Valmont Industries
Annual Report 2002

Plain-text annual report

Conserving Resources. Improving Life. A n n u a l R e p o r t 2 0 0 2 Throughout the World, Our Products Conserve Resources and Improve Life. 1 Financial Highlights 2 Letter to Shareholders 6 At a Glance 8 Poles: Lighting and Traffic 12 Poles: Utility Poles and Structures 14 Wireless Communication 16 Coatings 18 Irrigation 22 Tubing 24 Global Presence 26 Board of Directors 28 Conserving Resources. Improving Life. 29 Financial and Corporate Information 30 11-Year Financial Summary 32 Financial Objectives 33 Total Value Impact 34 Segment Summary 35 International Contact Information 39 Officers and Management 40 Corporate and Stock Information Cover: Valmont’s decorative light poles help beautify public areas near the Acropolis in Athens, Greece. 2002 Financi al Hi ghlig ht s Net Sales Operating Income Diluted Earnings Per Share 1 (Dollars in millions, except per share amounts) 2002 2001 2000 Operating Results Net sales $ 854.9 $ 872.4 $ 846.1 Operating income 70.3 65.0 67.3 Net earnings 33.6 26.7 30.4 Diluted earnings per share 1.37 1.09 1.28 Dividends per share 0.29 0.26 0.26 Financial Position Shareholders’ equity $ 242.0 $ 225.8 $ 191.9 Shareholders’ equity per share 10.13 9.23 8.23 Long-term debt as a % of invested capital 36.8% 41.9% 42.8% Operating Ratios Gross profit as a % of net sales 27.1% 24.9% 25.0% Operating income as a % of net sales 8.2% 7.5% 7.9% Net earnings as a % of net sales 3.9% 3.1% 3.6% Return on beginning equity 14.9% 13.9% 17.8% Return on invested capital 9.7% 8.6% 10.9% Year-End Data Shares outstanding (000) 23,883 24,477 23,320 Approximate number of shareholders 5,500 5,500 5,500 Number of employees 5,234 5,342 5,503 Le tter To Fellow S har e holde r s “Our Market Drivers Are Compe lli ng, Global And En duri ng” 2 2 VValmont performed well in 2002 with record operating income and record U earnings per share. This performance was achieved despite slightly lower revenues and a global operating environment of economic and political uncertainty. I salute our business units for managing their businesses well and reacting quickly to both opportunities and challenges in the external environment. 2 U Since we are in cyclical businesses with limited control over the short-term drivers of our markets, we must constantly strive for improvements in those areas of our businesses we do control. Our 2002 results reflected good efforts in the areas of pricing discipline, cost control, productivity improvement and working capital management. Our pole business posted another record year in 2002. Continued strength in the lighting and traffic markets, together with progress in our international businesses, offset an emerging weakness in the North American utility market. The irrigation business also had a strong year. In North America we benefited from improving commodity prices, the new U.S. farm bill and dry growing conditions. Internationally we had record sales and earnings as a result of our long-term com- mitment to developing new markets and supporting them with local manufacturing and distribution. Our wireless communication business faced further reductions in capital spending by our customers. We lowered our cost structure and consolidated product lines and facilities. While we do not know if we have seen the bottom of this market, we have a broad product line and a strong organization ready to capitalize on the eventual recovery. Meanwhile, we are applying our substantial engineering talent and excellent manufacturing facilities to develop and manufacture innovative products for distribution by other Valmont divisions. Our coatings business reflected the weakness in the industrial economy. We responded by further cutting costs while maintaining the high service levels our customers have come to expect. Our tubing business performed well. We met the dual challenges of volatile steel prices and a weak economy, and ended the year with higher sales and profits. There are a number of reasons we like the industries we serve: Our m arket driv er s are co mp elling , g lo b al a nd e ndur ing . The single biggest challenge facing global agriculture is the need for ever more efficient use of limited fresh water resources as industrial and urban demand for water continues to increase. The broad product lines and services of our infrastructure businesses support general infrastructure development. This alignment is true in the industrialized world, where current infrastructure is continually being upgraded and expanded, as well as in countries pursuing economic development with newly expanded infrastructure. These opportunities are enduring. The management of fresh water resources world- wide is becoming more critical. Economic development can only be sustained by investment in infrastructure, including support structures for utility lines, lighting, traffic controls, cellular antennas and many more applications. 3 We ho ld lea d ers hip pos it ions in a ll o f o ur m ajo r p ro du ct lines. We are the leading pole and tower company in the world and the only one with a global reach. Our manufacturing facilities in Europe, North America, Africa and Asia give us great flexibility in serving global markets. We pioneered the center-pivot irrigation industry 50 years ago and have been the clear market leader ever since. We initiated our international expansion in this business in the mid-1970s. Today with manufacturing facilities for irrigation equipment in Europe, North and South America, Africa and the Middle East, we are uniquely positioned to partner with agriculture to help solve the world’s water management challenges. From a modest beginning a few years ago, we have grown our coatings business to where we are now the largest custom hot-dip galvanizing company in North America. 44 Clockwise from top left: Members of Valmont’s Management Team Tom Spears, Irrigation Division President Terry McClain, Senior Vice President and Chief Financial Officer (left) and Bob Meaney, Senior Vice President Mark Richards, Poles Division President (left) and Doug Kochenderfer, Wireless Communication Division Vice President and General Manager Myron Noble, Wireless Communication Division Chairman Leonard Adams, Tubing Division President (left) and Jeffrey Briggs, Coatings Division President Ou r busines se s g ene rate st ro ng cas h flow s . At current revenue and profitability levels we generate approximately $50 million in annual free cash flow. That, combined with a conservative balance sheet, gives us great flexibility to pursue growth, reduce debt and manage our business. We have made key investments needed to grow our businesses. We have invested in new modern facilities and added manufacturing capacity in our major businesses. Therefore, we can support substantial growth in the coming years without major new investments. 4 Outl ook fo r 20 03 : The future is – by definition – unknown. The current political and economic uncertainty worldwide, fueled by the war on terrorism and the conflict with Iraq, makes it very difficult to make predictions about our businesses in the coming year. In our Pole Segment, we expect the utility market to decline and the lighting and traffic market to remain strong. In the Irrigation Segment, we anticipate continued strength in North America and most international markets but weakness in the important Middle East region. Our Coatings and Tubing Segments will require some help from an economic recovery to continue to improve, and in our Wireless Communication Segment we are still waiting for indications that the carriers will accelerate their build out. Internally, we will continue our efforts to improve the way we manage our capital and costs. This will help us maximize our performance regardless of external circumstances. In an area of particular importance to all of us – safety – we saw improved performance in 2002. We have always put a high value on safety, and our record here is solid. However, we must continue to improve our performance. We have no more important responsibility than to create an environment where each employee can go home as safe and sound as when he or she arrived. This past year, in response to well-publicized business and accounting scandals, new corporate governance regulations were introduced. Valmont has always had a straightforward conservative financial philosophy and a long history of having an independent Board of Directors. I am the only director who is also an employee of the company. Historically, our Audit and Compensation Committees have been comprised of only independent directors, and in 2002 we established an independent Governance and Nominating Committee. Our Board has adopted the Valmont Corporate Governance Principles, and each of our Board committees operates under a Board-approved charter. You can review these documents on our Web site. Our outside directors are independent in every way, I assure you. I thank them for their guidance of and interest in our Company. I am proud of each and every member of the Valmont team and their passion for “Conserving Resources and Improving Life” for people all around the world. They deserve our gratitude. Sincerely, Mogens C. Bay Chairman and Chief Executive Officer 5 Look C losely. Ev ery Day, Everyw here . . . Valmont Products Touch Your Life 66 at a glance WWherever you live, whatever you do, chances are Valmont is part of your life. Lighting and traffic poles guide your way. Utility poles bring power to your home and business. Communication poles and towers enable your wireless communications. Irrigation equipment brings much-needed water to cropland while conserving fresh water resources. And our long-lasting finishes improve products around the world every day. Just take a look . . . 6 � � � � � � � � � � ������ � � � � � � � � � � � � � � � � � � � � � � � � � ��� � � � � � � � � � � � � � � � � � � � 7 ������ �� � � � � � Infrastructure Po l es: Li ghti ng and Tr af f ic / Ut ilit y Po le s a n d S t ruc t ur e s > Area lighting poles for parking lots and public areas > Sports lighting structures for arenas and stadiums > Decorative lighting poles > Street and high-mast lighting poles > Traffic and sign structures > Utility transmission and distribution poles > Utility substation structures Wire les s Com munic atio n > Monopoles, towers and structures for cellular, PCS, broadcast, microwave and two-way communications > Wireless communication components > Minimum visual impact structures Coatings > Galvanizing, anodizing, powder coatings and integrated graphics Agricult ure I rri gat ion a nd Wate r Ma nage m e nt > Mechanized irrigation systems > Environmental consulting services Tub ing > Custom-made tubing used for truck mufflers, fire extinguishers, grain augers, railings and fences, etc. Prac ti cally a ny wh ere you a re in t h e wo r ld , Valm o nt is t h e r e w it h you. Now ta ke a n e v en clos e r loo k . . . 88 In Athens, G re ec e, Ou r Products Make Li fe A Little Brighter 8 poles: lighting and traffic 9 A Athens, Greece, is one of the world’s oldest cities, with a rich, historical past. Near the Acropolis where Socrates and Plato once strolled, you are likely to see families with babies in strollers or backpacks today. Our decorative light poles – custom designed in a style that would please even the ancient Greeks – line the streets. They help keep tourists and the citizens of Athens safe at night, and provide a tasteful homage to the classical past of a bright, modern city. How to honor the past while providing for the future? Using Valmont’s innovative pole design software, lighting designers created a series of elegant decorative poles that would capture just the right ambience. Our manufacturing facilities in France then carefully crafted functional yet aesthetically pleasing poles. Classic collaboration. I n Ch ic ago, I llinois, Our Products Help Brin g Safe ty And Order To Life 1010 poles: lighting and traffic In the U.S., federal spending on highway infrastructure has increased annually at the rate of three to five percent. The need to improve roadway efficiency using traffic controls and sign structures is a high priority. To meet this need in a cost-effective manner, Valmont engineers design practical and attractive products with the durability to last well into the future. C Chicago, Illinois, is a fast-paced, bustling city. Once called “The Feedlot to the World,” today it is a growing center of commerce and industry. We installed one of our nostalgic design products here – a combination decorative light and traffic structure that illuminates the roadway and helps direct traffic at the same time. For years to come, this dual-purpose product will benefit Chicago and other thriving communities with growing traffic and safety concerns. 10 11 In S hang ha i, Ch ina, We Help Energize Your Li fe 1212 poles: utility poles and structures With a rapidly growing population, China is on its way to becoming an economic powerhouse in the 21st century. We expect it to be our fastest-growing market for poles. From our manufacturing facility in Shanghai, we work closely with our customers to ensure they receive quality products and fast delivery to help keep pace with their growing demands. S Shanghai, China, is one of the most energetic cities in the world . . . a sea of sights, sounds and people. Shanghai is also energized by electricity, and our utility poles and structures help provide the backbone that delivers electricity – and the improved quality of life it provides – to people in Shanghai and throughout China. Keeping pace with the world’s electricity demand is a challenge, and we are proud to provide the infrastructure products to help meet this growing need. 12 13 1414 In Patil las, Pue rt o Rico , We Help You Commu ni cate An d Enjoy Li fe 14 wireless communication 15 I In Puerto Rican fishing villages like Patillas, sportfishing is a big industry and every morning, guides who know these waters well set out to show visitors their secret fishing spots. And when you make your first catch? No matter the size of the fish . . . or the fisherman . . . you can call Mom and tell her all about it. Our communication structures provide the backbone to relay those phone calls and help fishermen and guides alike stay in touch with shore, making fishing expeditions safer, more efficient and much more fun. In many parts of the world, wireless phone service is more available and affordable than landline. Evolving technology will make wireless communications – and our poles, towers and components – even more necessary. With standard communication poles and our minimum visual impact (MVI) product line – built to resemble trees, flagpoles and other objects that blend into the environment – we’re ready to deliver. 1616 In Los Angel es, Cal ifo rnia, Ou r Coatings Improve Look s And Service Li fe 16 coatings 17 I In California, skateboarders do their acrobatic moves with even more style, thanks to the custom-designed coatings we put on the ‘trucks’ that attach wheels and axles to the board. We apply designs for our customers, the truck manufacturers, along with a protective coating that extends service life. This winning combination adds value and lets skaters create their own signature styles by mixing and matching trucks and boards. So go ahead and try your best move, but always wear your helmet. (By the way, we coat and protect those, too.) We galvanized our own products for more than 30 years, then other manufacturers asked if we could do it for them. One thing led to another, and now we are the largest custom galvanizer in North America. We also provide anodizing and powder coatings for aluminum and other products – from flashlights and baseball bats to computers, cell phones and more. In Uber ab a, B ra zil, Center Pivots Con serve Water An d Add To The Quality Of Life 1818 irrigation Mechanized irrigation is more precise and efficient than other forms of irrigation, lowering production costs and food prices. Yet today, less than five percent of irrigated agriculture outside the U.S. uses mechanized irrigation methods. Our manufacturing plants in Uberaba, Brazil, and around the world make our equipment more affordable and modern water conservation techniques more available for local farmers. Not only is it our job, it is our mission. I In much of Brazil, the landscape and climate are ideal for growing coffee. Valmont irrigation equipment helps farmers here use less labor and more importantly, less water, while actually increasing yields. Conserving water is important in Brazil and in every other country in the world. Putting less burden on our fresh water supplies today will help keep this precious resource more available for other uses for generations to come. 18 19 2020 In Moses Lake , Washingto n, Valley Life Is All In The Family 20 irrigation 21 I In 1954, Valmont engineers built an innovative irrigation system that many farmers knew would change the future of their business. Some of them – like Arlie Updegrave in Moses Lake, Washington – opened Valley Irrigation dealerships. Today, Arlie’s son helps run the dealership, in some cases serving the third generation of Arlie’s first customers. In Washington, and everywhere else you buy Valley products, our dealers are more than business partners. They’re part of the family. Today’s modern irrigation equipment can be custom designed for specific crops and terrain. It can be programmed to precisely apply the right amounts of water, chemicals and fertilizer. Around the clock, Valley dealers are ‘on call’ to provide personalized service, training and advice – one reason we are now the largest supplier of mechanized irrigation equipment and services in the world. In Nort h Be nd, Ne b r as ka, Our Tubing Products Shape Everyday Li fe 2222 tubing Specialty tubing is a niche market. Often customers come to us for a special part or product. That’s when our engineers go to work. They design a product that is custom designed yet mass produced. This saves customers money and they appreciate that. W We make tubes. That doesn’t sound too exciting, but it’s an area of our business where we really get creative. Our specialty is customized shapes and sizes. Tubing is everywhere. Motorcycle mufflers. Fences. Exercise equipment. In North Bend, Nebraska – and wherever grain is produced – tubing is an essential part of a grain auger. Tubing is an integral part of our business, and we think it is the shape of good things to come. 22 23 Valm ont’s Global Presence TULSA, OKLAHOMA, USA Steel Poles and Galvanizing TULSA, OKLAHOMA, USA Steel Poles and Galvanizing TUALATIN, OREGON, USA Galvanizing TUALATIN, OREGON, USA Galvanizing SALEM, OREGON, USA Wireless Communication Structures and Components SALEM, OREGON, USA Wireless Communication Structures and Components ALBANY, OREGON, USA Cascade Earth Sciences ALBANY, OREGON, USA Cascade Earth Sciences LINDON, UTAH, USA Galvanizing and Powder Coating LINDON, UTAH, USA Galvanizing and Powder Coating 2424 LOS ANGELES, CALIFORNIA, USA Anodizing and Powder Coating LOS ANGELES, CALIFORNIA, USA Anodizing and Powder Coating LONG BEACH, CALIFORNIA, USA LONG BEACH, CALIFORNIA, USA Galvanizing Galvanizing SIOUX CITY, IOWA, USA Galvanizing SIOUX CITY, IOWA, USA Galvanizing WEST POINT, NEBRASKA, USA Galvanizing WEST POINT, NEBRASKA, USA Galvanizing McCOOK, NEBRASKA, USA Irrigation Equipment McCOOK, NEBRASKA, USA Irrigation Equipment OMAHA, NEBRASKA, USA Corporate Headquarters OMAHA, NEBRASKA, USA Corporate Headquarters WAVERLY, NEBRASKA, USA Steel Tubing WAVERLY, NEBRASKA, USA Steel Tubing VALLEY, NEBRASKA, USA Irrigation Equipment, Steel Poles, Tubing and Galvanizing VALLEY, NEBRASKA, USA Irrigation Equipment, Steel Poles, Tubing and Galvanizing BRENHAM, TEXAS, USA Steel Poles BRENHAM, TEXAS, USA Steel Poles MONTERREY, MEXICO Steel Poles MONTERREY, MEXICO Steel Poles ST. JULIE, QUEBEC, CANADA Steel and Aluminum Poles ST. JULIE, QUEBEC, CANADA Steel and Aluminum Poles MINNEAPOLIS, MINNEAPOLIS, MINNESOTA, USA MINNESOTA, USA Anodizing, Powder Coating Anodizing, Powder Coating and E-Coating and E-Coating FARMINGTON, MINNESOTA, USA Aluminum Poles FARMINGTON, MINNESOTA, USA Aluminum Poles ELKHART, INDIANA, USA Steel and Aluminum Poles ELKHART, INDIANA, USA Steel and Aluminum Poles PLYMOUTH, INDIANA, USA Wireless Communication Structures and Components PLYMOUTH, INDIANA, USA Wireless Communication Structures and Components JASPER, TENNESSEE, USA Steel Poles JASPER, TENNESSEE, USA Steel Poles CHICAGO, ILLINOIS, USA Galvanizing CHICAGO, ILLINOIS, USA Galvanizing UBERABA, BRAZIL Irrigation Equipment UBERABA, BRAZIL Irrigation Equipment MAARHEEZE, THE NETHERLANDS MAARHEEZE, THE NETHERLANDS Steel Poles Steel Poles GELSENKIRCHEN, GERMANY GELSENKIRCHEN, GERMANY Steel Poles Steel Poles SIEDLCE, POLAND SIEDLCE, POLAND Steel Poles Steel Poles SHANGHAI, CHINA SHANGHAI, CHINA Steel Poles Steel Poles CHARMEIL, FRANCE CHARMEIL, FRANCE Steel Poles Steel Poles CREUZIER-LE-NEUF, FRANCE CREUZIER-LE-NEUF, FRANCE Industrial Covers and Conveyers Industrial Covers and Conveyers JEBEL ALI, U.A.E. JEBEL ALI, U.A.E. Irrigation Equipment Irrigation Equipment RIVE-DE-GIER, FRANCE RIVE-DE-GIER, FRANCE Aluminum Poles Aluminum Poles MADRID, SPAIN MADRID, SPAIN Irrigation Equipment Irrigation Equipment BERRECHID, MOROCCO BERRECHID, MOROCCO Steel Poles Steel Poles JOHANNESBURG, SOUTH AFRICA JOHANNESBURG, SOUTH AFRICA Irrigation Equipment Irrigation Equipment 24 TULSA, OKLAHOMA, USA Steel Poles and Galvanizing TUALATIN, OREGON, USA Galvanizing SALEM, OREGON, USA Wireless Communication Structures and Components ALBANY, OREGON, USA Cascade Earth Sciences LINDON, UTAH, USA Galvanizing and Powder Coating LOS ANGELES, CALIFORNIA, USA Anodizing and Powder Coating LONG BEACH, CALIFORNIA, USA Galvanizing SIOUX CITY, IOWA, USA Galvanizing WEST POINT, NEBRASKA, USA Galvanizing McCOOK, NEBRASKA, USA Irrigation Equipment OMAHA, NEBRASKA, USA Corporate Headquarters WAVERLY, NEBRASKA, USA Steel Tubing VALLEY, NEBRASKA, USA Irrigation Equipment, Steel Poles, Tubing and Galvanizing BRENHAM, TEXAS, USA Steel Poles MONTERREY, MEXICO Steel Poles ST. JULIE, QUEBEC, CANADA Steel and Aluminum Poles MINNEAPOLIS, MINNESOTA, USA Anodizing, Powder Coating and E-Coating FARMINGTON, MINNESOTA, USA Aluminum Poles ELKHART, INDIANA, USA Steel and Aluminum Poles PLYMOUTH, INDIANA, USA Wireless Communication Structures and Components JASPER, TENNESSEE, USA Steel Poles CHICAGO, ILLINOIS, USA Galvanizing UBERABA, BRAZIL Irrigation Equipment MAARHEEZE, THE NETHERLANDS Steel Poles GELSENKIRCHEN, GERMANY Steel Poles SIEDLCE, POLAND Steel Poles SHANGHAI, CHINA Steel Poles CHARMEIL, FRANCE Steel Poles CREUZIER-LE-NEUF, FRANCE Industrial Covers and Conveyers JEBEL ALI, U.A.E. Irrigation Equipment RIVE-DE-GIER, FRANCE Aluminum Poles MADRID, SPAIN Irrigation Equipment BERRECHID, MOROCCO Steel Poles JOHANNESBURG, SOUTH AFRICA Irrigation Equipment 25 Our g lobal bu si ne ss be gins in o ur loc a l m a n ufac t ur i ng fac i lit i es . Wherever you are, whatever you do, Valmont is not far away. In fact, with 34 manufacturing facilities around the world, we may be closer than you think. By working and living near our customers, we better understand their needs, and they better understand our capabilities. That makes for stronger partnerships, and ultimately, a better world. Val mo nt Indust r ie s, Inc . Board Of Directors Mogens C. Bay Chairman and Chief Executive Officer Valmont Industries, Inc. Director Since 1993 Robert B. Daugherty Founder and Chairman Emeritus Valmont Industries, Inc. Director Since 1947 John E. Jones Retired Chairman, President and Chief Executive Officer CBI Industries, Inc. Director Since 1993 Dr. Stephen R. Lewis, Jr. President Emeritus and Professor of Economics Carleton College Director Since 2002 2626 Thomas F. Madison President MLM Partners Chairman of the Board Communications Holdings, Inc. Director Since 1987 Charles D. Peebler, Jr. Chairman Emeritus True North Communications, Inc. Director Since 1999 Walter Scott, Jr. Chairman Level 3 Communications, Inc. Director Since 1981 Kenneth E. Stinson Chairman and Chief Executive Officer Peter Kiewit Sons’, Inc. Director Since 1996 Audit Committee Walter Scott, Jr., Chairman John E. Jones Charles D. Peebler, Jr. Compensation Committee Thomas F. Madison, Chairman Charles D. Peebler, Jr. Dr. Stephen R. Lewis, Jr. Governance and Nominating Committee Thomas F. Madison, Chairman Dr. Stephen R. Lewis, Jr. 26 27 Clockwise, from far left: Mogens C. Bay Kenneth E. Stinson Dr. Stephen R. Lewis, Jr. Thomas F. Madison Charles D. Peebler, Jr. John E. Jones Robert B. Daugherty Walter Scott, Jr. 28 It’s True. Valmont Products Are Part Of Your Life NNow you can see that wherever in the world you live, the chances are good that one or more Valmont products touch your life in a positive way. Guiding you through traffic. Helping light the places where you live, work and play. Enabling your wireless connection to the rest of the world. Providing you with more high-quality food thanks to irrigation products that increase production while preserving precious fresh water. Making many of the things you use every day last longer and look better. C o nse rving Re so urc es. Im prov ing Lif e . That’s Valmont . Financial And Corporate Information 29 Selected 1 1- Ye ar Finan ci al Su mmary (Dollars in thousands, except per share amounts) 02 2002 2001 2000* 1999* 1998* 1997 1996 1995 1994 1993 1992 Operating Data Net sales $ 854,898 872,380 846,129 639,869 630,858 622,506 644,531 544,642 501,740 464,274 445,481 Operating Income 70,289 65,021 67,256 50,176 47,752 61,990 36,644 41,831 31,679 16,768 13,122 Earnings from continuing operations 33,629 26,693 30,400 26,367 27,636 37,544 21,248 24,759 18,887 7,551 11,671 Earnings from discontinued operations – – – – – – – – – 4,637 35,644 Cumulative effect of accounting change (500) – – – – – – – – (4,910) – Net earnings $ 33,629 26,693 30,400 26,367 27,636 37,544 21,248 24,759 18,887 7,278 15,235 Depreciation and amortization $ 33,942 36,324 30,270 21,949 19,843 16,437 14,832 12,361 11,018 10,907 12,585 Capital expenditures 13,942 25,652 46,456 37,783 29,667 39,115 35,559 34,772 23,535 17,089 8,353 Pe r Share Data 30 Earnings: Basic $ 1.40 1.10 1.31 1.09 1.04 1.36 0.78 0.92 0.70 0.27 0.57 Diluted 1.37 1.09 1.28 1.08 1.02 1.33 0.76 0.90 0.69 0.27 0.56 Cash dividends 0.29 0.26 0.26 0.26 0.25 0.22 0.19 0.15 0.15 0.15 0.13 Shareholders’ equity 10.13 9.23 8.23 7.30 7.12 7.49 6.41 5.87 5.10 4.52 4.43 Fi nanci al Position Working capital $ 154,112 145,550 145,575 98,588 99,466 94,416 81,403 80,993 88,278 87,793 68,551 Property, plant and equipment, net 193,175 209,580 208,272 173,920 157,447 140,834 120,579 113,532 89,201 75,501 78,150 Total assets 578,571 588,897 600,135 419,335 406,957 368,052 341,648 308,710 283,443 261,275 286,076 Long-term debt, including current installments 166,391 198,008 205,472 108,622 96,218 28,060 29,573 36,687 43,242 44,076 69,735 Shareholders’ equity 242,020 225,811 191,911 170,488 175,913 207,102 175,231 159,256 137,582 121,841 118,428 Invested capital 451,753 472,229 479,609 321,096 317,708 270,400 243,905 215,318 197,591 180,961 200,501 Ke y Fi nancial Measures Return on beginning shareholders’ equity 14.9% 13.9% 17.8% 15.0% 13.3% 21.4% 13.3% 18.0% 15.5% 6.1% 14.1% Return on invested capital 9.7% 8.6% 10.9% 9.8% 10.3% 15.4% 10.3% 13.0% 10.7% 5.6% 7.4% Long-term debt as a percent of invested capital 36.8% 41.9% 42.8% 33.8% 30.3% 10.4% 12.1% 17.0% 21.9% 24.4% 34.8% Year End Data Shares outstanding (000) 23,883 24,477 23,320 23,354 24,721 27,641 27,330 27,120 26,990 26,972 26,750 Approximate number of shareholders 5,500 5,500 5,500 5,500 5,500 5,400 4,400 3,900 3,800 3,800 3,500 Number of employees 5,234 5,342 5,503 3,948 3,869 3,751 4,868 4,166 3,946 4,152 4,532 Per share amounts and number of shares reflect the two-for-one stock split 1997. * In 2000, 1999, and 1998, freight costs have been reclassified to cost of goods sold. The selected consolidated financial data set forth in the above table has been derived from the Company’s consolidated financial statements. This data should be read in conjunction with, and is qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report form 10-K, and the Company’s audited consolidated financial statements, including the notes thereto, and the other financial information included elsewhere in the Annual Report form 10-K filed with the Securities and Exchange Commission. (Dollars in thousands, except per share amounts) Operating Data Per Share Data Earnings: Financial Position Key Financ ial M easures Year E nd Data 2002 2001 2000* 1999* 1998* 1997 1996 1995 1994 1993 1992 Net sales $ 854,898 872,380 846,129 639,869 630,858 622,506 644,531 544,642 501,740 464,274 445,481 Operating Income 70,289 65,021 67,256 50,176 47,752 61,990 36,644 41,831 31,679 16,768 13,122 Earnings from continuing operations 33,629 26,693 30,400 26,367 27,636 37,544 21,248 24,759 18,887 7,551 11,671 Earnings from discontinued operations – – – – – – – – – 4,637 35,644 Cumulative effect of accounting change (500) – – – – – – – – (4,910) – Net earnings $ 33,629 26,693 30,400 26,367 27,636 37,544 21,248 24,759 18,887 7,278 15,235 Depreciation and amortization $ 33,942 36,324 30,270 21,949 19,843 16,437 14,832 12,361 11,018 10,907 12,585 Capital expenditures 13,942 25,652 46,456 37,783 29,667 39,115 35,559 34,772 23,535 17,089 8,353 30 Basic $ 1.40 1.10 1.31 1.09 1.04 1.36 0.78 0.92 0.70 0.27 0.57 Diluted 1.37 1.09 1.28 1.08 1.02 1.33 0.76 0.90 0.69 0.27 0.56 Cash dividends 0.29 0.26 0.26 0.26 0.25 0.22 0.19 0.15 0.15 0.15 0.13 Shareholders’ equity 10.13 9.23 8.23 7.30 7.12 7.49 6.41 5.87 5.10 4.52 4.43 31 Working capital $ 154,112 145,550 145,575 98,588 99,466 94,416 81,403 80,993 88,278 87,793 68,551 Property, plant and equipment, net 193,175 209,580 208,272 173,920 157,447 140,834 120,579 113,532 89,201 75,501 78,150 Total assets 578,571 588,897 600,135 419,335 406,957 368,052 341,648 308,710 283,443 261,275 286,076 Long-term debt, including current installments 166,391 198,008 205,472 108,622 96,218 28,060 29,573 36,687 43,242 44,076 69,735 Shareholders’ equity 242,020 225,811 191,911 170,488 175,913 207,102 175,231 159,256 137,582 121,841 118,428 Invested capital 451,753 472,229 479,609 321,096 317,708 270,400 243,905 215,318 197,591 180,961 200,501 Return on beginning shareholders’ equity 14.9% 13.9% 17.8% 15.0% 13.3% 21.4% 13.3% 18.0% 15.5% 6.1% 14.1% Return on invested capital 9.7% 8.6% 10.9% 9.8% 10.3% 15.4% 10.3% 13.0% 10.7% 5.6% 7.4% Long-term debt as a percent of invested capital 36.8% 41.9% 42.8% 33.8% 30.3% 10.4% 12.1% 17.0% 21.9% 24.4% 34.8% Shares outstanding (000) 23,883 24,477 23,320 23,354 24,721 27,641 27,330 27,120 26,990 26,972 26,750 Approximate number of shareholders 5,500 5,500 5,500 5,500 5,500 5,400 4,400 3,900 3,800 3,800 3,500 Number of employees 5,234 5,342 5,503 3,948 3,869 3,751 4,868 4,166 3,946 4,152 4,532 Per share amounts and number of shares reflect the two-for-one stock split 1997. * In 2000, 1999, and 1998, freight costs have been reclassified to cost of goods sold. The selected consolidated financial data set forth in the above table has been derived from the Company’s consolidated financial statements. This data should be read in conjunction with, and is qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report form 10-K, and the Company’s audited consolidated financial statements, including the notes thereto, and the other financial information included elsewhere in the Annual Report form 10-K filed with the Securities and Exchange Commission.  Val mo nt’s Fina nc ial Ob je ct ives Total Value Impact Return on Invested Capital Long-Term Debt as a Percent of Invested Capital 3232 FFinancially, we have selected three principal factors that tell just how well we are managing the Company and the money invested in it. These factors are: Total Value Impact (TVI) – a tool for estimating growth in shareholder value; return on invested capital – a yearly measure of our returns on money invested; and long-term debt as a percent of invested capital – a measure of the financial risk we are taking. The goals we have established for growth, return on invested capital and long-term debt leverage are appropriate for the industries in which we participate, yet challenging enough to demand the very best talents and performance of our management teams. In 2001, we replaced our earnings-per-share growth goal with one to grow TVI, which we believe is a more meaningful measure of growth in shareholder value. TVI : Al i gn i ng Management Performance With Shareholders’ Goals 32 33 TThere are three major components used to calculate TVI: after-tax operating profits, average-invested capital and the cost of capital. We subtract the cost of capital (average invested capital times the weighted average cost of capital) from after-tax operating profits, and this residual is TVI. If the results of an investment, project or division performance do not contribute to positive TVI growth over time, we are not creating value for our shareholders. To motivate our managers to think and act with shareholder interests in mind, business unit bonuses are directly tied to increases in TVI.  Se gme nt Su m mary Segment Sales (Dollars in millions) Change Change 2002 2001 2000 2002-2001 2001-2000 Net Sal es: Infrastructure businesses: Poles $ 359.2 $ 354.0 $ 310.0 1.5% 14.2% Wireless Communication $ 77.5 $ 121.6 $ 92.6 -36.3% 31.3% Coatings $ 96.0 $ 99.2 $ 94.1 -3.2% 5.4% Total Infrastructure businesses $ 532.7 $ 574.8 $ 496.7 -7.3% 15.7% Agricultural businesses: Irrigation $ 264.7 $ 238.6 $ 283.6 10.9% -15.9% Tubing $ 45.4 $ 42.4 $ 43.3 7.1% -2.1% Total Agricultural businesses $ 310.1 $ 281.0 $ 326.9 10.4% -14.0% Other $ 12.1 $ 16.6 $ 22.5 -27.5% -26.1% 34 Net Sales $ 854.9 $ 872.4 $ 846.1 -2.0% 3.1% Ope rating Income: Infrastructure businesses: Poles $ 34.2 $ 34.1 $ 21.7 0.2% 57.4% Wireless Communication $ (3.0) $ (1.6) $ 2.3 90.5% -167.5% Coatings $ 10.7 $ 9.4 $ 13.5 14.0% -30.3% Total Infrastructure businesses $ 41.9 $ 41.9 $ 37.5 0.0% 12.0% Agricultural businesses: Irrigation $ 24.0 $ 15.5 $ 21.2 55.6% -27.2% Tubing $ 6.5 $ 5.8 $ 7.6 11.4% -23.5% Total Agricultural businesses $ 30.5 $ 21.3 $ 28.8 43.6% -26.2% Other $ (2.1) $ 1.8 $ 1.0 -221.3% 77.4% Operating Income $ 70.3 $ 65.0 $ 67.3 8.1% -3.3% 34 I nt ernati ona l Co ntact I nf or matio n Corp o rate One Valmont Plaza Pole s Div ision Valmont Poles Division Headquarters China Shanghai Valmont SST Co., Ltd. Omaha, NE 68154-5215 USA 7002 North 288th Street 100 Rongchang Road Tel 1-402-963-1000 Fax 1-402-963-1198 www.valmont.com P.O. Box 358 Valley, NE 68064 USA Tel 1-800-825-6668 Fax 1-402-359-6221 Valmont Lexington 20805 Eaton Avenue Songjiang Industrial Development Zone 201611 Shanghai, China Tel +86-21-5760-9200 Fax +86-21-5760-9222 France Valmont Europe Headquarters Farmington, MN 55024 USA Parc Des Reflets-Paris Nord II Tel 1-651-463-8990 Fax 1-651-463-3349 Valmont Indiana 57843 Charlotte Avenue Elkhart, IN 46517 USA Tel 1-219-295-6942 Fax 1-219-295-6998 Valmont Oklahoma 801 North Xanthus P. O. Box 2620 Tulsa, OK 74110 USA Tel 1-800-331-3002 Fax 1-918-585-1927 Valmont Texas 2551 Valmont Drive Brenham, TX 77833 USA Tel 1-979-836-9395 Fax 1-979-836-4415 Valmont Tennessee 1950 Industrial Boulevard Jasper, TN 37347 USA Tel 1-423-942-9888 Fax 1-423-942-9885 Canada Valmont Feralux 2250, Bombardier Sainte-Julie, Quebec Canada J3E 2L6 Tel 450-649-4114 Fax 450-649-4940 35 165 Avenue Du Bois De La Pie B.P. 40074 Roissy en France 95 913 Roissy Charles De Gaulle Cedex Paris, France Tel +33-148-17-7180 Fax +33-148-17-7189 Valmont Sermeto-Charmeil Les Martoulets-B.P. 1 03110 Charmeil, France Tel +33-470-58-8686 Fax +33-470-58-8687 Valmont Tubalco Vallee de Couzon BP 184 F-42800 Rive-de-Gier, France Tel +33-477-83-0010 Fax +33-477-83-7425 Italy Valmont International LLC Residence la Genziana Vicolo Casal Lumbroso 85 00166 Roma, Italy Italy +39-06-66-17-0010 Tel +39-06-66-17-0010 Germany Valmont Mastbau GmbH & Co. KG Im Dörener Feld 3 D-33100 Paderborn, Germany Tel +49-5251-500400 Fax +49-5251-5004045 36 Wir ele ss Com municatio n Div is ion Valmont Communications China Shanghai Valmont SST Co., Ltd. 100 Rongchang Road Songjiang Industrial Development Zone 3575 25th Street S.E. P.O. Box 12985 Salem, OR 97309 USA Tel 1-800-547-2151 Fax 1-503-363-4613 201611 Shanghai, China Tel +86-21-5760-9200 Fax +86-21-5760-9222 France Valmont Sermeto-Charmeil Valmont Communications Les Martoulets-B.P. 1 03110 Charmeil, France Tel +33-470-58-8686 Fax +33-470-58-8687 Mexico Valmont De Mexico Chopo 530 Col. Santa Maria Insurgentes Mexico City C.P. 06430, Mexico Tel +52-55-5547-4759 Fax +52-55-5547-4805 1545 Pidco Drive Plymouth, IN 46563 USA Tel 1-574-936-4221 Fax 1-574-936-6796 Valmont Poles 7002 North 288th Street P.O. Box 358 Valley, NE 68064 USA Tel 1-800-825-6668 Fax 1-402-343-6146 Valmont Texas 2551 Valmont Drive Brenham, TX 77833 USA Tel 1-979-836-9395 Fax 1-979-836-4415 Valmont Tennessee 1950 Industrial Blvd. Jasper, TN 37347 USA Tel 1-423-942-9888 Fax 1-423-942-9885 Po le s Di vi sion (continued) Morocco Valmont SARL Maroc Zone Industrielle Berrechid RP Nº7 26.100 Berrechid, Morocco Tel +212-22-33-72-06 Fax +212-22-53-47-88 Mexico Valmont Formet Carretera a Laredo Km. 21 Apodaca, N.L. Mexico C.P. 66600 Tel +52-81-8319-7939 Fax +52-81-8319-0636 The Netherlands Valmont Nederland B. V. Den Engelsman 3 NL-6026 RB Maarheeze, The Netherlands Tel +31-495-599-959 Fax +31-495-591-781 Poland Valmont Polska Sp. z o.o. UI: Terespolska 12 PL-08-110 Siedlce, Poland Tel +48-25-644-78-85 Fax +48-25-644-82-94 Spain Valmont S.A. Ctra de Mejorada del Campo A Velilla de San Antonio Km 0.64 28840 Mejorada del Campo Madrid, Spain Tel +34-91-679-4300 Fax +34-91-679-1677 United Kingdom Valmont U.K. Unit 8-Temple Normanton Business Park Chesterfield-Derbyshire, S41 0JS U.K. Tel +44-1246-222501 Fax +44-1246-222502 36 C oat in gs Di visi on Valmont Coatings George Industries Inc. 4116 Whiteside Street Ir r igatio n Division Valmont Irrigation 7002 North 288th Street P.O. Box 358 Valley, NE 68064 USA Tel 1-800-825-6668 Fax 1-402-359-6070 Applied Coating Technology 2411 Pilot Knob Road Mendota Heights, MN 55120 USA Tel 1-651-454-7777 Fax 1-651-454-0043 Calwest Galvanizing 2226 East Dominguez Street Long Beach, CA 90810 USA Tel 1-310-549-2200 Fax 1-310-513-6741 Pacific States Galvanizing 9700 Southwest Herman Road Tualatin, OR 97062 USA Tel 1-503-692-8888 Fax 1-503-612-0592 Empire Galvanizing 10909 Franklin Avenue Franklin Park, IL 60131 USA Tel 1-847-455-0884 Fax 1-847-455-0889 Los Angeles, CA 90063 USA Tel 1-888-436-7434 Fax 1-323-263-9342 Intermountain Galvanizing 1085 West 400 North Lindon, UT 84042 USA Tel 1-801-785-7200 Fax 1-801-785-7009 Oklahoma Galvanizing 25055 Alliance Drive Claremore, OK 74017 USA Tel 1-918-266-2800 Fax 1-918-266-0614 Siouxland Galvanizing P.O. Box 3807 2301 Bridgeport Drive Sioux City, IA 51102 USA Tel 1-712-252-4101 Fax 1-712-252-2792 Valmont Coatings / West Point 1700 South Beemer Street P.O. Box 303 West Point, NE 68788 USA Tel 1-402-372-3706 Fax 1-402-372-6908 7002 North 288th Street P.O. Box 358 Valley, NE 68064 USA Tel 1-800-825-6668 Fax: 1-402-359-2045 Valmont Industries Inc. 75 South Hwy 83 McCook, NE 69001 USA Tel 1-308-345-2223 Fax 1-308-345-2224 Australia-Pacific Valmont Australia P.O. Box 125 Carole Park, Queensland, 4300, Australia Tel +61-7-3879-3622 Fax +61-7-3879-3655 Mercosur Valmont Industria e Comercio LTDA Av. Francisco Podboy, 1600 CEP 38056-640 Uberaba/MG, Brazil Tel +55-34-3318-9000 Fax +55-34-3318-9001 37 I rri gati on Div ision (continued) Mexico and Latin America Valmont International Corporation Tub ing Division Valmont Tubing South Africa Valley Irrigation of Southern Africa (Pty) Ltd. P.O. Box 1234 Nigel, 1490 Republic of South Africa Tel +27-11-814-7007 Fax +27-11-814-4533 Western Europe Valmont S.A. Ctra. de Mejorada Del Campo A Velilla de San Antonio Km. 0,64 28840 Mejorada del Campo Madrid, Spain Tel +34-91-679-4300 Fax +34-91-679-1677 Middle East Valmont Middle East FZE Plot # MO0781 & 782, R/A/ #12 Street # 1245, JAFZA P.O. BOX 17937 Jebel Ali, Dubai, United Arab Emirates Tel +9714-88-39740 Fax +9714-88-39567 2105 Mannix Drive 7002 North 288th Street San Antonio, TX 78217 USA P.O. Box 358 Tel +1-210-829-7971 Fax +1-210-824-3233 China Valmont China Room 4-2-61, Bldg. 4 Jianwai DRC 1 Xiushui Street Beijing 100600, China Tel +86-10-8532-2607 Fax +86-10-8532-2610 Valley, Nebraska 68064 USA Tel 1-800-825-6668 Fax 1-402-359-4481 Central Nebraska Tubing 14441 U.S. Highway 6 P.O. Box 446 Waverly, Nebraska 68462 USA Tel 1-402-786-5005 Fax 1-402-786-2719 Ot h er Valmont SIE Les Rebrillons F-03300 Creuzier le Neuf, France Tel +33-470-58-4740 Fax: +33-470-58-0022 Valmont Wind Energy 7002 North 288th Street P.O. Box 358 Valley, Nebraska 68064 USA Tel 1-402-359-2201, ext. 3037 Fax 1-402-359-6173 38 38 O ffi cer s and Manag e ment C or po r ate a nd Staff O ffi cer s Mogens C. Bay Chairman and Chief Executive Officer Terry J. McClain Senior Vice President and Chief Financial Officer E. Robert Meaney Senior Vice President Ann F. Ashford Vice President Human Resources Po le s Div ision Coat ings Division Mark R. Richards President Keith A. Huffman Vice President Operations Richard M. Sampson Vice President and General Manager Utility Products and Services Thomas F. Sanderson Vice President Global Marketing and Product Development Jeffrey Briggs President Richard S. Cornish Vice President Operations Ir r igat io n D ivision Thomas D. Spears President Duane Bier Vice President Operations Steven G. Branscombe Vice President Thomas J. Sutko Vice President and General Manager James L. Brown Vice President Information Technology Commercial Lighting and Transportation North American Sales 39 Mark C. Jaksich Vice President Corporate Controller Walter P. Pasko Vice President Procurement P. Thomas Pogge Vice President General Counsel and Secretary Mark E. Treinen Vice President Business Development Products and Services Philippe Guidez President Europe/Middle East/Africa Klavs Guldager General Manager China Wir ele s s Com municatio n Div is ion Myron Noble Chairman Doug Kochenderfer Vice President and General Manager William G. Loughman III Vice President Parts and Service Terry Rahe President Cascade Earth Sciences Tub ing Division Leonard M. Adams Vice President and General Manager  C or po r ate And S t oc k In fo rmati on Corporate Headquarters Valmont Industries, Inc. One Valmont Plaza Independent Public Accountants Deloitte & Touche LLP Annual Meeting The annual meeting of Valmont’s shareholders will be held at 2:00 p.m. Omaha, NE 68154 USA Omaha, Nebraska USA on Monday, April 28, 2003, at the Joslyn Tel 1-402-963-1000 Fax 1-402-963-1198 www.valmont.com 40 Legal Counsel McGrath North Mullin & Kratz, PC LLO Omaha, Nebraska USA Stock Transfer Agent and Registrar Address Shareholder Inquiries to: The Bank of New York Shareholder Relations Department, 11 E P.O. Box 11258 Church Street Station New York, N.Y. 10285 USA 1-866-886-9962 Send Certificates for Transfer and Address Changes to: The Bank of New York Receive and Deliver Department P.O. Box 11002 Church Street Station New York, N.Y. 10286 USA Art Museum in Omaha, Nebraska USA. Shareholder and Investor Relations Valmont’s common stock trades on the New York Stock Exchange (NYSE) under the symbol VMI. Valmont maintains an active investor relations program and mailing list to keep shareholders and potential investors informed about the Company. Comments and inquiries are welcomed and should be directed to Investor Relations. Valmont makes available, free of charge, its Annual Report on Form 10-K, Quarterly Report on Form 10-Q, the other company SEC filings, company press releases, and other information, by calling or writing Investor Relations, or on the Internet at www.valmont.com, under the heading “Investor Relations.” Jeffrey S. Laudin Investor Relations Department Valmont Industries, Inc. One Valmont Plaza Omaha, NE 68154 USA Tel 1-402-963-1000 Fax 1-402-963-1198 Valmont Industries, Inc. One Valmont Plaza Omaha, Nebraska 68154-5215 USA 402-963-1000 www.valmont.com 

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