Valmont Industries Annual Report 2003

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FY2003 Annual Report · Valmont Industries

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ANNUAL REPORT 2003

GLOBAL
LEVERAGE
AT WORK

IN 2004, VALMONT CELEBRATES THE 50TH ANNIVERSARY OF OUR FOUNDING OF THE CENTER PIVOT IRRIGATION INDUSTRY.

GLOBAL LEVERAGE.

The Valmont Advantage.

GLOBAL POPULATION GROWTH AND INTERDEPENDENT ECONOMIES

GENERATE OPPORTUNITIES . . . AND COMPETITION. TO GROW OUR INDUSTRY LEADERSHIP,

WE LEVERAGE OUR ENGINEERING CAPABILITIES AND OUR MULTINATIONAL MANUFACTURING

AND DISTRIBUTION NETWORKS – AND WE DELIVER SUPERIOR PRODUCTS WORLDWIDE IN A TIMELY

AND COST-EFFECTIVE MANNER. OUR STRONG GLOBAL RESOURCES SET US APART FROM THE COMPETITION.

OUR MARKETS ARE SOLID. THE DEMAND FOR HIGHLY ENGINEERED PRODUCTS IS GROWING. THE NEED

TO CONSERVE RESOURCES IS GREATER THAN EVER. AND IN EVERY AREA OF OUR BUSINESS,

OUR PEOPLE WORK TIRELESSLY TO PRODUCE THE BEST RESULTS FOR OUR

CUSTOMERS, OUR COMPANY, OUR SHAREHOLDERS, OUR WORLD.

VALMONT. CONSERVING RESOURCES. IMPROVING LIFE.

FINANCIAL HIGHLIGHTS

LETTER TO FELLOW SHAREHOLDERS

AT A GLANCE

CONSERVING RESOURCES. IMPROVING LIFE.

ENGINEERED SUPPORT STRUCTURES: LIGHTING AND TRAFFIC

ENGINEERED SUPPORT STRUCTURES: UTILITY POLES AND STRUCTURES

ENGINEERED SUPPORT STRUCTURES: SPECIALTY STRUCTURES

IRRIGATION

TUBING

COATINGS

EMERGING PRODUCTS – WIND ENERGY STRUCTURES

GLOBAL PRESENCE

BOARD OF DIRECTORS

FINANCIAL AND CORPORATE INFORMATION

11-YEAR FINANCIAL SUMMARY

FINANCIAL OBJECTIVES

TOTAL VALUE IMPACT

SEGMENT SUMMARY

INTERNATIONAL CONTACT INFORMATION

CORPORATE AND STAFF OFFICERS

CORPORATE AND STOCK INFORMATION

GLOBAL LEVERAGE.

The Valmont Advantage.

GLOBAL POPULATION GROWTH AND INTERDEPENDENT ECONOMIES

GENERATE OPPORTUNITIES . . . AND COMPETITION. TO GROW OUR INDUSTRY LEADERSHIP,

WE LEVERAGE OUR ENGINEERING CAPABILITIES AND OUR MULTINATIONAL MANUFACTURING

AND DISTRIBUTION NETWORKS – AND WE DELIVER SUPERIOR PRODUCTS WORLDWIDE IN A TIMELY

AND COST-EFFECTIVE MANNER. OUR STRONG GLOBAL RESOURCES SET US APART FROM THE COMPETITION.

OUR MARKETS ARE SOLID. THE DEMAND FOR HIGHLY ENGINEERED PRODUCTS IS GROWING. THE NEED

TO CONSERVE RESOURCES IS GREATER THAN EVER. AND IN EVERY AREA OF OUR BUSINESS,

OUR PEOPLE WORK TIRELESSLY TO PRODUCE THE BEST RESULTS FOR OUR

CUSTOMERS, OUR COMPANY, OUR SHAREHOLDERS, OUR WORLD.

VALMONT. CONSERVING RESOURCES. IMPROVING LIFE.

Financial Highlights

Dollars in millions, except per share amounts

2003

2002

2001

OPERATING RESULTS

Net sales

Operating income

Net earnings

Diluted earnings per share

Dividends per share

FINANCIAL POSITION

837.6

854.9

872.4

54.6

25.5

1.05

0.315

70.3

33.6

1.37

0.290

Shareholders’ equity
Long-term debt as a % of invested capital 1

265.5

242.0

30.9%

36.8%

OPERATING PROFITS

Gross profit as a % of net sales

Operating income as a % of net sales

Net earnings as a % of net sales

Return on beginning equity
Return on invested capital1

YEAR-END DATA

Shares outstanding (000)

Approximate number of shareholders

Number of employees

24.8%

6.5%

3.0%

10.5%

7.4%

23,825

5,400

5,074

27.1%

8.2%

3.9%

14.9%

9.7%

23,883

5,500

5,234

65.0

26.7

1.09

0.260

225.8

41.9%

24.9%

7.5%

3.1%

13.9%

8.6%

24,477

5,500

5,342

NET
SALES

OPERATING
INCOME

DILUTED EARNINGS
PER SHARE

1 See footnote (2) on page 30.

L E T T E R T O F E L L O W S H A R E H O L D E R S

GLOBAL
LEVERAGE
AT WORK

Leveraging our capabilities

What do we mean by “Global Leverage at Work?”

on a global scale is the theme

Let me address each word separately, starting

of this year’s Annual Report.

Our “Global Leverage at

Work” symbol is highlighted

throughout this report.

with “Global.” The drivers for our businesses are

truly global. The needs for water conservation

and infrastructure development are as important

in international markets as they are in our

home market. We believe that we can create

shareholder value by taking abroad the products

and services we develop for the U.S. market,

and by bringing back to the U.S. product lines

developed in our international markets.

The speed with which we have expanded inter-

nationally has been tempered by acknowledging

the challenges of entering cultures and countries

where we have little experience. We like to say

we plant trees internationally as opposed to

buying forests. It takes resources and time to

nurture each tree to its potential, but in our

opinion it is a more prudent way to proceed.

For 10 years our strategy for growth has

2003

been based on “Leverage” of product lines,

Financially, 2003 was a disappointing year.

market knowledge, and skill sets. An example

Net earnings and earnings per share dropped

of leveraging a product line is taking the center

nearly 25 percent on slightly lower revenues.

pivot to markets around the world. An example

of market knowledge leverage is adding aluminum

lighting and traffic poles to the steel product line.

When we developed our coatings division, we

leveraged a skill set, our galvanizing expertise,

which we developed internally over decades as

a cost center.

The profitability of our utility business was

severely impacted by extreme pricing pressures

for utility structures. This was due in large part

to the weak wireless communications market.

Struggling manufacturers of these products

continued to attempt to gain a foothold and

increase their sales through low pricing. Our

The word “Work” is included for a reason.

coatings business struggled this year as internal

When we travel around the world, we discover

volumes fell and weakness in the business

many instances where Valmont employees find

conditions of our customer base persisted.

better ways of doing things and cooperating

We countered those challenges with a solid

across borders. However, we must leverage these

performance in our lighting and traffic

opportunities and actively drive processes for

businesses, particularly in North America.

our customers to benefit even more from our

skill sets, global plant network, and our ability

to source materials globally as availability and

foreign exchange rates change. Only then can

we realize the significant advantages of being

a worldwide corporation.

China was another bright spot. Valmont

recognized the significant potential of this

market early on, and we have now realized

seven consecutive years of improved sales and

profits in our operation. China continues to

invest heavily in infrastructure, creating demand

I look forward to keeping you updated on these

for structures for wireless communication, utility,

initiatives, which I am convinced are of significant

and lighting and traffic. Our Shanghai facility

strategic importance. We believe our global reach

and our excellent organization in China provide

gives us an opportunity to build competitive

us with a solid platform for further growth.

advantages, as most of the companies we compete

with are local or regional in nature.

The year 2003 was a difficult year and a year

Our irrigation business excelled in 2003.

of transition for our wireless communication

We achieved record operating income due to

business. Early in the year we combined our wire-

the record performance of our international

less communication and pole divisions into the

irrigation business, despite an almost non-ex-

engineered structures division. This move allowed

istent market in the Middle East. This region

us to expand our product line and provide new

formed an important part of our business in

products, such as overhead sign structures. We

the past, but is now severely depressed due to

now have a lower expense structure and a more

political unrest. Leveraging our manufacturing

streamlined organization that better leverages

capacity and global market presence enabled

our engineering and manufacturing capabilities.

us to succeed in our global irrigation business.

Our tubing business remained solidly profitable

A Valley® center pivot is featured on the cover

in 2003. We have succeeded in this arena by

of this year’s Annual Report. In 2004 we will

finding niche products that require high levels

celebrate the 50th anniversary of our founding

of engineering and manufacturing skill. We will

of the center pivot industry. This engineering

continue this strategy of providing exceptional

marvel has revolutionized irrigated agriculture

customer service in tubing, as we do in every

worldwide and has been characterized in

one of our businesses.

Scientific American magazine as “the most

significant mechanical innovation in agriculture

OUTLOOK FOR 2004

since the replacement of draft animals by the

Looking to the year 2004, we expect improved

tractor.” Valmont founded this industry and then

performance. In the North American irrigation

went on to leverage its experience and expertise

business, increasing corn, soybean and cotton

to build a diverse and successful global business.

prices should be supportive both to farm

Robert B. Daugherty, the founder of our

company, has decided to retire from our Board

of Directors after serving for 57 years. Bob

acquired the patent for the center pivot in the

early 1950s and developed a commercial product

that debuted in 1954. His vision laid the

groundwork for a global industry. He literally

changed the surface of the earth. The green

circles you see when flying over many parts of

the world are made by center pivots. Mechanized

irrigation equipment simultaneously conserves

water resources and increases yields, while

income and the irrigation business. We do not

yet expect a recovery in the Middle East and

other international markets may not achieve the

record levels seen in 2003. In our infrastructure

businesses, we look for better results overall.

While we face uncertainties in steel pricing and

availability, as well as the unknown timing of

new government energy and highway legislation,

we believe that on balance, we should perform

better. Our coatings business should improve

as the industrial economy strengthens. Our

tubing business is off to a good start.

producing food and fiber for mankind. Bob has

I want to thank the entire Valmont team for its

been the guiding force in the evolution of our

continued dedication to Valmont’s success. One

company and all of us at Valmont owe him an

area of significant improvement in 2003 was in

enormous debt of gratitude. We are determined

safety performance where our focus, systems and

to extend his visionary legacy into the future

processes continue to pay dividends. Our goal

as Valmont continues to grow and adapt to the

is to be world class in safety, and thanks to the

global business environment.

Valmont team, we are making excellent progress.

Sincerely,

MOGENS C. BAY

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

C O M P A N Y O V E R V I E W

AT A
GLANCE.

I N F R A S T R U C T U R E

Engineered Support Structures

LIGHTING AND TRAFFIC POLES AND STRUCTURES
Area lighting poles for parking lots and public areas. Sports lighting structures for arenas and stadiums.
Decorative lighting poles. Traffic and sign structures. Street and high-mast lighting poles.

UTILITY POLES AND STRUCTURES
Utility transmission and distribution poles. Utility substation structures.

Monopoles, towers and structures for cellular, PCS, broadcast, microwave and two-way communications.
Wireless communication components. Minimum visual impact structures. Overhead sign structures.

SPECIALTY STRUCTURES

Coatings

Galvanizing, anodizing, powder coatings and integrated graphics.

A G R I C U LT U R E

Irrigation and Water Management

Mechanized irrigation systems. Wastewater consulting services.

Tubing

Custom-made tubing used for mufflers, fire extinguishers, grain augers, railings, fences and other industrial applications.

A growing population has growing needs.

CONSERVING RESOURCES.
IMPROVING LIFE.

From delivering precious water to

croplands, to manufacturing poles

and structures that dependably carry

electricity, light our way, guide traffic

and allow us to communicate with

one another, Valmont engineers design

products that conserve resources and

enable people to live better. We produce

and distribute them efficiently, cost-

effectively and globally.

E N G I N E E R E D S U P P O R T S T R U C T U R E S D I V I S I O N / L I G H T I N G A N D T R A F F I C

WE LIGHT
THE WAY.

What’s old is new again. People everywhere are proud of their history

and culture, and they want cities to reflect their traditions – and be safe

and inviting. Our decorative light poles help do that, merging style with

Valmont’s decorative

durability and economy. They illuminate walkways and set the tone in

light poles merge style,

historical neighborhoods throughout the world.

durability and economy,

making historical

neighborhoods safer

and more attractive.

We leverage capacity.

FOR A SINGLE MULTINATIONAL LIGHTING CUSTOMER, FOR EXAMPLE,

WE MANUFACTURE CUSTOM LIGHTING STRUCTURES ON THREE

DIFFERENT CONTINENTS. THIS GIVES US AN ADVANTAGE OVER LOCAL

MANUFACTURERS AND ALLOWS US TO BALANCE CAPACITY FOR OPTIMAL

COST EFFECTIVENESS. IT’S A WINNING COMBINATION THAT KEEPS

CUSTOMERS COMING BACK.

E N G I N E E R E D S U P P O R T S T R U C T U R E S D I V I S I O N / L I G H T I N G A N D T R A F F I C

WE EASE

THE JOURNEY.

Every minute of every day, the pulse of life travels through the streets

and highways of a growing world. For ease of travel – and more

importantly, for safety – people on the move are increasingly dependent

Valmont traffic and

on well-managed traffic systems. Doing their part, Valmont engineers

lighting structures

design and build traffic and lighting structures that illuminate and

help make life on the

streamline the thoroughfares of the world.

road safer and more

enjoyable for travelers

on a global scale.

We leverage global manufacturing presence.

WITH MANUFACTURING FACILITIES FROM CHINA TO CANADA, WE CAN

MEET THE NEEDS OF OUR GLOBAL CUSTOMERS WITH HIGHLY ENGINEERED

STRUCTURES CUSTOM TAILORED FOR EACH APPLICATION. OUR ABILITY

TO SOURCE OUR PRODUCTS FROM MULTIPLE PLANTS ASSURES OUR

CUSTOMERS THAT THEY’LL HAVE JUST THE PRODUCTS THEY NEED,

WHERE AND WHEN THEY NEED THEM.

E N G I N E E R E D S U P P O R T S T R U C T U R E S D I V I S I O N / U T I L I T Y P O L E S A N D S T R U C T U R E S

WE BRING

THE POWER.

All around the world, people need electricity for the simplest – and

the grandest – of tasks. From generation to distribution, Valmont

products provide the framework and support structures that bring

From generation to

power to people. Our poles and substation structures are designed

distribution, Valmont

and manufactured for years of service. Structures that last. In all

poles and substation

climates, under all conditions, Valmont poles and structures stand tall.

structures help supply

the power that energizes

modern life.

We leverage local market knowledge.

RAPID BUILD-OUT OF POWER TRANSMISSION INFRASTRUCTURE IS A GLOBAL

TREND WITH REGIONAL REQUIREMENTS. THE ABILITY TO UNDERSTAND

LOCAL MARKET NEEDS AND TO BALANCE GLOBAL CAPACITY ALLOWS

VALMONT TO PROVIDE THE BEST COST, AND AT THE SAME TIME MEET

LOCAL DESIGN REQUIREMENTS – AN ABILITY OUR COMPETITORS

CANNOT EASILY MATCH.

E N G I N E E R E D S U P P O R T S T R U C T U R E S D I V I S I O N / S P E C I A L T Y S T R U C T U R E S

WE OPEN

CHANNELS.

Wireless technology has changed the way we connect with one another.

You can send and collect email, data . . . even photos . . . from your cell

phone, laptop or PDA. But these hand-held miracles depend on an

extensive infrastructure to work their portable magic. From cellular,

Valmont provides the

voice and data to broadcast and two-way radio capabilities, Valmont

specialized structures

provides the infrastructure backbone that helps open the channels

that make the miracle

of communication around the world.

of modern wireless

communications possible.

We leverage complementary skills.

WHEN OUR SPECIALTY STRUCTURES DIVISION DEVELOPED INNOVATIVE

NEW SIGN AND SUBSTATION STRUCTURES, OUR UTILITY, LIGHTING

AND TRAFFIC GROUPS SAW A PERFECT OPPORTUNITY TO MARKET THEM

THROUGH THEIR DISTRIBUTION CHANNELS. THE RESULT – NEW AND

BETTER PRODUCTS DELIVERED QUICKLY TO AN EXPANSIVE NEW MARKET.

I R R I G AT I O N D I V I S I O N

WE BUILD

LEGACIES.

Our first center pivot irrigation equipment was revolutionary. But did

the Valmont engineers in the 1950s and 60s believe that more than 50

years later those machines would still be working? Yes, that’s what they

Rudy Meduna and

were built to do. From generation to generation, technology has changed

his Valley® brand

but principles remain the same. And Valmont engineers continue to

water-drive irrigation

lead the industry with revolutionary new irrigation systems that are

system share a proud

built to perform. Period.

legacy. Both are going

strong after nearly 50

years of hard work.

We leverage our legacy.

WE APPLY THE LEGACY OF INNOVATION THAT HAS MADE VALMONT’S

VALLEY IRRIGATION THE INDUSTRY LEADER TO OUR OTHER BUSINESSES.

THIS CULTURE OF INNOVATION AND PRECISION ALLOWS US TO CREATE

PRODUCTS THAT ARE THE BEST IN EVERY MARKET WE SERVE.

I R R I G AT I O N D I V I S I O N

WE CONSERVE
RESOURCES.

Conserving water and increasing crop yields have never been more

important, yet modern irrigation technology, incorporating remote

Valley’s modern irrigation

computer operation for precise applications of water and chemicals,

systems are designed to

is used on less than five percent of irrigated land outside the U.S.

work as dependably for

Only Valmont has the global presence to bring mechanized irrigation

Rudy Meduna’s sons

technology to farmers around the world, enabling them to grow more

and grandsons as

food while conserving precious water.

they’ve worked for

him for half a century.

We leverage global market presence.

IN ADDITION TO THE U.S., VALMONT MANUFACTURES IRRIGATION

EQUIPMENT IN OTHER HIGH-DEMAND MARKETS – SPAIN, BRAZIL, SOUTH

AFRICA AND THE MIDDLE EAST. WE LEVERAGE CAPACITY AND COSTS FOR

THE COMPANY AS A WHOLE WHILE QUICKLY PROVIDING MANUFACTURING

RESOURCES TO SUPPORT STRONG MARKETS ANYWHERE IN THE WORLD.

T U B I N G D I V I S I O N

WE SHAPE

THE FUTURE.

As we refined our tubing expertise in our irrigation business, we

Designed for safety,

quickly saw opportunities in other markets. We’ve evolved to designing

durability and reliability,

and producing a wide variety of specialized tubing products – some

Valmont’s tubing

you’d never expect. From pneumatic networks embedded in the walls

products – from grain

of banks and hospitals to motorcycle exhaust systems, we excel at

augers to mufflers to

meeting engineering challenges for pipe, pole and tubing customers

decorative fencing – have

worldwide. If it’s cylindrical and steel and a customer wants it, we

evolved into specialized

can probably make it.

products used in ways

you would never expect.

We leverage basic products and skills.

THE APPLICATIONS FOR TUBING ARE ENDLESS, AND SO IS THE

RESOURCEFULNESS OF VALMONT ENGINEERS. VALMONT LEADS THE

WAY IN ENGINEERING SOLUTIONS FOR DIVERSE REQUIREMENTS . . .

EVOLVING EXISTING PRODUCTS AND MARKETS AND FINDING NEW

WAYS TO MEET CUSTOMER NEEDS.

C O AT I N G S D I V I S I O N

WE BRAVE

THE ELEMENTS.

Valmont products have always been made to last. Irrigation equipment

we made in the early 1950s is still in use today, and many of the products

we’re making now will be used 50 years from now. Why? Because of

Valmont’s protective

well-planned design, high-quality steel manufacturing, and protective

coatings, like anodizing

coatings like anodizing and galvanizing that make products last longer.

and galvanizing, help

As long as people create products that need protective coatings, our

make products last

coatings business will add value for our customers.

longer in all kinds of

weather and conditions.

We leverage high company standards.

VALMONT’S COMMITMENT TO QUALITY AND DURABILITY IS ONE SHARED

BY OUR EMPLOYEES WORLDWIDE. OUR MANUFACTURING PLANTS AROUND

THE WORLD KNOW HOW HIGH WE’VE SET THE BAR, AND WE EXPECT THE

SAME EFFORT FROM OUR LOCAL SUPPLIERS TO ACHIEVE UNIFORMLY HIGH

QUALITY COMPANY WIDE.

E M E R G I N G P R O D U C T S / W I N D E N E R G Y S T R U C T U R E S

WE BREAK

NEW GROUND.

Call them the winds of change. To solve the world’s energy shortage,

alternative sources that provide electric power and conserve natural

resources are desperately needed. Valmont has reengineered wind tower

technology by designing a support pole with its own lifting device,

Valmont engineers have

eliminating the need for huge cranes and open construction sites to

refined and reengineered

install wind generators – helping to bring clean, low-impact energy

wind tower technology

to more places on earth than ever before.

to simplify installation.

We leverage innovative engineering.

DESIGNING NEW TECHNOLOGY AND ADAPTING EXISTING PRODUCTS TO

NEW AND UNIQUE ENGINEERING CHALLENGES ARE PARTS OF OUR CULTURE.

OUR ABILITY TO LEVERAGE OUR ENGINEERING EXPERTISE TO SOLVE

UNIQUE PROBLEMS AROUND THE WORLD – LIKE OUR WIND ENERGY

SUPPORT STRUCTURE – IS ANOTHER WAY VALMONT MAINTAINS ITS

COMPETITIVE ADVANTAGE.

LEVERAGE ON A

GLOBAL SCALE.

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CAPABILITIES FOR THE BENEFIT OF OUR SHAREHOLDERS, OUR INDIVIDUAL BUSINESSES AND CUSTOMERS

WORLDWIDE. THIS IS THE STRENGTH OF VALMONT AND THE CONTINUING FOUNDATION FOR OUR FUTURE.

VALMONT. CONSERVING RESOURCES. IMPROVING LIFE.

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V A L M O N T I N D U S T R I E S , I N C .

BOARD OF

DIRECTORS

Audit Committee
Walter Scott, Jr., Chairman
John E. Jones
Charles D. Peebler, Jr.

Compensation Committee
Thomas F. Madison, Chairman
Stephen R. Lewis, Jr.
Charles D. Peebler, Jr.

Governance and Nominating Committee
Thomas F. Madison, Chairman
Stephen R. Lewis, Jr.

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

Stephen R. Lewis, Jr.
President Emeritus and
Professor of Economics
Carleton College
Director Since 2002

Thomas F. Madison
President
MLM Partners
Director Since 1987

Charles D. Peebler, Jr.
Retired 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

Left. From top:

Kenneth E. Stinson
Walter Scott, Jr.
Mogens C. Bay

Right. From top:

John E. Jones
Charles D. Peebler, Jr.
Thomas F. Madison
Stephen R. Lewis, Jr.
Robert B. Daugherty

FINANCIAL
AND
CORPORATE
INFORMATION

Selected 11-Year Financial Summary

(Dollars in thousands, except per share amounts)

OPER ATING DATA

Net sales
Operating income
Earnings from continuing operations
Earnings from discontinued operations
Cumulative effect of accounting change

Net earnings

Depreciation and amortization
Capital expenditures
Effective tax rate

PER SHARE DATA

Earnings:
Basic
Diluted
Cash dividends

INVESTED CAPITAL

Total assets
Less: accounts payable
Less: accrued expenses
Less: dividends payable
Total invested capital

FINANCIAL POSITION

Working capital
Property, plant and equipment, net
Total assets
Long-term debt, including current installments
Shareholders’ equity

KEY FINANCIAL MEASURES 2

Return on beginning shareholders’ equity
Return on invested capital
Long-term debt as a percent of invested capital

YEAR END DATA

Shares outstanding (000)
Approximate number of shareholders
Number of employees

2003

2002

2001

2000

1999

19981

1997

1996

1995

1994

1993

837,625
54,623
25,853
–
(366)

25,487

34,597
17,679
36.3%

854,898
70,289
34,129
–
(500)

33,629

33,942
13,942
36.5%

872,380
65,021
26,693
–
–

26,693

36,324
25,652
36.9%

846,129
67,256
30,400
–
–

30,400

30,270
46,456
36.3%

639,869

50,176

26,367

–

26,367

21,949

37,783

36.9%

630,858

47,752

27,636

–

27,636

19,843

29,667

36.5%

622,506

61,990

37,544

–

37,544

16,437

39,115

36.3%

644,531

36,644

21,248

–

21,248

14,832

35,559

35.6%

544,642

41,831

24,759

–

24,759

12,361

34,772

35.7%

501,740

31,679

18,887

–

18,887

11,018

23,535

36.1%

1.07
1.05
0.315

1.38
1.37
0.290

1.10
1.09
0.260

1.31
1.28
0.260

1.09

1.08

0.260

1.04

1.02

0.250

1.36

1.33

0.220

0.78

0.76

0.190

0.92

0.90

0.150

0.70

0.69

0.150

604,797
(63,256)
(55,856)
(1,921)
483,764

169,568
190,103
604,797
149,662
265,494

10.5%
7.4%
30.9%

23,825
5,400
5,074

578,571
(55,198)
(69,828)
(1,792)
451,753

154,112
193,175
578,571
166,391
242,020

14.9%
9.7%
36.8%

23,883
5,500
5,234

588,897
(57,027)
(58,042)
(1,598)
472,230

145,550
209,580
588,897
198,008
225,811

13.9%
8.6%
41.9%

24,477
5,500
5,342

600,135
(63,005)
(56,005)
(1,516)
479,609

145,575
208,272
600,135
205,472
191,911

17.8%
10.7%
42.8%

23,320
5,500
5,503

419,335

(46,753)

(49,962)

(1,524)

321,096

98,588

173,920

419,335

108,622

170,488

15.0%

9.9%

33.8%

23,354

5,500

3,948

406,957

(45,996)

(41,646)

(1,607)

317,708

99,466

157,447

406,957

96,218

175,913

13.3%

10.3%

30.3%

24,721

5,500

3,869

368,052

(48,717)

(47,380)

(1,555)

270,400

94,416

140,834

368,052

28,060

207,102

21.4%

15.4%

10.4%

27,641

5,400

3,751

341,648

(43,699)

(52,678)

(1,366)

243,905

81,403

120,579

341,648

29,573

175,231

13.3%

10.3%

12.1%

27,330

4,400

4,868

308,710

(46,900)

(45,475)

(1,017)

215,318

80,993

113,532

308,710

36,687

159,256

18.0%

13.0%

17.0%

27,120

3,900

4,166

283,443

(44,504)

(40,481)

(866)

197,592

88,278

89,201

283,443

43,242

137,582

15.5%

10.7%

21.9%

26,990

3,800

3,946

464,274

16,768

7,551

4,637

(4,910)

7,278

10,907

17,089

36.4%

0.27

0.150

261,275

(33,333)

(40,198)

(865)

186,879

87,793

75,501

261,275

44,076

121,841

6.1%

5.6%

24.4%

26,972

3,800

4,152

1 Per share amounts and number of shares reflect the two-for-one stock split in 1997.
2 Operating Income after tax is calculated as ((Operating income-(Operating income multiplied by the Effective tax rate)).
Return on beginning shareholders’ equity is calculated as Net earnings divided by the prior year’s ending Shareholders’ equity.
Average invested capital is calculated as (prior year Invested capital plus current year Invested capital) divided by 2.
Return on invested capital is calculated as Operating income after-tax divided by the average invested capital.

Long-term debt as a percent of invested capital is calculated as Long-term debt, including current installments divided by Total invested capital.

(Dollars in thousands, except per share amounts)

OPER ATING DATA

Net sales

Operating income

Earnings from continuing operations

Earnings from discontinued operations

Cumulative effect of accounting change

Net earnings

Depreciation and amortization

Capital expenditures

Effective tax rate

PER SHARE DATA

Earnings:

Basic

Diluted

Cash dividends

INVESTED CAPITAL

Total assets

Less: accounts payable

Less: accrued expenses

Less: dividends payable

Total invested capital

FINANCIAL POSITION

Working capital

Property, plant and equipment, net

Total assets

Long-term debt, including current installments

Shareholders’ equity

KEY FINANCIAL MEASURES 2

Return on beginning shareholders’ equity

Return on invested capital

Long-term debt as a percent of invested capital

YEAR END DATA

Shares outstanding (000)

Approximate number of shareholders

Number of employees

837,625

54,623

25,853

–

(366)

25,487

34,597

17,679

36.3%

604,797

(63,256)

(55,856)

(1,921)

483,764

169,568

190,103

604,797

149,662

265,494

10.5%

7.4%

30.9%

23,825

5,400

5,074

2003

2002

2001

2000

1999

19981

1997

1996

1995

1994

1993

854,898

70,289

34,129

–

(500)

33,629

33,942

13,942

36.5%

872,380

65,021

26,693

–

26,693

36,324

25,652

36.9%

846,129

67,256

30,400

–

30,400

30,270

46,456

36.3%

639,869
50,176
26,367
–
–

26,367

21,949
37,783
36.9%

630,858
47,752
27,636
–
–

27,636

19,843
29,667
36.5%

622,506
61,990
37,544
–
–

37,544

16,437
39,115
36.3%

644,531
36,644
21,248
–
–

21,248

14,832
35,559
35.6%

544,642
41,831
24,759
–
–

24,759

12,361
34,772
35.7%

501,740
31,679
18,887
–
–

18,887

11,018
23,535
36.1%

1.07

1.05

0.315

1.38

1.37

0.290

1.10

1.09

0.260

1.31

1.28

0.260

1.09
1.08
0.260

1.04
1.02
0.250

1.36
1.33
0.220

0.78
0.76
0.190

0.92
0.90
0.150

0.70
0.69
0.150

578,571

(55,198)

(69,828)

(1,792)

451,753

154,112

193,175

578,571

166,391

242,020

14.9%

9.7%

36.8%

23,883

5,500

5,234

588,897

(57,027)

(58,042)

(1,598)

472,230

145,550

209,580

588,897

198,008

225,811

13.9%

8.6%

41.9%

24,477

5,500

5,342

600,135

(63,005)

(56,005)

(1,516)

479,609

145,575

208,272

600,135

205,472

191,911

17.8%

10.7%

42.8%

23,320

5,500

5,503

419,335
(46,753)
(49,962)
(1,524)
321,096

98,588
173,920
419,335
108,622
170,488

15.0%
9.9%
33.8%

23,354
5,500
3,948

406,957
(45,996)
(41,646)
(1,607)
317,708

99,466
157,447
406,957
96,218
175,913

13.3%
10.3%
30.3%

24,721
5,500
3,869

368,052
(48,717)
(47,380)
(1,555)
270,400

94,416
140,834
368,052
28,060
207,102

21.4%
15.4%
10.4%

27,641
5,400
3,751

341,648
(43,699)
(52,678)
(1,366)
243,905

81,403
120,579
341,648
29,573
175,231

13.3%
10.3%
12.1%

27,330
4,400
4,868

308,710
(46,900)
(45,475)
(1,017)
215,318

80,993
113,532
308,710
36,687
159,256

18.0%
13.0%
17.0%

27,120
3,900
4,166

283,443
(44,504)
(40,481)
(866)
197,592

88,278
89,201
283,443
43,242
137,582

15.5%
10.7%
21.9%

26,990
3,800
3,946

464,274
16,768
7,551
4,637
(4,910)

7,278

10,907
17,089
36.4%

0.27
0.27
0.150

261,275
(33,333)
(40,198)
(865)
186,879

87,793
75,501
261,275
44,076
121,841

6.1%
5.6%
24.4%

26,972
3,800
4,152

The selected consolidated financial data set forth in the above table have been derived from the Company’s consolidated financial statements. This data should be read in
conjunction with, and are 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.

These factors are: Total Value Impact (TVI) – a tool for estimating

growth in shareholder value; return on invested capital – a yearly mea-

sure of our returns on money invested; and long-term debt as a percent of

Financially, we have

invested capital – a measure of the financial risk we are taking. The goals

selected three principal

we have established for growth, return on invested capital and long-term

factors that tell just how

debt leverage are appropriate for the industries in which we participate,

well we are managing

yet challenging enough to demand the very best talents and performance

the Company and the

of our management teams. In 2001, we replaced our earnings-per-share

money invested in it.

growth goal with one to grow TVI, which we believe is a more

meaningful measure of growth in shareholder value.

Financial

OBJECTIVES

TOTAL
VALUE
IMPACT 1

RETURN ON
INVESTED
CAPITAL 2

LONG-TERM DEBT
AS A PERCENT OF
INVESTED CAPITAL 2

Objective

GROW TVI FROM
YEAR TO YEAR

Objective

ACHIEVE A MINIMUM 10%
AFTER-TAX RETURN ON
INVESTED CAPITAL

Objective

MAINTAIN LONG-TERM
DEBT AS A PERCENT
OF INVESTED CAPITAL
AT LESS THAN 40%

1 TVI is calculated as Operating income after-tax minus the Average invested capital times 8.5% (see page 30). 2 See footnote on page 30.

There 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 Company’s

TVI works like a lens

cost of capital) from after-tax operating profits, and this residual is TVI.

to focus managers and

If the results of an investment, project or division performance do not

employees on the key

contribute to TVI growth over time, we are not creating value for

aspects of the business

our shareholders. To motivate our managers to think and act with

that directly impact

shareholder interests in mind, business unit bonuses are directly

long-term growth

tied to increases in TVI.

and profitability.

Aligning management performance

with shareholders’ goals

TVI

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Segment Summary

(Dollars in millions)

NET SALES :

Infrastructure businesses:

Engineered Support Structures

Coatings

Total Infrastructure businesses

Agricultural businesses:

Irrigation

Tubing

2003

2002

2001

CHANGE
2003 -2002

CHANGE
2002 -2001

$ 406.8

$ 436.7

$ 475.6

$ 91.1

$ 96.0

$ 99.2

$ 497.9

$ 532.7

$ 574.8

-6.8%

-5.1%

-6.5%

-8.2%

-3.2%

-7.3%

$ 280.0

$ 264.7

$ 238.6

5.8%

10.9%

$ 44.8

$ 45.4

$ 42.4

-1.2%

7.1%

Total Agricultural businesses

$ 324.8

$ 310.1

$ 281.0

4.7%

10.4%

Other

Net Sales

OPER ATING INCOME :

Infrastructure businesses:

$ 14.9

$ 12.1

$ 16.6

23.2%

-27.5%

$ 837.6

$ 854.9

$ 872.4

-2.0%

Engineered Support Structures

$ 14.8

$ 31.2

$ 32.5

-52.5%

-4.1%

Coatings

5.4

$ 10.7

9.4

-49.8%

14.0%

Total Infrastructure businesses

$ 20.2

$ 41.9

-51.8%

0.0%

Agricultural businesses:

Irrigation

Tubing

$ 31.1

$ 24.0

$ 15.5

29.2%

55.6%

5.7

6.5

5.8

-11.7%

11.4%

Total Agricultural businesses

$ 36.8

$ 30.5

$ 21.3

20.5%

43.6%

Other

Operating Income

(2.4)

(2.1) $

1.8

-10.2%

-216.7%

$ 54.6

$ 70.3

$ 65.0

-22.3%

8.1%

SEGMENT SALES

Valmont Specialty Structures

3575 25th Street S.E.

Salem, OR 97302 USA

Tel 1-800-547-2151

Fax 1-503-363-4613

Valmont Specialty Structures

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

Canada

Valmont Feralux

2250, Bombardier

Sainte-Julie, Quebec

Canada J3E 2L6

Tel 450-649-4114

Fax 450-649-4940

Global Contact
Information

CORPORATE

One Valmont Plaza

ENGINEERED SUPPORT

STRUCTURES DIVISION

Omaha, Nebraska 68154-5215 USA

Division Headquarters

Tel 1-402-963-1000

Fax 1-402-963-1198

www.valmont.com

7002 North 288th Street

P.O. Box 358

Valley, NE 68064 USA

Tel 1-402-359-2201

Fax 1-402-359-6221

Valmont Lexington

20805 Eaton Avenue

Farmington, MN 55024 USA

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 1-918-583-5881

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

P.O. Box 985

1950 Industrial Boulevard

Jasper, TN 37347 USA

Tel 1-423-942-9888

Fax 1-423-942-9885

China

Germany

Poland

Valmont Industries (China), Ltd.

Valmont Mastbau GmbH

Valmont Polska Sp. z o.o.

100 Rongchang Road

Im Dörener Feld 3

UI: Terespolska 12

Songjiang Industry Development Zone

D-33100 Paderborn, Germany

PL-08-110 Siedlce, Poland

201611 Shanghai, China

Tel +86-21-5760-9200

Fax +86-21-5760-9222

France

Valmont Europe

Tel +49-5251-500400

Fax +49-5251-5004045

Tel +48-25-644-78-85

Fax +48-25-644-82-94

Morocco

Valmont Maroc SARL

Spain

Valmont Iberica

Zone Industrielle Berrechid RP Nº7

Poligono Industrial Can Castell

Parc Des Reflets-Paris Nord II

26.100 Berrechid, Morocco

C/. Isaac Peral, nave nº16-J

08420 Canovellas (Barcelona)

Spain

Tel +93-846-30-72

Fax +93-846-58-13

United Kingdom

Valmont U.K. Ltd.

Dunston Road, Sheepbridge

Chesterfield Derbys, S41 9QQ U.K.

Tel +44-1246-453-529

Fax +44-1246-456-012

165 Avenue Du Bois De La Pie

B.P. 42074 Roissy en France

Tel +212-22-33-72-06

Fax +212-22-53-47-88

95 913 Roissy Charles De Gaulle Cedex

Paris, France

Tel +33-148-17-7180

Fax +33-148-17-7189

Valmont Sermeto

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 Chateauneuf

42800 Rive-de-Gier, France

Tel +33-477-83-0010

Fax +33-477-83-7425

Italy

Valmont International LLC

Italian Branch

Via Monterosso al Mare Nº7

00168 Roma, Italy

Tel +39-06-614-60-11

Fax +39-06-454-39-341

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

George Industries Inc.

4116 Whiteside Street

Siouxland Galvanizing

P.O. Box 3807

Los Angeles, CA 90063 USA

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

West Point, NE 68788 USA

Tel 1-402-372-3706

Fax 1-402-372-6908

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 74019 USA

Tel 1-918-266-2800

Fax 1-918-266-0614

COATINGS DIVISION

Valmont Coatings

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

IRRIGATION DIVISION

Valmont Irrigation

7002 North 288th Street

P.O. Box 358

Valley, NE 68064 USA

Tel 1-800-825-6668

Fax 1-402-359-2045

Valmont Irrigation

75 South Highway 83

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

Mexico and Latin America

TUBING DIVISION

Valmont Tubing

7002 North 288th Street

P.O. Box 358

Valley, NE 68064 USA

Tel 1-800-825-6668

Fax 1-402-359-4481

Central Nebraska Tubing

14441 U.S. Highway 6

McCook, NE 69001 USA

Valmont International Corporation

P.O. Box 446

Waverly, NE 68462 USA

Tel 1-402-786-5005

Fax 1-402-786-2719

OTHER

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, NE 68064 USA

Tel 1-402-359-2201, ext. 3037

Fax 1-402-359-6173

Tel 1-308-345-2223

Fax 1-308-345-2224

Australia-Pacific

Valmont Australia

P.O. Box 125

2105 Mannix Drive

San Antonio, TX 78217 USA

Tel +1-210-829-7971

Fax +1-210-824-3233

China

Carole Park, Queensland, 4300, Australia

Valmont Industries (China), Ltd.

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

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

Room 4-2-61, Bldg. 4

Jianwai DRC

1 Xiushui Street

Beijing 100600, China

Tel +86-10-8532-2607

Fax +86-10-8532-2610

CORPORATE AND STAFF OFFICERS

ENGINEERED SUPPORT

COATINGS DIVISION

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

Steven G. Branscombe

Vice President

STRUCTURES DIVISION

Mark R. Richards

President

Keith A. Huffman

Vice President

Operations

Doug Kochenderfer

Jeffrey Briggs

President

Richard S. Cornish

Vice President

Operations

IRRIGATION DIVISION

Thomas D. Spears

Vice President and General Manager

President

Specialty Structures

Richard M. Sampson

Duane Bier

Vice President

Vice President and General Manager

Operations

Utility Products and Services

Thomas F. Sanderson

James L. Brown

Vice President

Information Technology

Vice President and General Manager

North American Sales

Mark C. Jaksich

Vice President

International

Thomas J. Sutko

William G. Loughman III

Vice President

Corporate Controller

Vice President and General Manager

Parts and Service

Walter P. Pasko

Vice President

Procurement

P. Thomas Pogge

Vice President

General Counsel and Secretary

Mark E. Treinen

Vice President

Business Development

Commercial Lighting and Transportation

Products and Services

Philippe Guidez

President

Europe/Middle East/Africa

Klavs Guldager

General Manager

China

Terry Rahe

President

Cascade Earth Sciences

TUBING DIVISION

Leonard M. Adams

Vice President and General Manager

Corporate and
Stock Information

CORPORATE HEADQUARTERS

ANNUAL MEETING

FORWARD-LOOKING STATEMENTS

Valmont Industries, Inc.

One Valmont Plaza

The annual meeting of Valmont’s

This report contains forward-looking

shareholders will be held at 2:00 p.m.

statements within the meaning of the

Omaha, Nebraska 68154-5215 USA

on Monday, April 26, 2004, at the Joslyn

Private Securities Litigation Reform Act

Tel 1-402-963-1000

Fax 1-402-963-1198

www.valmont.com

Art Museum in Omaha, Nebraska USA.

of 1995. These statements are based on

SHAREHOLDER AND

INVESTOR RELATIONS

management’s current expectations and

are subject to uncertainty and changes

in circumstances. Future economic and

INDEPENDENT PUBLIC ACCOUNTANTS

Valmont’s common stock trades on

market circumstances, industry condi-

Deloitte & Touche LLP

Omaha, Nebraska USA

the New York Stock Exchange (NYSE)

tions, Company performance and financial

under the symbol VMI.

results, operating efficiencies, availability

and price of raw materials, availability

LEGAL COUNSEL

We make available, free of charge

and market acceptance of new products,

McGrath North Mullin & Kratz, PC LLO

through our Internet Web site at

product pricing, domestic and international

Omaha, Nebraska USA

www.valmont.com, our annual report

competitive environments, actions and

on Form 10-K, quarterly reports on

policy changes of domestic and foreign

STOCK TRANSFER AGENT

Form 10-Q, current reports on Form 8-K,

governments and other risks described

AND REGISTRAR

and amendments to those reports filed

from time to time in the Company’s

Address Shareholder Inquiries to:

or furnished pursuant to Section 13(a)

reports to the Securities and Exchange

The Bank of New York

or 15(d) of the Securities Exchange Act

Commission are examples of factors,

Shareholder Relations Department, 11 E

of 1934, as soon as reasonably practicable

among others, that could cause results

P.O. Box 11258

Church Street Station

after such material is electronically filed

to differ materially from those described

with or furnished to the Securities and

in the forward-looking statements. The

New York, NY 10285 USA

Exchange Commission.

Company cautions that any forward-

1-866-886-9962

looking statements included in this report

We have also posted on our Web site

are made as of the date of this report.

Send Certificates for Transfer

our (1) Corporate Governance Principles,

and Address Changes to:

The Bank of New York

(2) charter for the Audit Committee,

Compensation Committee, and Gover-

Receive and Deliver Department

nance and Nominating Committee of

P.O. Box 11002

Church Street Station

the Board, (3) Code of Business Conduct,

and (4) Code of Ethics for Senior Officers

New York, NY 10286 USA

applicable to the Chief Executive Officer,

Chief Financial Officer and Controller.

Valmont shareholders may also obtain

copies of these items at no charge by

writing to:

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
402.963.1000
WWW.VALMONT.COM