ITEM 1. BUSINESS.
(A) GENERAL DESCRIPTION OF BUSINESS
Valmont Industries, Inc., a Delaware Corporation, was incorporated as a Nebraska corporation on March 8, 1946. Subsequently the Company changed its state of incorporation to be under the laws of Delaware in 1974 and together with its subsidiaries (the "Company" or "Valmont") is engaged in the Infrastructure and Irrigation businesses. The description of Valmont's businesses set forth on pages 8 through 25 of the Company's 1999 Annual Report is incorporated herein by reference. The Company entered the Irrigation market in 1953 from its manufacturing location in Valley, Nebraska. The Infrastructure segment began producing and marketing engineered metal structures in the early 1960's.
Valmont has grown internally and by acquisition and has also divested certain businesses. Valmont's business expansions during the past five years include (i) the acquisition of Microflect Company, Inc. in 1995, a manufacturer and installer of microwave communication structures, (ii) the 1996 acquisitions of TelecCentre, S.A., a French manufacturer of communication towers, and of Valmont Mastbau, KG, a German manufacturer and distributor of pole structures for the lighting market, (iii) the 1997 construction of a new galvanizing plant in West Point, Nebraska, (iv) the 1997 formation of a 70% owned joint venture with a Brazilian manufacturer of mechanized irrigation equipment, (v) the acquisition of two galvanizing facilities in Tualatin, Oregon and in Lindon, Utah in January of 1998, (vi) the expansion during 1998 of facilities in Siedlce, Poland, (vii) the acquisition during 1998 of two additional galvanizing facilities in Long Beach, California and Tulsa, Oklahoma and the purchase of Cascade Earth Sciences, Ltd., a firm providing consulting services for environmental and wastewater management projects headquartered in Albany, Oregon, (viii) investment in two retail irrigation outlets during 1999 in California and Colorado, (ix) the 1999 investment in an irrigation manufacturing facility in McCook, Nebraska and (x) the first quarter 2000 acquisitions of three coatings facilities and an aluminum pole manufacturing plant. Divestitures during the past five years include the January 1997 cash sale of the stock of Valmont Electric, Inc., a lighting ballast manufacturing business and the first quarter 1999 sale of stock of an investment in an irrigation technology development business.
(B) OPERATING SEGMENTS
During the first quarter of 1999 the Company reorganized its businesses on a worldwide product line basis. Accordingly the 1997 and 1998 segment information has been reclassified to conform to the 1999 presentation. The Company has two reportable segments:
IRRIGATION: This segment consists of the manufacture and distribution of agricultural irrigation equipment, tubular products and related parts and services; and
INFRASTRUCTURE: This segment includes the manufacture and distribution of engineered metal structures and coating services for the lighting, utility and wireless communications industries.
In addition to these two reportable segments, the Company has other businesses that individually are not more than 10% of consolidated sales. Amounts of revenues, operating income and total assets attributable to each Segment information for each of the last three years is set forth on page 49 of the Annual Report and incorporated herein by reference.
(C) NARRATIVE DESCRIPTION OF BUSINESS
PRINCIPAL PRODUCTS PRODUCED AND SERVICES RENDERED.
The information called for by this item is incorporated by reference to pages 8 through 25 in the Company's Annual Report.
SUPPLIERS AND AVAILABILITY OF RAW MATERIALS.
Hot rolled steel coil, zinc and other carbon steel products are the primary raw materials utilized in the manufacture of finished products for the Infrastructure and Irrigation segments. These essential items are purchased from steel mills, zinc producers and steel service centers and are readily available. It is not likely that key raw materials would be unavailable for extended periods.
PATENTS, LICENSES, FRANCHISES AND CONCESSIONS.
Valmont has a number of patents for its manufacturing machinery, poles and irrigation designs. The Company also has a number of registered trademarks. Management believes the loss of any individual patent would not have a material adverse effect on the financial condition of the Company.
SEASONAL FACTORS IN BUSINESS.
Sales can be somewhat seasonal based upon the agricultural growing season and the infrastructure construction season.
CUSTOMERS.
The Company is not dependent for a material part of its business upon a single customer, or upon very few customers, the loss of any one of which would have a material adverse effect on the financial condition of the Company.
BACKLOG.
The backlog of orders for the principal products manufactured and marketed was approximately $129.9 million at the end of the 1999 fiscal year and $106.3 million at the close of 1998. It is anticipated that most of the backlog of orders will be filled during fiscal year 2000. At year-end, the backlog by segment was as follows (dollar amounts in millions):
COMPETITIVE CONDITIONS.
In the Infrastructure segment, Valmont is a major manufacturer and supplier of engineered metal structures to the lighting and traffic, utility and wireless communication industries and supplies custom coating services. The Irrigation segment involves the development, manufacture and distribution of mechanized irrigation equipment, tubular steel products and related products for both the U.S. and international markets. The Company manufactures and distributes pressure vessels, machine tool accessories and industrial fasteners. The Company has significant competitors in each of its industry segments. The key competitive strategy used by the Company in each segment is one of high quality and service.
RESEARCH ACTIVITIES.
The information called for by this item is incorporated by reference to the "Research and Development" on page 48 in the Company's Annual Report.
ENVIRONMENTAL DISCLOSURE.
The Company is subject to various federal, state and local laws and regulations pertaining to environmental protection and the discharge of materials into the environment. Although the Company continues to incur expenses and to make capital expenditures related to environmental protection, it does not anticipate that future expenditures will materially impact the financial condition of the Company.
NUMBER OF EMPLOYEES.
At December 25, 1999, the Company had 3,948 employees.
GEOGRAPHIC AREAS.
Valmont's international sales activity encompasses over one hundred foreign countries. The information called for by this item is incorporated by reference to "Summary by Geographical Area" on page 49 in the Annual Report.
ITEM 2.
ITEM 2. PROPERTIES
The Company's corporate headquarters are located in a leased facility in Omaha, Nebraska. The headquarters and principal operating locations of each business are set forth on the following list of "Valmont Locations." Some locations have shared facilities.
Most principal manufacturing facilities are held in fee. However, certain parcels of land and machinery and buildings are leased. A map depicting 27 plants can be found on pages 6 and 7 in the Annual Report.
VALMONT LOCATIONS
A. INFRASTRUCTURE SEGMENT
POLES DIVISION
Headquarters in Valley, Nebraska.
12 plants operated in Nebraska, Texas, Oklahoma, Indiana (all owned), Utah, Canada, France, the Netherlands, Germany, Poland and China (leased).
COMMUNICATION DIVISION
Headquarters at the Salem, Oregon facility which is leased.
Manufacturing capabilities located in Nebraska, Oregon, Texas, France (all owned), Brazil and China(both leased). Sales and engineering located in Nebraska (owned) and Oregon (leased).
COATINGS DIVISION
Headquarters in Valley, Nebraska.
Six processing facilities in California, Nebraska, Oklahoma, Oregon, and Utah. Facilities in Nebraska and Oklahoma are owned with real estate being leased at the other sites.
B. IRRIGATION SEGMENT
IRRIGATION SYSTEM AND PARTS DIVISION
Headquarters and sales offices in Valley, Nebraska.
Five manufacturing facilities in Nebraska, Spain, Brazil (leased facility) and South Africa (leased facility).
RETAIL DIVISION
Headquarters in Valley, Nebraska.
Three sales facilities leased in California, Colorado and Washington.
ENVIRONMENTAL ENGINEERING DIVISION
Headquarters in Albany, Oregon.
Eight offices providing water and soil management services in Idaho, Washington, Oregon (leased) and Nebraska (owned).
TUBING DIVISION
Headquartered in Valley, Nebraska.
One plant in Nebraska (owned).
C. OTHER
INDUSTRIAL PRODUCTS DIVISION
Headquarters in Valley, Nebraska.
Three manufacturing plants in Oklahoma (owned), Oregon and France (both leased).
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to, nor is any of its property subject to, any material legal proceedings. The Company is from time to time engaged in routine litigation incidental to the business.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of stockholders during the fourth quarter of 1999.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company at December 25, 1999, their ages, positions held, and the business experience of each during the past five years are, as follows:
Mogens C. Bay, Age 51, Chairman and Chief Executive Officer of the Company since January 1997. President and Chief Executive Officer of the Company from August 1993 to December 1996 and Director of the Company since October 1993.
Vincent T. Corso, Age 52, Senior Vice President and Chief Operating Officer of the Company since September of 1998. Group President and Chief Operating Officer--Irrigation & Coatings Group of the Company from December 1996 until September 1998. Vice President--Operations from June 1994 until December 1996.
Thomas P. Egan, Jr., Age 51, Vice President, Corporate Counsel and Secretary of the Company since 1984.
Terry J. McClain, Age 52, Senior Vice President and Chief Financial Officer since January 1997. Previously Vice President and Chief Financial Officer of the Company from January 1994 until December 1996.
E. Robert Meaney, Age 52, Senior Vice President--International since September 1998. President and Chief Operating Officer--Valmont International from February 1994 to September 1998.
Brian C. Stanley, Age 57, Vice President--Controller of the Company since January 1994.
Mark E. Treinen Age 44, Vice President--Business Development since January 1994.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The information called for by items 5, 6 and 7 is incorporated by reference to the following captioned paragraphs (at the pages indicated) in the Company's Annual Report:
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for by item 7A
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements called for by this item are incorporated by reference to the Company's Annual Report as set forth on pages 40 through 49, together with the independent auditors' report on page 51. The supplemental quarterly financial information is incorporated herein by reference to page 50 of the Company's Annual Report
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Except for the information relating to the executive officers of the Company set forth in Part I of this 10-K Report, the information called for by items 10, 11, 12 and 13 is incorporated by reference to the sections entitled "Certain Shareholders", "Election of Directors", "Summary Compensation Table", "Stock Option Grants in Fiscal Year 1999", "Options Exercised in Fiscal Year 1999 and Fiscal Year End Values", and "Long-Term Incentive Plans" in the Company's Proxy Statement.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements and Consolidated Financial Statement Schedules
Consolidated Financial Statements
The following consolidated financial statements of Valmont Industries, Inc. and subsidiaries have been incorporated by reference to pages 40 to 49 of the Company's Annual Report to Shareholders for the year ended December 25, 1999:
Independent Auditors' Report--Page 51 of the annual report.
Consolidated Balance Sheets--December 25, 1999 and December 26, 1998
Consolidated Statements of Operations--Three-Year Period Ended December 25, 1999
Consolidated Statements of Shareholders' Equity--Three-Year Period Ended December 25, 1999
Consolidated Statements of Cash Flows--Three-Year Period Ended December 25, 1999
Notes to Consolidated Financial Statements--Three-Year Period Ended December 25, 1999
All other schedules have been omitted as the required information is inapplicable or the information is included in the consolidated financial statements or related notes.
Separate financial statements of the Registrant have been omitted because the Registrant meets the requirements which permit omission.
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders of Valmont Industries, Inc.
We have audited the consolidated financial statements of Valmont Industries, Inc. and Subsidiaries (the Company) as of December 25, 1999 and December 26, 1998, and for each of the three years in the period ended December 25,1999, and have issued our report thereon dated February 4, 2000; such financial statements and report are included in your 1999 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the financial statement schedule of the Company listed in Item 14 of this Form 10-K. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Omaha, Nebraska February 4, 2000
Schedule II
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS (DOLLARS IN THOUSANDS)
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* The deductions from reserves are net of recoveries.
SIGNATURES
The Registrant. Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Omaha, State of Nebraska, on the 15th day of March, 2000.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Valmont Industries, Inc. and in the capacities indicated on the dates indicated.
* Mogens C. Bay, by signing his name hereto, signs the Annual Report on behalf of each of the directors indicated on this 15th day of March, 2000. A Power of Attorney authorizing Mogens C. Bay to sign the Annual Report of Form 10-K on behalf of each of the indicated directors of Valmont Industries, Inc. has been filed herein as Exhibit 24.
INDEX TO EXHIBITS
This Exhibit Index relates to exhibits filed as a part of this Report. Numbers are assigned to exhibits in accordance with Item 601 of Regulation S-K.
Pursuant to Item 601(b)(4) of Regulation S-K, certain instruments with respect to Valmont Industries' long-term debt are not filed with this Form 10-K. Valmont will furnish a copy of such long-term debt agreements to the Securities and Exchange Commission upon request.
Management contracts and compensatory plans are set forth as exhibits 10(i) through 10(v).
* Filed herewith.