepaid expenses, restricted cash, and other assets
|
21,858
|
|
|
746
|
|
|
20,196
|
|
|
—
|
|
|
42,800
|
|
Refundable income taxes
|
4,576
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,576
|
|
Total current assets
|
454,062
|
|
|
153,687
|
|
|
735,293
|
|
|
(2,402
|
)
|
|
1,340,640
|
|
Property, plant and equipment, at cost
|
579,046
|
|
|
172,050
|
|
|
409,769
|
|
|
—
|
|
|
1,160,865
|
|
Less accumulated depreciation and amortization
|
390,438
|
|
|
93,374
|
|
|
163,061
|
|
|
—
|
|
|
646,873
|
|
Net property, plant and equipment
|
188,608
|
|
|
78,676
|
|
|
246,708
|
|
|
—
|
|
|
513,992
|
|
Goodwill
|
20,108
|
|
|
110,562
|
|
|
254,537
|
|
|
—
|
|
|
385,207
|
|
Other intangible assets
|
76
|
|
|
27,452
|
|
|
148,428
|
|
|
—
|
|
|
175,956
|
|
Investment in subsidiaries and intercompany accounts
|
1,286,545
|
|
|
1,161,612
|
|
|
932,982
|
|
|
(3,381,139
|
)
|
|
—
|
|
Other assets
|
47,674
|
|
|
—
|
|
|
66,805
|
|
|
—
|
|
|
114,479
|
|
Total assets
|
$
|
1,997,073
|
|
|
$
|
1,531,989
|
|
|
$
|
2,384,753
|
|
|
$
|
(3,383,541
|
)
|
|
$
|
2,530,274
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Current installments of long-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
779
|
|
|
$
|
—
|
|
|
$
|
779
|
|
Notes payable to banks
|
—
|
|
|
—
|
|
|
10,678
|
|
|
—
|
|
|
10,678
|
|
Accounts payable
|
68,304
|
|
|
21,081
|
|
|
128,730
|
|
|
—
|
|
|
218,115
|
|
Accrued employee compensation and benefits
|
41,418
|
|
|
7,186
|
|
|
30,687
|
|
|
—
|
|
|
79,291
|
|
Accrued expenses
|
25,936
|
|
|
10,132
|
|
|
55,874
|
|
|
—
|
|
|
91,942
|
|
Dividends payable
|
8,230
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,230
|
|
Total current liabilities
|
143,888
|
|
|
38,399
|
|
|
226,748
|
|
|
—
|
|
|
409,035
|
|
Deferred income taxes
|
14,376
|
|
|
—
|
|
|
29,113
|
|
|
—
|
|
|
43,489
|
|
Long-term debt, excluding current installments
|
733,964
|
|
|
166,729
|
|
|
7,858
|
|
|
(166,729
|
)
|
|
741,822
|
|
Defined benefit pension liability
|
—
|
|
|
—
|
|
|
143,904
|
|
|
—
|
|
|
143,904
|
|
Other noncurrent liabilities
|
45,083
|
|
|
620
|
|
|
10,798
|
|
|
—
|
|
|
56,501
|
|
Shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
Common stock of $1 par value
|
27,900
|
|
|
457,950
|
|
|
648,682
|
|
|
(1,106,632
|
)
|
|
27,900
|
|
Additional paid-in capital
|
—
|
|
|
162,906
|
|
|
1,107,536
|
|
|
(1,270,442
|
)
|
|
—
|
|
Retained earnings
|
2,027,596
|
|
|
624,394
|
|
|
467,699
|
|
|
(1,092,093
|
)
|
|
2,027,596
|
|
Accumulated other comprehensive income (loss)
|
(303,185
|
)
|
|
80,991
|
|
|
(333,346
|
)
|
|
252,355
|
|
|
(303,185
|
)
|
Treasury stock
|
(692,549
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(692,549
|
)
|
Total Valmont Industries, Inc. shareholders’ equity
|
1,059,762
|
|
|
1,326,241
|
|
|
1,890,571
|
|
|
(3,216,812
|
)
|
|
1,059,762
|
|
Noncontrolling interest in consolidated subsidiaries
|
—
|
|
|
—
|
|
|
75,761
|
|
|
—
|
|
|
75,761
|
|
Total shareholders’ equity
|
1,059,762
|
|
|
1,326,241
|
|
|
1,966,332
|
|
|
(3,216,812
|
)
|
|
1,135,523
|
|
Total liabilities and shareholders’ equity
|
$
|
1,997,073
|
|
|
$
|
1,531,989
|
|
|
$
|
2,384,753
|
|
|
$
|
(3,383,541
|
)
|
|
$
|
2,530,274
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year ended December 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
153,769
|
|
|
$
|
75,581
|
|
|
$
|
42,555
|
|
|
$
|
(112,439
|
)
|
|
$
|
159,466
|
|
Adjustments to reconcile net earnings to net cash flows from operations:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
26,734
|
|
|
13,518
|
|
|
42,012
|
|
|
—
|
|
|
82,264
|
|
Noncash loss on trading securities
|
—
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|
(172
|
)
|
Contribution to defined benefit pension plan
|
—
|
|
|
—
|
|
|
(18,461
|
)
|
|
—
|
|
|
(18,461
|
)
|
Stock-based compensation
|
11,587
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,587
|
|
Defined benefit pension plan (benefit)
|
—
|
|
|
—
|
|
|
(513
|
)
|
|
—
|
|
|
(513
|
)
|
(Gain) loss on sale of property, plant and equipment
|
133
|
|
|
240
|
|
|
(2,886
|
)
|
|
—
|
|
|
(2,513
|
)
|
Equity in earnings in nonconsolidated subsidiaries
|
(104,182
|
)
|
|
(7,900
|
)
|
|
—
|
|
|
112,082
|
|
|
—
|
|
Deferred income taxes
|
(3,120
|
)
|
|
—
|
|
|
7,060
|
|
|
—
|
|
|
3,940
|
|
Changes in assets and liabilities (net of acquisitions):
|
|
|
|
|
|
|
|
|
|
Net working capital
|
103,019
|
|
|
(36,781
|
)
|
|
13,641
|
|
|
355
|
|
|
80,234
|
|
Other noncurrent liabilities
|
(505
|
)
|
|
(5
|
)
|
|
(764
|
)
|
|
—
|
|
|
(1,274
|
)
|
Income taxes payable (refundable)
|
1,714
|
|
|
(2,012
|
)
|
|
(6,646
|
)
|
|
—
|
|
|
(6,944
|
)
|
Net cash flows from operating activities
|
189,149
|
|
|
42,641
|
|
|
75,826
|
|
|
(2
|
)
|
|
307,614
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
(59,394
|
)
|
|
(1,592
|
)
|
|
(36,439
|
)
|
|
—
|
|
|
(97,425
|
)
|
Proceeds from sale of assets
|
87
|
|
|
48
|
|
|
5,421
|
|
|
—
|
|
|
5,556
|
|
Acquisitions, net of cash acquired
|
—
|
|
|
(63,141
|
)
|
|
(18,700
|
)
|
|
—
|
|
|
(81,841
|
)
|
Proceeds from settlement of net investment hedge
|
11,184
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,184
|
|
Investments in nonconsolidated subsidiaries
|
(3,500
|
)
|
|
—
|
|
|
(2,669
|
)
|
|
—
|
|
|
(6,169
|
)
|
Other, net
|
(14,964
|
)
|
|
14,210
|
|
|
1,297
|
|
|
2
|
|
|
545
|
|
Net cash flows from investing activities
|
(66,587
|
)
|
|
(50,475
|
)
|
|
(51,090
|
)
|
|
2
|
|
|
(168,150
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Borrowings under short-term agreements
|
—
|
|
|
—
|
|
|
11,327
|
|
|
—
|
|
|
11,327
|
|
Proceeds from long-term borrowings
|
31,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,000
|
|
Principal payments on long-term borrowings
|
(10,000
|
)
|
|
—
|
|
|
(768
|
)
|
|
—
|
|
|
(10,768
|
)
|
Dividends paid
|
(32,642
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,642
|
)
|
Dividends to noncontrolling interest
|
—
|
|
|
—
|
|
|
(7,737
|
)
|
|
—
|
|
|
(7,737
|
)
|
Intercompany dividends
|
65,651
|
|
|
53,676
|
|
|
(119,327
|
)
|
|
—
|
|
|
—
|
|
Purchase of noncontrolling interest
|
(22,805
|
)
|
|
—
|
|
|
(5,040
|
)
|
|
—
|
|
|
(27,845
|
)
|
Intercompany capital contribution
|
(13,284
|
)
|
|
—
|
|
|
13,284
|
|
|
—
|
|
|
—
|
|
Intercompany interest on long-term note
|
—
|
|
|
(45,155
|
)
|
|
45,155
|
|
|
—
|
|
|
—
|
|
Proceeds from exercises under stock plans
|
13,619
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,619
|
|
Purchase of treasury shares
|
(62,915
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(62,915
|
)
|
Purchase of common treasury shares - stock plan exercises
|
(12,989
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,989
|
)
|
Net cash flows from financing activities
|
(44,365
|
)
|
|
8,521
|
|
|
(63,106
|
)
|
|
—
|
|
|
(98,950
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
(36
|
)
|
|
(146
|
)
|
|
—
|
|
|
(182
|
)
|
Net change in cash and cash equivalents
|
78,197
|
|
|
651
|
|
|
(38,516
|
)
|
|
—
|
|
|
40,332
|
|
Cash, cash equivalents, and restricted cash—beginning of year
|
104,256
|
|
|
5,518
|
|
|
203,436
|
|
|
—
|
|
|
313,210
|
|
Cash, cash equivalents, and restricted cash—end of period
|
$
|
182,453
|
|
|
$
|
6,169
|
|
|
$
|
164,920
|
|
|
$
|
—
|
|
|
$
|
353,542
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year ended December 29, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
94,351
|
|
|
$
|
77,679
|
|
|
$
|
32,440
|
|
|
$
|
(104,164
|
)
|
|
$
|
100,306
|
|
Adjustments to reconcile net earnings to net cash flows from operations:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
26,155
|
|
|
13,959
|
|
|
42,713
|
|
|
—
|
|
|
82,827
|
|
Noncash loss on trading securities
|
—
|
|
|
—
|
|
|
(62
|
)
|
|
—
|
|
|
(62
|
)
|
Contribution to defined benefit pension plan
|
—
|
|
|
—
|
|
|
(1,537
|
)
|
|
—
|
|
|
(1,537
|
)
|
Impairment of property, plant and equipment
|
—
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
|
5,000
|
|
Impairment of goodwill & intangible assets
|
—
|
|
|
—
|
|
|
15,780
|
|
|
—
|
|
|
15,780
|
|
Loss on divestiture of grinding media business
|
2,518
|
|
|
—
|
|
|
3,566
|
|
|
—
|
|
|
6,084
|
|
Stock-based compensation
|
10,392
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,392
|
|
Defined benefit pension plan expense (benefit)
|
—
|
|
|
—
|
|
|
(2,251
|
)
|
|
—
|
|
|
(2,251
|
)
|
(Gain) loss on sale of property, plant and equipment
|
57
|
|
|
(37
|
)
|
|
(245
|
)
|
|
—
|
|
|
(225
|
)
|
Equity in earnings in nonconsolidated subsidiaries
|
(68,383
|
)
|
|
(37,304
|
)
|
|
—
|
|
|
105,687
|
|
|
—
|
|
Deferred income taxes
|
1,532
|
|
|
1,791
|
|
|
(4,982
|
)
|
|
—
|
|
|
(1,659
|
)
|
Changes in assets and liabilities (net of acquisitions):
|
|
|
|
|
|
|
|
|
|
Net working capital
|
(17,681
|
)
|
|
(13,962
|
)
|
|
(13,208
|
)
|
|
(1,769
|
)
|
|
(46,620
|
)
|
Other noncurrent liabilities
|
(7,345
|
)
|
|
615
|
|
|
(4,158
|
)
|
|
—
|
|
|
(10,888
|
)
|
Income taxes payable (refundable)
|
(6,176
|
)
|
|
(1,303
|
)
|
|
3,340
|
|
|
—
|
|
|
(4,139
|
)
|
Net cash flows from operating activities
|
35,420
|
|
|
41,438
|
|
|
76,396
|
|
|
(246
|
)
|
|
153,008
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
(25,255
|
)
|
|
(13,115
|
)
|
|
(33,615
|
)
|
|
—
|
|
|
(71,985
|
)
|
Proceeds from sale of assets
|
44
|
|
|
268
|
|
|
62,791
|
|
|
—
|
|
|
63,103
|
|
Acquisitions, net of cash acquired
|
(57,805
|
)
|
|
—
|
|
|
(85,215
|
)
|
|
—
|
|
|
(143,020
|
)
|
Proceeds from settlement of net investment hedge
|
(1,621
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,621
|
)
|
Other, net
|
69,714
|
|
|
(42,667
|
)
|
|
(29,215
|
)
|
|
246
|
|
|
(1,922
|
)
|
Net cash flows from investing activities
|
(14,923
|
)
|
|
(55,514
|
)
|
|
(85,254
|
)
|
|
246
|
|
|
(155,445
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Payments under short-term agreements
|
—
|
|
|
—
|
|
|
10,543
|
|
|
—
|
|
|
10,543
|
|
Proceeds from long-term borrowings
|
245,936
|
|
|
—
|
|
|
5,719
|
|
|
—
|
|
|
251,655
|
|
Principal payments on long-term borrowings
|
(261,219
|
)
|
|
—
|
|
|
(972
|
)
|
|
—
|
|
|
(262,191
|
)
|
Settlement of financial derivative
|
(2,467
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,467
|
)
|
Debt issuance costs
|
(2,322
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,322
|
)
|
Dividends paid
|
(33,726
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,726
|
)
|
Dividends to noncontrolling interest
|
—
|
|
|
—
|
|
|
(7,055
|
)
|
|
—
|
|
|
(7,055
|
)
|
Intercompany dividends
|
168,757
|
|
|
11,296
|
|
|
(180,053
|
)
|
|
—
|
|
|
—
|
|
Intercompany capital contribution
|
(3,492
|
)
|
|
3,492
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Purchase of noncontrolling interest
|
—
|
|
|
—
|
|
|
(5,510
|
)
|
|
—
|
|
|
(5,510
|
)
|
Proceeds from exercises under stock plans
|
7,357
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,357
|
|
Purchase of treasury shares
|
(114,805
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(114,805
|
)
|
Purchase of common treasury shares - stock plan exercises
|
(3,589
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,589
|
)
|
Net cash flows from financing activities
|
430
|
|
|
14,788
|
|
|
(177,328
|
)
|
|
—
|
|
|
(162,110
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
(498
|
)
|
|
(14,550
|
)
|
|
—
|
|
|
(15,048
|
)
|
Net change in cash and cash equivalents
|
20,927
|
|
|
214
|
|
|
(200,736
|
)
|
|
—
|
|
|
(179,595
|
)
|
Cash, cash equivalents, and restricted cash—beginning of year
|
83,329
|
|
|
5,304
|
|
|
404,172
|
|
|
—
|
|
|
492,805
|
|
Cash, cash equivalents, and restricted cash—end of period
|
$
|
104,256
|
|
|
$
|
5,518
|
|
|
$
|
203,436
|
|
|
$
|
—
|
|
|
$
|
313,210
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(22) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year ended December 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Total
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net earnings
|
$
|
116,240
|
|
|
$
|
52,562
|
|
|
$
|
59,369
|
|
|
$
|
(105,852
|
)
|
|
$
|
122,319
|
|
Adjustments to reconcile net earnings to net cash flows from operations:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
26,237
|
|
|
15,003
|
|
|
43,717
|
|
|
—
|
|
|
84,957
|
|
Noncash loss on trading securities
|
—
|
|
|
—
|
|
|
237
|
|
|
—
|
|
|
237
|
|
Stock-based compensation
|
10,706
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,706
|
|
Defined benefit pension plan expense (benefit)
|
—
|
|
|
—
|
|
|
648
|
|
|
—
|
|
|
648
|
|
Contribution to defined benefit pension plan
|
—
|
|
|
—
|
|
|
(40,245
|
)
|
|
—
|
|
|
(40,245
|
)
|
(Gain) loss on sale of property, plant and equipment
|
(664
|
)
|
|
8
|
|
|
(3,268
|
)
|
|
—
|
|
|
(3,924
|
)
|
Equity in earnings in nonconsolidated subsidiaries
|
(83,877
|
)
|
|
(22,146
|
)
|
|
—
|
|
|
106,023
|
|
|
—
|
|
Deferred income taxes
|
10,307
|
|
|
—
|
|
|
29,448
|
|
|
—
|
|
|
39,755
|
|
Changes in assets and liabilities (net of acquisitions):
|
|
|
|
|
|
|
|
|
|
Net working capital
|
(23,943
|
)
|
|
(25,717
|
)
|
|
(25,219
|
)
|
|
(306
|
)
|
|
(75,185
|
)
|
Other noncurrent liabilities
|
(140
|
)
|
|
—
|
|
|
(7,088
|
)
|
|
—
|
|
|
(7,228
|
)
|
Income taxes payable (refundable)
|
(11,837
|
)
|
|
728
|
|
|
12,217
|
|
|
—
|
|
|
1,108
|
|
Net cash flows from operating activities
|
43,029
|
|
|
20,438
|
|
|
69,816
|
|
|
(135
|
)
|
|
133,148
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
(20,460
|
)
|
|
(9,454
|
)
|
|
(25,352
|
)
|
|
—
|
|
|
(55,266
|
)
|
Proceeds from sale of assets
|
748
|
|
|
3
|
|
|
7,434
|
|
|
—
|
|
|
8,185
|
|
Acquisitions, net of cash acquired
|
—
|
|
|
—
|
|
|
(5,362
|
)
|
|
—
|
|
|
(5,362
|
)
|
Proceeds from settlement of net investment hedge
|
5,123
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,123
|
|
Other, net
|
684
|
|
|
(22,777
|
)
|
|
19,663
|
|
|
135
|
|
|
(2,295
|
)
|
Net cash flows from investing activities
|
(13,905
|
)
|
|
(32,228
|
)
|
|
(3,617
|
)
|
|
135
|
|
|
(49,615
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Payments under short-term agreements
|
—
|
|
|
—
|
|
|
(585
|
)
|
|
—
|
|
|
(585
|
)
|
Principal payments on long-term borrowings
|
—
|
|
|
—
|
|
|
(887
|
)
|
|
—
|
|
|
(887
|
)
|
Dividends paid
|
(33,862
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,862
|
)
|
Dividends to noncontrolling interest
|
—
|
|
|
—
|
|
|
(5,674
|
)
|
|
—
|
|
|
(5,674
|
)
|
Intercompany dividends
|
22,662
|
|
|
—
|
|
|
(22,662
|
)
|
|
—
|
|
|
—
|
|
Intercompany capital contribution
|
(10,818
|
)
|
|
10,818
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Proceeds from exercises under stock plans
|
35,159
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,159
|
|
Purchase of common treasury shares - stock plan exercises
|
(26,161
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,161
|
)
|
Net cash flows from financing activities
|
(13,020
|
)
|
|
10,818
|
|
|
(29,808
|
)
|
|
—
|
|
|
(32,010
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
205
|
|
|
27,477
|
|
|
—
|
|
|
27,682
|
|
Net change in cash and cash equivalents
|
16,104
|
|
|
(767
|
)
|
|
63,868
|
|
|
—
|
|
|
79,205
|
|
Cash, cash equivalents, and restricted cash—beginning of year
|
67,225
|
|
|
6,071
|
|
|
340,304
|
|
|
—
|
|
|
413,600
|
|
Cash, cash equivalents, and restricted cash—end of period
|
$
|
83,329
|
|
|
$
|
5,304
|
|
|
$
|
404,172
|
|
|
$
|
—
|
|
|
$
|
492,805
|
|
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three-year period ended December 28, 2019
(Dollars in thousands, except per share amounts)
(23) QUARTERLY FINANCIAL DATA (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings
|
|
|
|
|
|
|
|
|
|
Gross
|
|
|
|
Per Share
|
|
Stock Price
|
|
Dividends
|
|
Net Sales
|
|
Profit
|
|
Amount
|
|
Basic
|
|
Diluted
|
|
High
|
|
Low
|
|
Declared
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
$
|
692,139
|
|
|
$
|
165,129
|
|
|
$
|
36,481
|
|
|
$
|
1.67
|
|
|
$
|
1.66
|
|
|
$
|
139.50
|
|
|
$
|
107.43
|
|
|
$
|
0.375
|
|
Second
|
700,871
|
|
|
180,414
|
|
|
41,397
|
|
|
1.90
|
|
|
1.90
|
|
|
136.75
|
|
|
112.94
|
|
|
0.375
|
|
Third
|
690,340
|
|
|
176,086
|
|
|
40,144
|
|
|
1.86
|
|
|
1.85
|
|
|
146.46
|
|
|
123.74
|
|
|
0.375
|
|
Fourth
|
683,626
|
|
|
170,867
|
|
|
35,747
|
|
|
1.67
|
|
|
1.66
|
|
|
151.46
|
|
|
123.80
|
|
|
0.375
|
|
Year
|
$
|
2,766,976
|
|
|
$
|
692,496
|
|
|
$
|
153,769
|
|
|
$
|
7.10
|
|
|
$
|
7.06
|
|
|
$
|
151.46
|
|
|
$
|
107.43
|
|
|
$
|
1.50
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
$
|
698,684
|
|
|
$
|
169,240
|
|
|
$
|
39,281
|
|
|
$
|
1.74
|
|
|
$
|
1.72
|
|
|
$
|
171.55
|
|
|
$
|
140.10
|
|
|
$
|
0.375
|
|
Second
|
682,405
|
|
|
174,999
|
|
|
32,960
|
|
|
1.47
|
|
|
1.46
|
|
|
154.60
|
|
|
137.90
|
|
|
0.375
|
|
Third (1)
|
678,692
|
|
|
164,340
|
|
|
4,448
|
|
|
0.20
|
|
|
0.20
|
|
|
157.15
|
|
|
135.00
|
|
|
0.375
|
|
Fourth (2)
|
697,363
|
|
|
149,701
|
|
|
17,662
|
|
|
0.80
|
|
|
0.80
|
|
|
141.38
|
|
|
103.01
|
|
|
0.375
|
|
Year
|
$
|
2,757,144
|
|
|
$
|
658,280
|
|
|
$
|
94,351
|
|
|
$
|
4.23
|
|
|
$
|
4.20
|
|
|
$
|
171.55
|
|
|
$
|
103.01
|
|
|
$
|
1.50
|
|
Earnings per share are computed independently for each of the quarters. Therefore, the sum of the quarterly earnings per share may not equal the total for the year.
_______________________________
|
|
(1)
|
The third quarter of 2018 included an impairment of goodwill and intangible assets totaling $14,736 after tax ($0.66 per share) and refinancing of long-term debt expenses of $11,115 after-tax ($0.50 per share).
|
|
|
(2)
|
In the fourth quarter of 2018, the Company recognized restructuring activities expenses and non-recurring asset impairment charges from exiting certain markets of $20,625 after-tax ($0.92 per share).
|