10-Q 1 a2216046z10-q.htm 10-Q

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

Form 10-Q

(Mark One) |  |
ý |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 2013
or
o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-31429

Valmont Industries, Inc.
(Exact name of registrant as specified in its charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization) |  | 47-0351813 (I.R.S. Employer Identification No.)
One Valmont Plaza, Omaha, Nebraska (Address of Principal Executive Offices) |  | 68154-5215 (Zip Code)
(402) 963-1000 (Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý |  | Accelerated filer o |  | Non-accelerated filer o (Do not check if a smaller reporting company) |  | Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

26,772,121
Outstanding shares of common stock as of July 19, 2013

Table of Contents

VALMONT INDUSTRIES, INC.
INDEX TO FORM 10-Q

Page No. |
--- | ---
PART I. FINANCIAL INFORMATION |
Item 1. |  | Financial Statements: |  |  |  |
|  | Condensed Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended June 29, 2013 and June 30, 2012 |  |  | 3 |
|  | Condensed Consolidated Statements of Comprehensive Income for the thirteen and twenty-six weeks ended June 29, 2013 and June 30, 2012 |  |  | 4 |
|  | Condensed Consolidated Balance Sheets as of June 29, 2013 and December 29, 2012 |  |  | 5 |
|  | Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended June 29, 2013 and June 30, 2012 |  |  | 6 |
|  | Condensed Consolidated Statements of Shareholders' Equity for the twenty-six weeks ended June 29, 2013 and June 30, 2012 |  |  | 7 |
|  | Notes to Condensed Consolidated Financial Statements |  |  | 8 |
Item 2. |  | Management's Discussion and Analysis of Financial Condition and Results of Operations |  |  | 31 |
Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk |  |  | 40 |
Item 4. |  | Controls and Procedures |  |  | 40 |
PART II. OTHER INFORMATION |
Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds |  |  | 41 |
Item 6. |  | Exhibits |  |  | 41 |
Signatures |  |  | 42 |

2

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
(Unaudited)

|  | Thirteen Weeks Ended |  | Twenty-six Weeks Ended |
--- | --- | --- | --- | --- | ---
|  | June 29, 2013 |  | June 30, 2012 |  | June 29, 2013 |  | June 30, 2012 |
Product sales |  | $ | 794,341 |  | $ | 688,693 |  | $ | 1,534,788 |  | $ | 1,330,680 |
Services sales |  |  | 84,318 |  |  | 78,622 |  |  | 163,501 |  |  | 153,985 |
Net sales |  |  | 878,659 |  |  | 767,315 |  |  | 1,698,289 |  |  | 1,484,665 |
Product cost of sales |  |  | 563,306 |  |  | 519,438 |  |  | 1,092,467 |  |  | 1,002,146 |
Services cost of sales |  |  | 53,882 |  |  | 48,482 |  |  | 108,982 |  |  | 96,810 |
Total cost of sales |  |  | 617,188 |  |  | 567,920 |  |  | 1,201,449 |  |  | 1,098,956 |
Gross profit |  |  | 261,471 |  |  | 199,395 |  |  | 496,840 |  |  | 385,709 |
Selling, general and administrative expenses |  |  | 117,206 |  |  | 102,043 |  |  | 234,385 |  |  | 205,539 |
Operating income |  |  | 144,265 |  |  | 97,352 |  |  | 262,455 |  |  | 180,170 |
Other income (expenses): |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (8,025 | ) |  | (7,421 | ) |  | (16,215 | ) |  | (15,228 | )
Interest income |  |  | 1,852 |  |  | 1,910 |  |  | 3,205 |  |  | 3,988 |
Other |  |  | 123 |  |  | (1,977 | ) |  | 1,679 |  |  | (400 | )
|  |  | (6,050 | ) |  | (7,488 | ) |  | (11,331 | ) |  | (11,640 | )
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries |  |  | 138,215 |  |  | 89,864 |  |  | 251,124 |  |  | 168,530 |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 48,210 |  |  | 35,985 |  |  | 86,870 |  |  | 63,014 |
Deferred |  |  | (1,042 | ) |  | (5,193 | ) |  | (4,729 | ) |  | (4,456 | )
|  |  | 47,168 |  |  | 30,792 |  |  | 82,141 |  |  | 58,558 |
Earnings before equity in earnings of nonconsolidated subsidiaries |  |  | 91,047 |  |  | 59,072 |  |  | 168,983 |  |  | 109,972 |
Equity in earnings of nonconsolidated subsidiaries |  |  | 269 |  |  | 2,087 |  |  | 473 |  |  | 3,775 |
Net earnings |  |  | 91,316 |  |  | 61,159 |  |  | 169,456 |  |  | 113,747 |
Less: Earnings attributable to noncontrolling interests |  |  | (1,753 | ) |  | (1,179 | ) |  | (2,324 | ) |  | (1,442 | )
Net earnings attributable to Valmont Industries, Inc. |  | $ | 89,563 |  | $ | 59,980 |  | $ | 167,132 |  |  | 112,305 |
Earnings per share: |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 3.36 |  | $ | 2.27 |  | $ | 6.28 |  | $ | 4.25 |
Diluted |  | $ | 3.33 |  | $ | 2.24 |  | $ | 6.22 |  | $ | 4.20 |
Cash dividends declared per share |  | $ | 0.250 |  | $ | 0.225 |  | $ | 0.475 |  | $ | 0.405 |
Weighted average number of shares of common stock outstanding—Basic (000 omitted) |  |  | 26,648 |  |  | 26,467 |  |  | 26,615 |  |  | 26,432 |
Weighted average number of shares of common stock outstanding—Diluted (000 omitted) |  |  | 26,910 |  |  | 26,758 |  |  | 26,884 |  |  | 26,718 |

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)

|  | Thirteen Weeks Ended |  | Twenty-six Weeks Ended |
--- | --- | --- | --- | --- | ---
|  | June 29, 2013 |  | June 30, 2012 |  | June 29, 2013 |  | June 30, 2012 |
Net earnings |  | $ | 91,316 |  | $ | 61,159 |  | $ | 169,456 |  | $ | 113,747 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |
Unrealized translation losses |  |  | (52,962 | ) |  | (30,821 | ) |  | (62,582 | ) |  | (1,259 | )
Realized loss included in net earnings during the period |  |  | — |  |  | — |  |  | (5,194 | ) |  | — |
Unrealized loss on cash flow hedge: |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization cost included in interest expense |  |  | 100 |  |  | 100 |  |  | 200 |  |  | 200 |
Actuarial gain (loss) in defined benefit pension plan |  |  | 42 |  |  | (1,238 | ) |  | (894 | ) |  | 633 |
Other comprehensive income (loss) |  |  | (52,820 | ) |  | (31,959 | ) |  | (68,470 | ) |  | (426 | )
Comprehensive income |  |  | 38,496 |  |  | 29,200 |  |  | 100,986 |  |  | 113,321 |
Comprehensive loss (income) attributable to noncontrolling interests |  |  | 1,549 |  |  | 2,533 |  |  | 3,189 |  |  | (2,481 | )
Comprehensive income attributable to Valmont Industries, Inc. |  | $ | 40,045 |  | $ | 31,733 |  | $ | 104,175 |  | $ | 110,840 |

See accompanying notes to condensed consolidated financial statements.

4

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except shares and per share amounts)
(Unaudited)

|  | June 29, 2013 |  | December 29, 2012 |
--- | --- | --- | --- | --- | ---
ASSETS |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 490,477 |  | $ | 414,129 |
Receivables, net |  |  | 513,766 |  |  | 515,902 |
Inventories |  |  | 413,408 |  |  | 412,384 |
Prepaid expenses |  |  | 33,587 |  |  | 25,144 |
Refundable and deferred income taxes |  |  | 68,168 |  |  | 58,381 |
Total current assets |  |  | 1,519,406 |  |  | 1,425,940 |
Property, plant and equipment, at cost |  |  | 1,018,988 |  |  | 994,774 |
Less accumulated depreciation and amortization |  |  | 488,506 |  |  | 482,162 |
Net property, plant and equipment |  |  | 530,482 |  |  | 512,612 |
Goodwill |  |  | 332,367 |  |  | 330,791 |
Other intangible assets, net |  |  | 168,470 |  |  | 172,270 |
Other assets |  |  | 100,898 |  |  | 126,938 |
Total assets |  | $ | 2,651,623 |  | $ | 2,568,551 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |
Current installments of long-term debt |  | $ | 457 |  | $ | 224 |
Notes payable to banks |  |  | 16,004 |  |  | 13,375 |
Accounts payable |  |  | 212,097 |  |  | 212,424 |
Accrued employee compensation and benefits |  |  | 100,536 |  |  | 101,905 |
Accrued expenses |  |  | 80,988 |  |  | 78,503 |
Dividends payable |  |  | 6,693 |  |  | 6,002 |
Total current liabilities |  |  | 416,775 |  |  | 412,433 |
Deferred income taxes |  |  | 80,151 |  |  | 88,300 |
Long-term debt, excluding current installments |  |  | 471,662 |  |  | 472,593 |
Defined benefit pension liability |  |  | 98,707 |  |  | 112,043 |
Deferred compensation |  |  | 37,117 |  |  | 31,920 |
Other noncurrent liabilities |  |  | 48,854 |  |  | 44,252 |
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 |
Retained earnings |  |  | 1,458,326 |  |  | 1,300,529 |
Accumulated other comprehensive income (loss) |  |  | (19,019 | ) |  | 43,938 |
Treasury stock |  |  | (21,317 | ) |  | (22,455 | )
Total Valmont Industries, Inc. shareholders' equity |  |  | 1,445,890 |  |  | 1,349,912 |
Noncontrolling interest in consolidated subsidiaries |  |  | 52,467 |  |  | 57,098 |
Total shareholders' equity |  |  | 1,498,357 |  |  | 1,407,010 |
Total liabilities and shareholders' equity |  | $ | 2,651,623 |  | $ | 2,568,551 |

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

|  | Twenty-six Weeks Ended |
--- | --- | --- | ---
|  | June 29, 2013 |  | June 30, 2012 |
Cash flows from operating activities: |  |  |  |  |  |  |
Net earnings |  | $ | 169,456 |  | $ | 113,747 |
Adjustments to reconcile net earnings to net cash flows from operations: |  |  |  |  |  |  |
Depreciation and amortization |  |  | 38,186 |  |  | 34,367 |
Stock-based compensation |  |  | 3,342 |  |  | 3,067 |
Defined benefit pension plan expense |  |  | 3,245 |  |  | 2,050 |
Contribution to defined benefit pension plan |  |  | (10,346 | ) |  | (10,750 | )
Gain on sale of property, plant and equipment |  |  | (5,071 | ) |  | (164 | )
Equity in earnings in nonconsolidated subsidiaries |  |  | (473 | ) |  | (3,775 | )
Deferred income taxes |  |  | (4,729 | ) |  | (4,456 | )
Changes in assets and liabilities (net of acquisitions): |  |  |  |  |  |  |
Receivables |  |  | (3,331 | ) |  | (69,922 | )
Inventories |  |  | (2,491 | ) |  | (48,498 | )
Prepaid expenses |  |  | (5,910 | ) |  | (4,060 | )
Accounts payable |  |  | 736 |  |  | 1,976 |
Accrued expenses |  |  | 2,916 |  |  | (621 | )
Other noncurrent liabilities |  |  | 1,873 |  |  | (408 | )
Income taxes payable |  |  | (11,810 | ) |  | (16,090 | )
Net cash flows from operating activities |  |  | 175,593 |  |  | (3,537 | )
Cash flows from investing activities: |  |  |  |  |  |  |
Purchase of property, plant and equipment |  |  | (54,258 | ) |  | (39,221 | )
Proceeds from sale of assets |  |  | 39,054 |  |  | 4,867 |
Acquisitions, net of cash acquired |  |  | (53,152 | ) |  | — |
Other, net |  |  | (133 | ) |  | 1,837 |
Net cash flows from investing activities |  |  | (68,489 | ) |  | (32,517 | )
Cash flows from financing activities: |  |  |  |  |  |  |
Net borrowings under short-term agreements |  |  | 2,620 |  |  | 5,931 |
Proceeds from long-term borrowings |  |  | 68 |  |  | 39,126 |
Principal payments on long-term borrowings |  |  | (303 | ) |  | (39,232 | )
Proceeds from sale of partial ownership interest |  |  | — |  |  | 1,404 |
Dividends paid |  |  | (12,021 | ) |  | (9,545 | )
Dividends to noncontrolling interest |  |  | (1,767 | ) |  | (1,379 | )
Proceeds from exercises under stock plans |  |  | 14,098 |  |  | 15,153 |
Excess tax benefits from stock option exercises |  |  | 305 |  |  | 3,211 |
Purchase of common treasury shares—stock plan exercises |  |  | (13,602 | ) |  | (14,086 | )
Net cash flows from financing activities |  |  | (10,602 | ) |  | 583 |
Effect of exchange rate changes on cash and cash equivalents |  |  | (20,154 | ) |  | 958 |
Net change in cash and cash equivalents |  |  | 76,348 |  |  | (34,513 | )
Cash and cash equivalents—beginning of year |  |  | 414,129 |  |  | 362,894 |
Cash and cash equivalents—end of period |  | $ | 490,477 |  | $ | 328,381 |

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)

|  | 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, 2011 |  | $ | 27,900 |  | $ | — |  | $ | 1,079,698 |  | $ | 64,052 |  | $ | (24,688 | ) | $ | 50,949 |  | $ | 1,197,911 |
Net earnings |  |  | — |  |  | — |  |  | 112,305 |  |  | — |  |  | — |  |  | 1,442 |  |  | 113,747 |
Other comprehensive income (loss) |  |  | — |  |  | — |  |  | — |  |  | (1,465 | ) |  | — |  |  | 1,039 |  |  | (426 | )
Cash dividends declared |  |  | — |  |  | — |  |  | (10,763 | ) |  | — |  |  | — |  |  | — |  |  | (10,763 | )
Dividends to noncontrolling interests |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,379 | ) |  | (1,379 | )
Sale of partial ownership interest |  |  | — |  |  | (610 | ) |  | — |  |  | — |  |  | — |  |  | 2,014 |  |  | 1,404 |
Stock plan exercises; 119,928 shares acquired |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (14,086 | ) |  | — |  |  | (14,086 | )
Stock options exercised; 230,141 shares issued |  |  | — |  |  | (5,576 | ) |  | 5,363 |  |  | — |  |  | 15,366 |  |  | — |  |  | 15,153 |
Tax benefit from stock option exercises |  |  | — |  |  | 3,211 |  |  | — |  |  | — |  |  |  |  |  | — |  |  | 3,211 |
Stock option expense |  |  | — |  |  | 2,490 |  |  | — |  |  | — |  |  |  |  |  | — |  |  | 2,490 |
Stock awards; 402 shares issued |  |  | — |  |  | 485 |  |  | — |  |  | — |  |  | 92 |  |  | — |  |  | 577 |
Balance at June 30, 2012 |  | $ | 27,900 |  | $ | — |  | $ | 1,186,603 |  | $ | 62,587 |  | $ | (23,316 | ) | $ | 54,065 |  | $ | 1,307,839 |
Balance at December 29, 2012 |  | $ | 27,900 |  | $ | — |  | $ | 1,300,529 |  | $ | 43,938 |  | $ | (22,455 | ) | $ | 57,098 |  | $ | 1,407,010 |
Net earnings |  |  | — |  |  | — |  |  | 167,132 |  |  | — |  |  | — |  |  | 2,324 |  |  | 169,456 |
Other comprehensive loss |  |  | — |  |  | — |  |  | — |  |  | (62,957 | ) |  | — |  |  | (5,513 | ) |  | (68,470 | )
Cash dividends declared |  |  | — |  |  | — |  |  | (12,713 | ) |  | — |  |  | — |  |  | — |  |  | (12,713 | )
Dividends to noncontrolling interests |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1,767 | ) |  | (1,767 | )
Acquisition of Locker |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 325 |  |  | 325 |
Stock plan exercises; 85,874 shares acquired |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (13,602 | ) |  | — |  |  | (13,602 | )
Stock options exercised; 177,902 shares issued |  |  | — |  |  | (3,647 | ) |  | 3,378 |  |  | — |  |  | 14,367 |  |  | — |  |  | 14,098 |
Tax benefit from stock option exercises |  |  | — |  |  | 305 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 305 |
Stock option expense |  |  | — |  |  | 2,627 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,627 |
Stock awards; 2,667 shares issued |  |  | — |  |  | 715 |  |  | — |  |  | — |  |  | 373 |  |  | — |  |  | 1,088 |
Balance at June 29, 2013 |  | $ | 27,900 |  | $ | — |  | $ | 1,458,326 |  | $ | (19,019 | ) | $ | (21,317 | ) | $ | 52,467 |  | $ | 1,498,357 |

See accompanying notes to condensed consolidated financial statements.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Condensed Consolidated Financial Statements

The Condensed Consolidated Balance Sheet as of June 29, 2013, the Condensed Consolidated Statements of Earnings and Comprehensive Income for the thirteen and twenty-six weeks ended June 29, 2013 and June 30, 2012, and the Condensed Consolidated Statements of Cash Flows and Shareholders' Equity for the twenty-six week periods then ended have been prepared by the Company, without audit. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial statements as of June 29, 2013 and for all periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012. The accounting policies and methods of computation followed in these interim financial statements are the same as those followed in the financial statements for the year ended December 29, 2012. In 2013, the Company changed its presentation of certain intercompany utility structure sales to align with management's current reporting structure. In 2013, those sales were recorded as part of the Engineered Infrastructure Products (EIP) segment. In 2012, these sales were recorded in the Utility Support Structures segment. Fiscal 2012 reporting was reclassified to conform with the 2013 presentation. Accordingly, fiscal 2012 EIP segment sales (and the associated intersegment sales elimination) for the thirteen and twenty-six weeks ended June 30, 2012 increased by $10,034 and $16,062, respectively. Fiscal 2012 segment sales (after intersegment sales eliminations) and operating income were unchanged from amounts previously reported. The results of operations for the period ended June 29, 2013 are not necessarily indicative of the operating results for the full year.

Inventories

Approximately 40% and 43% of inventory is valued at the lower of cost, determined on the last-in, first-out (LIFO) method, or market as of June 29, 2013 and December 29, 2012, 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 $42,468 and $45,822 at June 29, 2013 and December 29, 2012, respectively.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventories consisted of the following:

|  | June 29, 2013 |  | December 29, 2012 |
--- | --- | --- | --- | --- | ---
Raw materials and purchased parts |  | $ | 182,907 |  | $ | 199,808 |
Work-in-process |  |  | 39,385 |  |  | 36,114 |
Finished goods and manufactured goods |  |  | 233,584 |  |  | 222,284 |
Subtotal |  |  | 455,876 |  |  | 458,206 |
Less: LIFO reserve |  |  | 42,468 |  |  | 45,822 |
|  | $ | 413,408 |  | $ | 412,384 |

Income Taxes

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries for the thirteen and twenty-six weeks ended June 29, 2013 and June 30, 2012, were as follows:

|  | Thirteen Weeks Ended |  | Twenty-six Weeks Ended |
--- | --- | --- | --- | --- | ---
|  | 2013 |  | 2012 |  | 2013 |  | 2012 |
United States |  | $ | 98,684 |  | $ | 68,132 |  | $ | 187,421 |  | $ | 130,827 |
Foreign |  |  | 39,531 |  |  | 21,732 |  |  | 63,703 |  |  | 37,703 |
|  | $ | 138,215 |  | $ | 89,864 |  | $ | 251,124 |  | $ | 168,530 |

Pension Benefits

The Company incurs expenses in connection with the Delta Pension Plan ("DPP"). The DPP was acquired as part of the Delta plc acquisition in fiscal 2010 and has no members that are active employees. 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.

The components of the net periodic pension expense for the twenty-six weeks ended June 29, 2013 and June 30, 2012 were as follows:

|  | 2013 |  | 2012 |
--- | --- | --- | --- | --- | ---
Net periodic benefit expense: |  |  |  |  |  |  |
Interest cost |  | $ | 13,058 |  | $ | 11,594 |
Expected return on plan assets |  |  | (9,813 | ) |  | (9,544 | )
Net periodic benefit expense |  | $ | 3,245 |  | $ | 2,050 |

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Plans

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, non-vested stock awards and bonuses of common stock. At June 29, 2013, 1,700,000 shares of common stock remained available for issuance under the plans. Shares and options issued and available are subject to changes in capitalization.

Under the plans, the exercise price of each option equals the closing market price at the date of the grant. Options vest beginning on the first anniversary of the grant in equal amounts over three to six years or on the fifth anniversary of the grant.

Expiration of grants is from six to ten years from the date of grant. The Company's compensation expense (included in selling, general and administrative expenses) and associated income tax benefits related to stock options for the thirteen and twenty-six weeks ended June 29, 2013 and June 30, 2012, respectively, were as follows:

|  | Thirteen Weeks Ended |  | Twenty-six Weeks Ended |
--- | --- | --- | --- | --- | ---
|  | 2013 |  | 2012 |  | 2013 |  | 2012 |
Compensation expense |  | $ | 1,314 |  | $ | 1,245 |  | $ | 2,627 |  | $ | 2,490 |
Income tax benefits |  |  | 505 |  |  | 479 |  |  | 1,011 |  |  | 959 |

Equity Method Investments

The Company has equity method investments in non-consolidated subsidiaries, which are recorded within "Other assets" on the Condensed Consolidated Balance Sheet. In February 2013, the Company sold its nonconsolidated investment in Manganese Materials Company Pty. Ltd. to the majority owner of the business for approximately $29,250. The profit on the sale was not significant, which included the recognition of $5,194 in currency translation adjustments previously recorded as part of "Accumulated other comprehensive income" on the Condensed consolidated balance sheet. The Company also recognized certain deferred tax benefits of approximately $3,200 associated with the sale in the first quarter of fiscal 2013.

Fair Value

The Company applies the provisions of Accounting Standards Codification 820, Fair Value Measurements ("ASC 820") which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 apply to other accounting pronouncements that require or permit fair value measurements. As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820 establishes 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. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 represent mutual funds, invested in debt and equity securities, classified as trading securities in accordance with Accounting Standards Codification 320, Accounting for Certain Investments in Debt and Equity Securities, considering the employee's ability to change investment allocation of their deferred compensation at any time. Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.

|  |  |  | Fair Value Measurement Using: |
--- | --- | --- | --- | --- | ---
|  | Carrying Value June 29, 2013 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Trading Securities |  | $ | 24,562 |  | $ | 24,562 |  | $ | — |  | $ | — |

|  |  |  | Fair Value Measurement Using: |
--- | --- | --- | --- | --- | ---
|  | Carrying Value December 29, 2012 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Trading Securities |  | $ | 20,087 |  | $ | 20,087 |  | $ | — |  | $ | — |

Comprehensive Income

Comprehensive income includes net earnings, 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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

liabilities are translated at the exchange rates in effect on the balance sheet dates. Accumulated other comprehensive income (loss) consisted of the following at June 29, 2013 and December 29, 2012:

|  | Foreign Currency Translation Adjustments |  | Unrealized Loss on Cash Flow Hedge |  | Defined Benefit Pension Plan |  | Accumulated Other Comprehensive Income |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Balance at December 29, 2012 |  | $ | 30,576 |  | $ | (2,935 | ) | $ | 16,297 |  | $ | 43,938 |
Current-period comprehensive income (loss) |  |  | (62,263 | ) |  | 200 |  |  | (894 | ) |  | (62,957 | )
Balance at June 29, 2013 |  | $ | (31,687 | ) | $ | (2,735 | ) | $ | 15,403 |  | $ | (19,019 | )

(2) ACQUISITION OF LOCKER GROUP HOLDINGS PTY. LTD.

On February 5, 2013, the Company purchased 100% of the outstanding shares of Locker Group Holdings Pty. Ltd. (Locker). Locker is a manufacturer of perforated and expanded metal for the non-residential market, industrial flooring and handrails for the access systems market, and screening media for applications in the industrial and mining sectors in Australia and Asia. Locker's annual sales for the twelve months prior to the acquisition date were approximately $80,000 and its operations are reported in the Engineered Infrastructure Products Segment. The purchase price paid for the business at closing (net of $116 cash acquired) was $53,152. In addition, a maximum of $7,911 additional purchase price may be paid to the sellers upon the achievement of certain gross profit and inventory targets over the next two years. The Company determined the present value of the potential additional purchase price at February 5, 2013 to be $6,175. The acquisition, which was funded by cash held by the Company, was completed to expand our product offering and sales coverage for access systems and related products in Asia Pacific.

The preliminary fair value measurement was completed at June 29, 2013, subject to final independent reviews of the fair value assessments of assets acquired and liabilities assumed. The Company expects the fair value measurement process to be completed in the third quarter of 2013.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the date of acquisition.

|  | At February 5, 2013 |
--- | --- | --- | ---
Current assets |  | $ | 25,584 |
Property, plant and equipment |  |  | 20,412 |
Intangible assets |  |  | 11,199 |
Goodwill |  |  | 13,326 |
Total fair value of assets acquired |  | $ | 70,521 |
Current liabilities |  |  | 9,595 |
Deferred income taxes |  |  | 481 |
Other non-current liabilities |  |  | 677 |
Non-controlling interests |  |  | 325 |
Total fair value of liabilities assumed and non-controlling interests |  |  | 11,078 |
Net assets acquired |  | $ | 59,443 |

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(2) ACQUISITION OF LOCKER GROUP HOLDINGS PTY. LTD. (Continued)

The Company's Condensed Consolidated Statements of Earnings for the thirteen and twenty-six weeks ended June 29, 2013 included net sales of $18,082 and $29,936, respectively, and net earnings of $288 and $539, respectively, resulting from Locker's operations from February 5, 2013 to June 29, 2013.

Based on the fair value assessments, the Company allocated $11,199 of the purchase price to acquired intangible assets. The following table summarizes the major classes of Locker acquired intangible assets and the respective weighted-average amortization periods:

|  | Amount |  | Weighted Average Amortization Period (Years) |
--- | --- | --- | --- | --- | ---
Trade Names |  | $ | 4,116 |  |  | Indefinite |
Customer Relationships |  |  | 6,047 |  |  | 10.0 |
Software and Technology |  |  | 1,036 |  |  | 5.0 |
|  | $ | 11,199 |  |  |  |

(3) GOODWILL AND INTANGIBLE ASSETS

Amortized Intangible Assets

The components of amortized intangible assets at June 29, 2013 and December 29, 2012 were as follows:

|  | June 29, 2013
--- | --- | ---
|  | Gross Carrying Amount |  | Accumulated Amortization |  | Weighted Average Life
Customer Relationships |  | $ | 171,290 |  | $ | 68,632 |  | 13 years
Proprietary Software & Database |  |  | 3,949 |  |  | 2,824 |  | 6 years
Patents & Proprietary Technology |  |  | 9,592 |  |  | 6,084 |  | 8 years
Non-compete Agreements |  |  | 1,793 |  |  | 1,582 |  | 6 years
|  | $ | 186,624 |  | $ | 79,122 |  |

|  | December 29, 2012
--- | --- | ---
|  | Gross Carrying Amount |  | Accumulated Amortization |  | Weighted Average Life
Customer Relationships |  | $ | 170,556 |  | $ | 62,957 |  | 13 years
Proprietary Software & Database |  |  | 3,073 |  |  | 2,795 |  | 6 years
Patents & Proprietary Technology |  |  | 9,953 |  |  | 5,517 |  | 8 years
Non-compete Agreements |  |  | 1,807 |  |  | 1,542 |  | 6 years
|  | $ | 185,389 |  | $ | 72,811 |  |

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(3) GOODWILL AND INTANGIBLE ASSETS (Continued)

Amortization expense for intangible assets for the thirteen and twenty-six weeks ended June 29, 2013 and June 30, 2012, respectively was as follows:

|  | Thirteen Weeks Ended |  | Twenty-six Weeks Ended |  |
--- | --- | --- | --- | --- | --- | ---
|  | 2013 |  | 2012 |  | 2013 |  | 2012 |  |
|  | $ | 3,458 |  | $ | 3,624 |  | $ | 7,696 |  | $ | 7,169 |  |

Estimated annual amortization expense related to finite-lived intangible assets is as follows:

|  | Estimated Amortization Expense |
--- | --- | --- | ---
2013 |  | $ | 15,715 |
2014 |  |  | 14,898 |
2015 |  |  | 14,053 |
2016 |  |  | 13,518 |
2017 |  |  | 13,479 |

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

Non-amortized intangible assets

Intangible assets with indefinite lives are not amortized. The carrying values of trade names at June 29, 2013 and December 29, 2012 were as follows:

|  | June 29, 2013 |  | December 29, 2012 |  | Year Acquired |
--- | --- | --- | --- | --- | --- | --- | ---
Webforge |  | $ | 16,456 |  | $ | 17,411 |  |  | 2010 |
Newmark |  |  | 11,111 |  |  | 11,111 |  |  | 2004 |
Ingal EPS/Ingal Civil Products |  |  | 8,685 |  |  | 9,189 |  |  | 2010 |
Donhad |  |  | 6,552 |  |  | 6,932 |  |  | 2010 |
Industrial Galvanizers |  |  | 3,809 |  |  | 4,030 |  |  | 2010 |
Other |  |  | 14,355 |  |  | 11,019 |  |  |  |
|  | $ | 60,968 |  | $ | 59,692 |  |  |  |

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.

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(3) GOODWILL AND INTANGIBLE ASSETS (Continued)

The Company's trade names were tested for impairment in the third quarter of 2012. The values of the trade names were determined using the relief-from-royalty method. Based on this evaluation, the Company determined that its trade names were not impaired.

Goodwill

The carrying amount of goodwill by segment as of June 29, 2013 and December 29, 2012 was as follows:

|  | Engineered Infrastructure Products Segment |  | Utility Support Structures Segment |  | Coatings Segment |  | Irrigation Segment |  | Other |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Balance at December 29, 2012 |  | $ | 155,185 |  | $ | 77,141 |  | $ | 77,053 |  | $ | 2,517 |  | $ | 18,895 |  | $ | 330,791 |
Acquisitions |  |  | 13,326 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 13,326 |
Foreign currency translation |  |  | (9,663 | ) |  | — |  |  | (998 | ) |  | (54 | ) |  | (1,035 | ) |  | (11,750 | )
Other |  |  | 1,737 |  |  | (1,737 | ) |  | — |  |  | — |  |  | — |  |  | — |
Balance at June 29, 2013 |  | $ | 160,585 |  | $ | 75,404 |  | $ | 76,055 |  | $ | 2,463 |  | $ | 17,860 |  | $ | 332,367 |

The goodwill from acquisitions arose from the acquisition of Locker. The Company's goodwill was tested for impairment during the third quarter of 2012. As a result of that testing, the Company determined that its goodwill was not impaired, as the valuation of the reporting units exceeded their respective carrying values. The Company continues to monitor changes in the global economy that could impact future operating results of its reporting units. If such conditions arise, the Company will test a given reporting unit for impairment prior to the annual test.

(4) 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 twenty-six weeks ended June 29, 2013 and June 30, 2012 were as follows:

|  | 2013 |  | 2012 |
--- | --- | --- | --- | --- | ---
Interest |  | $ | 16,329 |  | $ | 15,494 |
Income taxes |  |  | 103,604 |  |  | 73,105 |

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(5) 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 |
--- | --- | --- | --- | --- | --- | --- | ---
Thirteen weeks ended June 29, 2013: |  |  |  |  |  |  |  |  |  |
Net earnings attributable to Valmont Industries, Inc. |  | $ | 89,563 |  | $ | — |  | $ | 89,563 |
Shares outstanding |  |  | 26,648 |  |  | 262 |  |  | 26,910 |
Per share amount |  | $ | 3.36 |  | $ | (0.03 | ) | $ | 3.33 |
Thirteen weeks ended June 30, 2012: |  |  |  |  |  |  |  |  |  |
Net earnings attributable to Valmont Industries, Inc. |  | $ | 59,980 |  | $ | — |  | $ | 59,980 |
Shares outstanding |  |  | 26,467 |  |  | 291 |  |  | 26,758 |
Per share amount |  | $ | 2.27 |  | $ | (0.03 | ) | $ | 2.24 |
Twenty-six weeks ended June 29, 2013: |  |  |  |  |  |  |  |  |  |
Net earnings attributable to Valmont Industries, Inc. |  | $ | 167,132 |  | $ | — |  | $ | 167,132 |
Shares outstanding |  |  | 26,615 |  |  | 269 |  |  | 26,884 |
Per share amount |  | $ | 6.28 |  | $ | (0.06 | ) | $ | 6.22 |
Twenty-six weeks ended June 30, 2012: |  |  |  |  |  |  |  |  |  |
Net earnings attributable to Valmont Industries, Inc. |  | $ | 112,305 |  | $ | — |  | $ | 112,305 |
Shares outstanding |  |  | 26,432 |  |  | 286 |  |  | 26,718 |
Per share amount |  | $ | 4.25 |  | $ | (0.05 | ) | $ | 4.20 |

At June 29, 2013 there were 1,172 outstanding stock options with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share for the thirteen weeks and twenty-six weeks ending June 29, 2013. At June 30, 2012, there were no outstanding stock options with exercise prices exceeding the market price of common stock.

(6) 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 INFRASTRUCTURE PRODUCTS: This segment consists of the manufacture of engineered metal structures and components for the global lighting and traffic, wireless communication, roadway safety and access systems applications;

UTILITY SUPPORT STRUCTURES: This segment consists of the manufacture of engineered steel and concrete structures for the global utility industry;

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(6) BUSINESS SEGMENTS (Continued)

COATINGS: This segment consists of galvanizing, anodizing and powder coating services on a global basis; and

IRRIGATION: This segment consists of the manufacture of agricultural irrigation equipment and related parts and services for the global agricultural industry.

In addition to these four reportable segments, the Company has other businesses and activities that individually are not more than 10% of consolidated sales. These include the manufacture of forged steel grinding media for the mining industry, tubular products for industrial customers, electrolytic manganese dioxide for disposable batteries and the distribution of industrial fasteners and are reported in the "Other" category.

The accounting policies of the reportable segments are the same as those described in Note 1. The Company evaluates the performance of its business segments based upon operating income and invested capital. The Company does not allocate interest expense, non-operating income and deductions, or income taxes to its business segments.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(6) BUSINESS SEGMENTS (Continued)

Summary by Business

|  | Thirteen Weeks Ended |  | Twenty-six Weeks Ended |
--- | --- | --- | --- | --- | ---
|  | June 29, 2013 |  | June 30, 2012 |  | June 29, 2013 |  | June 30, 2012 |
SALES: |  |  |  |  |  |  |  |  |  |  |  |  |
Engineered Infrastructure Products segment: |  |  |  |  |  |  |  |  |  |  |  |  |
Lighting, Traffic, and Roadway Products |  | $ | 161,487 |  | $ | 158,575 |  | $ | 308,657 |  | $ | 297,900 |
Communication Products |  |  | 34,771 |  |  | 36,488 |  |  | 63,393 |  |  | 63,183 |
Access Systems |  |  | 54,378 |  |  | 40,753 |  |  | 102,256 |  |  | 78,660 |
Engineered Infrastructure Products segment |  |  | 250,636 |  |  | 235,816 |  |  | 474,306 |  |  | 439,743 |
Utility Support Structures segment: |  |  |  |  |  |  |  |  |  |  |  |  |
Steel |  |  | 201,164 |  |  | 185,079 |  |  | 411,661 |  |  | 352,043 |
Concrete |  |  | 27,079 |  |  | 27,158 |  |  | 56,220 |  |  | 51,426 |
Utility Support Structures segment |  |  | 228,243 |  |  | 212,237 |  |  | 467,881 |  |  | 403,469 |
Coatings segment |  |  | 93,798 |  |  | 84,837 |  |  | 183,043 |  |  | 167,684 |
Irrigation segment |  |  | 270,175 |  |  | 194,496 |  |  | 514,882 |  |  | 390,762 |
Other |  |  | 83,679 |  |  | 87,194 |  |  | 161,548 |  |  | 173,257 |
Total |  |  | 926,531 |  |  | 814,580 |  |  | 1,801,660 |  |  | 1,574,915 |
INTERSEGMENT SALES: |  |  |  |  |  |  |  |  |  |  |  |  |
Engineered Infrastructure Products segment |  |  | 22,169 |  |  | 24,726 |  |  | 51,621 |  |  | 43,146 |
Utility Support Structures segment |  |  | 299 |  |  | 467 |  |  | 710 |  |  | 2,447 |
Coatings segment |  |  | 14,448 |  |  | 13,252 |  |  | 28,778 |  |  | 25,949 |
Irrigation segment |  |  | 1 |  |  | 6 |  |  | 1 |  |  | 431 |
Other |  |  | 10,955 |  |  | 8,814 |  |  | 22,261 |  |  | 18,277 |
Total |  |  | 47,872 |  |  | 47,265 |  |  | 103,371 |  |  | 90,250 |
NET SALES: |  |  |  |  |  |  |  |  |  |  |  |  |
Engineered Infrastructure Products segment |  |  | 228,467 |  |  | 211,090 |  |  | 422,685 |  |  | 396,597 |
Utility Support Structures segment |  |  | 227,944 |  |  | 211,770 |  |  | 467,171 |  |  | 401,022 |
Coatings segment |  |  | 79,350 |  |  | 71,585 |  |  | 154,265 |  |  | 141,735 |
Irrigation segment |  |  | 270,174 |  |  | 194,490 |  |  | 514,881 |  |  | 390,331 |
Other |  |  | 72,724 |  |  | 78,380 |  |  | 139,287 |  |  | 154,980 |
Total |  | $ | 878,659 |  | $ | 767,315 |  | $ | 1,698,289 |  | $ | 1,484,665 |
OPERATING INCOME: |  |  |  |  |  |  |  |  |  |  |  |  |
Engineered Infrastructure Products segment |  | $ | 22,603 |  | $ | 14,168 |  | $ | 35,337 |  | $ | 22,192 |
Utility Support Structures segment |  |  | 42,121 |  |  | 26,574 |  |  | 88,276 |  |  | 51,678 |
Coatings segment |  |  | 23,552 |  |  | 19,517 |  |  | 36,972 |  |  | 36,029 |
Irrigation segment |  |  | 64,174 |  |  | 37,607 |  |  | 118,733 |  |  | 76,015 |
Other |  |  | 13,025 |  |  | 12,259 |  |  | 23,812 |  |  | 23,670 |
Corporate |  |  | (21,210 | ) |  | (12,773 | ) |  | (40,675 | ) |  | (29,414 | )
Total |  | $ | 144,265 |  | $ | 97,352 |  | $ | 262,455 |  | $ | 180,170 |

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION

The Company has $450,000 principal amount of senior unsecured notes outstanding at a coupon interest rate of 6.625% per annum. The notes are guaranteed, jointly, severally, fully and unconditionally 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.

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 Thirteen weeks ended June 29, 2013

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Net sales |  | $ | 426,817 |  | $ | 169,027 |  | $ | 360,802 |  | $ | (77,987 | ) | $ | 878,659 |
Cost of sales |  |  | 297,949 |  |  | 126,290 |  |  | 273,482 |  |  | (80,533 | ) |  | 617,188 |
Gross profit |  |  | 128,868 |  |  | 42,737 |  |  | 87,320 |  |  | 2,546 |  |  | 261,471 |
Selling, general and administrative expenses |  |  | 55,720 |  |  | 14,347 |  |  | 47,139 |  |  | — |  |  | 117,206 |
Operating income |  |  | 73,148 |  |  | 28,390 |  |  | 40,181 |  |  | 2,546 |  |  | 144,265 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (7,636 | ) |  | (11,944 | ) |  | (390 | ) |  | 11,945 |  |  | (8,025 | )
Interest income |  |  | 8 |  |  | 237 |  |  | 13,552 |  |  | (11,945 | ) |  | 1,852 |
Other |  |  | 394 |  |  | 31 |  |  | (302 | ) |  | — |  |  | 123 |
|  |  | (7,234 | ) |  | (11,676 | ) |  | 12,860 |  |  | — |  |  | (6,050 | )
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries |  |  | 65,914 |  |  | 16,714 |  |  | 53,041 |  |  | 2,546 |  |  | 138,215 |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 24,824 |  |  | 6,546 |  |  | 16,182 |  |  | 658 |  |  | 48,210 |
Deferred |  |  | (750 | ) |  | 1,399 |  |  | (1,691 | ) |  | — |  |  | (1,042 | )
|  |  | 24,074 |  |  | 7,945 |  |  | 14,491 |  |  | 658 |  |  | 47,168 |
Earnings before equity in earnings of nonconsolidated subsidiaries |  |  | 41,840 |  |  | 8,769 |  |  | 38,550 |  |  | 1,888 |  |  | 91,047 |
Equity in earnings of nonconsolidated subsidiaries |  |  | 47,723 |  |  | 23,234 |  |  | — |  |  | (70,688 | ) |  | 269 |
Net earnings |  |  | 89,563 |  |  | 32,003 |  |  | 38,550 |  |  | (68,800 | ) |  | 91,316 |
Less: Earnings attributable to noncontrolling interests |  |  | — |  |  | — |  |  | (1,753 | ) |  | — |  |  | (1,753 | )
Net earnings attributable to Valmont Industries, Inc |  | $ | 89,563 |  | $ | 32,003 |  | $ | 36,797 |  | $ | (68,800 | ) | $ | 89,563 |

19

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Twenty-six Weeks Ended June 29, 2013

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Net sales |  | $ | 843,430 |  | $ | 339,876 |  | $ | 686,211 |  | $ | (171,228 | ) | $ | 1,698,289 |
Cost of sales |  |  | 598,629 |  |  | 255,288 |  |  | 521,865 |  |  | (174,333 | ) |  | 1,201,449 |
Gross profit |  |  | 244,801 |  |  | 84,588 |  |  | 164,346 |  |  | 3,105 |  |  | 496,840 |
Selling, general and administrative expenses |  |  | 105,746 |  |  | 28,341 |  |  | 100,298 |  |  | — |  |  | 234,385 |
Operating income |  |  | 139,055 |  |  | 56,247 |  |  | 64,048 |  |  | 3,105 |  |  | 262,455 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (15,391 | ) |  | (24,574 | ) |  | (824 | ) |  | 24,574 |  |  | (16,215 | )
Interest income |  |  | 15 |  |  | 490 |  |  | 27,274 |  |  | (24,574 | ) |  | 3,205 |
Other |  |  | 1,802 |  |  | 46 |  |  | (169 | ) |  | — |  |  | 1,679 |
|  |  | (13,574 | ) |  | (24,038 | ) |  | 26,281 |  |  | — |  |  | (11,331 | )
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries |  |  | 125,481 |  |  | 32,209 |  |  | 90,329 |  |  | 3,105 |  |  | 251,124 |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 45,999 |  |  | 13,382 |  |  | 26,652 |  |  | 837 |  |  | 86,870 |
Deferred |  |  | (2,504 | ) |  | 1,702 |  |  | (3,927 | ) |  | — |  |  | (4,729 | )
|  |  | 43,495 |  |  | 15,084 |  |  | 22,725 |  |  | 837 |  |  | 82,141 |
Earnings before equity in earnings of nonconsolidated subsidiaries |  |  | 81,986 |  |  | 17,125 |  |  | 67,604 |  |  | 2,268 |  |  | 168,983 |
Equity in earnings of nonconsolidated subsidiaries |  |  | 85,146 |  |  | 42,385 |  |  | 207 |  |  | (127,265 | ) |  | 473 |
Net earnings |  |  | 167,132 |  |  | 59,510 |  |  | 67,811 |  |  | (124,997 | ) |  | 169,456 |
Less: Earnings attributable to noncontrolling interests |  |  | — |  |  | — |  |  | (2,324 | ) |  | — |  |  | (2,324 | )
Net earnings attributable to Valmont Industries, Inc |  |  | 167,132 |  |  | 59,510 |  |  | 65,487 |  |  | (124,997 | ) |  | 167,132 |

20

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Thirteen weeks ended June 30, 2012

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Net sales |  | $ | 347,643 |  | $ | 152,159 |  | $ | 333,171 |  | $ | (65,658 | ) | $ | 767,315 |
Cost of sales |  |  | 249,557 |  |  | 121,658 |  |  | 261,374 |  |  | (64,669 | ) |  | 567,920 |
Gross profit |  |  | 98,086 |  |  | 30,501 |  |  | 71,797 |  |  | (989 | ) |  | 199,395 |
Selling, general and administrative expenses |  |  | 43,762 |  |  | 13,177 |  |  | 45,104 |  |  | — |  |  | 102,043 |
Operating income |  |  | 54,324 |  |  | 17,324 |  |  | 26,693 |  |  | (989 | ) |  | 97,352 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (7,573 | ) |  | (12,244 | ) |  | 152 |  |  | 12,244 |  |  | (7,421 | )
Interest income |  |  | 5 |  |  | 129 |  |  | 14,020 |  |  | (12,244 | ) |  | 1,910 |
Other |  |  | (454 | ) |  | 11 |  |  | (1,534 | ) |  | — |  |  | (1,977 | )
|  |  | (8,022 | ) |  | (12,104 | ) |  | 12,638 |  |  | — |  |  | (7,488 | )
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries |  |  | 46,302 |  |  | 5,220 |  |  | 39,331 |  |  | (989 | ) |  | 89,864 |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 19,363 |  |  | 6,197 |  |  | 10,425 |  |  | — |  |  | 35,985 |
Deferred |  |  | (2,963 | ) |  | (1,031 | ) |  | (1,199 | ) |  | — |  |  | (5,193 | )
|  |  | 16,400 |  |  | 5,166 |  |  | 9,226 |  |  | — |  |  | 30,792 |
Earnings before equity in earnings of nonconsolidated subsidiaries |  |  | 29,902 |  |  | 54 |  |  | 30,105 |  |  | (989 | ) |  | 59,072 |
Equity in earnings of nonconsolidated subsidiaries |  |  | 30,078 |  |  | 23,253 |  |  | 2,276 |  |  | (53,520 | ) |  | 2,087 |
Net earnings |  | $ | 59,980 |  | $ | 23,307 |  | $ | 32,381 |  | $ | (54,509 | ) | $ | 61,159 |
Less: Earnings attributable to noncontrolling interests |  |  | — |  |  | — |  |  | (1,179 | ) |  | — |  |  | (1,179 | )
Net earnings attributable to Valmont Industries, Inc |  | $ | 59,980 |  | $ | 23,307 |  | $ | 31,202 |  | $ | (54,509 | ) | $ | 59,980 |

21

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
For the Twenty-six Weeks Ended June 30, 2012

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Net sales |  |  | 712,483 |  |  | 280,871 |  |  | 627,113 |  |  | (135,802 | ) |  | 1,484,665 |
Cost of sales |  |  | 517,069 |  |  | 225,300 |  |  | 491,297 |  |  | (134,710 | ) |  | 1,098,956 |
Gross profit |  |  | 195,414 |  |  | 55,571 |  |  | 135,816 |  |  | (1,092 | ) |  | 385,709 |
Selling, general and administrative expenses |  |  | 87,034 |  |  | 26,965 |  |  | 91,540 |  |  | — |  |  | 205,539 |
Operating income |  |  | 108,380 |  |  | 28,606 |  |  | 44,276 |  |  | (1,092 | ) |  | 180,170 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (15,255 | ) |  | (24,501 | ) |  | 27 |  |  | 24,501 |  |  | (15,228 | )
Interest income |  |  | 14 |  |  | 323 |  |  | 28,152 |  |  | (24,501 | ) |  | 3,988 |
Other |  |  | 1,005 |  |  | 25 |  |  | (1,430 | ) |  | — |  |  | (400 | )
|  |  | (14,236 | ) |  | (24,153 | ) |  | 26,749 |  |  | — |  |  | (11,640 | )
Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries |  |  | 94,144 |  |  | 4,453 |  |  | 71,025 |  |  | (1,092 | ) |  | 168,530 |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 36,548 |  |  | 5,296 |  |  | 21,170 |  |  | — |  |  | 63,014 |
Deferred |  |  | (2,769 | ) |  | 139 |  |  | (1,826 | ) |  | — |  |  | (4,456 | )
|  |  | 33,779 |  |  | 5,435 |  |  | 19,344 |  |  | — |  |  | 58,558 |
Earnings before equity in earnings of nonconsolidated subsidiaries |  |  | 60,365 |  |  | (982 | ) |  | 51,681 |  |  | (1,092 | ) |  | 109,972 |
Equity in earnings of nonconsolidated subsidiaries |  |  | 51,940 |  |  | 46,361 |  |  | 3,932 |  |  | (98,458 | ) |  | 3,775 |
Net earnings |  |  | 112,305 |  |  | 45,379 |  |  | 55,613 |  |  | (99,550 | ) |  | 113,747 |
Less: Earnings attributable to noncontrolling interests |  |  | — |  |  | — |  |  | (1,442 | ) |  | — |  |  | (1,442 | )
Net earnings attributable to Valmont Industries, Inc |  | $ | 112,305 |  | $ | 45,379 |  | $ | 54,171 |  | $ | (99,550 | ) | $ | 112,305 |

22

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirteen weeks ended June 29, 2013

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Net earnings |  | $ | 89,563 |  | $ | 32,003 |  | $ | 38,550 |  | $ | (68,800 | ) | $ | 91,316 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains (losses) arising during the period |  |  | — |  |  | 65,807 |  |  | (118,769 | ) |  | — |  |  | (52,962 | )
Realized (loss) included in net earnings during the period |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
|  |  | — |  |  | 65,807 |  |  | (118,769 | ) |  | — |  |  | (52,962 | )
Unrealized loss on cash flow hedge: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization cost included in interest expense |  |  | 100 |  |  | — |  |  | — |  |  | — |  |  | 100 |
|  |  | 100 |  |  | — |  |  | — |  |  | — |  |  | 100 |
Actuarial gain (loss) in defined benefit pension plan liability |  |  | — |  |  | — |  |  | 42 |  |  | — |  |  | 42 |
Equity in other comprehensive income |  |  | (49,618 | ) |  | — |  |  | — |  |  | 49,618 |  |  | — |
Other comprehensive income (loss) |  |  | (49,518 | ) |  | 65,807 |  |  | (118,727 | ) |  | 49,618 |  |  | (52,820 | )
Comprehensive income |  |  | 40,045 |  |  | 97,810 |  |  | (80,177 | ) |  | (19,182 | ) |  | 38,496 |
Comprehensive income attributable to noncontrolling interests |  |  | — |  |  | — |  |  | 1,549 |  |  | — |  |  | 1,549 |
Comprehensive income attributable to Valmont Industries, Inc. |  | $ | 40,045 |  | $ | 97,810 |  | $ | (78,628 | ) | $ | (19,182 | ) | $ | 40,045 |

23

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Twenty-six Weeks Ended June 29, 2013

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Net earnings |  | $ | 167,132 |  | $ | 59,510 |  | $ | 67,811 |  | $ | (124,997 | ) | $ | 169,456 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains (losses) arising during the period |  |  | — |  |  | 27,486 |  |  | (90,068 | ) |  | — |  |  | (62,582 | )
Realized (loss) included in net earnings during the period |  |  | — |  |  | — |  |  | (5,194 | ) |  | — |  |  | (5,194 | )
|  |  | — |  |  | 27,486 |  |  | (95,262 | ) |  | — |  |  | (67,776 | )
Unrealized loss on cash flow hedge: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization cost included in interest expense |  |  | 200 |  |  | — |  |  | — |  |  | — |  |  | 200 |
|  |  | 200 |  |  | — |  |  | — |  |  | — |  |  | 200 |
Actuarial gain (loss) in defined benefit pension plan liability |  |  | — |  |  | — |  |  | (894 | ) |  | — |  |  | (894 | )
Equity in other comprehensive income |  |  | (63,157 | ) |  | — |  |  |  |  |  | 63,157 |  |  | — |
Other comprehensive income (loss) |  |  | (62,957 | ) |  | 27,486 |  |  | (96,156 | ) |  | 63,157 |  |  | (68,470 | )
Comprehensive income |  |  | 104,175 |  |  | 86,996 |  |  | (28,345 | ) |  | (61,840 | ) |  | 100,986 |
Comprehensive income attributable to noncontrolling interests |  |  | — |  |  | — |  |  | 3,189 |  |  | — |  |  | 3,189 |
Comprehensive income attributable to Valmont Industries, Inc. |  | $ | 104,175 |  | $ | 86,996 |  | $ | (25,156 | ) | $ | (61,840 | ) | $ | 104,175 |

24

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Thirteen weeks ended June 30, 2012

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Net earnings |  | $ | 59,980 |  | $ | 23,307 |  | $ | 32,381 |  | $ | (54,509 | ) | $ | 61,159 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains (losses) arising during the period |  |  | — |  |  | 14,123 |  |  | (38,433 | ) |  | (6,511 | ) |  | (30,821 | )
|  |  | — |  |  | 14,123 |  |  | (38,433 | ) |  | (6,511 | ) |  | (30,821 | )
Unrealized loss on cash flow hedge: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization cost included in interest expense |  |  | 100 |  |  | — |  |  | — |  |  | — |  |  | 100 |
|  |  | 100 |  |  | — |  |  | — |  |  | — |  |  | 100 |
Actuarial gain (loss) in defined benefit pension plan liability |  |  | — |  |  | — |  |  | (1,238 | ) |  | — |  |  | (1,238 | )
Equity in other comprehensive income |  |  | (28,347 | ) |  | — |  |  | — |  |  | 28,347 |  |  | — |
Other comprehensive income (loss) |  |  | (28,247 | ) |  | 14,123 |  |  | (39,671 | ) |  | 21,836 |  |  | (31,959 | )
Comprehensive income |  |  | 31,733 |  |  | 37,430 |  |  | (7,290 | ) |  | (32,673 | ) |  | 29,200 |
Comprehensive income attributable to noncontrolling interests |  |  | — |  |  | — |  |  | 2,533 |  |  | — |  |  | 2,533 |
Comprehensive income attributable to Valmont Industries, Inc. |  | $ | 31,733 |  | $ | 37,430 |  | $ | (4,757 | ) | $ | (32,673 | ) | $ | 31,733 |

25

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Twenty-six Weeks Ended June 30, 2012

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Net earnings |  | $ | 112,305 |  | $ | 45,379 |  | $ | 55,613 |  | $ | (99,550 | ) | $ | 113,747 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gains (losses) arising during the period |  |  | — |  |  | (2,244 | ) |  | 7,496 |  |  | (6,511 | ) |  | (1,259 | )
|  |  | — |  |  | (2,244 | ) |  | 7,496 |  |  | (6,511 | ) |  | (1,259 | )
Unrealized loss on cash flow hedge: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization cost included in interest expense |  |  | 200 |  |  | — |  |  | — |  |  | — |  |  | 200 |
|  |  | 200 |  |  | — |  |  | — |  |  | — |  |  | 200 |
Actuarial gain in defined benefit pension plan liability |  |  | — |  |  | — |  |  | 633 |  |  | — |  |  | 633 |
Equity in other comprehensive income |  |  | (1,665 | ) |  | — |  |  | — |  |  | 1,665 |  |  | — |
Other comprehensive income (loss) |  |  | (1,465 | ) |  | (2,244 | ) |  | 8,129 |  |  | (4,846 | ) |  | (426 | )
Comprehensive income |  |  | 110,840 |  |  | 43,135 |  |  | 63,742 |  |  | (104,396 | ) |  | 113,321 |
Comprehensive income attributable to noncontrolling interests |  |  | — |  |  | — |  |  | (2,481 | ) |  | — |  |  | (2,481 | )
Comprehensive income attributable to Valmont Industries, Inc. |  | $ | 110,840 |  | $ | 43,135 |  | $ | 61,261 |  | $ | (104,396 | ) | $ | 110,840 |

26

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
June 29, 2013

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 135,336 |  | $ | 29,738 |  | $ | 325,403 |  | $ | — |  | $ | 490,477 |
Receivables, net |  |  | 143,707 |  |  | 81,159 |  |  | 288,900 |  |  | — |  |  | 513,766 |
Inventories |  |  | 135,396 |  |  | 70,345 |  |  | 207,667 |  |  | — |  |  | 413,408 |
Prepaid expenses |  |  | 6,573 |  |  | 712 |  |  | 26,302 |  |  | — |  |  | 33,587 |
Refundable and deferred income taxes |  |  | 38,155 |  |  | 5,605 |  |  | 24,408 |  |  | — |  |  | 68,168 |
Total current assets |  |  | 459,167 |  |  | 187,559 |  |  | 872,680 |  |  | — |  |  | 1,519,406 |
Property, plant and equipment, at cost |  |  | 476,731 |  |  | 141,114 |  |  | 401,143 |  |  | — |  |  | 1,018,988 |
Less accumulated depreciation and amortization |  |  | 296,524 |  |  | 58,723 |  |  | 133,259 |  |  | — |  |  | 488,506 |
Net property, plant and equipment |  |  | 180,207 |  |  | 82,391 |  |  | 267,884 |  |  | — |  |  | 530,482 |
Goodwill |  |  | 20,108 |  |  | 107,542 |  |  | 204,717 |  |  | — |  |  | 332,367 |
Other intangible assets |  |  | 419 |  |  | 50,869 |  |  | 117,182 |  |  | — |  |  | 168,470 |
Investment in subsidiaries and intercompany accounts |  |  | 1,446,491 |  |  | 1,348,693 |  |  | 556,568 |  |  | (3,351,752 | ) |  | — |
Other assets |  |  | 36,588 |  |  | — |  |  | 64,310 |  |  | — |  |  | 100,898 |
Total assets |  | $ | 2,142,980 |  | $ | 1,777,054 |  | $ | 2,083,341 |  | $ | (3,351,752 | ) | $ | 2,651,623 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current installments of long-term debt |  | $ | 188 |  | $ | — |  | $ | 269 |  | $ | — |  | $ | 457 |
Notes payable to banks |  |  | — |  |  | — |  |  | 16,004 |  |  | — |  |  | 16,004 |
Accounts payable |  |  | 66,559 |  |  | 19,128 |  |  | 126,410 |  |  | — |  |  | 212,097 |
Accrued employee compensation and benefits |  |  | 58,734 |  |  | 9,046 |  |  | 32,756 |  |  | — |  |  | 100,536 |
Accrued expenses |  |  | 37,575 |  |  | 4,227 |  |  | 39,186 |  |  | — |  |  | 80,988 |
Dividends payable |  |  | 6,693 |  |  | — |  |  | — |  |  | — |  |  | 6,693 |
Total current liabilities |  |  | 169,749 |  |  | 32,401 |  |  | 214,625 |  |  | — |  |  | 416,775 |
Deferred income taxes |  |  | 19,182 |  |  | 28,254 |  |  | 32,715 |  |  | — |  |  | 80,151 |
Long-term debt, excluding current installments |  |  | 470,919 |  |  | 532,852 |  |  | 743 |  |  | (532,852 | ) |  | 471,662 |
Defined benefit pension liability |  |  | — |  |  | — |  |  | 98,707 |  |  | — |  |  | 98,707 |
Deferred compensation |  |  | 29,689 |  |  | — |  |  | 7,428 |  |  | — |  |  | 37,117 |
Other noncurrent liabilities |  |  | 7,551 |  |  | — |  |  | 41,303 |  |  | — |  |  | 48,854 |
Shareholders' equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock of $1 par value |  |  | 27,900 |  |  | 457,950 |  |  | 254,982 |  |  | (712,932 | ) |  | 27,900 |
Additional paid-in capital |  |  | — |  |  | 150,286 |  |  | 894,239 |  |  | (1,044,525 | ) |  | — |
Retained earnings |  |  | 1,458,326 |  |  | 526,750 |  |  | 505,878 |  |  | (1,032,628 | ) |  | 1,458,326 |
Accumulated other comprehensive income (loss) |  |  | (19,019 | ) |  | 48,561 |  |  | (19,746 | ) |  | (28,815 | ) |  | (19,019 | )
Treasury stock |  |  | (21,317 | ) |  | — |  |  | — |  |  | — |  |  | (21,317 | )
Total Valmont Industries, Inc. shareholders' equity |  |  | 1,445,890 |  |  | 1,183,547 |  |  | 1,635,353 |  |  | (2,818,900 | ) |  | 1,445,890 |
Noncontrolling interest in consolidated subsidiaries |  |  | — |  |  | — |  |  | 52,467 |  |  | — |  |  | 52,467 |
Total shareholders' equity |  |  | 1,445,890 |  |  | 1,183,547 |  |  | 1,687,820 |  |  | (2,818,900 | ) |  | 1,498,357 |
Total liabilities and shareholders' equity |  | $ | 2,142,980 |  | $ | 1,777,054 |  | $ | 2,083,341 |  | $ | (3,351,752 | ) | $ | 2,651,623 |

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED BALANCE SHEETS
December 29, 2012

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 40,926 |  | $ | 83,203 |  | $ | 290,000 |  | $ | — |  | $ | 414,129 |
Receivables, net |  |  | 144,161 |  |  | 86,403 |  |  | 285,338 |  |  | — |  |  | 515,902 |
Inventories |  |  | 146,619 |  |  | 71,988 |  |  | 193,777 |  |  | — |  |  | 412,384 |
Prepaid expenses |  |  | 7,153 |  |  | 1,029 |  |  | 16,962 |  |  | — |  |  | 25,144 |
Refundable and deferred income taxes |  |  | 29,359 |  |  | 6,904 |  |  | 22,118 |  |  | — |  |  | 58,381 |
Total current assets |  |  | 368,218 |  |  | 249,527 |  |  | 808,195 |  |  | — |  |  | 1,425,940 |
Property, plant and equipment, at cost |  |  | 456,497 |  |  | 122,937 |  |  | 415,340 |  |  | — |  |  | 994,774 |
Less accumulated depreciation and amortization |  |  | 288,226 |  |  | 55,239 |  |  | 138,697 |  |  | — |  |  | 482,162 |
Net property, plant and equipment |  |  | 168,271 |  |  | 67,698 |  |  | 276,643 |  |  | — |  |  | 512,612 |
Goodwill |  |  | 20,108 |  |  | 107,542 |  |  | 203,141 |  |  | — |  |  | 330,791 |
Other intangible assets |  |  | 499 |  |  | 53,517 |  |  | 118,254 |  |  | — |  |  | 172,270 |
Investment in subsidiaries and intercompany accounts |  |  | 1,456,159 |  |  | 1,246,777 |  |  | 615,152 |  |  | (3,318,088 | ) |  | — |
Other assets |  |  | 32,511 |  |  | — |  |  | 94,427 |  |  | — |  |  | 126,938 |
Total assets |  | $ | 2,045,766 |  | $ | 1,725,061 |  | $ | 2,115,812 |  | $ | (3,318,088 | ) | $ | 2,568,551 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current installments of long-term debt |  | $ | 189 |  | $ | — |  | $ | 35 |  | $ | — |  | $ | 224 |
Notes payable to banks |  |  | — |  |  | — |  |  | 13,375 |  |  | — |  |  | 13,375 |
Accounts payable |  |  | 72,610 |  |  | 22,006 |  |  | 117,808 |  |  | — |  |  | 212,424 |
Accrued employee compensation and benefits |  |  | 61,572 |  |  | 10,530 |  |  | 29,803 |  |  |  |  |  | 101,905 |
Accrued expenses |  |  | 30,641 |  |  | 4,674 |  |  | 43,188 |  |  | — |  |  | 78,503 |
Income taxes payable |  |  | — |  |  | 31 |  |  | 669 |  |  | (700 | ) |  | — |
Dividends payable |  |  | 6,002 |  |  | — |  |  | — |  |  | — |  |  | 6,002 |
Total current liabilities |  |  | 171,014 |  |  | 37,241 |  |  | 204,878 |  |  | (700 | ) |  | 412,433 |
Deferred income taxes |  |  | 23,305 |  |  | 27,851 |  |  | 37,144 |  |  | — |  |  | 88,300 |
Long-term debt, excluding current installments |  |  | 471,828 |  |  | 599,873 |  |  | 765 |  |  | (599,873 | ) |  | 472,593 |
Defined benefit pension liability |  |  | — |  |  | — |  |  | 112,043 |  |  | — |  |  | 112,043 |
Deferred compensation |  |  | 25,200 |  |  | — |  |  | 6,720 |  |  | — |  |  | 31,920 |
Other noncurrent liabilities |  |  | 4,507 |  |  | — |  |  | 39,745 |  |  | — |  |  | 44,252 |
Shareholders' equity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock of $1 par value |  |  | 27,900 |  |  | 457,950 |  |  | 254,982 |  |  | (712,932 | ) |  | 27,900 |
Additional paid-in capital |  |  | — |  |  | 150,286 |  |  | 893,274 |  |  | (1,043,560 | ) |  | — |
Retained earnings |  |  | 1,300,529 |  |  | 467,240 |  |  | 443,337 |  |  | (910,577 | ) |  | 1,300,529 |
Accumulated other comprehensive income |  |  | 43,938 |  |  | (15,380 | ) |  | 65,826 |  |  | (50,446 | ) |  | 43,938 |
Treasury stock |  |  | (22,455 | ) |  | — |  |  | — |  |  | — |  |  | (22,455 | )
Total Valmont Industries, Inc. shareholders' equity |  |  | 1,349,912 |  |  | 1,060,096 |  |  | 1,657,419 |  |  | (2,717,515 | ) |  | 1,349,912 |
Noncontrolling interest in consolidated subsidiaries |  |  | — |  |  | — |  |  | 57,098 |  |  | — |  |  | 57,098 |
Total shareholders' equity |  |  | 1,349,912 |  |  | 1,060,096 |  |  | 1,714,517 |  |  | (2,717,515 | ) |  | 1,407,010 |
Total liabilities and shareholders' equity |  | $ | 2,045,766 |  | $ | 1,725,061 |  | $ | 2,115,812 |  | $ | (3,318,088 | ) | $ | 2,568,551 |

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twenty-six Weeks Ended June 29, 2013

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings |  | $ | 167,132 |  | $ | 59,510 |  | $ | 67,811 |  | $ | (124,997 | ) | $ | 169,456 |
Adjustments to reconcile net earnings to net cash flows from operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 9,834 |  |  | 6,452 |  |  | 21,900 |  |  | — |  |  | 38,186 |
Stock-based compensation |  |  | 3,342 |  |  | — |  |  | — |  |  | — |  |  | 3,342 |
Defined benefit pension plan expense |  |  | — |  |  | — |  |  | 3,245 |  |  | — |  |  | 3,245 |
Contribution to defined benefit pension plan |  |  | — |  |  | — |  |  | (10,346 | ) |  | — |  |  | (10,346 | )
Gain on sale of property, plant and equipment |  |  | 337 |  |  | 36 |  |  | (5,444 | ) |  | — |  |  | (5,071 | )
Equity in earnings in nonconsolidated subsidiaries |  |  | (266 | ) |  | — |  |  | (207 | ) |  | — |  |  | (473 | )
Deferred income taxes |  |  | (2,504 | ) |  | 1,702 |  |  | (3,927 | ) |  | — |  |  | (4,729 | )
Changes in assets and liabilities (net of acquisitions): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Receivables |  |  | 453 |  |  | 5,235 |  |  | (9,019 | ) |  | — |  |  | (3,331 | )
Inventories |  |  | 10,524 |  |  | 1,643 |  |  | (14,658 | ) |  | — |  |  | (2,491 | )
Prepaid expenses |  |  | 579 |  |  | 318 |  |  | (6,807 | ) |  | — |  |  | (5,910 | )
Accounts payable |  |  | (6,052 | ) |  | (2,877 | ) |  | 9,665 |  |  | — |  |  | 736 |
Accrued expenses |  |  | 4,471 |  |  | (1,932 | ) |  | 377 |  |  | — |  |  | 2,916 |
Other noncurrent liabilities |  |  | 3,058 |  |  | — |  |  | (1,185 | ) |  | — |  |  | 1,873 |
Income taxes payable (refundable) |  |  | (10,415 | ) |  | (1,943 | ) |  | (277 | ) |  | 825 |  |  | (11,810 | )
Net cash flows from operating activities |  |  | 180,493 |  |  | 68,144 |  |  | 51,128 |  |  | (124,172 | ) |  | 175,593 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchase of property, plant and equipment |  |  | (22,826 | ) |  | (18,569 | ) |  | (12,863 | ) |  | — |  |  | (54,258 | )
Proceeds from sale of assets |  |  | 1,466 |  |  | 32 |  |  | 37,556 |  |  | — |  |  | 39,054 |
Acquisitions, net of cash acquired |  |  | — |  |  | — |  |  | (53,152 | ) |  | — |  |  | (53,152 | )
Other, net |  |  | (53,317 | ) |  | (99,472 | ) |  | 28,484 |  |  | 124,172 |  |  | (133 | )
Net cash flows from investing activities |  |  | (74,677 | ) |  | (118,009 | ) |  | 25 |  |  | 124,172 |  |  | (68,489 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net borrowings under short-term agreements |  |  | — |  |  | — |  |  | 2,620 |  |  | — |  |  | 2,620 |
Proceeds from long-term borrowings |  |  | — |  |  | — |  |  | 68 |  |  | — |  |  | 68 |
Principal payments on long-term borrowings |  |  | (186 | ) |  | — |  |  | (117 | ) |  | — |  |  | (303 | )
Dividends paid |  |  | (12,021 | ) |  | — |  |  | — |  |  | — |  |  | (12,021 | )
Dividends to noncontrolling interest |  |  | — |  |  | — |  |  | (1,767 | ) |  | — |  |  | (1,767 | )
Proceeds from exercises under stock plans |  |  | 14,098 |  |  | — |  |  | — |  |  | — |  |  | 14,098 |
Excess tax benefits from stock option exercises |  |  | 305 |  |  | — |  |  | — |  |  | — |  |  | 305 |
Purchase of common treasury shares—stock plan exercises: |  |  | (13,602 | ) |  | — |  |  | — |  |  | — |  |  | (13,602 | )
Net cash flows from financing activities |  |  | (11,406 | ) |  | — |  |  | 804 |  |  | — |  |  | (10,602 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | — |  |  | (3,600 | ) |  | (16,554 | ) |  | — |  |  | (20,154 | )
Net change in cash and cash equivalents |  |  | 94,410 |  |  | (53,465 | ) |  | 35,403 |  |  | — |  |  | 76,348 |
Cash and cash equivalents—beginning of year |  |  | 40,926 |  |  | 83,203 |  |  | 290,000 |  |  | — |  |  | 414,129 |
Cash and cash equivalents—end of period |  | $ | 135,336 |  | $ | 29,738 |  | $ | 325,403 |  | $ | — |  | $ | 490,477 |

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VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

(7) GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Twenty-six Weeks Ended June 30, 2012

|  | Parent |  | Guarantors |  | Non-Guarantors |  | Eliminations |  | Total |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Cash flows from operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings |  | $ | 112,305 |  | $ | 45,379 |  | $ | 55,613 |  | $ | (99,550 | ) | $ | 113,747 |
Adjustments to reconcile net earnings to net cash flows from operations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 9,121 |  |  | 6,341 |  |  | 18,905 |  |  | — |  |  | 34,367 |
Stock-based compensation |  |  | 3,067 |  |  | — |  |  | — |  |  | — |  |  | 3,067 |
Defined benefit pension plan expense |  |  | — |  |  | — |  |  | 2,050 |  |  | — |  |  | 2,050 |
Contribution to defined benefit pension plan |  |  | — |  |  | — |  |  | (10,750 | ) |  | — |  |  | (10,750 | )
Gain on sale of property, plant and equipment |  |  | (65 | ) |  | (44 | ) |  | (55 | ) |  | — |  |  | (164 | )
Equity in earnings of nonconsolidated subsidiaries |  |  | 157 |  |  | — |  |  | (3,932 | ) |  | — |  |  | (3,775 | )
Deferred income taxes |  |  | (2,769 | ) |  | 139 |  |  | (1,826 | ) |  | — |  |  | (4,456 | )
Changes in assets and liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Receivables |  |  | (11,412 | ) |  | (27,844 | ) |  | (30,666 | ) |  | — |  |  | (69,922 | )
Inventories |  |  | (10,063 | ) |  | (7,131 | ) |  | (31,471 | ) |  | 167 |  |  | (48,498 | )
Prepaid expenses |  |  | (1,332 | ) |  | 266 |  |  | (2,994 | ) |  | — |  |  | (4,060 | )
Accounts payable |  |  | (13,913 | ) |  | 5,395 |  |  | 10,494 |  |  | — |  |  | 1,976 |
Accrued expenses |  |  | 3,009 |  |  | (1,227 | ) |  | (2,403 | ) |  | — |  |  | (621 | )
Other noncurrent liabilities |  |  | 719 |  |  | — |  |  | (1,127 | ) |  | — |  |  | (408 | )
Income taxes payable (refundable) |  |  | (13,249 | ) |  | 38 |  |  | (2,879 | ) |  | — |  |  | (16,090 | )
Net cash flows from operations |  |  | 75,575 |  |  | 21,312 |  |  | (1,041 | ) |  | (99,383 | ) |  | (3,537 | )
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchase of property, plant and equipment |  |  | (15,037 | ) |  | (6,017 | ) |  | (18,167 | ) |  | — |  |  | (39,221 | )
Proceeds from sale of assets |  |  | 98 |  |  | 52 |  |  | 4,717 |  |  | — |  |  | 4,867 |
Other, net |  |  | (59,181 | ) |  | 6,599 |  |  | (44,964 | ) |  | 99,383 |  |  | 1,837 |
Net cash flows from investing activities |  |  | (74,120 | ) |  | 634 |  |  | (58,414 | ) |  | 99,383 |  |  | (32,517 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net borrowings under short-term agreements |  |  | — |  |  | — |  |  | 5,931 |  |  | — |  |  | 5,931 |
Proceeds from long-term borrowings |  |  | 39,000 |  |  | — |  |  | 126 |  |  | — |  |  | 39,126 |
Principal payments on long-term borrowings |  |  | (39,191 | ) |  | — |  |  | (41 | ) |  | — |  |  | (39,232 | )
Proceeds from sale of partial ownership interest |  |  | — |  |  | — |  |  | 1,404 |  |  | — |  |  | 1,404 |
Dividends paid |  |  | (9,545 | ) |  | — |  |  | — |  |  | — |  |  | (9,545 | )
Dividend to noncontrolling interests |  |  | — |  |  | — |  |  | (1,379 | ) |  | — |  |  | (1,379 | )
Proceeds from exercises under stock plans |  |  | 15,153 |  |  | — |  |  | — |  |  | — |  |  | 15,153 |
Excess tax benefits from stock option exercises |  |  | 3,211 |  |  | — |  |  | — |  |  | — |  |  | 3,211 |
Purchase of common treasury shares—stock plan exercises |  |  | (14,086 | ) |  | — |  |  | — |  |  | — |  |  | (14,086 | )
Net cash flows from financing activities |  |  | (5,458 | ) |  | — |  |  | 6,041 |  |  | — |  |  | 583 |
Effect of exchange rate changes on cash and cash equivalents |  |  | — |  |  | 270 |  |  | 688 |  |  | — |  |  | 958 |
Net change in cash and cash equivalents |  |  | (4,003 | ) |  | 22,216 |  |  | (52,726 | ) |  | — |  |  | (34,513 | )
Cash and cash equivalents—beginning of year |  |  | 27,545 |  |  | 18,257 |  |  | 317,092 |  |  | — |  |  | 362,894 |
Cash and cash equivalents—end of period |  | $ | 23,542 |  | $ | 40,473 |  | $ | 264,366 |  | $ | — |  | $ | 328,381 |

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

Management's discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which the Company operates, as well as management's perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions. Many factors could affect the Company's actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, risk factors described from time to time in the Company's reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, and actions and policy changes of domestic and foreign governments.

This discussion should be read in conjunction with the financial statements and notes thereto, and the management's discussion and analysis included in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2012. Segment sales in the table below are presented net of intersegment sales.

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Results of Operations

Dollars in millions, except per share amounts

|  | Thirteen Weeks Ended |  | Twenty-six Weeks Ended |
--- | --- | --- | --- | --- | ---
|  | June 29, 2013 |  | June 30, 2012 |  | % Incr. (Decr.) |  | June 29, 2013 |  | June 30, 2012 |  | % Incr. (Decr.) |
Consolidated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  | $ | 878.7 |  | $ | 767.3 |  |  | 14.5 | % | $ | 1,698.3 |  | $ | 1,484.7 |  |  | 14.4 | %
Gross profit |  |  | 261.5 |  |  | 199.4 |  |  | 31.1 | % |  | 496.8 |  |  | 385.7 |  |  | 28.8 | %
as a percent of sales |  |  | 29.8 | % |  | 26.0 | % |  |  |  |  | 29.3 | % |  | 26.0 | % |  |  |
SG&A expense |  |  | 117.2 |  |  | 102.0 |  |  | 14.9 | % |  | 234.4 |  |  | 205.5 |  |  | 14.1 | %
as a percent of sales |  |  | 13.3 | % |  | 13.3 | % |  |  |  |  | 13.8 | % |  | 13.8 | % |  |  |
Operating income |  |  | 144.3 |  |  | 97.4 |  |  | 48.2 | % |  | 262.5 |  |  | 180.2 |  |  | 45.7 | %
as a percent of sales |  |  | 16.4 | % |  | 12.7 | % |  |  |  |  | 15.5 | % |  | 12.1 | % |  |  |
Net interest expense |  |  | 6.2 |  |  | 5.5 |  |  | 12.7 | % |  | 13.0 |  |  | 11.2 |  |  | 16.1 | %
Effective tax rate |  |  | 34.1 | % |  | 34.3 | % |  |  |  |  | 32.7 | % |  | 34.7 | % |  |  |
Net earnings |  | $ | 89.6 |  | $ | 60.0 |  |  | 49.3 | % | $ | 167.1 |  | $ | 112.3 |  |  | 48.8 | %
Diluted earnings per share |  | $ | 3.33 |  | $ | 2.24 |  |  | 48.7 | % | $ | 6.22 |  | $ | 4.20 |  |  | 48.1 | %
Engineered Infrastructure Products |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  | $ | 228.5 |  | $ | 211.1 |  |  | 8.2 | % | $ | 422.7 |  | $ | 396.6 |  |  | 6.6 | %
Gross profit |  |  | 64.8 |  |  | 54.5 |  |  | 18.9 | % |  | 118.4 |  |  | 101.1 |  |  | 17.1 | %
SG&A expense |  |  | 42.2 |  |  | 40.3 |  |  | 4.7 | % |  | 83.1 |  |  | 78.9 |  |  | 5.3 | %
Operating income |  |  | 22.6 |  |  | 14.2 |  |  | 59.2 | % |  | 35.3 |  |  | 22.2 |  |  | 59.0 | %
Utility Support Structures |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  | $ | 227.9 |  | $ | 211.7 |  |  | 7.7 | % | $ | 467.2 |  | $ | 401.0 |  |  | 16.5 | %
Gross profit |  |  | 62.1 |  |  | 44.3 |  |  | 40.2 | % |  | 128.0 |  |  | 86.6 |  |  | 47.8 | %
SG&A expense |  |  | 20.0 |  |  | 17.7 |  |  | 13.0 | % |  | 39.7 |  |  | 34.9 |  |  | 13.8 | %
Operating income |  |  | 42.1 |  |  | 26.6 |  |  | 58.3 | % |  | 88.3 |  |  | 51.7 |  |  | 70.8 | %
Coatings |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  | $ | 79.4 |  | $ | 71.6 |  |  | 10.9 | % | $ | 154.3 |  | $ | 141.8 |  |  | 8.8 | %
Gross profit |  |  | 29.1 |  |  | 27.4 |  |  | 6.2 | % |  | 52.2 |  |  | 52.7 |  |  | (0.9 | )%
SG&A expense |  |  | 5.5 |  |  | 7.9 |  |  | (30.4 | )% |  | 15.2 |  |  | 16.7 |  |  | (9.0 | )%
Operating income |  |  | 23.6 |  |  | 19.5 |  |  | 21.0 | % |  | 37.0 |  |  | 36.0 |  |  | 2.8 | %
Irrigation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  | $ | 270.2 |  | $ | 194.5 |  |  | 38.9 | % | $ | 514.9 |  | $ | 390.3 |  |  | 31.9 | %
Gross profit |  |  | 87.1 |  |  | 55.9 |  |  | 55.8 | % |  | 163.5 |  |  | 111.9 |  |  | 46.1 | %
SG&A expense |  |  | 22.9 |  |  | 18.3 |  |  | 25.1 | % |  | 44.8 |  |  | 35.9 |  |  | 24.8 | %
Operating income |  |  | 64.2 |  |  | 37.6 |  |  | 70.7 | % |  | 118.7 |  |  | 76.0 |  |  | 56.2 | %
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  | $ | 72.7 |  | $ | 78.4 |  |  | (7.3 | )% | $ | 139.2 |  | $ | 155.0 |  |  | (10.2 | )%
Gross profit |  |  | 18.3 |  |  | 17.1 |  |  | 7.0 | % |  | 34.4 |  |  | 33.4 |  |  | 3.0 | %
SG&A expense |  |  | 5.3 |  |  | 4.8 |  |  | 10.4 | % |  | 10.6 |  |  | 9.7 |  |  | 9.3 | %
Operating income |  |  | 13.0 |  |  | 12.3 |  |  | 5.7 | % |  | 23.8 |  |  | 23.7 |  |  | 0.4 | %
Net corporate expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross profit |  | $ | 0.1 |  | $ | 0.2 |  |  | NM |  | $ | 0.3 |  | $ | — |  |  | NM |
SG&A expense |  |  | 21.3 |  |  | 13.0 |  |  | 63.8 | % |  | 41.0 |  |  | 29.4 |  |  | 39.5 | %
Operating loss |  |  | (21.2 | ) |  | (12.8 | ) |  | (65.6 | )% |  | (40.7 | ) |  | (29.4 | ) |  | (38.4 | )%

NM=Not meaningful

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Overview

On a consolidated basis, the increase in net sales in the second quarter and first half of fiscal 2013, as compared with 2012, reflected improved sales in all reportable segments while sales were down in the "Other" category. Fiscal 2013 refers to the twenty-six and thirteen week periods ended June 29, 2013 and fiscal 2012 refers to the twenty-six and thirteen week periods ended June 30, 2012. The increase in net sales in 2013, as compared with 2012, was due to the following factors:

|  | Second Quarter |
--- | --- | --- | ---
|  | Total |  | EIP |  | Utility |  | Coatings |  | Irrigation |  | Other |
Sales—2012 |  | $ | 767.3 |  | $ | 211.1 |  | $ | 211.7 |  | $ | 71.6 |  | $ | 194.5 |  | $ | 78.4 |
Volume |  |  | 63.4 |  |  | (0.9 | ) |  | (4.7 | ) |  | (2.1 | ) |  | 70.5 |  |  | 0.6 |
Pricing/mix |  |  | 25.7 |  |  | — |  |  | 20.8 |  |  | 1.3 |  |  | 7.3 |  |  | (3.7 | )
Acquisitions |  |  | 27.1 |  |  | 18.1 |  |  | — |  |  | 9.0 |  |  | — |  |  | — |
Currency translation |  |  | (4.8 | ) |  | 0.2 |  |  | 0.1 |  |  | (0.4 | ) |  | (2.1 | ) |  | (2.6 | )
Sales—2013 |  | $ | 878.7 |  | $ | 228.5 |  | $ | 227.9 |  | $ | 79.4 |  | $ | 270.2 |  | $ | 72.7 |

|  | Year-to-date |
--- | --- | --- | ---
|  | Total |  | EIP |  | Utility |  | Coatings |  | Irrigation |  | Other |
Sales—2012 |  | $ | 1,484.7 |  | $ | 396.6 |  | $ | 401.0 |  | $ | 141.8 |  | $ | 390.3 |  | $ | 155.0 |
Volume |  |  | 119.0 |  |  | (4.0 | ) |  | 22.8 |  |  | (4.9 | ) |  | 110.2 |  |  | (5.1 | )
Pricing/mix |  |  | 56.7 |  |  | 0.5 |  |  | 43.3 |  |  | 1.4 |  |  | 18.9 |  |  | (7.4 | )
Acquisitions |  |  | 46.9 |  |  | 29.9 |  |  | — |  |  | 17.0 |  |  | — |  |  | — |
Currency translation |  |  | (9.0 | ) |  | (0.3 | ) |  | 0.1 |  |  | (1.0 | ) |  | (4.5 | ) |  | (3.3 | )
Sales—2013 |  | $ | 1,698.3 |  | $ | 422.7 |  | $ | 467.2 |  | $ | 154.3 |  | $ | 514.9 |  | $ | 139.2 |

Acquisitions included Locker Holdings Group ("Locker") and Pure Metal Galvanizing ("PMG"). We acquired PMG in December 2012 and Locker in February 2013. We report Locker in the Engineered Infrastructure Products segment and PMG in the Coatings segment.

The decrease in operating profit due to currency translation effects in the second quarter and first half of 2013, as compared with 2012 was $0.5 million and $1.2 million, respectively.

The increase in gross margin (gross profit as a percent of sales) in fiscal 2013, as compared with 2012, was due to a combination of improved sales prices and sales mix, improved sales volumes and lower raw material costs in 2013, as compared with 2012. In general, our cost of steel and other raw materials were slightly lower in the second quarter and first half of 2013, as compared with the same periods in 2012.

Selling, general and administrative (SG&A) spending in the second quarter and first half of fiscal 2013, as compared with the same period in 2012, increased mainly due to the following factors:

•
  Expenses recorded by Locker and PMG, which were acquired after the second quarter of 2012, of $5.0 million and $9.6 million, respectively;
•
  Increased compensation expenses of $2.1 million and $4.7 million, respectively, mainly associated with increased employment levels and salary increases, and;
•
  Increased employee incentive accruals of $6.0 million and $8.7 million, respectively, due to improved operating results and increased share price in valuing long-term incentive plans.

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In addition, certain non-recurring items affecting the comparisons of SG&A expenses included:

•
  The sale of one of our galvanizing facilities in Australia resulted in a gain of $4.6 million in the second quarter of 2013, which was reported as a reduction of SG&A expense, and;
•
  Insurance proceeds received in the second quarter of 2012 related to a fire in one of our galvanizing facilities in Australia resulted in a non-recurring reduction in SG&A of $1.4 million.

On a reportable segment basis, all segments realized improved operating income in the second quarter and first half of 2013, as compared with 2012.

Net interest expense increased in the the second quarter and first half of fiscal 2013, as compared with 2012, due to a combination of lower interest income, as we used invested cash to fund the Locker acquisition, and slightly higher interest expense. The increase in interest expense principally was due to higher bank fees and interest incurred due to international working capital borrowings.

Our effective income tax rate in the second quarter of fiscal 2013 was comparable with 2012. The year-to-date effective tax rate in fiscal 2013 was lower than 2012, mainly due to approximately $3.2 million of non-cash tax benefits associated with the first quarter 2013 sale of our nonconsolidated investment in South Africa and $1.0 million of increased research and development tax credits in the U.S.

Earnings in non-consolidated subsidiaries were lower in fiscal 2013, as compared with 2012, due to the sale of our 49% owned manganese materials operation in February 2013. There was no significant gain or loss on the sale.

Our cash flows generated by operations were approximately $175.6 million in fiscal 2013, as compared with $3.5 million used by operations in 2012. The increase in operating cash flow in 2013 was the result of improved in net earnings and lower working capital increase in 2013, as compared with 2012.

Engineered Infrastructure Products (EIP) segment

The increase in net sales in the second quarter and first half of fiscal 2013 as compared with 2012 was mainly due to the acquisition of Locker in February 2013. Global lighting sales in the second quarter and first half of fiscal 2013 were comparable with the same periods in fiscal 2012, and slightly improved sales in North America were offset by lower sales in Europe. The transportation market for lighting and traffic structures in the U.S., while stable, continues to be challenging. Sales in other market channels such as sales to lighting fixture manufacturers and commercial construction projects in the second quarter and first half of fiscal 2013 improved somewhat as compared with the same periods in 2012. In Europe, sales in fiscal 2013 were lower than 2012, as weak economic conditions and restricted government roadway spending activity hampered demand for lighting structures.

Communication product line sales in fiscal 2013 were improved over 2012, mainly due to higher sales in North America of $4.1 million and $8.5 million, respectively. The increase in North America sales was mainly attributable to stronger sales demand for components due to 4G wireless communication development. In China, sales of wireless communication structures in the second quarter and first half of fiscal 2013 were lower than the same periods in fiscal 2012.

Access systems product line sales improved in 2013, as compared with 2012, mainly due to the Locker acquisition in February 2013. Highway safety product sales in 2013 were comparable with 2012, as spending for roads and highways in Australia continues to be relatively weak due to budgetary restrictions.

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Operating income for the segment in the second quarter and first half of fiscal 2013 increased, as compared with the same periods of fiscal 2012, due primarily to:

•
  improved operating performance of our pole structures operations in Europe and Asia Pacific, due to better sales mix, better factory operating performance and lower SG&A spending;
•
  improved North American communication product sales, and;
•
  operating profit generated from Locker (approximately $0.9 million and $1.3 million, respectively).

The increase in SG&A spending was attributable to Locker (approximately $3.6 million and $6.6 million, respectively). SG&A spending otherwise was lower in 2013, as compared with 2012, mainly associated with cost cutting measures taken in Europe in the latter part of 2012.

Utility Support Structures (Utility) segment

In the Utility segment, the sales increase in the second quarter and first half of fiscal 2013, as compared with 2012, was due mainly to improved sales in the U.S. market. While international sales were lower in the second quarter of 2013, as compared with the same period of 2012, year-to-date international sales in 2013 improved over fiscal 2012. International utility sales are more dependent on bid projects than North America.

In the U.S., electrical utility companies continue to invest in the electrical grid at a high rate, as evidenced by record backlogs at December 29, 2012 and continued strong order flow in 2013. Certain low margin orders that shipped and were completed in fiscal 2012 contributed to improved sales prices and mix in 2013, as compared with 2012. In international markets, the year-to-date sales increase was related to higher sales in the Asia Pacific region and certain project sales in Africa.

Operating income in fiscal 2013, as compared with 2012, increased due to the increase in sales volumes, improved sales pricing and mix and favorable leverage of fixed costs. In addition, the second quarter and first half of fiscal 2012 included approximately $5.8 million and $7.1 million, respectively, of unanticipated production and rework costs associated with one large order. These costs did not recur in fiscal 2013, which contributed to the gross profit improvements in fiscal 2013, as compared with 2012. The increases in SG&A expense in the second quarter and first half of fiscal 2013, as compared with fiscal 2012, were mainly due to increased employee compensation ($0.5 million and $1.3 million, respectively) and incentives ($0.3 million and $0.8 million, respectively) associated with the increase in business levels and operating income.

Coatings segment

Coatings segment sales increased in the second quarter and first half of fiscal 2013, as compared with 2012, due mainly to the December 2012 PMG acquisition. In North America, we experienced slightly lower external demand for galvanizing services, although internal demand from our other segments was higher in the second quarter and first half of 2013, as compared with 2012. Asia Pacific volumes in 2013 were lower than 2012 due to weak demand in Australia. Unit pricing in 2013 was comparable with 2012.

The increase in segment operating income in the second quarter and first half of fiscal 2013, as compared with 2012, was mainly due to the gain on the sale of an Australian galvanizing operation in the second quarter of fiscal 2013 of $4.6 million, and operating income provided by PMG ($1.2 million and $1.5 million, respectively). These two positive effects on fiscal 2013 operating income were offset to an extent by the effect of lower external demand for coatings services and a non-recurring favorable settlement with a vendor in the second quarter of fiscal 2012 of approximately $0.9 million.

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Irrigation segment

The increase in Irrigation segment net sales in the second quarter and first half of fiscal 2013, as compared with 2012, was mainly due to sales volume increases in both North American and International markets. The pricing and sales mix effect was generally due to sales price increases that took effect in 2012 to recover higher material costs in early 2012. In global markets, the sales growth was due to very strong agricultural economies around the world. Farm commodity prices continue to be favorable. We believe that farm commodity prices have been favorable due to strong demand, including consumption in the production of ethanol and other fuels, and traditionally low inventories of major farm commodities. In addition, in North America, we believe widespread drought throughout much of the country in 2012 further highlighted the benefits of center pivot irrigation and contributed to enhanced demand for our products. In international markets, sales improved in the second quarter and first half of fiscal 2013, as compared with 2012, mainly due to increased activity in Brazil and Eastern Europe. On balance, sales in other international regions in the second quarter and first half of fiscal 2013 were comparable to the same periods of a strong fiscal 2012.

Operating income for the segment improved in fiscal 2013 over 2012, due to improved sales unit volumes in North America and related price increases. Moderating raw material prices in light of higher selling prices also contributed to improved operating income in 2013, as compared with 2012. The most significant reason for the increase in SG&A expense in 2013, as compared with 2012, related to employee compensation costs and incentives (approximately $2.3 million and $3.1 million, respectively), $1.2 million in bad debt provisions for international receivables recorded in the second quarter of 2013 and other expenses to support the business activity levels and product development.

Other

This unit includes the grinding media, industrial tubing, electrolytic manganese and industrial fasteners operations. The decrease in sales in the second quarter and first half of fiscal 2013, as compared with 2012, was mainly due lower sales volumes and sales prices. Operating income in the second quarter and first half of fiscal 2013 was comparable with the same periods in 2012, as lower raw material prices helped to dampen the effects of lower selling prices.

Net corporate expense

Net corporate expense in the second quarter and first half of fiscal 2013 increased over the same periods in fiscal 2012. These increases were mainly due to:

•
  higher employee incentives associated with improved net earnings and share price, which affected long-term incentive plans (approximately $3.9 million and $5.6 million, respectively);
•
  insurance settlements realized in the second quarter of 2012 related to a fire and storm damage to one of our galvanizing facilities in Australia of $1.4 million that did not recur in fiscal 2013;
•
  higher compensation and employee benefit costs (approximately $1.0 million and $2.7 million, respectively), and;
•
  increased expenses associated with the Delta Pension Plan (approximately $0.6 million and $1.2 million, respectively).

These increases were partially offset by 2012 stamp duties incurred in the first quarter of fiscal 2012 related to the 2011 Delta legal restructuring of $1.2 million that did not recur in 2013.

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Liquidity and Capital Resources

Cash Flows

Working Capital and Operating Cash Flows—Net working capital was $1,102.6 million at June 29, 2013, as compared with $1,013.5 million at December 29, 2012. The increase in net working capital in 2013 mainly resulted from increased cash on hand. Cash flow provided by operations was $175.6 million in fiscal 2013, as compared with $3.5 million used by operations in fiscal 2012. The increase in operating cash flow in 2013 was the result of the improvement in net earnings and working capital management in 2013, as compared with 2012. Despite higher sales levels, receivable and inventory levels were comparable with December 2012. Receivable turnover was slightly better in 2013, as compared with 2012, in part due to strong sales in North America, where collections generally are faster than at international locations. Inventory levels in June 2013 were comparable with December 2012, due to generally improved material lead times and has resulted in us being able to maintain lower inventory stocks at June 2013, as compared with December 2012.

Investing Cash Flows—Capital spending in the first half of fiscal 2013 was $54.3 million, as compared with $39.2 million for the same period in 2012. The most significant capital spending projects in 2013 included certain capacity expansions in the Utility and Irrigation segments. We expect our capital spending for the 2013 fiscal year to be approximately $110 million. The increase in expected capital spending over 2012 is mainly due to capacity increases to meet the growing need for utility structures in the U.S. and additional manufacturing investment in the Irrigation segment. In 2013, investing cash flows included proceeds from asset sales of $39.1 million, principally consisting of $29.2 million received from the sale of our 49% owned non-consolidated subsidiary in South Africa and $8.2 million received from the sale of the Western Australia galvanizing operation. Investing cash flows also included $53.2 million paid for the Locker acquisition.

Financing Cash Flows—Our total interest-bearing debt increased slightly to $488.1 million at June 29, 2013 from $486.2 million at December 29, 2012. Financing cash flows overall were lower in fiscal 2013, as compared with 2012. The main reasons for the decrease related to higher dividend payments associated with an increase in per share dividends in fiscal 2013 and lower excess tax benefits related to stock option exercises.

Financing and Capital

We have historically funded our growth, capital spending and acquisitions through a combination of operating cash flows and debt financing. We have an internal long-term objective to maintain long-term debt as a percent of invested capital at or below 40%. At June 29, 2013, our long-term debt to invested capital ratio was 22.8%, as compared with 23.9% at December 29, 2012. Subject to our level of acquisition activity and steel industry operating conditions (which could affect the levels of inventory we need to fulfill customer commitments), we plan to maintain this ratio below 40% in 2013.

Our debt financing at June 29, 2013 consisted primarily of long-term debt. We also maintain certain short-term bank lines of credit totaling $106.6 million, $90.6 million of which was unused at June 29, 2013. Our long-term debt principally consists of:

•
  $450 million face value ($462 million carrying value) of senior unsecured notes that bear interest at 6.625% per annum and are due in April 2020. We are allowed to repurchase the notes at specified prepayment premiums. These notes are guaranteed by certain of our subsidiaries.
•
  $400 million revolving credit agreement with a group of banks. We may increase the credit facility by up to an additional $200 million at any time, subject to participating banks increasing

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the amount of their lending commitments. The interest rate on our borrowings will be, at our option, either:

(a)
  LIBOR (based on a 1, 2, 3 or 6 month interest period, as selected by us) plus 125 to 225 basis points (inclusive of facility fees), depending on our ratio of debt to earnings before taxes, interest, depreciation and amortization (EBITDA), or;
(b)
  the higher of
  •
    The higher of (a) the prime lending rate and (b) the Federal Funds rate plus 50 basis points plus in each case, 25 to 100 basis points (inclusive of facility fees), depending on our ratio of debt to EBITDA, or
  •
    LIBOR (based on a 1 week interest period) plus 125 to 225 basis points (inclusive of facility fees), depending on our ratio of debt to EBITDA.

At June 29, 2013 and December 29, 2012, we had no outstanding borrowings under the revolving credit agreement. The revolving credit agreement has a termination date of August 15, 2017, and contains certain financial covenants that may limit our additional borrowing capability under the agreement. At June 29, 2013, we had the ability to borrow $384.5 million under this facility, after consideration of standby letters of credit of $15.5 million associated with certain insurance obligations.

These debt agreements contain covenants that require us to maintain certain coverage ratios and may limit us with respect to certain business activities, including capital expenditures. Our key debt covenants are as follows:

•
  Interest-bearing debt is not to exceed 3.5X EBITDA of the prior four quarters; and
•
  EBITDA over the prior four quarters must be at least 2.5X our interest expense over the same period.

At June 29, 2013, we were in compliance with all covenants related to these debt agreements. The key covenant calculations at June 29, 2013 were as follows:

Interest-bearing debt |  | $ | 488,123 |
EBITDA—last four quarters |  |  | 545,633 |
Leverage ratio |  |  | 0.89 |
EBITDA—last four quarters |  | $ | 545,633 |
Interest expense—last four quarters |  |  | 32,612 |
Interest earned ratio |  |  | 16.73 |

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The calculation of EBITDA—last four quarters (June 30, 2012 through June 29, 2013) is as follows:

Net cash flows from operations |  | $ | 376,227 |
Interest expense |  |  | 32,612 |
Income tax expense |  |  | 150,085 |
Deferred income tax benefit |  |  | (3,448 | )
Noncontrolling interest |  |  | (5,727 | )
Equity in earnings of nonconsolidated subsidiaries |  |  | 2,826 |
Stock-based compensation |  |  | (6,104 | )
Pension plan expense |  |  | (5,476 | )
Contribution to pension plan |  |  | 11,187 |
Changes in assets and liabilities |  |  | (11,136 | )
Other |  |  | 4,587 |
EBITDA |  | $ | 545,633 |
Net earnings attributable to Valmont Industries, Inc. |  | $ | 288,899 |
Interest expense |  |  | 32,612 |
Income tax expense |  |  | 150,085 |
Depreciation and amortization expense |  |  | 74,037 |
EBITDA |  | $ | 545,633 |

Our businesses are cyclical, but we have diversity in our markets, from a product, customer and a geographical standpoint. We have demonstrated the ability to effectively manage through business cycles and maintain liquidity. We have consistently generated operating cash flows in excess of our capital expenditures. Based on our available credit facilities, recent issuance of senior unsecured notes and our history of positive operational cash flows, we believe that we have adequate liquidity to meet our needs.

We have not made any provision for U.S. income taxes in our financial statements on approximately $620.4 million of undistributed earnings of our foreign subsidiaries, as we intend to reinvest those earnings. Of our cash balances at June 29, 2013, approximately $352.0 million is held in entities outside the United States. If we need to repatriate foreign cash balances to the United States to meet our cash needs, income taxes would be paid to the extent that those cash repatriations were undistributed earnings of our foreign subsidiaries. The income taxes that we would pay if cash were repatriated depends on the amounts to be repatriated and from which country. If all of our cash outside the United States were to be repatriated to the United States, we estimate that we would pay approximately $42.4 million in income taxes to repatriate that cash.

Financial Obligations and Financial Commitments

There have been no material changes to our financial obligations and financial commitments as described on page 37 in our Form 10-K for the fiscal year ended December 29, 2012.

Off Balance Sheet Arrangements

There have been no changes in our off balance sheet arrangements as described on page 38 in our Form 10-K for the fiscal year ended December 29, 2012.

Critical Accounting Policies

There have been no changes in our critical accounting policies as described on pages 39-43 in our Form 10-K for the fiscal year ended December 29, 2012 during the quarter ended June 29, 2013.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes in the company's market risk during the quarter ended June 29, 2013. For additional information, refer to the section "Risk Management" in our Form 10-K for the fiscal year ended December 29, 2012.

Item 4. Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934 is (1) accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.

No changes in the Company's internal control over financial reporting occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

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

Issuer Purchases of Equity Securities

|  | (a) |  | (b) |  | (c) |  | (d) |
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Period |  | Total Number of Shares Purchased |  | Average Price paid per share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |
March 31, 2013 to April 27, 2013 |  |  | — |  |  | — |  |  | — |  |  | — |
April 28, 2013 to June 1, 2013 |  |  | 7,919 |  |  | 154.91 |  |  | — |  |  | — |
June 2, 2013 to June 29, 2013 |  |  | — |  |  | — |  |  | — |  |  | — |
Total |  |  | 7,919 |  | $ | 154.91 |  |  | — |  |  | — |

During the second quarter, the only shares reflected above were those delivered to the Company by employees as part of stock option exercises, either to cover the purchase price of the option or the related taxes payable by the employee as part of the option exercise. The price paid per share was the market price at the date of exercise.

Item 6. Exhibits

(a)
  Exhibits

|  | Exhibit No. |  | Description
--- | --- | --- | --- | ---
|  |  | 31.1 |  | Section 302 Certificate of Chief Executive Officer
|  |  | 31.2 |  | Section 302 Certificate of Chief Financial Officer
|  |  | 32.1 |  | Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
|  |  | 101 |  | The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended June 29, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf and by the undersigned hereunto duly authorized.

|  | VALMONT INDUSTRIES, INC. (Registrant)
|  | /s/ RICHARD P. HEYSE Richard P. Heyse Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Dated this 25th day of July, 2013.

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Index of Exhibits

|  | Exhibit No. |  | Description
--- | --- | --- | --- | ---
|  |  | 31.1 |  | Section 302 Certificate of Chief Executive Officer
|  |  | 31.2 |  | Section 302 Certificate of Chief Financial Officer
|  |  | 32.1 |  | Section 906 Certifications of Chief Executive Officer and Chief Financial Officer
|  |  | 101 |  | The following financial information from Valmont's Quarterly Report on Form 10-Q for the quarter ended June 29, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Shareholders' Equity, (vi) Notes to Condensed Consolidated Financial Statements and (vii) document and entity information.

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