What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-23 compared with 2021-02-24 · 289 added, 379 removed, 1364 unchanged (33% of the section changed)

2 unchanged sentences

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Statements of Earnings—Three-Year Period Ended December 25 , 2021

11 unchanged sentences

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 25, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, effective December 30, 2018, the Company adopted FASB Accounting Standards Update 2016-02, Leases .

As discussed in Note 1 to the financial statements, effective December 29, 2019, the Company elected to change its method of accounting for certain of its inventory to the first-in, first-out method.

Basis for Opinion

14 unchanged sentences

Critical Audit Matter Description

The Company has goodwill of $430 million as of December 26, 2020, which is allocated among twelve reporting units.

The Company evaluates its twelve reporting units for goodwill impairment during the third fiscal quarter of each year, or when events or changes in circumstances indicate the carrying value may not be recoverable.

Reporting units are evaluated using after-tax cash flows from operations (less capital expenses) discounted to present value.

The solar tracking structure reporting unit was also evaluated using a multiple of earnings before interest, taxes, depreciation and amortization valuation using other

industrial companies with similar product lines.

These valuation methods require management to make significant estimates and assumptions related to projected cash flows.

The estimated fair value of all reporting units exceeded their respective carrying value, except the access systems reporting unit for which a $13 million impairment was recognized in the year ended December 26, 2020.

We identified goodwill for certain reporting units as a critical audit matter because of the significant estimates and assumptions made by management to estimate fair value, including the impact of forecasted growth, and the difference between the fair values and the carrying values of certain reporting units as of December 26, 2020.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to certain assumptions within the projected cash flows.

The Company has goodwill, which is allocated among thirteen reporting units.

The Company evaluates its thirteen reporting units for goodwill impairment during the third fiscal quarter of each year, or when events or changes in circumstances indicate the carrying value may not be recoverable.

Twelve reporting units are evaluated using after-tax cash flows from operations (less capital expenses) discounted to present value (“discounted cash flows”).

The solar tracking structure reporting unit was valued using a blend of both the discounted cash flows and a market approach.

The market valuation approach estimates the value for this reporting unit using a multiple of earnings before interest, taxes, depreciation and amortization (EBITDA).

The EBITDA multiples are analyzed against other industrial companies with similar product lines.

These valuation methods require management to make significant estimates and assumptions related to projected cash flows, selection of industrial companies with similar product lines and forecasted EBITDA, and discount rates.

The estimated fair value of all reporting units exceeded their respective carrying value as of the measurement date and, therefore, no impairment was recognized.

We identified goodwill for certain reporting units as a critical audit matter because of the significant estimates and assumptions made by management to estimate fair value and the difference between the fair values and the carrying values of certain reporting units as of August 28, 2021.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the goodwill impairment assessment for certain reporting units included the following, among others:

• We tested the effectiveness of internal controls over management’s goodwill impairment evaluation, including those over the projected cash flows.

• We tested the effectiveness of internal controls over management’s goodwill impairment evaluation, including those over the projected cash flows, selection of industrial companies with similar product lines and forecasted EBITDA, and discount rates.

• We evaluated management’s ability to accurately forecast cash flows by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s projected cash flows by comparing to (1) historical results, (2) internal communications to management and the Board of Directors, (3) industry reports and (4) information included in Company press releases to analysts and investors.

• With the assistance of our fair value specialists, we evaluated the certain reporting units’ valuation compared to its peer companies.

• We evaluated the impact of changes in management’s forecasts from the annual measurement date to December 26, 2020.

• With the assistance of our fair value specialists, we evaluated the discount rates, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rates selected by management.

• With the assistance of our fair value specialists, we evaluated the industrial companies with similar product lines and forecasted EBITDA, including testing the underlying source information and mathematical accuracy of the calculations.

/s/ DELOITTE & TOUCHE LLP

30 unchanged sentences

1,192 2,374 3,942

Gain (loss) on investments - unrealized

2,443 5,960 ( 839 )

Costs associated with refinancing of debt

— — ( 14,820 )

Loss from divestiture of grinding media business

— — ( 6,084 )

Gain on investments - unrealized 1,920 2,443 5,960

12,798 3,073 2,204

8 unchanged sentences

198,669 143,153 152,105

Equity in earnings (loss) of nonconsolidated subsidiaries ( 1,004 ) — —

Equity in loss of nonconsolidated subsidiaries ( 944 ) ( 1,004 ) —

197,725 142,149 152,105

17 unchanged sentences

Unrealized translation gains (losses) ( 31,405 ) 21,483 ( 2,506 )

Realized loss on divestiture of grinding media business recorded in other expense — — 9,203

$ ( 31,405 ) $ 21,483 $ ( 2,506 )

Gain/(loss) on hedging activities:

Unrealized gain on net investment hedges, net of tax expense (benefit) of $ 2,428 in 2020, $ 384 in 2019, $ 1,894 in 2018

7,289 1,154 5,291

Realized loss on grinding media net investment hedge — — 1,215

Amortization cost (benefit) included in interest expense ( 64 ) ( 64 ) 423

Deferred loss on interest rate hedges — — ( 2,467 )

Cash flow hedges 1,598 — —

Realized (gain) loss on cash flow hedges recorded in earnings ( 1,598 ) — —

Commodity hedges 20,019 — ( 2,130 )

1 unchanged sentence

Unrealized gain (loss) on cross currency swaps 6,093 ( 5,751 ) 1,815

Cash flow hedges — 1,598 —

Realized (gain) loss on cash flow hedges recorded in earnings — ( 1,598 ) —

Amortization cost included in interest expense ( 64 ) ( 64 ) ( 64 )

Unrealized gain on net investment hedges, net of tax expense (benefit) of $ — in 2021, $ 2,428 in 2020, $ 384 in 2019

— 7,289 1,154

6 unchanged sentences

243,265 147,757 141,676

Comprehensive income attributable to noncontrolling interests

( 3,428 ) ( 5,505 ) ( 8,584 )

Comprehensive (income) loss attributable to noncontrolling interests ( 976 ) ( 3,428 ) ( 5,505 )

Comprehensive income attributable to Valmont Industries, Inc.

48 unchanged sentences

Defined benefit pension liability

118,523 140,007

Operating lease liabilities

3 unchanged sentences

Other noncurrent liabilities

89,207 58,657

Shareholders’ equity:

Preferred stock of $ 1 par value -

Authorized 75,000,000 shares;

Common stock of $ 1 par value -

Authorized 75,000,000 shares;

27,900,000 issued

3 unchanged sentences

2,394,307 2,245,035

Accumulated other comprehensive income (loss)

( 309,786 ) ( 313,422 )

Accumulated other comprehensive loss ( 263,127 ) ( 309,786 )

Cost of treasury stock, common shares of 6,619,860 in 2021 and 6,674,866 in 2020

21 unchanged sentences

Noncash loss on trading securities

39 ( 172 ) ( 62 )

Contribution to defined benefit pension plan

( 1,924 ) ( 35,399 ) ( 18,461 )

Impairment of property, plant and equipment

3,751 — 5,000

Impairment of goodwill & intangible assets

16,638 — 15,780

Loss on divestiture of grinding media business

Impairment of long-lived assets 27,911 20,389 —

Stock-based compensation

28,720 14,874 11,587

Defined benefit pension plan expense (benefit)

( 7,311 ) ( 513 ) ( 2,251 )

Defined benefit pension plan benefit ( 14,567 ) ( 7,311 ) ( 513 )

(Gain) loss on sale of property, plant and equipment ( 961 ) 60 ( 2,513 )

5 unchanged sentences

( 289,942 ) ( 21,888 ) 22,128

Prepaid expenses and other assets ( 10,633 ) 4,413 ( 11,048 )

Contract asset - costs and profits in excess of billings

19,835 ( 29,274 ) ( 32,932 )

Prepaid expenses and other assets (current and non-current) ( 36,066 ) ( 10,633 ) 4,413

Contract asset ( 21,579 ) 19,835 ( 29,274 )

Accounts payable

16 unchanged sentences

( 312,500 ) ( 15,862 ) ( 81,841 )

Proceeds from settlement of net investment hedge

11,983 11,184 ( 1,621 )

Settlement of net investment hedge — 11,983 11,184

Investments in nonconsolidated subsidiaries

5 unchanged sentences

Proceeds from short-term agreements 5,821 20,990 13,195

Payments on short-term agreements ( 7,946 ) ( 1,868 ) —

Principal payments on short-term agreements ( 26,062 ) ( 7,946 ) ( 1,868 )

Proceeds from long-term borrowings

2 unchanged sentences

( 91,313 ) ( 121,665 ) ( 10,768 )

Settlement of financial derivatives

— — ( 2,467 )

Debt issuance costs

12 unchanged sentences

( 21,547 ) ( 14,489 ) ( 12,989 )

Net cash flows used in financing activities

( 173,756 ) ( 98,950 ) ( 162,110 )

Net cash flows provided by (used) in financing activities 133,500 ( 173,756 ) ( 98,950 )

Effect of exchange rate changes on cash and cash equivalents

29 unchanged sentences

Impact of ASU 2016-16 adoption — — ( 8,886 ) — — — ( 8,886 )

Addition of noncontrolling interest — — — — — 40,783 40,783

Purchase of treasury shares;

17 unchanged sentences

Purchase of noncontrolling interest — — ( 31,067 ) — — ( 22,544 ) ( 53,611 )

Impact of ASU 842 adoption — — ( 8,886 ) — — — ( 8,886 )

Addition of noncontrolling interest — — — — — 5,125 5,125

Purchase of treasury shares;

13 unchanged sentences

Net earnings — — 195,630 — — 2,095 197,725

Other comprehensive income (loss) — — — 3,636 — 1,972 5,608

Other comprehensive income — — — 46,659 — ( 1,119 ) 45,540

Cash dividends declared ($ 2.00 per share)

— — ( 42,472 ) — — — ( 42,472 )

Dividends to noncontrolling interests — — — — — ( 5,642 ) ( 5,642 )

Purchase of noncontrolling interest — — ( 31,067 ) — — ( 22,544 ) ( 53,611 )

Addition of noncontrolling interest — — — — — 5,125 5,125

Purchase of treasury shares;

12 unchanged sentences

Balance at December 25, 2021 $ 27,900 $ 1,479 $ 2,394,307 $ ( 263,127 ) $ ( 773,712 ) $ 26,750 $ 1,413,597

(1) The retained earnings balance has been revised from the amounts previously reported as a result of the change in inventory valuation method from LIFO to FIFO.

Refer to Note 1 for additional information.

See accompanying notes to consolidated financial statements.

23 unchanged sentences

This segment consists of the manufacture of agricultural irrigation equipment, parts, services, tubular products, water management solutions, and technology for precision agriculture.

In addition to these four reportable segments, there are other businesses and activities which are not more than 10 % of consolidated sales, operating income or assets.

This includes the manufacture of forged steel grinding media for the mining industry and is reported in the "Other" category until its divestiture in 2018.

The Company operates on a 52 or 53 week fiscal year with each year ending on the last Saturday in December.

4 unchanged sentences

economic conditions and customer credit quality.

As the Company’s international Irrigation business has grown, the exposure to potential losses in international markets has also increased.

These exposures can be difficult to estimate, particularly in areas of political instability, or with governments with which the Company has limited experience, or where there is a lack of

As the Company’s international business has grown, the exposure to potential losses in international markets has also increased.

These exposures can be difficult to estimate, particularly in areas of political instability, or with governments with which the Company has limited experience, or where there is a lack of transparency as to the current credit condition of governmental units.

VALMONT INDUSTRIES, INC.

3 unchanged sentences

(Dollars in thousands, except per share amounts)

transparency as to the current credit condition of governmental units.

The Company’s allowance for doubtful accounts related to current accounts receivable was $ 15,952 at December 26, 2020.

The following table details the balances of our allowance for doubtful receivables and changes therein:

For periods ended:

Period Charged to Profit and Loss Currency Translation Adjustment Deductions from Reserves Balance at

December 25, 2021 $ 15,952 $ 3,379 $ ( 339 ) $ ( 942 ) $ 18,050

December 26, 2020 9,548 7,957 260 ( 1,813 ) 15,952

December 28, 2019 8,277 2,543 ( 76 ) ( 1,196 ) 9,548

The Company sells trade accounts receivable at a discount under uncommitted trade accounts receivable sale programs to third party financial institutions without recourse.

As these accounts receivable are sold without recourse, the Company does not retain the associated risks following the transfer of such accounts receivable to the financial institutions.

Transfers of accounts receivable are accounted for as sales and, accordingly, accounts receivables sold are excluded from Accounts receivable – net on the Consolidated Balance Sheet and cash proceeds are reflected in Cash flows from operating activities on the Consolidated Statement of Cash Flows.

The difference between the carrying amount of the trade accounts receivables sold and the cash received, or discount, is recorded in Other expenses on the Consolidated Statement of Operations.

For the period ended December 31, 2021, the Company sold trade accounts receivable of $ 25.4 million.

The Company did not sell trade accounts receivable in 2020.

The fees associated with trade accounts receivables sold are immaterial.

Inventory is valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market.

Finished goods and manufactured goods inventories include the costs of acquired raw materials and related factory labor and overhead charges required to convert raw materials to manufactured and finished goods.

Effective December 29, 2019, the first day of fiscal 2020, the Company changed its method of accounting for certain of its inventory, previously accounted for on the LIFO basis, so that now all inventory is valued on the FIFO basis.

The Company believes this change is preferable as it provides a better matching of costs with the physical flow of goods, more accurately reflects the current value of inventory presented on the Company’s Condensed Consolidated Balance Sheets, and standardizes the Company’s inventory valuation methodology.

In accordance with ASC 250, Accounting Changes and Error Corrections , this change in method of accounting for certain inventories has been retrospectively applied to the earliest period presented.

As a result of the retrospective change, the cumulative effect to retained earnings as of December 30, 2017, December 29, 2018, and December 28, 2019 was an incr ease of $ 32,795 , $ 40,215 , and $ 32,854 , respectivel y.

This change did not affect the Company's previously reported cash flows from operating, investing, or financing activities.

The impact of the change from LIFO to FIFO on the Company’s Condensed Consolidated Statements of Earnings and Comprehensive Income for the fiscal years ended December 28, 2019 and December 29, 2018 are as follows:

Fiscal Year 2019 Fiscal Year 2018

(in 000's, except earnings per share) As Previously Reported Retrospectively Adjusted Adjustment As Previously Reported Retrospectively Adjusted Adjustment

Cost of sales 2,074,480 2,084,295 9,815 2,098,864 2,088,972 ( 9,892 )

Operating income 237,720 227,905 ( 9,815 ) 202,280 212,172 9,892

Income tax expense 50,207 47,753 ( 2,454 ) 43,135 45,608 2,473

Net earnings attributed to Valmont Industries, Inc 153,769 146,408 ( 7,361 ) 94,351 101,770 7,419

Comprehensive (loss) income 149,037 141,676 ( 7,361 ) 78,772 86,191 7,419

Net earnings per diluted share 7.06 6.73 ( 0.33 ) 4.20 4.53 0.33

The Company applied this change retrospectively to the earliest period presented.

The resulting impact to the Condensed Consolidated Balance Sheet as of December 28, 2019 is as follows:

December 28, 2019

Consolidated Balance Sheet As Previously Reported Adjustment Retrospectively Adjusted

Inventory 374,565 43,805 418,370

Deferred income tax liability 47,955 10,951 58,906

Retained earnings 2,140,948 32,854 2,173,802

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

Long-Lived Assets

6 unchanged sentences

A recognized impairment loss reduces the carrying amount of the asset to its estimated fair value.

Impairment losses were recorded in 2020 and 2018 as facilities were closed and future plans for certain fixed assets changed in connection with the Company's restructuring plans.

The Company recognized a pre-tax $ 27,900 impairment of long-lived assets (property, plant, and equipment, customer relationship intangible asset, and trade name) in 2021 when it determined that its offshore and other complex steel structures reporting unit will not generate sufficient cash flows to recover the carrying values.

An impairment test was required in November 2021 when the Company received clarifying information on the competitive environment of this reporting unit in Europe.

Impairment losses were recorded in 2020 as facilities were closed and future plans for certain fixed assets changed in connection with the Company's restructuring plans.

Upon adoption of ASC 842, Leases in 2019, the Company impaired the right-of-use (lease) asset for one of its galvanizing facilities in Australia as it will not generate sufficient cash flows to recover the carrying value.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

The Company evaluates its reporting units for impairment of goodwill during the third fiscal quarter of each year, or when events or changes in circumstances indicate the carrying value may not be recoverable.

Reporting units are evaluated using after-tax operating cash flows (less capital expenditures) discounted to present value.

For the solar tracking reporting unit, the Company valued the terminal value for this reporting unit using a multiple of earnings before interest, taxes, depreciation and amortization (EBITDA).

Reporting units are evaluated using after-tax operating cash flows (less capital expenditures) discounted to present value ("discounted cash flows").

For the solar tracking reporting unit, the Company valued this reporting unit using a blend of the discounted cash flows and multiple of earnings before interest, taxes, depreciation and amortization (EBITDA) approach.

Indefinite‑lived intangible assets are assessed separately from goodwill as part of the annual impairment testing, using a relief-from-royalty method.

15 unchanged sentences

Derivative Instruments

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

The Company may enter into derivative financial instruments to manage risk associated with fluctuation in interest rates, foreign currency rates or commodities.

3 unchanged sentences

Results of operations for foreign subsidiaries are translated using the average exchange rates during the period.

Assets and liabilities are translated at the exchange rates in effect on the balance sheet dates.

Assets and liabilities are translated at the exchange rates in

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

effect on the balance sheet dates.

The components of accumulated other comprehensive income (loss) consisted of the following:

2 unchanged sentences

Current-period comprehensive income (loss) ( 30,286 ) 227 76,718 46,659

19,511 1,474 ( 17,349 ) 3,636

Balance at December 25, 2021 $ ( 243,350 ) $ 15,777 $ ( 35,554 ) $ ( 263,127 )

Revenue Recognition

On December 31, 2017, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (ASC 606) .

The Company elected to use the modified retrospective approach for the adoption of the new revenue standard.

The Company determines the appropriate revenue recognition for our contracts by analyzing the type, terms and conditions of each contract or arrangement with a customer.

15 unchanged sentences

We expect to recognize the majority of our remaining performance obligations on these contracts within the next 12 to 24 months.

In addition, the Company elected the practical expedient to not adjust the amount of consideration to be received in a contract for any

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

significant financing component if payment is expected within twelve months of transfer of control of goods or services;

the Company expects all consideration to be received in one year or less at contract inception.

In addition, the Company elected the practical expedient to not adjust the amount of consideration to be received in a contract for any significant financing component if payment is expected within twelve months of transfer of control of goods or services;

the Company expects all consideration to be received in one year or less from transfer of goods.

Segment and Product Line Revenue Recognition

5 unchanged sentences

For our steel and concrete utility and wireless communication structure product lines, we generally recognize revenue on an inputs basis, using total production hours incurred to-date for each order as a percentage of total hours estimated to produce the order.

The completion percentage is applied to the order’s total revenue and total estimated costs to determine reported revenue, cost of goods sold and gross profit.

The completion percentage is applied to the order’s total revenue and total estimated costs to determine reported revenue, cost of goods sold and gross

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

Production of an order, once started, is typically completed within three months.

16 unchanged sentences

A breakdown by segment of revenue recognized over time and revenue recognized at a point in time for the fiscal years ended December 25 , 2021 and December 26, 2020 is as follows:

Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2019

Point in Time Over Time Point in Time Over Time Point in Time Over Time

Utility Support Structures $ 62,904 $ 1,058,100 $ 86,382 $ 915,756 $ 47,450 $ 838,158

Engineered Support Structures 1,026,312 38,128 940,513 43,010 952,056 50,020

Coatings 299,081 — 269,602 — 300,640 —

Irrigation 996,278 20,772 624,831 15,261 564,918 13,734

Total $ 2,384,575 $ 1,117,000 $ 1,921,328 $ 974,027 $ 1,865,064 $ 901,912

The Company's contract asset as of December 25 , 2021 and December 26, 2020 was $ 142,643 and $ 123,495 , respectively.

Both steel and concrete Utility customers in North America are generally invoiced upon shipment or delivery of the goods to the customer's specified location with few customers that make up-front or progress payments.

The Offshore and complex steel structures business invoices customers a number of ways including advanced billings, progress billings, and billings upon shipment.

VALMONT INDUSTRIES, INC.

3 unchanged sentences

(Dollars in thousands, except per share amounts)

Point in Time Over Time Point in Time Over Time Point in Time Over Time

Fiscal year ended December 26, 2020 Fiscal year ended December 26, 2020 Fiscal year ended December 28, 2019 Fiscal year ended December 28, 2019 Fiscal year ended December 29, 2018 Fiscal year ended December 29, 2018

Utility Support Structures $ 86,382 $ 915,756 $ 47,450 $ 838,158 $ 16,760 $ 838,446

Engineered Support Structures

940,513 43,010 952,056 50,020 922,677 44,681

269,602 — 300,640 — 286,739 —

624,831 15,261 564,918 13,734 612,385 12,376

— — — — 23,080 —

$ 1,921,328 $ 974,027 $ 1,865,064 $ 901,912 $ 1,861,641 $ 895,503

The Company's contract asset as of December 26, 2020 and December 28, 2019 was $ 123,495 and $ 141,322 , respectively.

Both steel and concrete Utility customers in North America are generally invoiced upon shipment or delivery of the goods to the customer's specified location and there are typically no up-front or progress payments.

At December 26, 2020 and December 28, 2019, the contract liability was $ 170,919 and $ 117,945 .

As of December 26, 2020, $ 130,018 is recorded as contract liabilities and $ 40,901 is recorded as other noncurrent liabilities in the Consolidated Balance Sheets.

At December 25 , 2021 and December 26, 2020, total contract liabilities were $ 213,203 and $ 170,919 , respectively.

At December 25, 2021, $ 135,746 is recorded as contract liabilities and $ 77,457 is recorded as other noncurrent liabilities on the condensed consolidated balance sheets.

During the fiscal year ended December 25 , 2021 and December 26, 2020, the Company recognized $ 105,406 and $ 74,319 of revenue that was included in the liability as of December 26, 2020 and December 28, 2019.

The revenue recognized was due to applying advance payments received for projects completed during the period.

The remaining contract liability from December 28, 2019 that was not recognized in fiscal 2020 is expected to be recognized in fiscal 2021.

The revenue recognized was due to applying advance payments received for performance obligations completed during the period.

At December 25, 2021, the Company had $ 165,657 of remaining performance obligations on contracts with an original expected duration of one year or more and expects to complete the remaining performance obligations on these contracts within the next 12 to 24 months.

Use of Estimates

10 unchanged sentences

Research and Development

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

Research and development costs are charged to operations in the year incurred.

2 unchanged sentences

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.

The standard replaces the incurred loss impairment methodology in current U.S.

GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables.

This update is intended to provide financial statement users with more decision-useful information about the expected credit losses.

In December 2019, the FASB issued Accounting Standards Update No.

2019-12 (ASU 2019-12), Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , which simplifies the accounting and disclosure requirements for income taxes by clarifying existing guidance to improve consistency in application of Accounting Standards Codification (ASC) 740.

The Company adopted this ASU on the first day of fiscal 2021.

1 unchanged sentence

2019-12 did not have a significant impact on the consolidated financial statements.

The Company early adopted Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities rules as released by the Securities and Exchange Commission on March 2, 2020, which simplify the disclosure requirements related to the Company’s registered debt securities, guaranteed by certain of its subsidiaries, under Rule 3-10 and Rule 13-01 of Regulation S-X.

The final rules permit the simplified disclosures to be provided either in a footnote to the Company’s consolidated financial statements or in management’s discussion and analysis of financial condition and results of operations.

The Company has elected to provide the simplified disclosure within Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In August 2018, the FASB issued Accounting Standards Update No.

2018-14 (ASU 2018-14), Changes to the Disclosure Requirements for Defined Benefit Plans , which modifies the disclosure requirements for employers that sponsor defined benefit pension and other postretirement plans.

The Company adopted ASU 2018-14 on the first day of fiscal 2020 and it did not have a material impact on the Company’s consolidated financial statement disclosure requirements.

Recently Issued Accounting Pronouncements (not yet adopted)

In December 2019, the FASB issued Accounting Standards Update No.

2019-12 (ASU 2019-12), Income Taxes (Topic 740):

The Company will adopt on the first day of fiscal 2021 (the effective date) and it is not expected to have a material impact on the Company’s consolidated statements of earnings, balance sheet, or cash flows.

In March 2020, the FASB issued Accounting Standards Update No.

2020-04 (ASU 2020-04), Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying GAAP principles to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued due to reference rate reform.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

reference London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued due to reference rate reform.

This guidance can be adopted on a prospective basis no later than December 31, 2022, with early adoption permitted.

The Company is currently evaluating the effect that the new guidance will have on our consolidated financial statements and related disclosures.

The Company does not expect ASU 2020-04 to have a material impact to our consolidated financial statements and related disclosures.

(2) ACQUISITIONS

Acquisitions of Businesses

On May 12, 2021, the Company acquired the outstanding shares of Prospera Technologies, Ltd.

("Prospera"), an artificial intelligence company focused on machine learning and computer vision in agriculture, for $ 300,000 in cash (net of cash acquired).

The acquisition of Prospera, located in Tel Aviv, Israel, was made to allow the Company to accelerate innovation with machine learning for agronomy and is reported in the Irrigation segment.

In the purchase price allocation, goodwill of $ 273,453 , developed technology of $ 32,900 , trade name of $ 2,850 , property, plant, and equipment of $ 1,063 , and a deferred tax liability of $ 8,223 were recorded with the remainder to net working capital.

Goodwill is no t deductible for tax purposes, the trade name will be amortized over 7 years, and the developed technology asset will be amortized over 5 years.

The amount allocated to goodwill was primarily attributable to anticipated synergies and other intangibles that do not qualify for separate recognition.

The Company finalized the purchase price allocation in the fourth quarter of 2021.

On April 20, 2021 the Company acquired the assets of PivoTrac for $ 12,500 in cash.

The agreed upon purchase price was $ 14,000 , with $ 1,500 being held back for seller representations and warranties that will be settled within 12 months of the acquisition date.

The acquisition of PivoTrac, located in Texas, was made to allow the Company to advance its technology strategy and increase its number of connected agricultural devices and is reported in the Irrigation segment.

The preliminary fair values assigned were $ 10,800 for goodwill, $ 2,627 for customer relationships, and the remainder is net working capital.

Goodwill is no t deductible for tax purposes and the customer relationship will be amortized over 8 years.

The amount allocated to goodwill was primarily attributable to anticipated synergies and other intangibles that do not qualify for separate recognition.

The Company expects the purchase price allocation to be finalized in the second quarter of 2022.

On May 29, 2020, the Company acquired 55 % of Energia Solar do Brasil ("Solbras") for $ 4,308 .

Approximately $ 646 of the purchase price is contingent on seller representations and warranties that will be settled within 12 months of the acquisition date.

Approximately $ 646 of the purchase price was contingent on seller representations and warranties and was settled for the full amount in the second quarter of 2021.

Solbras is a leading provider of solar energy solutions for agriculture.

In the preliminary purchase price allocation, goodwill of $ 3,341 and customer relationships of $ 3,718 were recorded and the remainder is net working capital.

In the purchase price allocation, goodwill of $ 3,341 and customer relationships of $ 3,718 were recorded and the remainder to net working capital.

Goodwill is no t deductible for tax purposes and the customer relationship will be amortized over 8 years.

The acquisition of Solbras, located in Brazil, allows the Company to expand its product offerings in the Irrigation segment to include not only

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

pivots, but also a sustainable and low-cost energy source to provide electricity to the units.

The acquisition of Solbras, located in Brazil, was made to allow the Company to expand its product offerings in the Irrigation segment to include not only pivots, but also a sustainable and low-cost energy source to provide electricity to the units.

The Company finalized the purchase price allocation in the fourth quarter of 2020.

On March 6, 2020, the Company acquired 75 % of KC Utility Packaging, LLC for $ 4,200 .

Approximately $ 400 of the purchase price is contingent on seller representations and warranties that will be settled within 12 months of the acquisition date.

Approximately $ 400 of the purchase price was contingent on seller representations and warranties and was settled for the full amount in the first quarter of 2021.

The Company name was subsequently changed to Valmont Substations LLC.

5 unchanged sentences

Connect-It operates in Florida and is a manufacturer and distributor of wireless site components and safety products.

In the purchase price allocation, goodwill of $ 3,299 and customer relationships of $ 828 were recorded and the remainder is net working capital.

In the purchase price allocation, goodwill of $ 3,299 and customer relationships of $ 828 were recorded and the remainder to net working capital.

A portion of the goodwill is deductible for tax purposes.

The amount allocated to goodwill was primarily attributable to anticipated synergies and other intangibles that do not qualify for separate recognition.

Connect-It is included in the ESS segment and was acquired to expand the Company's wireless component distribution network.

The purchase price allocation was finalized in the fourth quarter of 2019.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

On February 11, 2019, the Company acquired the outstanding shares of United Galvanizing ("United"), a provider of coatings services for $ 26,000 in cash.

The agreed upon purchase price was $ 28,000 , with $ 2,000 being contingent on seller representations and warranties that was settled in the first quarter of 2020 for $ 1,522 .

The acquisition of United, located in Houston, Texas further expands the Company's galvanizing footprint in North America and will be reported in the Coatings segment.

The fair values assigned were $ 12,374 for goodwill, $ 3,170 for customer relationships, trade name of $ 894 , $ 10,987 for property, plant, and equipment, and the remainder is net working capital.

The acquisition of United, located in Houston, Texas further expanded the Company's galvanizing footprint in North America and is reported in the Coatings segment.

The fair values assigned were $ 12,374 for goodwill, $ 3,170 for customer relationships, trade name of $ 894 , $ 10,987 for property, plant, and equipment, and the remainder to net working capital.

Goodwill is no t deductible for tax purposes and the customer relationship will be amortized over 10 years.

The amount allocated to goodwill was primarily attributable to anticipated synergies and other intangibles that do not qualify for separate recognition.

The trade name has an indefinite life.

The Company finalized the purchase price allocation in the fourth quarter of 2019.

Proforma disclosures were omitted for the 2020 acquisitions as the Solbras and Valmont Substation acquisitions do not have a significant impact on the Company's financial results.

The proforma effect of 2019 acquisitions on the 2019 and 2018 Consolidated Statements of Earnings is as follows:

Fifty-two Weeks Ended December 28, 2019 Fifty-two Weeks Ended December 29, 2018

Acquisition-related costs incurred for the above acquisitions were insignificant for all years presented.

Proforma disclosures were omitted for the 2021 and 2020 acquisitions as the 2021 acquisitions of Prospera and PivoTrac and the 2020 acquisitions of Solbras and Valmont Substation do not have a significant impact on the Company's financial results.

The proforma effect of 2019 acquisitions on the 2019 Consolidated Statements of Earnings is as follows:

Fifty-two Weeks Ended December 28, 2019

Net sales $ 2,772,150

7 unchanged sentences

The purchase agreement also settled the escrow funds which the Company had paid at date of acquisition.

In April 2019, the Company acquired the remaining 4.8 % of Valmont SM that it did not own for $ 4,763 .

VALMONT INDUSTRIES, INC.

3 unchanged sentences

(Dollars in thousands, except per share amounts)

(3) DIVESTITURE

On April 30, 2018, the Company completed the sale of Donhad, its grinding media business in Australia, reported in the Other segment.

The business was sold because it did not fit the long-term strategic plans for the Company.

The grinding media business historical annual sales, operating profit, and net assets are not significant for discontinued operations presentation.

The grinding media business had an operating loss of $ 913 for the year ended December 29, 2018.

The Company received Australian $ 82,500 (U.S.

The pre-tax loss from the divestiture is reported in other income (expense).

The loss is comprised of the proceeds from buyer, less deal-related costs, less the net assets of the business which resulted in a gain of $ 4,334 .

Offsetting this amount is a $( 10,418 ) realized loss on foreign exchange translation adjustments and net investment hedges previously reported in shareholders' equity.

Pre-tax gain from divestiture, before recognition of currency translation loss $ 4,334

Recognition of cumulative currency translation loss and hedges (out of OCI)

Net pre-tax loss from divestiture of the grinding media business

The transaction did not result in a taxable capital gain as the cash proceeds were less than the tax carrying value of the business.

There is an insignificant tax benefit from the tax deductibility of deal related expenses.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

(3) RESTRUCTURING ACTIVITIES

18 unchanged sentences

Severance $ 12,660 $ ( 12,660 ) $ —

Other cash restructuring expenses — 4,022 ( 4,022 ) —

Total $ — $ 18,955 $ ( 6,295 ) $ 12,660

VALMONT INDUSTRIES, INC.

9 unchanged sentences

60,366 54,801 43,629

The acquisitions in 2019 included hold back payments contingent on seller representations and warranties of $ 5,456 .

The hold back payments were paid in the first quarter of 2020 and are shown as an investing use of cash in the acquisitions line item of the consolidated statements of cash flows.

The acquisitions in 2020 and 2019 included hold back payments contingent on seller representations and warranties of $ 1,046 and $ 5,456 , respectively.

The 2020 hold back payments were released from a trust in the first half of 2021 and the 2019 hold back payments were paid in the first quarter of 2020 and are shown as an investing use of cash in the acquisitions line item of the consolidated statements of cash flows.

(5) INVENTORIES

37 unchanged sentences

58,699 13,955 9 years

Trade Name 2,850 183 7 years

4,534 3,959 6 years

10 unchanged sentences

Amortization expense for intangible assets was $ 21,320 , $ 18,147 and $ 18,087 for the fiscal years ended December 25 , 2021 , December 26, 2020 and December 28, 2019, respectively.

During the fourth quarter of fiscal 2021, an impairment test was required when the Company received clarifying information on the competitive environment of the Valmont SM business in Europe.

As a result, an impairment charge of approximately $ 4,483 was recognized against the remaining net book value of the Valmont SM customer relationship.

Estimated annual amortization expense related to finite‑lived intangible assets is as follows:

8 unchanged sentences

Intangible assets with indefinite lives are not amortized.

The carrying values of trade names at December 26, 2020 and December 28, 2019 were as follows:

The carrying values of these trade names at December 25 , 2021 and December 26, 2020 were as follows:

December 25 ,

2021 December 26,

2020 Year Acquired

12 unchanged sentences

Accordingly, these assets are not amortized.

The Company’s trade names were tested for impairment in the third quarter of 2020.

The Company’s trade names were tested for impairment as of August 28, 2021.

The values of each trade name were determined using the relief-from-royalty method.

Based on this evaluation, no trade names were determined to be impaired.

During the fourth quarter of fiscal 2021, an impairment test was required when the Company received clarifying information on the competitive environment of the Valmont SM business in Europe.

As a result, an impairment charge of approximately $ 2,013 was recognized against the Valmont SM trade name.

In conjunction with an interim second quarter 2020 goodwill impairment test, impairment indicators were noted for the Webforge and Locker trade names requiring an interim impairment test.

13 unchanged sentences

— — — 284,253 284,253

Impairment ( 12,575 ) — — — ( 12,575 )

Foreign currency translation

18 unchanged sentences

— 1,100 — 5,038 6,138

( 12,575 ) — — — ( 12,575 )

Foreign currency translation

2 unchanged sentences

$ 201,078 $ 120,980 $ 78,087 $ 30,177 $ 430,322

The Company’s annual impairment test of goodwill was performed during the third quarter of 2020, using primarily the discounted cash flow method.

The estimated fair value of all of our reporting units exceeded their respective carrying value, so no goodwill was impaired.

The Company’s annual impairment test of goodwill was performed as of August 28, 2021, using primarily the discounted cash flow method.

The solar tracking structure reporting unit projects meaningful annual revenue growth for the foreseeable future due to strong market conditions.

Therefore, we valued this reporting unit using a blend of both the discounted cash flows and a market approach.

The market valuation approach estimates the terminal value for this reporting unit using a multiple of earnings before interest, taxes, depreciation and amortization (EBITDA).

During fiscal 2021, no goodwill impairment was recorded.

In April 2020, the price of a barrel of oil began a large decline and various economic forecasts show the lower price of oil will continue into the next few years.

4 unchanged sentences

(8) BANK CREDIT ARRANGEMENTS

The Company maintains various lines of credit for short-term borrowings totaling $ 144,690 at December 26, 2020.

As of December 26, 2020 and December 28, 2019, $ 35,147 and $ 21,774 was outstanding and recorded as notes payable in the Consolidated Balance Sheets, respectively.

The Company maintains various lines of credit for short-term borrowings totaling $ 137,818 available at December 25 , 2021 .

As of December 25 , 2021 and December 26, 2020, $ 13,439 and $ 35,147 was outstanding and recorded as notes payable to banks in the Consolidated Balance Sheets, respectively.

The interest rates charged on these lines of credit vary in relation to the banks’ costs of funds.

The weighted average interest rate on short-term borrowings w as 4.65 % at December 26, 2020.

The weighted average interest rate on short-term borrowings was 6.31 % at December 25 , 2021 .

The unused and available borrowings under the lines of credit were $ 124,379 at December 25 , 2021 .

37 unchanged sentences

Goodwill and intangible impairment — 2.4 —

Effects of 2017 Tax Act

( 2.4 ) 1.9 1.2

Fiscal years 2020 and 2018 include $ 4,651 and $ 3,171 of tax expense related to non-tax deductible impairment of goodwill.

Fiscal years 2020 and 2018 also include $ 1,100 and $ 6,756 of tax expense primarily related to restructuring charges for which no tax benefits have been recorded due to the increase in valuation allowance.

23.6 % 25.7 % 23.9 %

Fiscal 2021 includes $ 1,894 of U.S.

tax benefits related to foreign taxes paid offset by $ 5,102 of valuation allowance recorded against the Offshore and other complex steel structures deferred tax assets.

Fiscal year 2020 includes $ 4,651 of tax expense related to non-tax deductible impairment of goodwill.

Fiscal year 2020 also includes $ 1,100 of tax expense primarily related to restructuring charges for which no tax benefits have been recorded due to the increase in valuation allowance.

VALMONT INDUSTRIES, INC.

4 unchanged sentences

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss and tax credit carryforwards.

The tax effects of significant items comprising the Company’s net deferred income tax liabilities are as follows:

The tax effects of significant items comprising the Company’s net deferred income tax assets/liabilities are as follows:

Deferred income tax assets:

4 unchanged sentences

Defined benefit pension liability

30,623 35,539

Inventory allowances

Accrued compensation and benefits

20 unchanged sentences

132,099 114,068

Net deferred income tax asset

$ 32,362 $ 16,848

Net deferred income tax asset (liability) $ ( 2,149 ) $ 32,362

Deferred income tax assets (liabilities) are presented as follows on the Consolidated Balance Sheets:

2 unchanged sentences

Deferred income taxes ( 47,849 ) ( 41,689 )

Net deferred income tax asset

$ 32,362 $ 16,848

Net deferred income tax asset (liability) $ ( 2,149 ) $ 32,362

Management of the Company has reviewed recent operating results and projected future operating results.

2 unchanged sentences

Valuation allowances have been established for certain losses that reduce deferred tax assets to an amount that will, more likely than not, be realized.

During fiscal 2021, it was determined no longer more likely than not that the Offshore and complex steel structures reporting unit, based in Denmark, would generate future taxable income so a valuation allowance of $ 5,102 was recognized against their tax loss carryforwards.

Also in 2021, the Company recorded a valuation allowance of $ 6,472 against the tax attributes related to the acquisition of Prospera.

The deferred tax assets at December 25 , 2021 that are associated with tax loss and tax credit carryforwards not reduced by valuation allowances expire in periods starting in 2023.

13 unchanged sentences

Settlements with taxing authorities

( 183 ) ( 150 )

Lapse of statute of limitations

13 unchanged sentences

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $ 4,324 and $ 2,547 at December 25 , 2021 and December 26, 2020, respectively.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

(10) LONG-TERM DEBT

1 unchanged sentence

December 25 ,

2021 December 26,

5.00 % senior unsecured notes due 2044(a)

5 unchanged sentences

Revolving credit agreement (c) 218,897 —

IDR Bonds — 8,500

Other notes 5,684 4,483

10 unchanged sentences

These notes are guaranteed by certain subsidiaries of the Company.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

(b) The 5.25 % senior unsecured notes due 2054 include an aggregate principal amount of $ 305,000 on which interest is paid and an unamortized discount balance of $ 7,316 at December 25 , 2021 .

3 unchanged sentences

These notes are guaranteed by certain subsidiaries of the Company.

(c) The revolving credit facility with JP Morgan Chase Bank, N.A., as Administrative Agent, and the other lenders party thereto, has a maturity date of October 18, 2022.

and Valmont Group Pty.

Ltd., as borrowers, entered into an amendment and restatement of our revolving credit agreement with our lenders.

The maturity date of the revolving credit facility was extended to October 18, 2026.

The credit facility provides for $ 800,000 of committed unsecured revolving credit loans with available borrowings thereunder to $ 400,000 in foreign currencies.

1 unchanged sentence

The interest rate on the borrowings will be, at the Company's option, either:

(i) LIBOR (based on a 1, 2, 3 or 6 month interest period, as selected by the Company) plus 100 to 162.5 basis points, depending on the credit rating of the Company's senior debt published by Standard & Poor's Rating Services and Moody's Investors Service, Inc., or;

(i) term SOFR (based on a 1, 3 or 6 month interest period, as selected by the Company) plus a 10 basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of the Company's senior, unsecured, long-term debt published by Standard & Poor's Rating Services and Moody's Investors Service, Inc.;

(ii) the higher of

• the prime lending rate ,

• the Federal Funds rate plus 50 basis points, and

• LIBOR (based on a 1 month interest period) plus 100 basis points,

plus, in each case, 0 to 62.5 basis points, depending on the credit rating of the Company's senior debt published by Standard & Poor's Rating Services and Mood's Investors Service, Inc.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

• the overnight bank rate plus 50 basis points, and

• term SOFR (based on a 1 month interest period) plus 110 basis points,

plus, in each case, 0 to 62.5 basis points, depending on the credit rating of the Company's senior, unsecured, debt published by Standard & Poor's Rating Services and Mood's Investors Service, Inc.;

(iii) daily simple SOFR plus a 10 basis point adjustment plus a spread of 100 to 162.5 basis points, depending on the credit rating of the Company's senior, unsecured, long-term debt published by Standard & Poor's Rating Services and Mood's Investors Service, Inc.

At December 25 , 2021 , the Company had $ 218,897 outstanding borrowings under the revolving credit facility.

The revolving credit facility has a maturity date of October 18, 2022, and contains certain financial covenants that may limit additional borrowing capability under the agreement.

The revolving credit facility has a maturity date of October 18, 2026, and contains a financial covenant that may limit additional borrowing capability under the agreement.

At December 25 , 2021 , the Company had the ability to borrow $ 590,521 under this facility, after consideration of standby letters of credit of $ 744 associated with certain insurance obligations.

We also maintain certain short-term bank lines of credit totaling $ 137,818 , $ 124,379 of w hich was unused at December 25 , 2021 .

The lending agreements include certain maintenance covenants, including financial leverage and interest coverage.

The Company was in compliance with all financial debt covenants at December 26, 2020.

The revolving credit facility includes a financial leverage covenant.

The Company was in compliance with this covenant at December 25 , 2021 .

The minimum aggregate maturities of long-term debt for each of the five years following 2021 are:

$ 4,884 , $ 601 , $ 179 , $ 20 and $ 218,897 .

The obligations arising under the 5.00 % senior unsecured notes due 2044, the 5.25 % senior unsecured notes due 2054, and the revolving credit facility are guaranteed by the Company and its wholly-owned subsidiaries PiRod, Inc., Valmont Coatings, Inc., Valmont Newmark, Inc., and Valmont Queensland Pty.

The obligations arising under the 5.00 % senior unsecured notes due 2044, the 5.25 % senior unsecured notes due 2054, and the revolving credit facility are guaranteed by the Company and its wholly-owned subsidiaries Valmont Telecommunications, Inc., Valmont Coatings, Inc., Valmont Newmark, Inc., and Valmont Queensland Pty.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

(11) STOCK-BASED COMPENSATION

20 unchanged sentences

1.20 % 1.24 % 1.07 %

Following is a summary of the stock option activity during 2018, 2019 and 2020:

VALMONT INDUSTRIES, INC.

3 unchanged sentences

(Dollars in thousands, except per share amounts)

Following is a summary of the stock option activity during 2019, 2020 and 2021:

Shares Weighted

31 unchanged sentences

The weighted average per share fair value of options granted during 2021 was $ 67.81 .

Following is a summary of the status of stock options outstanding at December 26, 2020:

VALMONT INDUSTRIES, INC.

3 unchanged sentences

(Dollars in thousands, except per share amounts)

Outstanding and Exercisable By Price Range

Options Outstanding Options Exercisable

Exercise Price

Range Number Weighted

Life Weighted

Price Number Weighted

$ 104.47 - 112.08

120,194 3.99 years $ 109.58 79,796 $ 108.31

$ 123.87 - 132.84

26,282 0.97 years 132.48 26,282 132.48

$ 142.67 - 168.80

253,089 5.71 years 158.05 148,420 156.04

399,565 254,498

In accordance with shareholder-approved plans, the Human Resource Committee of the Board of Directors may grant stock under various stock‑based compensation arrangements, including restricted stock awards, restricted stock units, performance based restricted stock units, and stock issued in lieu of cash bonuses.

Under such arrangements, stock is issued without direct cost to the employee.

Under such arrangements, stock or cash (as applicable) is issued without direct cost to the employee.

The restricted stock units are settled in Company stock when the restriction period ends.

Restricted stock units and awards generally vest in equal installments over three years beginning on the first anniversary of the grant.

All cash-settled restricted stock units are marked-to-market and presented within other accrued expenses and noncurrent liabilities in our Consolidated Balance Sheets.

During fiscal 2021, 2020 and 2019, the Company granted restricted stock units to directors and certain management employees as follows (which are not included in the above stock plan activity tables):

6 unchanged sentences

$ 16,147 $ 9,081 $ 8,815

During the second half of 2021, the Company granted 159,982 restricted shares, worth $ 36,916 , to certain employees of Prospera.

These restricted shares vest in equal installments over four years, and require the employees to continue employment over those four years.

As such, the related compensation expense will be incurred over the vesting period.

At December 25 , 2021 the amount of deferred stock‑based compensation granted, to be recognized over a weighted‑average period of 3.21 years, was approximately $ 55,838 .

4 unchanged sentences

however, according to the grant agreements, if certain conditions are met, the employee (or beneficiary) will receive a prorated amount of the award based on active employment during the service period.

During fiscal 2020 and 2019, the Company issued PSUs of 35,181 and 31,344 with a weighted average grant date fair value of $ 125.41 and $ 136.14 per share.

During fiscal 2020, the Company recognized expense of $ 3,165 for these two PSU plans.

During fiscal 2021, 2020 and 2019, the Company granted PSU awards as follows (which are not included in the above stock plan activity tables):

2021 2020 2019

Shares granted

41,060 35,181 31,344

Weighted‑average per share price on grant date

$ 230.40 $ 125.41 $ 136.14

Recognized compensation expense

$ 10,035 $ 3,165 $ —

VALMONT INDUSTRIES, INC.

23 unchanged sentences

Per share amount $ 6.76 $ 0.03 $ 6.73

Basic and diluted net earnings and earnings per share in fiscal 2021 was impacted by impairments of long-lived assets (customer relationship intangible asset, trade name, and property, plant and equipment) associated with the Offshore and other complex steel structures reporting unit of $ 21,678 after-tax ($ 1.01 per share) and a valuation allowance against the deferred tax assets of the Offshore and other complex steel structures reporting unit of $ 5,076 after-tax ($ 0.24 per share).

Basic and diluted net earnings and earnings per share in fiscal 2020 was impacted by impairments of goodwill and intangible assets in fiscal 2020 of $ 16,220 after-tax ($ 0.76 per share) and restructuring expenses of $ 17,324 after-tax ($ 0.81 per share).

Basic and diluted net earnings and earnings per share in fiscal 2018 was impacted by impairments of goodwill and intangible assets of $ 14,736 after-tax ($ 0.66 per share), restructuring expenses and non-recurring asset impairments arising from exiting certain local markets of $ 37,779 after-tax ($ 1.68 per share), refinancing of long-term debt expenses of $ 11,115 after-tax ($ 0.50 per share), and a loss from the divestiture of the grinding media business of $ 5,350 after-tax ($ 0.24 per share).

Earnings per share are computed independently for each of the quarters.

1 unchanged sentence

At the end of fiscal years 2021, 2020, and 2019 there were 47,223 , 0 , and 130,704 outstanding stock options, respectively, with exercise prices exceeding the market price of common stock that were excluded from the computation of diluted earnings per share, respectively.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

(13) EMPLOYEE RETIREMENT SAVINGS PLAN

8 unchanged sentences

All distributions were made in cash.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

(14) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

20 unchanged sentences

The fair value of foreign currency and commodity forward and cross currency contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

(15) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Fair Value Measurement Using:

18 unchanged sentences

$ ( 5,911 ) $ — $ ( 5,911 ) $ —

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

(15) DERIVATIVE FINANCIAL INSTRUMENTS

8 unchanged sentences

Balance sheet location December 25 , 2021 December 26, 2020

Foreign currency forward contracts

Prepaid expenses and other assets

Cross currency swap contracts

Prepaid expenses and other assets

Cross currency swap contracts

Accrued expenses

Commodity forward contracts Accrued expenses $ ( 5,802 ) $ —

Foreign currency forward contracts Prepaid expenses and other assets 149 724

Foreign currency forward contracts Accrued expenses ( 118 ) —

Cross currency swap contracts Prepaid expenses and other assets 1,764 600

Cross currency swap contracts Accrued expenses — ( 7,235 )

$ ( 4,007 ) $ ( 5,911 )

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

(16) DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

Gains (losses) on derivatives recognized in the consolidated statements of earnings for the years ended December 25 , 2021 , December 26, 2020, and December 28, 2019 are as follows:

3 unchanged sentences

$ 25,821 $ — $ ( 2,130 )

Foreign currency forward contracts Loss from divestiture of grinding media business

— — ( 1,215 )

Foreign currency forward contracts Product Sales — 1,598 —

Foreign currency forward contracts Other income (expense)

( 40 ) 187 950

Interest rate contracts Interest expense

4 unchanged sentences

Cash Flow Hedges

During 2021, the Company entered into steel hot rolled coil (HRC) forward contracts that qualify as a cash flow hedge of the variability in cash flows attributable to future steel purchases.

The forward contracts had a notional amount of $ 93,498 for the total purchase of 86,100 short tons from May 2021 to December 2022.

The gain (loss) realized upon settlement will be recorded in product cost of sales in the condensed consolidated statements of earnings over average inventory turns.

In 2019, the Company entered into steel hot rolled coil (HRC) forward contracts which qualified as a cash flow hedge of the variability in the cash flows attributable to future steel purchases.

In 2019, the forward contracts had a notional amount of $ 12,128 for the purchase of 3,500 short tons for each month from May 2019 to September 2019.

The gain (loss) realized upon settlement is recorded in product cost of sales in the consolidated statements of earnings over average inventory turns.

In May 2020, a Brazilian subsidiary with a Real functional currency entered into foreign currency forward contracts to mitigate foreign currency risk related to a customer order with components purchased in Euros.

The gain (loss)

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

realized upon settlement was recorded in product cost of sales in the consolidated statements of earnings over average inventory turns.

During 2021, a Brazilian subsidiary with a Real functional currency entered into foreign currency forward contracts to mitigate foreign currency risk related to a customer order with components purchased in Euros.

The forward contracts, which qualify as a cash flow hedge, matured in July and September 2021 and had notional amounts to buy 3,800 euros in exchange for a stated amount of Brazilian Real.

During 2021, a subsidiary with a Euro functional currency entered into a foreign currency forward contract to mitigate foreign currency risk related to a large customer order denominated in U.S.

The forward contract, which qualifies as a fair value hedge, matured in December 2021 and a notional amount to sell $ 2,000 in exchange for a stated amount of Euros.

In 2020, a Brazilian subsidiary with a Real functional currency entered into foreign currency forward contracts to mitigate foreign currency risk related to a customer order with components purchased in Euros.

The forward contracts, which qualify as a cash flow hedge, matured in December 2020 and a notional amount to buy 4,500 euros in exchange for a stated amount of Brazilian Real.

In March 2020, a subsidiary with a Euro functional currency entered into foreign currency forward contracts to mitigate foreign currency risk related to a large customer order denominated in U.S.

The forward contracts, which qualify as a cash flow hedge, have a final maturity date of June 2021 and a notional amount to sell $ 27,500 in exchange for a stated amount of Euros.

In 2020, a subsidiary with a Euro functional currency entered into foreign currency forward contracts to mitigate foreign currency risk related to a large customer order denominated in U.S.

The forward contracts, which qualify as a cash flow hedge, matured in June 2021 and a notional amount to sell $ 27,500 in exchange for a stated amount of Euros.

Net Investment Hedges

6 unchanged sentences

Interest is exchanged twice per year on April 1 and October 1.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

Key terms of the two CCS are as follows:

7 unchanged sentences

Historical product claims data is used to estimate the cost of product warranties at the time revenue is recognized.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

Changes in the product warranty accrual, which is recorded in “Accrued expenses”, for the years ended December 25 , 2021 and December 26, 2020, were as follows:

31 unchanged sentences

dollars at December 25, 2021 and December 26, 2020, respectively.

The net funded status of $ 118,523 at December 26, 2020 is recorded as a noncurrent liability.

The PBO was $ 761,706 at December 25 , 2021 .

The net funded status of $ 536 at December 25 , 2021 is recorded as a noncurrent liability reflecting, in part, a significant actuarial gain for the period from December 26, 2020 to December 25, 2021 attributed to an increase in the discount rate.

Projected Benefit Obligation and Fair Value of Plan Assets —The accumulated benefit obligation (ABO) is the present value of benefits earned to date, assuming no future compensation growth.

1 unchanged sentence

The underfunded ABO represents the difference between the PBO and the fair value of plan assets.

On October 26, 2018, the High Court of Justice in the United Kingdom ruled that pension plans which offered guaranteed minimum pension ("GMP") benefits between 1990 and 1997 must ensure the benefit accrued between men and women were equal.

The Company estimated the cost of GMP equalization at £ 9,500 , which was treated as a prior service cost at December 29, 2018.

During fiscal 2020, the Company recognized an additional £ 711 for the effect of GMP equalization.

Changes in the PBO and fair value of plan assets for the pension plan for the period from December 28, 2019 to December 26, 2020 were as follows:

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

Obligation Plan

3 unchanged sentences

Interest cost 12,954 —

Prior service costs - GMP equalization 949 —

Actual return on plan assets — 89,988

3 unchanged sentences

Fair Value at December 26, 2020 $ 860,173 $ 741,650 $ ( 118,523 )

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

Changes in the PBO and fair value of plan assets for the pension plan for the period from December 26, 2020 to December 25 , 2021 were as follows:

4 unchanged sentences

Interest cost 9,896 —

Prior service costs - GMP equalization 949 —

Actual return on plan assets — 48,637

Benefits paid ( 22,952 ) ( 22,952 )

Actuarial (gain) loss 87,855 —

Actuarial (gain) ( 77,379 ) —

Currency translation ( 8,032 ) ( 8,089 )

Fair Value at December 25, 2021 $ 761,706 $ 761,170 $ ( 536 )

Actuarial loss that increased the projected benefit obligation was driven by a decrease in 2020 discount rates from 2.05 % to 1.40 %.

Actuarial gain decreased the projected benefit obligation resulted from an increase in the discount rate to 1.90 % in 2021 versus 1.40 %.

Pre-tax amounts recognized in accumulated other comprehensive income (loss) as of December 25 , 2021 and December 26, 2020 consisted of actuarial gains (losses):

1 unchanged sentence

Actuarial gain (loss) ( 16,731 )

Currency translation gain (loss) ( 2,699 )

Balance December 28, 2019 ( 143,726 )

Actuarial gain (loss) ( 16,731 )

Prior service costs - GMP equalization ( 814 )

1 unchanged sentence

Balance December 26, 2020 ( 165,258 )

Actuarial gain 102,529

Prior service costs amortization 550

Currency translation gain 1,239

Balance December 25, 2021 $ ( 60,940 )

Assumptions — The weighted-average actuarial assumptions used to determine the benefit obligation at December 25 , 2021 and December 26, 2020 were as follows:

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

Percentages 2021 2020

9 unchanged sentences

Differences in actual experience in relation to assumptions are not recognized in net earnings immediately, but are deferred and, if necessary, amortized as pension expense.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

The components of the net periodic pension expense for the fiscal years ended December 25 , 2021 and December 26, 2020 were as follows:

27 unchanged sentences

In December 2020, the Company made its required 2021 annual contribution in addition to the required 2020 annual contribution that was made earlier in fiscal 2020.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

Benefit Payments

5 unchanged sentences

• Long-term fixed‑income securities that are investment grade or government‑backed in nature;

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

• Common stock mutual funds in U.K.

23 unchanged sentences

The fair value recorded by the Plan is calculated using NAV for each investment.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

Corporate Stock —This investment category consists of common and preferred stock, including mutual funds, issued by U.K.

7 unchanged sentences

The fair value recorded by the Plan is calculated using NAV.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 25, 2021

(Dollars in thousands, except per share amounts)

At December 25 , 2021 and December 26, 2020, the pension plan assets measured at fair value on a recurring basis were as follows:

7 unchanged sentences

Temporary cash investments $ 14,000 $ — $ — $ 14,000

Corporate stock — — — —

Total plan net assets at fair value $ 14,000 $ — $ — $ 14,000

14 unchanged sentences

Temporary cash investments $ 31,935 $ — $ — $ 31,935

Corporate stock — — — —

Total plan net assets at fair value $ 31,935 $ — $ — $ 31,935

12 unchanged sentences

The Company has operating leases for plant locations, corporate offices, sales offices, and certain equipment.

Outstanding leases at December 26, 2020 have remaining lease terms of one year to fifteen years , some of which include options to extend leases for up to five years .

Outstanding leases at December 25, 2021 have remaining lease terms of one year to twenty-five years , some of which include options to extend leases for up to ten years .

The Company does not have any financing leases.

The Company elected practical expedients not to reassess whether existing contracts are or contain leases, to not reassess the lease classification of any existing leases, to not reassess initial direct costs for any existing leases, to use hindsight in determining the lease term and in assessing impairment of the right-of-use asset, and to not separate lease and non-lease components for all classes of underlying assets.

Commencing in 2021, the Company has an operating lease with first year annual cash expense of approximately $ 4,000 that will increase 2 % annually over the 25 year term.

The Company determines if an arrangement is a lease at inception.

6 unchanged sentences

Lease expense is recognized on a straight-line basis over the lease term.

The Company commenced on a new corporate headquarters operating lease with straight-line annual expense of approximately $ 5,100 , a 2 % annual increase in lease payment, and a 25 year term during 2021.

In recognition of this lease, an operating lease asset of $ 71,853 and an operating long-term liability of $ 71,196 was recognized.

Lease cost and other information related to the Company's operating leases at December 25, 2021 and December 26, 2020 are as follows:

5 unchanged sentences

Weighted average discount rate 4.0 % 3.5 %

Operating lease cost includes approximately $ 2,500 for short-term lease costs and approximately $ 2,000 for variable lease payments in 2020 and 2019.

As part of the adoption of ASC 842, the Company evaluated at the historical and projected cash flow generation of the operations at each of its long-term leased facilities.

One of those facilities, a galvanizing operation in Melbourne, Australia, will not generate sufficient cash flows on an undiscounted cash flow basis to recover the carrying value of the right of use asset.

Operating lease cost includes approximately $ 1,500 for short-term lease costs and approximately $ 3,600 for variable lease payments in 2021.

As part of the adoption of ASC 842 in 2019, the Company evaluated the historical and projected cash flow generation of the operations at each of its long-term leased facilities.

It was determined that one of those facilities, a galvanizing operation in Melbourne, Australia, would not generate sufficient cash flows on an undiscounted cash flow basis to recover the carrying value of the right of use asset.

The Company then estimated a value for this operation using a discounted cash flow model.

28 unchanged sentences

ENGINEERED SUPPORT STRUCTURES:

This segment consists of the manufacture and distribution of engineered poles, towers, and components for lighting, transportation, and wireless communication markets, including integrated structure solutions for smart cities, and engineered access systems;

This segment consists of the manufacture and distribution of engineered poles, towers, and components for lighting, traffic, and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products;

UTILITY SUPPORT STRUCTURES:

This segment consists of the manufacture of engineered steel and concrete structures for utility markets, including transmission, distribution, and substation products, and renewable energy generation equipment;

This segment consists of global galvanizing, painting and anodizing services to preserve and protect metal products;

This segment consists of the global manufacture of agricultural irrigation equipment, parts, services, tubular products, and advanced technology solutions for water management and precision agriculture.

In addition to these four reportable segments, the Company had other businesses and activities that individually are not more than 10 % of consolidated sales, operating income or assets.

This includes the manufacture of forged steel grinding media for the mining industry and is reported in the "Other" category until its divestiture in 2018.

This segment consists of the manufacture of engineered steel, concrete and composite structures for utility markets, including transmission, distribution, substations, and renewable energy generation equipment;

This segment consists of galvanizing, painting and anodizing services to preserve and protect metal products;

This segment consists of the manufacture of center pivot and linear irrigation equipment for agricultural markets, including parts, services and tubular products, and advanced technology solutions for water management and precision agriculture.

The accounting policies of the reportable segments are the same as those described in Note 1.

The Company evaluates the performance of its business segments based upon operating income and invested capital.

The Company does not allocate interest expense, non-operating income and deductions, or income taxes to its business segments.

The Company's operating income for segment purposes excludes unallocated corporate general and administrative expenses, interest expense, non-operating income and deductions, or income taxes.

VALMONT INDUSTRIES, INC.

5 unchanged sentences

2021 2020 2019

Engineered Support Structures segment:

Lighting, Traffic, and Highway Safety Products

$ 717,216 $ 708,853 $ 706,582

Communication Products

190,203 188,912 149,817

Access Systems

88,421 114,525 130,481

Engineered Support Structures segment

995,840 1,012,290 986,880

Utility Support Structures segment:

7 unchanged sentences

1,121,510 1,002,209 890,580

Engineered Support Structures segment:

Lighting, Traffic, and Highway Safety Products 717,650 717,216 708,853

Communication Products 240,171 190,203 188,912

Access Systems 106,940 88,421 114,525

Engineered Support Structures segment 1,064,761 995,840 1,012,290

Coatings segment

9 unchanged sentences

INTERSEGMENT SALES:

Engineered Support Structures

12,317 10,214 19,522

Utility Support Structures

71 4,972 3,967

75,710 67,195 66,612

Engineered Support Structures 321 12,317 10,214

87,232 75,710 67,195

11,667 5,739 6,544

Engineered Support Structures segment

99,726 93,837 88,925

1 unchanged sentence

1,121,004 1,002,138 885,608

Engineered Support Structures segment 1,064,440 983,523 1,002,076

Coatings segment

10 unchanged sentences

OPERATING INCOME (LOSS):

Engineered Support Structures

$ 65,342 $ 65,627 $ 34,776

Utility Support Structures

$ 67,624 $ 100,855 $ 87,788

Engineered Support Structures 115,417 65,342 65,627

50,365 42,975 51,008

4 unchanged sentences

( 41,420 ) ( 38,701 ) ( 36,211 )

Costs associated with refinancing of debt — — ( 14,820 )

Loss from divestiture of grinding media business

14,718 5,516 8,164

5,516 8,164 1,634

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries

1 unchanged sentence

TOTAL ASSETS:

Engineered Support Structures

$ 932,565 $ 944,428 $ 868,336

Utility Support Structures

$ 827,083 $ 778,127 $ 742,194

Engineered Support Structures 977,334 932,565 944,428

366,026 360,594 363,070

3 unchanged sentences

CAPITAL EXPENDITURES:

Engineered Support Structures

$ 24,447 $ 25,344 $ 26,783

Utility Support Structures

36,718 34,495 26,306

Engineered Support Structures 16,578 24,447 25,344

19,178 22,132 23,610

9 unchanged sentences

DEPRECIATION AND AMORTIZATION:

Engineered Support Structures

$ 25,399 $ 26,280 $ 27,274

Utility Support Structures

$ 24,075 $ 23,641 $ 23,779

Engineered Support Structures 24,733 25,399 26,280

16,928 15,793 15,907

7 unchanged sentences

297,720 252,253 255,271

Brazil 200,402 103,591 77,996

123,001 120,063 90,206

5 unchanged sentences

173,240 179,673 193,029

Brazil 28,583 17,151 7,963

21,232 61,546 58,435

8 unchanged sentences

Long-lived assets by geographical area are based on location of facilities.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Three-year period ended December 26, 2020

(Dollars in thousands, except per share amounts)

(22) QUARTERLY FINANCIAL DATA (Unaudited)

Gross Per Share Stock Price Dividends

Net Sales Profit Amount Basic Diluted High Low Declared

$ 674,200 $ 186,249 $ 42,929 $ 2.00 $ 1.99 $ 154.86 $ 82.60 $ 0.450

Second (1) 688,808 183,937 22,607 1.06 1.06 128.37 98.93 0.450

Third (2) 733,970 190,747 39,342 1.85 1.84 134.58 108.15 0.450

Fourth (3) 798,377 204,581 35,815 1.69 1.68 176.62 119.88 0.450

$ 2,895,355 $ 765,514 $ 140,693 $ 6.60 $ 6.57 $ 176.62 $ 82.60 $ 1.80

$ 692,139 $ 164,627 $ 36,104 $ 1.65 1 $ 1.64 $ 139.50 $ 107.43 $ 0.375

700,871 178,176 39,719 1.83 1.82 136.75 112.94 0.375

Third 690,340 173,287 38,045 1.76 1.75 146.46 123.74 0.375

Fourth 683,626 166,591 32,540 1.52 1.51 151.46 123.80 0.375

$ 2,766,976 $ 682,681 $ 146,408 $ 6.76 $ 6.73 $ 151.46 $ 107.43 $ 1.50

Earnings per share are computed independently for each of the quarters.

Therefore, the sum of the quarterly earnings per share may not equal the total for the year.

_______________________________

(1) The second quarter of 2020 included an impairment of goodwill and intangible assets totaling $ 16,220 after-tax ($ 0.76 per share) and certain restructuring expenses of $ 4,019 after-tax ($ 0.19 per share).

(2) The third quarter of 2020 included certain restructuring expenses of $ 2,133 after-tax ($ 0.10 per share).

(3) The fourth quarter of 2020 included certain restructuring expenses of $ 11,041 after-tax ($ 0.52 per share).

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data