Valmont Industries
Annual Report 2005

Plain-text annual report

5 0 0 2 T R O P E R L A U N N A ON A GLOBAL SCALE  1 2 6 8 10 12 14 16 18 20 21 FINANCIAL HIGHLIGHTS MESSAGE TO FELLOW SHAREHOLDERS VALMONT AT A GLANCE ENGINEERED SUPPORT STRUCTURES DIVISION UTILITY SUPPORT STRUCTURES DIVISION IRRIGATION DIVISION COATINGS DIVISION TUBING DIVISION GLOBAL PRESENCE BOARD OF DIRECTORS FINANCIAL AND CORPORATE INFORMATION VALMONT LEVERAGING STRENGTHS ON A GLOBAL SCALE. FINANCIAL HIGHLIGHTS Dollars in millions, except per share amounts 2005 2004 2003 OPERATING RESULTS Net sales Operating income Net earnings Diluted earnings per share Dividends per share $ 1,108.1 $ 82.9 39.1 1.54 0.335 1,031.5 $ 70.1 26.9 1.10 0.320 837.6 54.6 25.5 1.05 0.315 FINANCIAL POSITION Shareholders’ equity Long-term debt as a % of invested capital1 $ 328.7 $ 36.2% 294.7 $ 46.3% 265.5 30.9% 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 25.1% 7.5% 3.5% 13.3% 7.7% 23.8% 6.8% 2.6% 10.1% 7.6% 24.8% 6.5% 3.0% 10.5% 7.4% 24,765 5,700 5,336 24,162 5,600 5,542 23,825 5,400 5,074 1 See footnote (2) on page 22 of this document and items (a) and (d) on page 22 of the Company’s Form 10-K VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 1 MESSAGE TO FELLOW SHAREHOLDERS Y A B S N E G O M R E C I F F O E V I T U C E X E F E I H C D N A N A M R I A H C 2005 was a good year for our company. Our product line diversification and broad global coverage enabled us to deliver record revenues and net earnings. Strong performances in our infrastructure businesses more than offset a significant downturn in our irrigation businesses, both in the U.S. and abroad. In my letter to you last year I mentioned two specific areas where, in my opinion, we needed to improve: Operating income as a percentage of sales, and efficient use of our invested capital. I am pleased to report progress in both areas. Our operating income increased from 6.8 percent of sales in 2004 to 7.6 percent in 2005, and I am confident that we will see further improvement during 2006. We reduced our working capital significantly during 2005, and our return on invested capital improved. Our strong cash flow allowed us to reduce our long-term debt to well within our comfort zone. The Engineered Support Structures Segment, which consists of poles, towers and specialty structures for the lighting, traffic and wireless communications markets posted strong growth both in revenue and earnings. In the U.S. market, we are starting to see demand improve under the new Federal Highway Bill, and we are making good progress in building a highway sign structures business. We experienced much less turbulence in the steel markets during 2005 compared to 2004, which helped us return to more traditional margin levels. Internationally, I am very pleased to report record results 2 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 t I want to congratulate my fellow employees around the world for their accomplishments in 2005 and for strengthening Valmont globally. With our strategic initiatives in place throughout the company, we believe we are well positioned to achieve record performance again in 2006. both in Europe and China. We streamlined and simplified our European organiza- tional structure during 2004, and our team there delivered much improved results in 2005. In China we had our ninth consecutive year of improved sales and earnings. Our second manufacturing plant in the south of China should be in production by April of this year, ready to serve an ever-growing need for support structures in this important region. In our Utility Support Structures Segment, 2005 was the first full year of integrated operations for the Valmont steel utility pole business and Newmark International’s pre-stressed spun concrete and steel utility pole business. Revenues grew significantly while operating income nearly tripled. We now have the industry’s most complete product line, serving a utility market which presents numerous opportunities for growth. In our Irrigation Segment we were faced with challenges worldwide. Crop prices in general were not strong, and combined with escalating energy prices, put pressure on farm income. Our team did a good job of managing through this period of declining revenues while preserving acceptable profitability levels. Our irrigation business has always been a cyclical business, and today it is a good business in the down cycle and a great business in the up cycle. Water conserva- tion is a global issue that will not go away and we continue to have great enthusiasm for this business. Last year I predicted that our Tubing Segment would not be able to match the record performance of 2004. I was wrong! Their operating profit set a new record as they continued to focus on superior customer service in their niche markets. VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 3 S R E D L O H E R A H S W O L L E F O T E G A S S E M VISION North America and driving leverage among our international irrigation and structures businesses. While I am pleased with our 2005 results, I believe we can continue to improve. We are taking aggressive actions to drive earnings improvement and growth across all businesses. We are placing strategic focus on three initiatives that we believe will drive financial performance: Pricing Initiative. Because pricing is a key component in building revenue and profitability, we are examining elements of our pricing processes to ensure our products and services are priced appro- priately and commensurate with the value they provide to our customers. Our Coatings Segment delivered flat sales compared to 2004, but with twice the operating income as their mix of business was much improved. The galvanizing business showed new strength and our anodizing subsidiary in California returned to profitability. We made some major changes in the responsibilities of our senior operating managers in 2005 to give them new challenges. Tom Spears is now responsible for our engineered support structures business in the U.S. and Canada as well as our coatings businesses. Earl Foust oversees our steel and concrete pole businesses serving the utility market in the U.S. Len Adams has responsibility for our U.S. irrigation business in addition to managing the tubing business. We also established a new International Division, adding Victor Grizzle to our senior management team to be respon- sible for accelerating growth outside 4 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 VALMONT IS RECOGNIZED THROUGHOUT THE WORLD AS AN INDUSTRY LEADER IN ENGINEERED SUPPORT STRUCTURES AND SERVICES FOR INFRASTRUCTURE, AND WATER MANAGEMENT FOR AGRICULTURE. WE GROW OUR BUSINESSES BY LEVERAGING OUR EXISTING PRODUCTS, MARKETS AND PROCESSES. WE RECOGNIZE THAT OUR GROWTH WILL ONLY CREATE SHAREHOLDER VALUE IF, AT THE SAME TIME, WE EXCEED OUR COST OF CAPITAL. ESSENTIAL TO OUR SUCCESS IS A COMPANY-WIDE COMMITMENT TO CUSTOMER SERVICE AND INNOVATION, AND THE ABILITY TO BE THE BEST COST PRODUCER FOR ALL PRODUCTS AND SERVICES WE PROVIDE. RECOGNIZING THAT OUR EMPLOYEES ARE THE CORNERSTONE OF OUR ACCOMPLISHMENTS, WE PRIDE OURSELVES ON BEING PEOPLE OF PASSION AND INTEGRITY WHO EXCEL AND DELIVER RESULTS. Lean Manufacturing. We have put a renewed emphasis on this disciplined approach to managing costs in our operations and manufacturing plants throughout the entire company. By apply- ing lean manufacturing principles, we should improve our cost competitiveness while eliminating waste in our operations. we are well positioned to achieve record performance again in 2006. Valmont’s success in creating value is dependent upon our continued passion, integrity and commitment to deliver results. I look forward to report to you on our progress and thank you for your support. Sincerely, Mogens C. Bay Chairman and Chief Executive Officer Employee Engagement. We firmly believe Valmont’s success is directly linked to employee engagement, and we continue to make it a top priority. In 2005, the Gallup organization administered a second Q12 survey. I am pleased to report that Valmont’s overall score improved significantly. I want to congratulate my fellow employees around the world for their accomplishments in 2005 and for strengthening Valmont globally. With our strategic initiatives in place throughout the company, we believe VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 5 E R U T C U R T S A R F N I ENGINEERED SUPPORT 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. Monopoles, towers and structures for cellular, PCS, broadcast, microwave and two-way communications. Wireless communication components. Minimum visual impact structures. Overhead sign structures. VALMONT AT A GLANCE 6 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 VALMONT AT A GLANCE UTILITY SUPPORT STRUCTURES COATINGS FOR METAL PRODUCTS Utility transmission and distribution poles. Utility substation structures. Galvanizing, anodizing, powder coatings and integrated graphics. E R U T L U C I R G A IRRIGATION AND WATER MANAGEMENT Mechanized irrigation systems. Wastewater consulting services. TUBING Custom-made tubing used for agricultural and industrial applications. VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 7 T R O P P U S D E R E E N I G N E N O I S I V I D S E R U T C U R T S DIVERSIFICATION ON A GLOBAL SCALE How do you successfully meet the growing demands of a global market for lighting and traffic, wireless communication and sign structures? Diversify your products, your geographic locations and your skills. At Valmont, we think of it as leveraging our strengths. t A row of decorative streetlights illumine the night for strollers along the Champs-Élysées. An overhead tra�c sign guides travelers through a Chicago turnpike. Streetlights in Shanghai make night travel safer for drivers. In each instance, Valmont’s engineered support structures are present, making life easier, safer, and improving the way we live. Diversified Strengths. Around the world, Valmont’s broad array of steel and aluminum poles, specialty structures and towers are standing tall . . . bringing light and order to new and existing markets. From area and decorative lighting, to roadway and traffic structures, to wireless communication towers and components, Valmont’s engineered support structures are designed to meet the diverse needs of our customers worldwide. Into the Wind. Valmont is also leading the way into the future of wind energy. With our innovative wind energy support structure, we are preparing to meet the demands of the renewable energy market. Growing Demand. Moving forward into the 21st century, the demand for infra- structure will only increase, particularly in developing countries. As a worldwide leader in engineered support structures, we are positioned to meet those needs with 18 manufacturing facilities located around the world. Our global engineering and manufacturing capabilities affords us the unique ability to leverage our skills, technology and distribution channels to consistently deliver products of superior quality and value. As the world’s infrastructure needs increase, Valmont will continue to rise to the challenge . . . making life safer, and improving our lives, no matter where in the world we live. Above | Decorative poles, trolley and sports lighting structures are among a wide array of various lighting and traffic, wireless communication and sign structures designed and engineered by Valmont. VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 9 t Power lines. They run through countrysides, towns and cities throughout the world. Mile after mile, they quietly deliver the energy we need for daily life. Yet, we rarely give them a second thought. And thanks to the steadfast support of Valmont’s quality utility poles and substations, we don’t need to. Power Duty. Everywhere, power networks are expanding to meet our growing energy needs. These networks rely on Valmont’s utility support struc- tures – substations, and transmission and distribution poles – to support lines that transmit as much as 765,000 volts down to 220 volts of electricity into homes, offices and other locations to meet consumer demands. Powerful Solutions. Because we leverage our global engineering and manufactur- ing capabilities, Valmont-Newmark is able to offer the most comprehensive selection of utility support structures in the industry. From tubular steel poles, to spun concrete and hybrid poles, our utility structures are durable enough to withstand harsh environments and the most demanding weather conditions. To ensure the utmost in safety standards, and to meet the rigorous demands of utility companies for structures that provide reliable performance and longer service lives at the best cost, Valmont works diligently to remain at the forefront of innovative design and emerging technology. Above | Valmont-Newmark’s comprehensive selection of utility support structures offers utility engineers a seamless blend of custom solutions for diverse applications in the power delivery industry. 10 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 DILIGENCE ON A GLOBAL SCALE How do you live up to increasing demands for quality power transmission infrastructure products, delivered on time, at the best cost? Through constant diligence. Especially when it comes to design and engineering, balancing capacity and leveraging knowledge of local markets, no matter where they are. T R O P P U S Y T I L I T U N O I S I V I D S E R U T C U R T S N O I S I V I D N O I T A G I R R I DISTRIBUTION ON A GLOBAL SCALE How do you help feed a growing global population, even in remote regions where local conditions make farming an unlikely endeavor? By leveraging capacity, resources and distribution channels to bring water-conserving, mechanized irrigation technology to farmers around the world. t A global manufacturing network and a worldwide dealer network allow Valmont to manufacture and deliver the most innovative, high quality irrigation equipment in the world. The result? More e�cient agriculture around the world . . . and continued resource conservation for generations to come. Reaching the World. Because Valmont is a global producer of mechanized irrigation equipment, our ability to help feed the world and conserve resources is far reaching. From the world’s arid regions to the most fertile, Valley® center pivot and linear irrigation equipment can be found delivering precious water to the crops that nourish our lives. Conserving Our Resources. Thanks to advanced technology and engineering, Valmont’s Valley brand center pivot irrigation equipment leads the industry. Using less water, lower water pressure, and less energy, Valley mechanized irrigation products reduce costs and improve yields by efficiently placing water where it is needed, near the root zone. Looking Forward. In the future, the need to grow more food with less water will only intensify. Valmont is ready for the challenge. As the most innovative company in mechanized irrigation, we are committed to the success of our customers, to delivering reliable, long-lasting products, and to maintaining the high level of advanced research and innovation that has helped us reach the world with products that improve life. Above | Crop circles flourish even in the most arid climates with Valmont’s Valley® brand mechanized irrigation equipment. VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 13 t When it comes to adding the perfect ½nishing touch to metal products, Valmont leads the way. We are the largest custom galvanizer in North America, but it doesn’t end there. Over the years, we have built upon our strengths to expand the scope of our coatings services to include anodizing and powder coating. Battling the Elements. Water may be the essence of life, but it is unforgiving when it comes in contact with metal. The same is true for salt, humidity and other harsh environments. Yet, day after day, steel and aluminum products are exposed to corrosive elements that erode their aesthetic beauty and service life. Continuous Innovation. Since Valmont began galvanizing products over 30 years ago, our coatings services have significantly expanded. Our company- wide commitment to continuous innovation has led to the development of quality processes for powder coating, anodizing and embedded graphics. At Valmont, we have made it our busi- ness to protect steel and aluminum products with surface finishes that beautify and last. From large steel poles and expansive bridges, to golf clubs and flashlights, Valmont’s surface finishes are hard at work battling the elements, and protecting the products we use for life. Above | The combined capabilities of our state-of-the-art plants provide Valmont Coatings with the capacity to quickly and efficiently galvanize products of almost any size. 14 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 DURABILITY ON A GLOBAL SCALE How do you balance the need for aesthetically pleasing steel and aluminum products with durability? Leverage company-wide quality standards to engineer products and processes for the duration. Through continuous innovation, Valmont has developed quality processes to provide protective coatings that last, year after year. N O I S I V I D S G N I T A O C N O I S I V I D G N I B U T DETAILS ON A GLOBAL SCALE How do you provide high quality, custom tubing products that fulfill your customer’s specific requirements for very demanding applications? The answer is in the details. By leveraging our engineering and manufacturing capabilities, Valmont is able to produce tubing in custom shapes, sizes and chemistries made to customer specifications . . . precisely. t You can’t always see it, but Valmont’s custom tubing is all around us. Though its presence is unassuming, it is essential. It functions in various capacities, from a pneumatic tube system in a hospital, to a motorcycle mu≥er, to the fence in your backyard. It comes in all shapes, sizes and chemistries, made to order, by Valmont. Niche Market. Customized tubing is a specialized endeavor at Valmont. With a wide range of tubular steel products, we serve niche markets that rely on us to design and engineer tubing products for specialized applications. Whether they are sold into distribution or to original equipment manufacturers, Valmont’s tubing products are consis- tently on the cutting edge of quality, down to the finest detail. Tubing Technology. While we have built our success on providing excep- tional quality products for specialized applications, we are continuously seeking opportunities to serve customers in new markets. Through ongoing research, we will continue to develop new products and processes to meet evolving customer needs, no matter how they take shape. Above | Valmont produces specialized tubing in custom shapes, sizes and chemistries designed to meet precise specifications. VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 17 E C N E S E R P L A B O L G DEDICATION ON A GLOBAL SCALE Throughout the world, our dedicated employees strive to make a difference. A difference at work, at home and in their communities. 18 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 Albany, Oregon, USA Cascade Earth Sciences Barstow, California, USA Concrete Poles Bartow, Florida, USA Concrete Poles Bay Minette, Alabama, USA Concrete Poles Bellville, Texas, USA Concrete Poles Brenham, Texas, USA Steel Poles Chicago, Illinois, USA Galvanizing Claxton, Georgia, USA Concrete Poles Commerce City, Colorado, USA Composite Poles El Dorado, Kansas, USA Steel Poles Elkhart, Indiana, USA Steel And Aluminum Poles Farmington, Minnesota, USA Aluminum Poles Jasper, Tennessee, USA Steel Poles Lindon, Utah, USA Galvanizing and Powder Coating Long Beach, California, USA Galvanizing Los Angeles, California, USA Anodizing and Powder Coating Mansfield, Texas, USA Steel Poles McCook, Nebraska, USA Irrigation Equipment Minneapolis, Minnesota, USA Anodizing, Powder Coating and E-coating Omaha, Nebraska, USA Corporate Headquarters Plymouth, Indiana, USA Wireless Communication Structures and Components and Specialty Structures Salem, Oregon, USA Wireless Communication Structures and Components and Specialty Structures Selbyville, Delaware, USA Specialty Structures Sioux City, Iowa, USA Galvanizing Tualatin, Oregon, USA Galvanizing Tulsa, Oklahoma, USA Steel Poles and Galvanizing Tuscaloosa, Alabama, USA Concrete Poles Valley, Nebraska, USA Irrigation Equipment, Steel Poles, Tubing and Galvanizing Waverly, Nebraska, USA Steel Tubing West Point, Nebraska, USA Galvanizing Uberaba, Brazil Irrigation Equipment St. Julie, Quebec, Canada Aluminum Poles Guangzhou, China1 Steel Poles Shanghai, China Steel Poles Charmeil, France Steel Poles Creuzier-le-neuf, France Industrial Covers and Conveyers Rive-de-gier, France Aluminum Poles Gelsenkirchen, Germany Steel Poles Monterrey, Mexico Steel Poles Berrechid, Morocco Steel Poles Maarheeze, The Netherlands Steel Poles Siedlce, Poland Steel Poles Johannesburg, South Africa Irrigation Equipment Madrid, Spain Irrigation Equipment Chesterfield, United Kingdom Steel Poles Jebel Ali, U.A.E. Irrigation Equipment 1 Scheduled to open spring 2006. VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 19 P I H S R E D A E L BOARD OF DIRECTORS Mogens C. Bay Chairman and Chief Executive Officer Valmont Industries, Inc. Director Since 1993 Thomas F. Madison Lead Director President MLM Partners Director Since 1987 Glen Barton Retired Chairman and Chief Executive Officer Caterpillar, Inc. Director Since 2004 Kaj den Daas Executive Vice President Philips Lighting B.V. Chief Operating Officer Business Group Lamps Director Since 2004 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 Daniel P. Neary Chairman and Chief Executive Officer Mutual of Omaha Director Since 2005 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 20 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 From left to right | Glen Barton, John E. Jones, Daniel P. Neary, Walter Scott, Jr., Kaj den Daas, Mogens C. Bay, Dr. Stephen R. Lewis, Jr., Kenneth E. Stinson, Charles D. Peebler, Jr. and Thomas F. Madison. Kenneth E. Stinson Chairman Peter Kiewit Sons’, Inc. Director Since 1996 Audit Committee Walter Scott, Jr., Chairman John E. Jones Daniel P. Neary Charles D. Peebler, Jr. Compensation Committee Thomas F. Madison, Chairman Glen A. Barton Dr. Stephen R. Lewis, Jr. Charles D. Peebler, Jr. Governance and Nominating Committee Thomas F. Madison, Chairman Kaj den Daas Dr. Stephen R. Lewis, Jr. 5 0 0 2 FINANCIAL AND CORPORATE INFORMATION VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 21 SELECTED 11-YEAR FINANCIAL SUMMARY $ $ $ $ $ $ (Dollars in thousands, except per share amounts) OPERATING DATA Net sales Operating income Net earnings Depreciation and amortization Capital expenditures Effective tax rate PER SHARE DATA 1 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)1 Approximate number of shareholders Number of employees 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1,108,100 82,863 39,079 39,807 35,119 37.8% 1,031,475 70,112 26,881 38,644 17,182 36.0% 837,625 54,623 25,487 34,597 17,679 854,898 70,289 33,629 33,942 13,942 36.3% 36.5% 36.9% 36.3% 36.9% 36.5% 36.3% 35.6% 35.7% 1.61 1.54 0.335 802,042 (90,674) (67,869) (2,107) 641,392 229,161 194,676 802,042 232,340 328,675 13.3% 7.7% 36.2% 24,765 5,700 5,336 1.13 1.10 0.320 843,351 (77,222) (66,506) (1,932) 697,691 277,444 205,655 843,351 322,775 294,655 10.1% 7.6% 46.3% 24,162 5,600 5,542 1.07 1.05 0.315 613,022 (71,481) (55,856) (1,921) 483,764 169,568 190,103 613,022 149,662 265,494 10.5% 7.4% 30.9% 23,825 5,400 5,074 1.40 1.37 0.290 593,649 (70,276) (69,828) (1,792) 451,753 154,112 193,175 593,649 166,391 242,020 14.9% 9.7% 36.8% 23,883 5,500 5,234 872,380 846,129 639,869 630,858 622,506 644,531 544,642 65,021 26,693 36,324 25,652 1.10 1.09 0.260 599,433 (67,563) (58,042) (1,598) 472,230 145,550 209,580 599,433 198,008 225,811 13.9% 8.6% 41.9% 24,477 5,500 5,342 67,256 30,400 30,270 46,456 1.31 1.28 0.260 600,135 (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 50,176 26,367 21,949 37,783 1.09 1.08 0.260 419,335 (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 47,752 27,636 19,843 29,667 1.04 1.02 0.250 406,957 (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 61,990 37,544 16,437 39,115 1.36 1.33 0.220 368,052 (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 36,644 21,248 14,832 35,559 0.78 0.76 0.190 341,648 (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 41,831 24,759 12,361 34,772 0.92 0.90 0.150 308,710 (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 1 2 Per share amounts and number of shares reflect the two-for-one stock split in 1997. 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. 22 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 (Dollars in thousands, except per share amounts) OPERATING DATA Net sales Operating income Net earnings Depreciation and amortization Capital expenditures Effective tax rate PER SHARE DATA 1 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)1 Approximate number of shareholders Number of employees 82,863 39,079 39,807 35,119 1.61 1.54 0.335 $ 802,042 (90,674) (67,869) (2,107) $ 641,392 $ $ $ 229,161 194,676 802,042 232,340 328,675 13.3% 7.7% 36.2% 24,765 5,700 5,336 70,112 26,881 38,644 17,182 1.13 1.10 0.320 843,351 (77,222) (66,506) (1,932) 697,691 277,444 205,655 843,351 322,775 294,655 10.1% 7.6% 46.3% 24,162 5,600 5,542 54,623 25,487 34,597 17,679 1.07 1.05 0.315 613,022 (71,481) (55,856) (1,921) 483,764 169,568 190,103 613,022 149,662 265,494 10.5% 7.4% 30.9% 23,825 5,400 5,074 70,289 33,629 33,942 13,942 1.40 1.37 0.290 593,649 (70,276) (69,828) (1,792) 451,753 154,112 193,175 593,649 166,391 242,020 14.9% 9.7% 36.8% 23,883 5,500 5,234 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 $ 1,108,100 1,031,475 837,625 854,898 872,380 65,021 26,693 36,324 25,652 846,129 67,256 30,400 30,270 46,456 639,869 50,176 26,367 21,949 37,783 630,858 47,752 27,636 19,843 29,667 622,506 61,990 37,544 16,437 39,115 644,531 36,644 21,248 14,832 35,559 544,642 41,831 24,759 12,361 34,772 37.8% 36.0% 36.3% 36.5% 36.9% 36.3% 36.9% 36.5% 36.3% 35.6% 35.7% 1.10 1.09 0.260 599,433 (67,563) (58,042) (1,598) 472,230 145,550 209,580 599,433 198,008 225,811 13.9% 8.6% 41.9% 24,477 5,500 5,342 1.31 1.28 0.260 600,135 (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 1.09 1.08 0.260 419,335 (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 1.04 1.02 0.250 406,957 (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 1.36 1.33 0.220 368,052 (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 0.78 0.76 0.190 341,648 (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 0.92 0.90 0.150 308,710 (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 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 on 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 on Form 10-K filed with the Securities and Exchange Commission. VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 23 SEGMENT SUMMARY (Dollars in millions, except per share amounts) CONSOLIDATED Net sales Gross profit as a percent of sales SG&A expense as a percent of sales Operating income as a percent of sales Net interest expense Effective tax rate Net earnings Earnings per share ENGINEERED SUPPORT STRUCTURES SEGMENT Net sales Gross profit SG&A expense Operating income UTILITY SUPPORT STRUCTURES SEGMENT Net sales Gross profit SG&A expense Operating income(loss) COATINGS SEGMENT Net sales Gross profit SG&A expense Operating income IRRIGATION SEGMENT Net sales Gross profit SG&A expense Operating income TUBING SEGMENT Net sales Gross profit SG&A expense Operating income OTHER Net sales Gross profit SG&A expense Operating loss NET CORPORATE EXPENSE Gross profit SG&A expense Operating loss MN – not meaningful 24 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 2005 2004 Change 2005-2004 2003 Change 2004-2003 $ $ $ 1,108.1 278.3 25.1 % 195.4 17.6 % 82.9 7.5 % 17.7 37.8 % 39.1 1.54 470.7 127.2 82.6 44.6 218.9 48.6 27.9 20.7 72.1 17.6 9.2 8.4 260.4 61.0 36.2 24.8 71.9 20.6 6.0 14.6 14.1 4.3 8.4 (4.1) (1.0) 25.1 (26.1) 1,031.5 245.9 23.8 % 175.8 17.0 % 70.1 6.8 % 14.7 36.0 % 26.9 1.10 402.0 102.8 71.2 31.6 175.3 32.1 25.0 7.1 73.5 14.0 9.8 4.2 297.8 73.8 38.3 35.5 68.7 20.3 6.9 13.4 14.2 4.6 7.4 (2.8) (1.6) 17.3 (18.9) 7.4 % 13.2 % 11.1 % 18.3 % 20.4 % 45.4 % 40.0 % 17.1 % 23.7 % 16.0 % 41.1 % 24.9 % 51.4 % 11.6 % 191.5 % (1.9) % 25.7 % (6.1) % 100.0 % (12.6) % (17.3) % (5.5) % (30.1) % 4.7 % 1.5 % (13.0) % 9.0 % (0.7) % (6.5) % 13.5 % (46.4) % 37.5 % 45.1 % (38.1) % 837.6 208.0 24.8 % 153.4 18.3 % 54.6 6.5 % 8.8 36.3 % 25.5 1.05 330.0 94.6 68.4 26.2 76.8 8.8 14.3 (5.5) 91.1 16.7 9.9 6.8 279.9 71.8 37.2 34.6 44.8 11.3 4.8 6.5 14.9 5.2 7.3 (2.1) (0.4) 11.5 (11.9) 23.1 % 18.2 % 14.6 % 28.4 % 67.0 % 5.5 % 4.8 % 21.8 % 8.7 % 4.1 % 20.6 % 128.3 % NM 74.8 % NM (19.3) % (16.2) % (1.0) % (38.2) % 6.4 % 2.8 % 3.0 % 2.6 % 53.3 % 79.6 % 43.8 % 106.2 % (4.7) % (11.5) % 1.4 % (33.3) % NM 50.4 % (58.8) % (Dollars in millions, except per share amounts) 2005 2004 Change 2005-2004 2003 Change 2004-2003 ENGINEERED SUPPORT STRUCTURES SEGMENT UTILITY SUPPORT STRUCTURES SEGMENT CONSOLIDATED Net sales Gross profit as a percent of sales SG&A expense as a percent of sales Operating income as a percent of sales Net interest expense Effective tax rate Net earnings Earnings per share Net sales Gross profit SG&A expense Operating income Net sales Gross profit SG&A expense Operating income(loss) COATINGS SEGMENT Net sales Gross profit SG&A expense Operating income IRRIGATION SEGMENT Net sales Gross profit SG&A expense Operating income TUBING SEGMENT Net sales Gross profit SG&A expense Operating income OTHER NET CORPORATE EXPENSE Net sales Gross profit SG&A expense Operating loss Gross profit SG&A expense Operating loss MN – not meaningful $ 1,108.1 278.3 25.1 % 195.4 17.6 % 82.9 7.5 % 17.7 37.8 % 39.1 1.54 $ 1,031.5 245.9 23.8 % 175.8 17.0 % 70.1 6.8 % 14.7 36.0 % 26.9 1.10 470.7 127.2 82.6 44.6 218.9 48.6 27.9 20.7 72.1 17.6 9.2 8.4 260.4 61.0 36.2 24.8 71.9 20.6 6.0 14.6 14.1 4.3 8.4 (4.1) (1.0) 25.1 (26.1) 402.0 102.8 71.2 31.6 175.3 32.1 25.0 7.1 73.5 14.0 9.8 4.2 297.8 73.8 38.3 35.5 68.7 20.3 6.9 13.4 14.2 4.6 7.4 (2.8) (1.6) 17.3 (18.9) 7.4 % 13.2 % 11.1 % 18.3 % 20.4 % 45.4 % 40.0 % 17.1 % 23.7 % 16.0 % 41.1 % 24.9 % 51.4 % 11.6 % 191.5 % (1.9) % 25.7 % (6.1) % 100.0 % (12.6) % (17.3) % (5.5) % (30.1) % 4.7 % 1.5 % (13.0) % 9.0 % (0.7) % (6.5) % 13.5 % (46.4) % 37.5 % 45.1 % (38.1) % $ 837.6 208.0 24.8 % 153.4 18.3 % 54.6 6.5 % 8.8 36.3 % 25.5 1.05 330.0 94.6 68.4 26.2 76.8 8.8 14.3 (5.5) 91.1 16.7 9.9 6.8 279.9 71.8 37.2 34.6 44.8 11.3 4.8 6.5 14.9 5.2 7.3 (2.1) (0.4) 11.5 (11.9) 23.1 % 18.2 % 14.6 % 28.4 % 67.0 % 5.5 % 4.8 % 21.8 % 8.7 % 4.1 % 20.6 % 128.3 % NM 74.8 % NM (19.3) % (16.2) % (1.0) % (38.2) % 6.4 % 2.8 % 3.0 % 2.6 % 53.3 % 79.6 % 43.8 % 106.2 % (4.7) % (11.5) % 1.4 % (33.3) % NM 50.4 % (58.8) % VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 25 CORPORATE AND BUSINESS UNIT OFFICERS COR PORATE OFFI C ERS 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 Information Technology 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 Corporate Development and Treasurer I N FRASTRUCTU R E Thomas D. Spears Group President I R R IGATION AN D TU B I NG Leonard M. Adams Group President North American Structures North American Irrigation and Coatings Richard S. Cornish Vice President Operations Coatings Doug Kochenderfer Vice President and General Manager Specialty Structures Thomas F. Sanderson Vice President Sales and Marketing and Tubing Duane Bier Vice President Operations Irrigation James L. Brown Vice President North American Sales Irrigation I NTER NATIONAL Victor D. Grizzle Group President North American Structures Valmont International Thomas J. Sutko Vice President Operations North American Structures UTI L ITY SU PPO RT STRUCTU R E S DIV ISION Earl Foust President Wesley J. Oliphant Vice President Steel Business Units Douglas C. Sherman Vice President Market Development Michael Banat Vice President International Structure Sales and Marketing Klavs Guldager Vice President Operations Bernhard L. Kiep Vice President and General Manager International Irrigation Stéphane Devulder General Manager Southern Europe Huang Xiao Yong General Manager China 26 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 CORPORATE AND STOCK INFORMATION COR PO RATE H EADQ UA RTERS SHA R EH OLDE R AN D I NVE STOR R E L ATIONS Valmont Industries, Inc. One Valmont Plaza Valmont’s common stock trades on the New York Stock Exchange (NYSE) under Omaha, Nebraska 68154-5215 USA the symbol VMI. Tel Fax 1-402-963-1000 1-402-963-1198 valmont.com I N DE P E N DE NT P U B L IC ACCO U NTANTS Deloitte & Touche LLP Omaha, Nebraska USA LE GAL COU N S EL McGrath North Mullin & Kratz, PC LLO Omaha, Nebraska USA STO C K TRAN S FE R AG ENT AN D R EG ISTRA R Address Shareholder Inquiries to: The Bank of New York Shareholder Relations Department, 11 E P.O. Box 11258 Church Street Station New York, NY 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, NY 10286 USA AN N UAL M E ETI N G The annual meeting of Valmont’s shareholders will be held at 2:00 p.m. on Monday, April 24, 2006, at the Joslyn Art Museum in Omaha, Nebraska USA. We make available, free of charge through our Internet Web site at www.valmont.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. We have also posted on our Web site our (1) Corporate Governance Principles, (2) charter for the Audit Committee, Compensation Committee, and Governance and Nominating Committee of the Board, (3) Code of Business Conduct, and (4) Code of Ethics for Senior Officers 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 Fax 1-402-963-1000 1-402-963-1198 VA L M O N T I N D U S T R I E S , I N C . | AN N U A L RE P O R T 2005 27 FORWARD-LOOKING STATEMENTS This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which the Company operates, as well as management’s perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions. Many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward-looking state- ments. These factors include, among other things, risk factors described from time to time in the Company’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, and actions and policy changes of domestic and foreign governments.The Company cautions that any forward-looking statements included in this report are made as of the date of this report. VALMONT INDUSTRIES, INC. ONE VALMONT PLAZA OMAHA, NEBRASKA 68154-5215 USA 402 .963.1000 VALMONT.COM 

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