Annual Report 2009 at work valmont’s vision 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. financial highlights D o l l a r s i n M i l l i o n s , e x c e p t p e r s h a r e a M o u n t s Operating Results Net sales Operating income Net earnings1 Diluted earnings per share Dividends per share Financial Position 2009 2008 2007 $ 1,786.6 238.0 150.6 5.73 0.580 $ 1,907.3 228.6 132.4 5.04 0.495 $ 1,499.8 155.6 94.7 3.63 0.410 Shareholders’ equity2 Long-term debt as a % of invested capital3 $ 786.3 15.2% $ 624.1 31.7% $ 510.6 27.3% 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 capital3 29.8% 13.3% 8.4% 24.1% 15.2% 26.8% 12.0% 6.9% 25.9% 16.0% 26.7% 10.4% 6.3% 23.6% 14.0% Year-End Data Shares outstanding (000) Approximate number of shareholders Number of employees 26,297 5,400 6,626 26,168 5,800 7,380 25,945 5,800 6,029 1 Net earnings attributable to Valmont Industries, Inc. 2 Total Valmont Industries, Inc. shareholders’ equity. 3 See footnote (a) on page 32 of this document and item 6 on pages 22 through 24 of the Company’s Form 10-K. 1,907 1,786 228.6 238.0 5.73 5.04 1,500 1,281 1,108 155.6 3.63 110.1 82.9 2.38 1.54 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 net sales operating income diluted earnings per share l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 1 1 4 6 8 12 16 20 24 26 27 28 29 financial highlights message to fellow shareholders valmont at a glance engineered support structures division utility support structures division irrigation division coatings division global dedication board of directors corporate and business unit officers corporate and stock information financial summary 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 2 our strong market positions in our core businesses persist. our business drivers are global, compelling and enduring. our knowledge is a platform from which we build our businesses. l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 3 message to fellow shareholders THE YEAR 2009 MARKED ANOTHER RECORD FOR VALMONT, WITH A 13.7 PERCENT INCREASE IN EARNINGS PER SHARE ON A 6.3 PERCENT DECLINE IN REVENUE. Our industry diversification played an important role in this year’s record performance. The improvements in earnings were contributed by our utility business, as our other segments were hit by the global recession to varying degrees. Operating income as a percent of sales improved to 13.3% compared with 12.0% in 2008. Our return on invested capital declined slightly to 15.2% from 16% last year. Overall, we are pleased with these results given the very difficult global economic environment. In reflecting on the year 2009, the severe global financial crisis prompts the question: Has anything fundamentally changed to threaten Valmont’s future opportunities for success? We think not. Let me explain why. Most major economies are still under stress and many infrastructure projects are being delayed. Furthermore, farm income has declined recently. We believe these are short-term challenges. The two principal long-term drivers for Valmont’s businesses are general economic growth, which requires investments in infrastructure, and a growing population, which leads to increased pressures on production agriculture to more efficiently use limited fresh water resources. To support economic growth and expansion, our structures enhance the quality of a country’s infrastructure. To support population growth, Valmont’s irrigation products help farmers to increase production with less water. The link between our products and economic and critical social progress has not changed because of recent events. Valmont is in a strong position. We hold market leader- ship positions in businesses that support infrastructure growth and the need for more food, and are very optimistic about our long-term opportunities. In 2009, our Engineered Support Structures Segment faced many headwinds. The strongest one was global weakness in roadway and construction spending, resulting in a 7% decline in sales and a 5% reduction in operating income. Our Utility Support Structures Segment had an extraordinary year. We started with a record backlog of orders and experienced strong activity throughout the year, which led to a 37% increase in sales. The high volumes led to excellent fixed cost leverage in the plants and good leverage of selling, general and administrative costs. As a result, operating income more than doubled. 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 4 Our coatings business did a good job of protecting the quality of its earnings. Despite an 18% sales decline and a 22% decline in operating income, operating income as a percent of sales remained above 20%. One milestone for which we are particularly proud occurred in November, when Valmont was presented with the Presidential “E Star” Award. This award recognizes persons or organizations for significantly contributing to increasing United States exports. Our Irrigation Segment results were defined by the North American farmers’ reluctance to invest, as they were faced with tremendous economic uncertainty during the core selling season and declining commodity prices. International markets were confronted with similar issues, as well as the additional stress of tighter credit. These adverse conditions led to a 35% drop in global irrigation sales and a 60% decline in operating income for the year. Throughout 2009, I continued my visits to our facili- ties around the world. It is important for me to meet our employees face to face. I assure you, we have a dedicated worldwide team with great passion for our products and markets, and for serving our custom- ers better than anyone else. I am proud of what they have accomplished, and I thank each one of my fellow employees for all they do for Valmont. The turbulent economic environment will pose chal- lenges for Valmont and for our customers in the coming year. We move into 2010 with a cautious outlook, but unbridled enthusiasm for the opportunities ahead. Regardless of the economic environment facing us in 2010, I can assure you that we will remain sharply focused on maximizing our performance and deliver - ing the highest value possible to our customers and stakeholders. Sincerely, Mogens C. Bay Chairman and Chief Executive Officer l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 5 Let me update you on our progress with “The Valmont Way.” The Valmont Way is our method of implementing a culture of continuous improvement. It is our road map to becoming a true lean enterprise and is based upon our corporate values by which we live every day: passion for our customers and products; uncompromising integrity; the pursuit of excellence through continuous improve- ment; and delivering results. In 2009, we continued to sharpen our focus on eliminating waste through the ongoing training and engagement of our global workforce in The Valmont Way. Each employee had individual and group training on the principles of the Valmont Way, and I believe we are gaining broad acceptance and enthusiasm for the power of these methods. Our commitment to the health and safety of our employees and communities remains unwavering. Around the world, our divisional and facility safety programs were strengthened through the streamlined reporting, improved communication, training, and audit- ing of our Environmental Health and Safety Department. Our emphasis on health and safety is an integral part of The Valmont Way. We have also initiated a concerted effort to address our sustainability. We believe that companies that monitor and measure their practices with an eye toward the environment will become better companies and stronger competitors. We have an obligation to be good stewards of our resources. valmont at a glance Wherever you live, whatever you do, chances are Valmont is part of your life. Engineered structures for infrastructure and water management for agriculture. agriculture 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 6 Mechanized irrigation systems irrigation infrastructure 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 utility support structures Utility transmission and distribution poles Utility substation structures coatings Galvanizing, anodizing, powder coatings and integrated graphics l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 7 customer needs » sustained innovation in design, engineering, and manufacturing a road map for customer service Increasingly, customers around the world are relying on Valmont to deliver quality structures for lighting and traffic, mass transit, and wireless communication. How will Valmont continue to meet these demands? Our road map for continuous improvement is guiding the way. This will lead to the delivery of an even higher level of service and value for our customers. engineered support structures division 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 8 l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 9 diversifying strengths 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 10 In emerging and developed economies, the needs for nighttime safety, traffic control and telecommunication continue to grow and drive demand for Valmont’s engineered support structures. Over the next 20 years, as populations continue to grow and evolve, these needs will continue to increase. Market Drivers: In Place, Evolving, Enduring Urbanization in developing countries is creating a need for infrastructure to bring safety and traffic control to a rising number of urban dwellers. More than 50 percent of the world’s population now lives in urban settings, an unprecedented number that is expected to climb to 81 percent by 2030. Safe structures are becoming a high priority for a growing number of urban communities in developed countries. In an effort to create safer highway systems, much of the existing roadway lighting infrastructure is beginning to be replaced with energy-absorbing structures, requiring highly engineered design solutions. Beautification of cities to attract tourists is a growing trend in many countries. This movement is leading to an increasing demand for decorative structures to differentiate cities and create beautiful and safely lit urban areas. engineered support structures division Upgrading and replacement of aging infrastructure in the U.S. is a growing concern and will continue to drive the demand for engineered structures. Communication structures for cell phones and data transmission continue to generate strong demand as emerging markets build out their wireless infrastructures for cell phone usage. Rising global demand is being driven by a transition to wireless machine-to-machine communication. Technology advances such as light-emitting diodes, or LEDs, are signaling the need for future solutions for lighting infrastructure as LEDs suitable for outdoor lighting applications become more widely available. Strength for the Future Valmont is prepared for the challenge. Our manufacturing facilities are strategically located around the world. Our engineering capacities, knowledge of local markets and distribution channels are strengths we continue to leverage. The depth and breadth of our product portfolio allows us to meet the unique needs of our customers. And our passion for continuous improvement and innovation helps us to serve our customers better than anyone else. l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 11 customer needs » sustained innovation in design, engineering, and manufacturing 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 12 the way we conduct business The market for utility infrastructure is expanding around the world. More and more, utility customers are calling upon Valmont for their largest, most complex projects requiring transmission, distribution and substation structures. How is Valmont meeting these increasing demands? The way we conduct business and the processes we have set in place allow us to deliver superior quality, service and value, time after time. utility support structures division l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 13 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 14 Developed countries needing upgraded power grids to improve reliability stand in striking contrast to developing economies located miles from the nearest electricity source. Yet, both scenarios will require significant investments in utility infra- structure over the coming decades, further driving demand for Valmont’s engineered utility structures. The Need for Power Interconnection of power grids is an emerging and necessary trend as the U.S., Europe, and developing countries attempt to meet rising demand for power with greater reliability. Interconnect ties, which allow electricity to be transferred in either direction between state and national borders, are long-term projects requiring unique utility infrastructure solutions. Developing countries are building power grids from the ground up to improve the standard of living for one-fourth of the world’s population. Demand for electrification in these regions is generating long-term investments in transmission and distribution infrastructure. Utility projects are continuing to increase in size and duration as the U.S. builds out a stronger national grid system to move bulk power. These large, complex projects require a variety of highly engineered infrastructure products, and unprec- edented support from skilled infrastructure engineers and project managers with proven risk management expertise. utility support structures division delivering powerful results Renewable energy sources are the nexus of attention for planners and design engineers of power grids worldwide. In North America alone, plans to integrate renewable energy into existing power grids represent a major undertaking. These extended projects require skilled project managers and long-term investments in engineered utility infrastructure. our worldwide facilities, including three located in China, to maximize efficiencies and engineer- ing innovations. Our diverse product portfolio includes tubular steel poles, spun concrete structures, and hybrid poles. Looking ahead, Valmont-Newmark has the processes in place to sustain the superior service, quality, and value utility projects require, and our customers expect. Power to Deliver As demand for utility infrastructure increases worldwide, project scopes are becoming larger, and the risks to customers are getting higher. It takes expertise, like that of Valmont-Newmark’s qualified project managers, to support increased engineering, logistical, and delivery require- ments. As a leader in utility infrastructure, we transfer knowledge and resources between l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 15 customer needs » sustained innovation in design, engineering, and manufacturing helping people grow Growing populations and urbanization in emerging economies are placing ever-increasing demands on the world’s food supply. Due to limited fresh water resources, this means more food must be grown with less water. How is Valmont contributing to the solution? The way we leverage our strengths and implement our strategies allows us to continuously deliver mechanized irrigation equipment of superior quality and value to producers around the world, helping them grow more with less water. irrigation division 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 16 l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 17 conserving resources 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 18 Fresh water is a severely limited resource. Yet, with each passing year, the demands on our fresh water supply are intensifying. Paramount to humanity’s well-being is the ability to grow more food with less water. This is the source of enduring demand for Valmont’s mechanized irrigation equipment. Producing More with Less Population growth continues to stress the world’s food supply. The World Bank estimates global population will rise from today’s 6.8 billion to over 8 billion by 2025. Most of this growth will occur in developing countries, where roughly 800 million people are still undernourished. Producers world- wide are challenged to grow more food with limited resources. Expanding middle class populations in developing economies are driving demand for higher quality, protein-based diets. The shift in food consumption requires that more grain be grown for livestock. This trend will continue to gain momentum as rapid urbanization and rising income levels lead to improved standards of living. Limited water resources and escalating popula- tions mean more food must be grown with less water. Of all the earth’s fresh water, only 1 percent is available for human use. Of that, approximately 70 percent is used for agriculture today. Without more efficient irrigation methods, the United Nations predicts the demand for water will escalate 70 to 90 percent by 2050. irrigation division Conversion from traditional flood to mechanized irrigation can have a far-reaching impact. Mechanized irrigation equipment can save 50 to 70 percent of the water used when compared to flood irrigation. Converting dry land to irrigated farming in arid regions offers further opportunities to increase food production using mechanized irrigation equipment. Replacement of aging irrigation equipment in North America presents ongoing opportunities in the mechanized irrigation market. While built for durability, much of the mechanized irrigation equipment in the fields today is over 30 years old. Biofuel usage is on the rise, driving demand for increased grain production for ethanol. Sustaining Solutions Valmont is a premier solution provider. We are the world’s largest manufacturer of mechanized irrigation equipment with the foremost global dealer network. Our water-saving Valley® brand center pivot and linear irrigation equipment is universally recognized for its unmatched quality and reliability. Our strength arises from our global presence, continuous innovation, and ability to leverage our resources. Through sustained engineering and service excellence, Valmont will persist as the industry leader. l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 19 customer needs » sustained innovation in design, engineering, and manufacturing taking performance to a higher level The annual cost of corrosion of metal products in the U.S. represents a major financial burden for industry and government. At Valmont, we are helping our customers curb corrosion costs. How? As a full-service coatings company, we commit daily to continuous process improvement and innovation to extend the service life of metal products and add value for our customers, and to taking our product and service performance to higher levels. coatings division 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 20 l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 21 When it comes to corrosion of aging and inadequately protected metal structures, the stakes can be high. Not only does corrosion cost billions of dollars in the U.S. each year, compromised structural integrity due to corrosion can cost lives. With a maintenance-free service life of up to 50 or more years in most environments, Valmont’s quality galvanizing can lower the stakes considerably. 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 22 Driving to the Finish Corrosion represents a direct annual cost of nearly $300 billion in the U.S., and more than $1.8 trillion worldwide, according to a 2009 report issued by the World Corrosion Organization. With proper corrosion control, billions of dollars could be saved in the U.S. alone. The increased focus on controlling these costs is a catalyst behind long-term demand for protective finishes. Aging infrastructure accounts for nearly $22.6 billion in direct corrosion costs each year, accord- ing to a study commissioned by the U.S. Federal Highway Administration. The need for galvanizing and other protective finishes will remain strong as aging metal structures and components are replaced over the coming years. coatings division enhancing service life our customers better than anyone else. Our array of quality finishes can be found on prod- ucts ranging from large steel poles and other products for infrastructure, to flashlights and guitars. With our extensive knowledge, our commitment to continuous innovation, and our strategically located facilities around the country, Valmont Coatings will continue to be a leader in the industry through performance, and by example. l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 23 Diversity in climates and physical environments requires assorted coatings options to protect metal structures from location-specific corrosives. Meeting the associated engineering requirements, efficiently and economically, requires solutions from a coatings provider specializing in a variety of high quality protective finishes. Value-Added Performance The high cost of corrosion in the U.S. is a press- ing issue. As a full-service coatings company, Valmont Coatings is already providing superior quality, value-added solutions to steel fabrica- tion markets nationwide. We are one of the largest and most efficient custom galvanizers in North America. Throughout our history, we have made continuous process improvements, leveraged our engineering resources, and broadened our coatings offerings to serve global dedication Delta, BC, Canada Steel Poles Winnipeg, MB, Canada Steel Poles Barrie, ON, Canada Steel Poles St. Julie, QC, Canada Steel and Aluminum Poles Monterrey, Mexico Steel Poles Uberaba, Brazil Irrigation Equipment Berrechid, Morocco Steel Poles Johannesburg, South Africa Irrigation Equipment EUROPE & MIDDLE EAST Kiiu, Estonia Steel Poles Kangasniemi, Finland Steel and Wood Poles Charmeil, France Steel Poles Rive-de-Gier, France Aluminum Poles Gelsenkirchen, Germany Steel Poles Maarheeze, The Netherlands Steel Poles Siedlce, Poland Steel Poles Madrid, Spain Irrigation Equipment Ankara, Turkey Steel Poles Jebel Ali, U.A.E. Irrigation Equipment Stockton-on-Tees, United Kingdom Steel Poles Guangzhou, China Steel Poles Haiyang, China Steel Poles and Irrigation Equipment Shanghai, China Steel Poles Bay Minette, Alabama, USA Concrete Poles Tuscaloosa, Alabama, USA Concrete Poles Barstow, California, USA Concrete and Steel Poles Long Beach, California, USA Galvanizing Los Angeles, California, USA Anodizing and Powder Coating Santa Fe Springs, California, USA Wireless Components Aurora, Colorado, USA Composite Poles Bartow, Florida, USA Concrete Poles Atlanta, Georgia, USA Wireless Components Claxton, Georgia, USA Concrete Poles Chicago, Illinois, USA Galvanizing Elkhart, Indiana, USA Aluminum Poles Jeffersonville, Indiana, USA Galvanizing Plymouth, Indiana, USA Wireless Communication Structures, Components and Specialty Structures Sioux City, Iowa, USA Galvanizing El Dorado, Kansas, USA Steel Poles Salina, Kansas, USA Galvanizing Farmington, Minnesota, USA Aluminum Poles Minneapolis, Minnesota, USA Powder Coating and E-Coating McCook, Nebraska, USA Irrigation Equipment Omaha, Nebraska, USA Corporate Headquarters Valley, Nebraska, USA Irrigation Equipment, Steel Poles, Tubing and Galvanizing West Point, Nebraska, USA Galvanizing Hauppauge, New York, USA Wireless Components Tulsa, Oklahoma, USA Steel Poles and Galvanizing Salem, Oregon, USA Wireless Communication Structures, Components and Specialty Structures Tualatin, Oregon, USA Galvanizing Hazleton, Pennsylvania, USA Steel Poles Jasper, Tennessee, USA Steel Poles Bellville, Texas, USA Concrete Poles Brenham, Texas, USA Steel Poles Mansfield, Texas, USA Steel Poles Lindon, Utah, USA Galvanizing and Powder Coating Ferndale, Washington, USA Steel Poles 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 24 Throughout the world, our dedicated employees strive to make a difference. A difference at work, at home, and in their communities. Delta, BC, Canada Steel Poles Winnipeg, MB, Canada Steel Poles Barrie, ON, Canada Steel Poles St. Julie, QC, Canada Steel and Aluminum Poles Monterrey, Mexico Steel Poles Bay Minette, Alabama, USA Concrete Poles Tuscaloosa, Alabama, USA Concrete Poles Barstow, California, USA Concrete and Steel Poles Long Beach, California, USA Galvanizing Los Angeles, California, USA Anodizing and Powder Coating Santa Fe Springs, California, USA Wireless Components Aurora, Colorado, USA Composite Poles Bartow, Florida, USA Concrete Poles Atlanta, Georgia, USA Wireless Components Claxton, Georgia, USA Concrete Poles Chicago, Illinois, USA Galvanizing Elkhart, Indiana, USA Aluminum Poles Valley, Nebraska, USA Irrigation Equipment, Steel Poles, Tubing and Galvanizing West Point, Nebraska, USA Galvanizing Hauppauge, New York, USA Wireless Components Tulsa, Oklahoma, USA Steel Poles and Galvanizing Jeffersonville, Indiana, USA Salem, Oregon, USA Galvanizing Plymouth, Indiana, USA Wireless Communication Structures, Components and Specialty Structures Wireless Communication Structures, Components and Specialty Structures Tualatin, Oregon, USA Galvanizing Hazleton, Pennsylvania, USA Sioux City, Iowa, USA Steel Poles El Dorado, Kansas, USA Steel Poles Jasper, Tennessee, USA Galvanizing Steel Poles Salina, Kansas, USA Galvanizing Bellville, Texas, USA Concrete Poles Brenham, Texas, USA Farmington, Minnesota, USA Steel Poles Aluminum Poles Mansfield, Texas, USA Minneapolis, Minnesota, USA Steel Poles Powder Coating and E-Coating Lindon, Utah, USA McCook, Nebraska, USA Galvanizing and Powder Coating Irrigation Equipment Omaha, Nebraska, USA Corporate Headquarters Ferndale, Washington, USA Steel Poles Uberaba, Brazil Irrigation Equipment Berrechid, Morocco Steel Poles Johannesburg, South Africa Irrigation Equipment EUROPE & MIDDLE EAST Kiiu, Estonia Steel Poles Kangasniemi, Finland Steel and Wood Poles Charmeil, France Steel Poles Rive-de-Gier, France Aluminum Poles Gelsenkirchen, Germany Steel Poles Maarheeze, The Netherlands Steel Poles Siedlce, Poland Steel Poles Madrid, Spain Irrigation Equipment Ankara, Turkey Steel Poles Jebel Ali, U.A.E. Irrigation Equipment Stockton-on-Tees, United Kingdom Steel Poles Guangzhou, China Steel Poles Haiyang, China Steel Poles and Irrigation Equipment Shanghai, China Steel Poles l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 25 board of directors From left to right: Dr. Stephen R. Lewis, Jr., Kenneth E. Stinson, Jr., Daniel P. Neary, Thomas F. Madison, Kaj den Daas, Ambassador Clark T. Randt, Jr., Mogens C. Bay, Glen A. Barton, Walter Scott, Jr. 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 A. Barton Retired Chairman and Chief Executive Officer Caterpillar, Inc. Director Since 2004 Kaj den Daas Retired Executive Vice President Philips Lighting, B.V. of the Netherlands and Chairman of its North American Lighting Operations Director Since 2004 Dr. Stephen R. Lewis, Jr. Chairman RiverSource Funds Director Since 2002 Daniel P. Neary Chairman and Chief Executive Officer Mutual of Omaha Director Since 2005 Ambassador Clark T. Randt, Jr. Former U.S. Ambassador to the People’s Republic of China Director Since 2009 Walter Scott, Jr. Chairman Level 3 Communications, Inc. Director Since 1981 Kenneth E. Stinson Chairman Peter Kiewit Sons’, Inc. Director Since 1996 Audit Committee Walter Scott, Jr., Chairman Kaj den Daas Daniel P. Neary Human Resources Committee Kenneth E. Stinson, Chairman Dr. Stephen R. Lewis, Jr. Thomas F. Madison Daniel P. Neary Governance and Nominating Committee Dr. Stephen R. Lewis, Jr., Chairman Thomas F. Madison Glen A. Barton International Committee Glen A. Barton, Chairman Kaj den Daas Ambassador Clark T. Randt, Jr. Mogens C. Bay 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 26 officers corporate and business units Corporate Officers Mogens C. Bay Chairman & Chief Executive Officer Terry J. McClain Senior Vice President & Chief Financial Officer E. Robert Meaney Senior Vice President & Corporate Secretary Steven G. Branscombe Vice President Information Technology Brian Desigio Vice President Corporate Development John G. Graboski Vice President Human Resources Mark C. Jaksich Vice President & Controller Walter P. Pasko Vice President Procurement Global Utility Earl Foust Group President Michael Banat Vice President & General Manager International Utility James P. Ruddy Vice President Steel Business Units Steven A. Schmid Vice President Operations Douglas C. Sherman Vice President Marketing Global Irrigation Leonard M. Adams Group President Bernhard L. Kiep Vice President & General Manager International Irrigation Stephen B. LeGrand Vice President Operations Irrigation Craig Malsam Vice President Engineering Irrigation Coatings and Tubing Victor D. Grizzle Group President Richard S. Cornish Vice President & General Manager Global Lighting and Communication Structures Victor D. Grizzle Group President Todd P. Barth Vice President & General Manager Americas Lighting & Communication Structures Ted Brockman Vice President & General Manager Valmont West Coast Engineering Gary King Vice President Operations Jason Palumbis Vice President Sales Thomas F. Sanderson Vice President Global Platforms & Strategic Growth Mark E. Treinen Group Vice President Controller & Business Development Dan Witt Vice President Marketing, Research & Development & Customer Engagement Piet Stevens Vice President & General Manager Europe Middle East Asia Stéphane Devulder General Manager Southern Europe Huang Xiao Yong President Valmont China l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 27 corporate and stock information Shareholder and Investor Relations Valmont’s common stock trades on the New York Stock Exchange (NYSE) under the symbol VMI. 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. Valmont has filed the Chief Executive Officer and Chief Financial Officer certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits with the company’s annual report on Form 10-K for the fiscal year ended December 26, 2009. We have also posted on our Web site our (1) Corporate Governance Principles, (2) Charters for the Audit Committee, Human Resources Committee, Governance and Nominating Committee and International 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 1-402-963-1000 Tel 1-402-963-1198 Fax Corporate Headquarters Valmont Industries, Inc. One Valmont Plaza Omaha, Nebraska 68154-5215 USA Tel Fax Online valmont.com 1-402-963-1000 1-402-963-1198 Independent Public Accountants Deloitte & Touche LLP Omaha, Nebraska USA Legal Counsel McGrath North Mullin & Kratz, PC LLO Omaha, Nebraska USA Stock Transfer Agent and Registrar Address Shareholder Inquiries to: Wells Fargo Shareowner Services 161 N. Concord Exchange South St. Paul, MN 55075 1-866-886-9962 Send Certificates for Transfer and Address Changes to: Wells Fargo Shareowner Services 161 N. Concord Exchange South St. Paul, MN 55075 1-866-886-9962 Annual Meeting The annual meeting of Valmont’s shareholders will be held at 2:00 p.m. on Tuesday, April 27, 2010, at the Joslyn Art Museum in Omaha, Nebraska USA. 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 28 financial summary selected 5-year financial summary D o l l a r s i n t h o u s a n D s , e x c e p t p e r s h a r e a m o u n t s Operating Data Net sales Operating income Net earnings1 Depreciation and amortization Capital expenditures Per Share Data Earnings: Basic Diluted Cash dividends Financial Position Working capital Property, plant and equipment, net Total assets Long-term debt, including current installments Shareholders’ equity2 Cash Flow Data Net cash flows from operations Net cash flows from investing activities Net cash flows from financing activities Financial Measures (e) Invested capital(a) Return on invested capital(a) EBITDA(b) Return on beginning shareholders’ equity(c) Long-term debt as a percent of invested capital(d) Year End Data Shares outstanding (000) Approximate number of shareholders Number of employees 2009 2008 2007 2006 2005 $ 1,786,601 237,994 150,562 44,748 44,129 $ 1,907,278 228,591 132,397 39,597 50,879 $ 1,499,834 155,626 94,713 35,176 56,610 $ 1,281,281 110,085 61,544 36,541 27,898 $ 1,108,100 82,863 39,079 39,392 35,119 $ 5.80 5.73 0.580 $ 5.13 5.04 0.495 $ 3.71 3.63 0.410 $ 2.44 2.38 0.370 $ 1.61 1.54 0.335 $ 458,605 283,088 1,302,169 $ 475,215 269,320 1,326,288 $ 350,561 232,684 1,052,613 $ 277,736 200,610 892,310 $ 229,161 194,676 802,042 160,482 786,261 338,032 624,131 223,248 510,613 221,137 401,281 232,340 328,675 $ 349,520 $ 52,575 $ 110,249 $ 59,130 $ 133,777 (43,595) (194,615) (71,040) (36,735) (30,354) (198,400) 109,291 (210) (6,946) (93,829) $ 1,057,483 $ 1,066,160 $ 819,092 $ 706,855 $ 641,392 15.2% 16.0% 14.0% 11.1% 7.7% $ 283,964 $ 260,474 $ 191,635 $ 146,029 $ 122,317 24.1% 25.9% 23.6% 18.7% 15.2% 31.7% 27.3% 31.3% 13.3% 36.2% 26,297 26,168 25,945 25,634 24,765 5,400 6,626 5,800 7,380 5,800 6,029 5,600 5,684 5,700 5,336 See footnotes on page 32. 1 Net earnings attributable to Valmont Industries, Inc. 2 Total Valmont Industries, Inc. shareholders’ equity. 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 30 segment summary D o l l a r s i n m i l l i o n s , e x c e p t p e r s h a r e a m o u n t s 2009 2008 Change 2009-2008 2007 Change 2008-2007 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 Diluted earnings per share $ 1,786.6 532.0 29.8 % 294.0 16.5 % 238.0 13.3 % 14.3 32.2 % $ 1,907.3 510.5 26.8 % 281.9 14.8 % 228.6 12.0 % 15.9 34.2 % $ $ 150.6 5.73 $ $ 132.4 5.04 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 Coatings Segment Net sales Gross profit SG&A expense Operating income Irrigation Segment Net sales Gross profit SG&A expense Operating income Other Net sales Gross profit SG&A expense Operating income Net corporate expense Gross profit SG&A expense Operating loss NM = Not meaningful $ $ $ $ $ $ 582.3 153.8 108.7 45.1 698.2 236.0 71.2 164.8 90.6 38.0 13.3 24.7 362.2 84.3 49.2 35.1 53.3 20.5 7.5 13.0 (0.6) 44.1 (44.7) $ $ $ $ $ $ 638.3 156.5 109.1 47.4 508.4 136.1 62.6 73.5 112.0 45.2 13.4 31.8 562.7 143.2 56.0 87.2 86.0 30.1 9.1 21.0 (6.3) % 4.2 % $ 1,499.8 399.8 4.3 % 4.1 % (10.1) % 13.8 % 13.7 % (8.8) % (1.7) % (0.4) % (4.9) % 37.3 % 73.4 % 13.7 % 124.2 % (19.1) % (15.9) % (0.1) % (22.3) % (35.6) % (41.1) % (12.1) % (59.7) % (38.0) % (31.9) % (17.6) % (38.1) % 26.7 % 244.2 16.3 % 155.6 10.4 % 14.9 31.4 % 94.7 3.63 542.1 142.0 90.8 51.2 366.8 94.5 45.8 48.7 106.5 33.9 10.9 23.0 388.9 98.5 46.8 51.7 95.6 30.7 11.8 18.9 (0.2) 38.1 (37.9) $ $ $ $ $ $ $ $ 27.2 % 27.7 % 15.4 % 46.9 % 6.7 % 39.8 % 38.8 % 17.7 % 10.2 % 20.2 % (7.4) % 38.6 % 44.0 % 36.7 % 50.9 % 5.2 % 33.3 % 22.9 % 38.3 % 44.7 % 45.4 % 19.7 % 68.7 % (10.0) % (2.0) % (22.9) % 11.1 % NM (16.8) % 14.8 % l V a m o n t I n d u s t r i e s A n n u a l R e p o r t 2 0 0 9 31 (0.6) 31.7 (32.3) NM 39.1 % 38.4 % appendix Sources and Footnotes Photo Information Footnotes (a) Return on Invested Capital is calculated as Operating Income (after-tax) divided by the average of beginning and ending Invested Capital. Invested Capital represents Total Assets minus Accounts Payable, Accrued Expenses and Dividends Payable. Return on Invested Capital is one of our key operat- ing ratios, as it allows investors to analyze our operating performance in light of the amount of investment required to generate our operating profit. Return on Invested Capital is also a measurement used to determine management incen- tives. Return on Invested Capital is not a measure of financial performance or liquidity under generally accepted accounting principles (GAAP). Accordingly, Return on Invested Capital should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity. Return on Invested Capital, as presented, may not be comparable to similarly titled measures of other companies. (b) Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) is one of our key financial ratios in that it is the basis for determining our maximum borrowing capacity at any one time. Our bank credit agreements contain a financial covenant that our total interest-bearing debt not exceed 3.75x EBITDA for the most recent twelve month period. If this covenant is vio- lated, we may incur additional financing costs or be required to pay the debt before its maturity date. EBITDA is not a measure of financial performance or liquidity under GAAP and, accord- ingly, should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity. (c) Return on beginning shareholders’ equity is calculated by dividing Net earnings attributable to Valmont Industries, Inc. by the prior year’s ending Total Valmont Industries, Inc. shareholders equity. (d) Long-term debt as a percent of invested capital is calculated as the sum of Current portion of long-term debt and Long-term debt divided by Total Invested Capital. This is one of our key financial ratios in that it measures the amount of financial leverage on our balance sheet at any point in time. We also have covenants under our major debt agreements that relate to the amount of debt we carry. If those covenants are violated, we may incur additional financing costs or be required to pay the debt before its maturity date. We have an internal target to maintain this ratio at or below 40%. This ratio may exceed 40% from time to time to take advantage of opportunities to grow and improve our businesses. Long-term debt as a percent of invested capital is not a measure of financial performance or liquidity under GAAP and, accordingly, should not be consid- ered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP or as a measure of our operating performance or liquidity. (e) See pages 22-24 of our attached Company Form 10-K for tables that show how the financial measurement described in footnotes are calculated from our financial statements. Page 9 Area lighting structure, South Waterfront project – Portland, Oregon. Page 11 Valmont’s engineered support structures for lighting and traffic, and wireless communication are found around the world. Page 13 Valmont-Newmark’s 345kv double circuit transmission line, hybrid project – North Texas. Page 14 Meticulous attention to design, engineering, and manufacturing allow Valmont to deliver utility structures of exceptional quality and durability in any environment. Page 17 Water-saving Valley® brand center pivot irrigation equipment. Page 19 Valmont’s efficient mechanized irrigation equipment provides solutions to the world’s increasing demand for food. Page 21 Full-service galvanizing solutions, Valmont Coatings Valley Galvanizing – Valley, Nebraska. Page 22 Valmont’s quality finishes protect steel from corrosion, extending service life and appearance. 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 percep- tions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. These statements are not guarantees of perfor- mance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions. Many factors could affect the Company’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, risk factors described from time to time in the Company’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, avail- ability 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. 9 0 0 2 t r o p e R l a u n n A s e i r t s u d n I t n o m a V l 32 Valmont IndustrIes, Inc. one Valmont Plaza omaha, nebraska 68154-5215 usa 402.963.1000 Valmont.com