What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-03-01 · 709 added, 858 removed, 636 unchanged (71% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following consolidated financial statements of the Company and its subsidiaries are included herein as listed below:

Consolidated Financial Statements

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

Consolidated Statements of Earnings—Three-Year Period Ended December 31, 2022

Consolidated Statements of Comprehensive Income—Three-Year Period Ended December 31, 2022

Consolidated Balance Sheets—December 31, 2022 and December 25, 2021

Consolidated Statements of Cash Flows—Three-Year Period Ended December 31, 2022

Consolidated Statements of Shareholders’ Equity—Three-Year Period Ended December 31, 2022

Notes to Consolidated Financial Statements—Three-Year Period Ended December 31, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of Valmont Industries, Inc.

and subsidiaries (the “Company”) as of December 31, 2022 and December 25, 2021, the related consolidated statements of earnings, comprehensive income, cash flows, and shareholders’ equity, for each of the fiscal years in the three-year period ended December 31, 2022, and the related notes listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and December 25, 2021, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

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 31, 2022, 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 March 1, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting.

and subsidiaries (the "Company") as of December 30, 2023 and December 31, 2022, the related consolidated statements of earnings, comprehensive income, shareholders' equity and redeemable noncontrolling interests, and cash flows, for each of the three years in the period ended December 30, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

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 30, 2023, 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 28, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Critical Audit Matter Description

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.

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 27, 2022.

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, selection of industrial companies with similar product lines and forecasted EBITDA, and discount rates.

The Company has goodwill which is allocated among fourteen reporting units.

The Company evaluates its fourteen 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 projected after-tax cash flows from operations (less capital expenses) discounted to present value.

This valuation method requires management to make significant estimates and assumptions related to projected cash flows and discount rates.

We identified goodwill at the Agriculture Technology, Solar Tracking Structure, and Asia Pacific Access Systems 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 as of September 2, 2023.

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 the projected cash flows and discount rates for these three reporting units.

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, selection of industrial companies with similar product lines and forecasted EBITDA, and discount rates.

Our audit procedures related to the goodwill impairment assessment for the Agriculture Technology, Solar Tracking Structure, and Asia Pacific Access Systems 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 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 discount rates, by 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 selection of industrial companies with similar product lines and forecasted EBITDA and tested the underlying source information and mathematical accuracy of the calculations .

● 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, and (3) industry reports.

● 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.

In addition, we developed a range of independent estimates and compared those to the discount rates selected by management.

/s/ DELOITTE & TOUCHE LLP

Omaha, Nebraska

March 1, 2023

February 28, 2024

We have served as the Company’s auditor since 1996.

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CONSOLIDATED STATEMENTS OF EARNINGS

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

Fiscal Year Ended

Product sales

Services sales

Service sales

Product cost of sales

Services cost of sales

Service cost of sales

Total cost of sales

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Impairment of goodwill and intangible assets

Realignment charges

Operating income

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Gain (loss) on investments - unrealized

Loss from divestiture of offshore wind energy structures business

Earnings before income taxes

Income tax expense:

Earnings before equity in earnings of nonconsolidated subsidiaries

Gain (loss) on divestitures

Total other income (expenses)

Earnings before income taxes and equity in loss of nonconsolidated subsidiaries

Income tax expense (benefit):

Total income tax expense

Earnings before equity in loss of nonconsolidated subsidiaries

Equity in loss of nonconsolidated subsidiaries

Earnings attributable to noncontrolling interests

Loss (earnings) attributable to redeemable noncontrolling interests

Net earnings attributable to Valmont Industries, Inc.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three-year period ended December 31, 2022

(Dollars in thousands)

Fiscal Year Ended

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments:

Unrealized translation gains (losses)

Unrealized translation gain (loss)

Realized loss on offshore wind energy structures business recorded in other expense

Gain (loss) on hedging activities:

Commodity hedges

Realized (gain) loss on commodity hedges recorded in earnings

Total foreign currency translation adjustments

Hedging activities:

Unrealized gain (loss) on commodity hedges

Realized loss (gain) on commodity hedges recorded in earnings

Unrealized gain (loss) on cross currency swaps

Unrealized gain on net investment hedges, net of tax expense of $ 2,428 in 2020

Realized (gain) on offshore wind energy structures business cross currency swap, net of tax expense of $ 1,207 in 2022

Cash flow hedges

Realized gain on cash flow hedges recorded in earnings

Realized gain on offshore wind energy structures business cross currency swap, net of tax expense of $ 1,207

Amortization cost included in interest expense

Net gain (loss) on defined benefit pension plan, net of tax expense (benefit) of $( 606 ) in 2022, $ 25,736 in 2021, $( 4,183 ) in 2020

Other comprehensive income (loss)

Total hedging activities

Net gain (loss) on defined benefit pension plan

Other comprehensive income (loss), net of tax

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive loss (income) attributable to redeemable noncontrolling interests

Comprehensive income attributable to Valmont Industries, Inc.

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CONSOLIDATED BALANCE SHEETS

December 31, 2022 and December 25, 2021

(Dollars in thousands, except shares and per share amounts)

(Dollars in thousands, except par value)

Current assets:

Cash and cash equivalents

Receivables, less allowance of $ 20,890 in 2022 and $ 18,050 in 2021

Receivables, less allowance of $ 32,897 and $ 20,890 , respectively

Contract assets

Prepaid expenses and other assets

Prepaid expenses and other current assets

Refundable income taxes

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Property, plant, and equipment, at cost

Less accumulated depreciation and amortization

Net property, plant and equipment

Less accumulated depreciation

Property, plant, and equipment, net

Other intangible assets, net

Defined pension benefit asset

LIABILITIES AND SHAREHOLDERS’ EQUITY

Other non-current assets

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS,

AND SHAREHOLDERS’ EQUITY

Current liabilities:

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Deferred compensation

Other noncurrent liabilities

Other non-current liabilities

Total liabilities

Redeemable noncontrolling interests

Shareholders’ equity:

Common 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

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Cost of treasury stock, common shares of 6,549,833 in 2022 and 6,619,860 in 2021

Total Valmont Industries, Inc.

shareholders’ equity

Noncontrolling interest in consolidated subsidiaries

Treasury stock, at cost, common shares of 7,691,192 and 6,549,833 , respectively

( 1,043,990 )

Total shareholders’ equity

Total liabilities and shareholders’ equity

Total liabilities, redeemable noncontrolling interests, and shareholders’ equity

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Three-year period ended December 31, 2022 (Dollars in thousands)

(Dollars in thousands)

Fiscal Year Ended

Cash flows from operating activities:

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Depreciation and amortization

Noncash loss on trading securities

Contribution to defined benefit pension plan

Impairment of long-lived assets

Loss on sale of offshore wind energy structures business

Loss (gain) on divestitures

Stock-based compensation

Defined benefit pension plan benefit

Defined benefit pension plan cost (benefit)

Loss (gain) on sale of property, plant, and equipment

Equity in loss in nonconsolidated subsidiaries

Equity in loss of nonconsolidated subsidiaries

Deferred income taxes

Changes in assets and liabilities:

Prepaid expenses and other assets (current and non-current)

Contract assets

Prepaid expenses and other assets (current and non-current)

Accounts payable

Accrued expenses

Contract liabilities

Other noncurrent liabilities

Accrued expenses

Income taxes payable / refundable

Net cash flows from operating activities

Other non-current liabilities

Net cash flows provided by operating activities

Cash flows from investing activities:

Purchase of property, plant, and equipment

Proceeds from divestitures, net of cash divested

Proceeds from sale of assets

Proceeds from property damage insurance claims

Acquisitions, net of cash acquired

Proceeds from settlement of net investment hedge

Investments in nonconsolidated subsidiaries

Net cash flows from investing activities

Net cash flows used in investing activities

Cash flows from financing activities:

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Dividends paid

Dividends to noncontrolling interest

Purchase of noncontrolling interests

Dividends to redeemable noncontrolling interests

Purchase of redeemable noncontrolling interests

Purchase of treasury shares

Proceeds from exercises under stock plans

Purchase of common treasury shares—stock plan exercises

Net cash flows from financing activities

Tax withholdings on exercises under stock plans

Net cash flows provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents—beginning of year

Cash and cash equivalents—beginning of period

Cash and cash equivalents—end of period

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Three-year period ended December 31, 2022

(Dollars in thousands, except shares and per share amounts)

Noncontrolling

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND

REDEEMABLE NONCONTROLLING INTERESTS

(Dollars in thousands, except per share amounts)

comprehensive

shareholders’

noncontrolling

income (loss)

Balance at December 28, 2019

Other comprehensive income (loss)

Balance as of December 26, 2020

Other comprehensive income (loss), net of tax

Cash dividends declared ($ 2.00 per share)

Dividends to noncontrolling interests

Purchase of noncontrolling interest

Addition of noncontrolling interest

Purchase of treasury shares;

111,833 shares acquired

Stock plan exercises, 88,411 shares acquired

Stock options exercised;

147,014 shares issued

Stock option expense

Stock awards;

65,248 shares issued

Balance at December 26, 2020

Other comprehensive income (loss)

Stock option and incentive plans

Balance as of December 25, 2021

Other comprehensive loss, net of tax

Cash dividends declared ($ 2.20 per share)

Dividends to redeemable noncontrolling interests

Addition of redeemable noncontrolling interests

Reduction of redeemable noncontrolling interests

Purchase of treasury shares;

137,612 shares acquired

Stock plan exercises;

90,292 shares acquired

Stock options exercised;

169,908 shares issued

Stock option expense

Stock awards;

88,395 shares issued

Balance at December 25, 2021

Other comprehensive loss

Stock option and incentive plans

Balance as of December 31, 2022

Net earnings (loss)

Other comprehensive income, net of tax

Cash dividends declared ($ 2.40 per share)

Dividends to noncontrolling interests

Addition of noncontrolling interest

Reduction of noncontrolling interest

Change in redemption value of redeemable noncontrolling interest

Dividends to redeemable noncontrolling interests

Purchase of treasury shares;

1,282,706 shares acquired

Stock plan exercises;

60,599 shares acquired

Stock options exercised;

121,163 shares issued

Stock option expense

Stock awards;

147,075 shares issued

Balance at December 31, 2022

Stock option and incentive plans

Balance as of December 30, 2023

( 1,043,990 )

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

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The Consolidated Financial Statements include the accounts of Valmont Industries, Inc.

and its wholly and majority‑owned subsidiaries (the “Company”).

Investments in 20 % to 50 % owned affiliates and joint ventures are accounted for by the equity method.

Investments in less than 20 % owned affiliates are accounted for by the cost method.

and its controlled subsidiaries (the “Company”).

Investments in affiliates and joint ventures through which the Company exercises significant influence over but does not control the investee and is not the primary beneficiary of the investee's activities are accounted for using the equity method.

All intercompany items have been eliminated.

Cash Overdrafts

Cash book overdrafts totaling $ 25,075 and $ 19,670 were classified as accounts payable at December 31, 2022 and December 25, 2021, respectively.

The Company’s policy is to report the change in book overdrafts as an operating activity in the Consolidated Statements of Cash Flows.

Change in Reportable Segments

During the first quarter of 2022, the Company’s Chief Executive Officer, as the chief operating decision maker, made changes to the Company’s management structure and began to manage the business, allocate resources, and evaluate performance under the new structure.

As a result, the Company has realigned its reportable segment structure.

All prior period segment information has been recast to reflect this change in reportable segments.

Refer to Note 21 for additional information.

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

Accordingly, the Company’s fiscal year ended December 30, 2023 consisted of 52 weeks, the Company’s fiscal year ended December 31, 2022 consisted of 53 weeks, and the Company’s fiscal year ended December 25, 2021 consisted of 52 weeks.

The estimated impact on the Company's results of operations due to the additional week in the fiscal year ended December 31, 2022 was additional net sales of approximately $ 80,800 and additional net earnings of approximately $ 5,300 .

Reportable Segments

The Company has two reportable segments based on its management structure.

Each segment is global in nature with a manager responsible for segment operational performance and allocation of capital within the segment.

Each segment is global in nature with a manager responsible for operational performance and allocation of capital.

Reportable segments are as follows:

INFRASTRUCTURE:

This segment consists of the manufacture and distribution of products and solutions to serve the infrastructure markets of utility, renewable energy, lighting, transportation, and telecommunications, and coatings services to preserve metal products.

This segment consists of the manufacture and distribution of products and solutions to serve the infrastructure markets of utility, solar, lighting, transportation, and telecommunications, along with coatings services to protect metal products.

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

In addition to these two reportable segments, the Company had a business and related activities that was not more than 10% of consolidated sales, operating income, or assets.

This includes the offshore wind energy structures business and is reported in the “Other” segment until its divestiture in 2022.

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

Accordingly, the Company’s fiscal year ended December 31, 2022 consisted of 53 weeks and the Company’s fiscal years ended December 25, 2021 and December 26, 2020 consisted of 52 weeks.

The estimated impact on the Company's results of operations due to the extra week in fiscal year 2022 was additional net sales of approximately $ 80,800 and additional net earnings of approximately $ 5,300 .

Accounts Receivable

Accounts receivable are reported on the balance sheet net of any allowance for doubtful accounts.

Allowances are maintained in amounts considered to be appropriate in relation to the outstanding receivables based on age of the receivable, economic conditions and customer credit quality.

As the Company’s international business has grown, the exposure to potential losses in international

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

markets has also increased.

In addition to these two reportable segments, the Company had a business and related activities in fiscal 2022 that were not more than 10% of consolidated sales, operating income, or assets.

This business, the offshore wind energy structures business, was reported in the “Other” segment until its divestiture in the fourth quarter of fiscal 2022.

Cash Overdrafts

Cash book overdrafts totaling $ 19,869 and $ 25,075 were classified as “Accounts payable” in the Consolidated Balance Sheets as of December 30, 2023 and December 31, 2022, respectively.

The Company’s policy is to report the change in book overdrafts as “Cash flows from operating activities” in the Consolidated Statements of Cash Flows.

Receivables are reported on the Consolidated Balance Sheets net of any allowance for credit losses.

Allowances are maintained in amounts considered to be appropriate in relation to the outstanding receivables based on the age of the receivable, economic conditions, and customer credit quality.

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, 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.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

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

For periods ended:

The following table details the balances of the allowance for credit losses and changes therein:

Balance as of

Fiscal year ended:

December 30, 2023

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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 “Receivables, less allowance” on the Consolidated Balance Sheets and cash proceeds are reflected in “Cash flows from operating activities” on the Consolidated Statements 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 Statements of Earnings.

At December 31, 2022 and December 25, 2021, the Company sold trade accounts receivable of $ 100.0 million and $ 25.4 million, respectively.

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 net realizable value.

Transfers of accounts receivable are accounted for as sales and, accordingly, accounts receivable sold are excluded from “Receivables, less allowance” in the Consolidated Balance Sheets, and cash proceeds are reflected in “Cash flows from operating activities” in the Consolidated Statements 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 income (expenses)” in the Consolidated Statements of Earnings.

As of December 30, 2023 and December 31, 2022, the Company sold trade accounts receivable of $ 60,000 and $ 100,000 , respectively.

The fees associated with the trade accounts receivables factoring program are recognized within “Selling, general, and administrative expenses” in the Consolidated Statements of Earnings and were approximately $ 4,500 for the fiscal year ended December 30, 2023.

Inventory is valued at the lower of cost, determined on the first-in, first-out method, or net realizable value.

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.

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buildings and improvements - 10 to 30 years , machinery and equipment - 3 to 10 years , transportation equipment - 3 to 10 years , office furniture and equipment - 3 to 7 years , and intangible assets - 2 to 20 years .

Depreciation expense in fiscal 2022, 2021, and 2020 was $ 73,938 , $ 70,223 , and $ 63,890 , respectively.

An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds estimated future undiscounted cash flows of the asset.

Depreciation expense was $ 78,138 , $ 73,938 , and $ 70,223 for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021, respectively.

An impairment loss is recognized if the carrying amount of an asset may not be recoverable and exceeds the estimated future undiscounted cash flows of the asset.

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

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 wind energy business reporting unit would 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.

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(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 (“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.

The Company evaluates its reporting units for impairment of goodwill during the third quarter of each fiscal 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.

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

If the underlying assumptions related to the valuation of a reporting unit’s goodwill or an indefinite‑lived intangible asset change materially before or after the annual impairment testing, the reporting unit or asset is evaluated for potential impairment.

If the underlying assumptions related to the valuation of a reporting unit’s goodwill or indefinite‑lived intangible assets change materially before or after the annual impairment testing, the reporting unit or asset is evaluated for potential impairment.

In these evaluations, management considers recent operating performance, expected future performance, industry conditions, and other indicators of potential impairment.

See footnote 8 for details of impairments recognized during 2021.

The Company recognized a pre-tax $ 21,415 impairment of property, plant, and equipment in fiscal 2021 when it determined that its offshore wind energy structures business reporting unit would not generate sufficient cash flows to recover the carrying values, recorded as “ Product cost of sales ” in the Consolidated Statements of Earnings.

See Note 8 for details of impairments of goodwill and other intangible assets recognized during the fiscal years ended December 30, 2023 and December 25, 2021.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

The Company's operating leases are included in “Other assets” and “Operating lease liabilities” in the Consolidated Balance Sheets.

The Company's operating lease right-of-use (“ROU”) assets are included in “Other non-current assets” and the corresponding lease obligations are included in “Other accrued expenses” and “Operating lease liabilities” in the Consolidated Balance Sheets.

The Company uses the asset and liability method to calculate deferred income taxes.

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In addition, the Company records provisions for known warranty claims.

Pension Benefits

Pension Cost (Benefit)

Certain expenses are incurred in connection with a defined benefit pension plan.

In order to measure expense and the related benefit obligation, various assumptions are made including discount rates used to value the obligation, expected return on plan assets used to fund these expenses, and estimated future inflation rates.

In order to measure the expense and the related benefit obligation, various assumptions are made including discount rates used to value the obligation, the expected return on plan assets used to fund these expenses, and the estimated future inflation rates.

These assumptions are based on historical experience as well as current facts and circumstances.

An actuarial analysis is used to measure the expense and liability associated with pension benefits.

The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and bonuses of common stock.

An actuarial analysis is used to measure the expense and liability associated with the pension cost (benefit).

The Company maintains stock-based compensation plans approved by the shareholders, which provide that the Human Resources Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and bonuses of common stock.

The Company applies the provisions of Accounting Standards Codification 820, Fair Value Measurement (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

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Derivative Instruments

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

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

Where applicable, the Company may elect to account for such derivatives as either a cash flow, fair value, or net investment hedge.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Comprehensive Income (Loss)

Comprehensive income (loss) includes net earnings, currency translation adjustments, certain derivative-related activity, and changes in net actuarial gains / losses from a pension plan.

Comprehensive income (loss) includes net earnings, foreign currency translation adjustments, certain derivative-related activity, and changes in prior service cost from the pension plan.

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.

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

Comprehensive

Income (Loss)

Balance at December 25, 2021

Current period comprehensive income (loss)

Divestiture of offshore wind energy structures business

Balance at December 31, 2022

Accumulated other comprehensive income (loss) (“AOCI”) consisted of the following as of December 30, 2023 and December 31, 2022:

Foreign currency translation adjustments

Hedging activities

Defined benefit pension plan

Accumulated other comprehensive loss

Revenue Recognition

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

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

Contracts with customers for all businesses are fixed-price with sales tax excluded from revenue and do not include variable consideration.

Discounts included in contracts with customers, typically early pay discounts, are recorded as a reduction of net sales in the period in which the sale is recognized.

Contract revenues are classified as product sales when the performance obligation is related to the manufacturing of goods.

Contract revenues are classified as “Product sales” when the performance obligation is related to the manufacturing and sale of goods.

Contract revenues are classified as “Service sales” when the performance obligation is the performance of a service.

Service revenue is primarily related to the Coatings and Technology Products and Services product lines.

Customer acceptance provisions exist primarily in the design stage of products (on a limited basis, the Company may agree to other acceptance terms), and acceptance of the design by the customer is required before the project is manufactured and delivered to the customer.

The Company is not entitled to any compensation solely based on design of the product and does not recognize this service as a separate performance obligation and, therefore, no revenue is recognized with the design stage.

Service revenue is primarily related to the Coatings product line and Technology Products and Services product line.

Customer acceptance provisions exist only in the design stage of our products (on a limited basis, the Company may agree to other acceptance terms), and acceptance of the design by the customer is required before manufacturing commences and the product is manufactured and delivered to the customer.

The Company is generally not entitled to any compensation solely based on the design of the product and does not recognize this service as a separate performance obligation, therefore, no revenue is recognized for design services.

No general rights of return exist for customers once the product has been delivered, and the Company establishes provisions for estimated warranties.

The Company does not sell extended warranties for any of its products.

Shipping and handling costs associated with sales are recorded as costs of goods sold.

Shipping and handling costs associated with sales are recorded within cost of sales.

The Company elected to use the practical expedient of treating freight as a fulfillment obligation instead of a separate performance obligation and ratably recognize freight expense as the structure is being manufactured when the revenue from the associated customer contract is being recognized over time.

With the exception of the transmission, distribution, and substation structures ("TD&S") product line, the renewable energy product line, and the telecommunication structures product line, the Company’s inventory is interchangeable for a variety of each segment’s customers.

With the exception of the Transmission, Distribution, and Substation ("TD&S"), Solar, and Telecommunications product lines, the Company’s inventory is interchangeable for a variety of each segment’s customers.

The Company has elected to not disclose the partially satisfied performance obligation at the end of the period when the contract has an original expected duration of one year or less.

In addition, the Company does 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’s contract assets as of December 31, 2022 and December 25, 2021 totaled $ 174,539 and $ 142,643 , respectively.

In addition, the Company does not adjust the amount of consideration to be received in a contract for any significant financing component if payment is expected within one year of transfer of control of goods or services.

Most of the Company’s customers are invoiced upon shipment or delivery of the goods to the customer’s specified location.

Contract assets are recorded as revenue is recognized over time and such contract assets are relieved when the customer is invoiced.

As of December 30, 2023 and December 31, 2022, the Company’s contract assets totaled $ 175,721 and $ 174,539 , respectively.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

While most of the Infrastructure segment customers are generally invoiced upon shipment or delivery of the goods to the customer’s specified location, certain customers are also invoiced by advanced billings or progress billings.

At December 31, 2022 and December 25, 2021, total contract liabilities were $ 178,531 and $ 213,203 , respectively.

At December 31, 2022, $ 172,915 was recorded as contract liabilities and $ 5,616 was recorded as other noncurrent liabilities on the consolidated balance sheets.

Certain customers are also invoiced by advanced billings or progress billings.

When progress on performance obligations is less than the amount the customer has been billed, a contract liability is recognized.

As of December 30, 2023, total contract liabilities of $ 70,978 were recorded as “Contract liabilities” in the Consolidated Balance Sheets.

As of December 31, 2022, contract liabilities of $ 172,915 were recorded as “Contract liabilities” and $ 5,616 were recorded as “Other non-current liabilities” in the Consolidated Balance Sheets.

Additional details are as follows:

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

● During the fiscal year ended December 31, 2022 and December 25, 2021, the Company recognized $ 96,373 and $ 105,406 of revenue that was included in the total contract liability as of December 25, 2021 and December 26, 2020, respectively.

● During the fiscal years ended December 30, 2023 and December 31, 2022, the Company recognized $ 162,182 and $ 96,373 of revenue that was included in the total contract liability as of December 31, 2022 and December 25, 2021, respectively.

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

● At December 31, 2022, the Company had $ 11,080 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 .

● As of December 30, 2023, the Company had no material remaining performance obligations on contracts with an original expected duration of one year or more.

Segment and Product Line Revenue Recognition

Infrastructure Segment

Steel and concrete utility structures within the TD&S product lines are engineered to customer specifications resulting in limited ability to sell the structure to a different customer if an order is canceled after production commences.

Steel and concrete structures within the TD&S and Telecommunications product lines are engineered to customer specifications resulting in limited ability to sell the structure to a different customer if an order is canceled after production commences.

The continuous transfer of control to the customer is evidenced either by contractual termination clauses or by rights to payment for work performed to date plus a reasonable profit as the products do not have an alternative use to the Company.

Since control is transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation.

The selection of the method to measure progress towards completion requires judgment.

For the TD&S and telecommunication structure product lines, the Company generally recognizes 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.

Since control is transferred over time, revenue is recognized based on the extent of progress toward completion of the performance obligation.

The selection of the method to measure progress toward completion requires judgment.

For the structures manufactured within the TD&S and Telecommunications product lines, the Company generally recognizes revenue on an inputs basis, using total production hours incurred to date for each order as a percentage of total hours estimated to complete the order.

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

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

Depending on the product sold, revenue from renewable energy is recognized both upon shipment or delivery of goods to the customer depending on contract terms, or by using an inputs method, based on the ratio of costs incurred to-date to the total estimated costs at completion of the performance obligation.

External sales agents are used in certain TD&S sales and the Company has chosen to expense estimated commissions owed to third parties by recognizing them proportionately as the goods are manufactured.

For the structures sold for lighting and transportation and for the majority of telecommunication products, revenue is recognized upon shipment or delivery of goods to the customer depending on contract terms, which is the same point in time that the customer is billed.

There are also large regional customers who have unique product specifications for telecommunication structures.

Depending on the product sold, revenue from the Solar product line is recognized upon shipment or delivery of goods to the customer depending on contract terms, or by using an inputs method, based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.

External sales agents are used in certain TD&S product line sales and the Company has chosen to expense estimated commissions owed to third parties by recognizing them proportionately as the goods are manufactured.

For the structures sold for the Lighting and Transportation product line and for the majority of Telecommunications products, revenue is recognized upon shipment or delivery of goods to the customer depending on contract terms, which is the same point in time that the customer is billed.

Some large regional customers have unique product specifications for telecommunication structures.

When the customer contract includes a cancellation clause that would require them to pay for work completed plus a reasonable margin if an order was canceled, revenue is recognized over time based on hours worked as a percent of total estimated hours to complete production.

The Coatings product line revenues are derived by providing coating services to customers’ products, which include galvanizing, anodizing, and powder coating.

Revenue is recognized once the coating service has been performed and the goods are ready to be picked up or delivered to the customer which is the same time that the customer is billed.

Revenue is recognized once the service has been performed and the goods are ready to be picked up or delivered to the customer, which is the same time that the customer is billed.

Agriculture Segment

Revenue recognition from the manufacture of irrigation equipment and related parts and services (including tubular products for industrial customers) is generally upon shipment of the goods to the customer which is the same point in time that the customer is billed.

The remote monitoring subscription services recognized as part of technology services product line are primarily billed annually and revenue is recognized on a straight-line basis over the subsequent twelve months (contract terms).

The remote monitoring subscription services recognized as part of the Technology Products and Services product line are primarily billed annually and revenue is recognized on a straight-line basis over the contract period.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Disaggregation of revenue by product line is disclosed in the “Business Segments” footnote.

A breakdown by segment of revenue recognized over time and revenue recognized at a point in time for the fiscal years ended December 31, 2022 and December 25, 2021 is as follows:

Fiscal Year 2022

Fiscal Year 2021

Fiscal Year 2020

The disaggregation of revenue by product line is disclosed in Note 21.

A breakdown by segment of revenue recognized over time and revenue recognized at a point in time for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021 was as follows:

Fiscal Year Ended

December 30, 2023

December 31, 2022

December 25, 2021

Point in Time

Infrastructure

Total net sales

Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the reported amounts of revenue and expenses, and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles.

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the reported amounts of revenue and expenses, and the disclosure of contingent assets and liabilities to prepare the Consolidated Financial Statements in conformity with generally accepted accounting principles.

Actual results could differ from those estimates.

Equity Method Investments

The Company has equity method investments in non-consolidated subsidiaries which are recorded within “Other assets” on the Consolidated Balance Sheets.

The Company has equity method investments in nonconsolidated subsidiaries which are recorded within “Other non-current assets” in the Consolidated Balance Sheets.

Treasury Stock

Repurchased shares are recorded as “Cost of treasury stock” and result in a reduction of “Shareholders’ equity.” When treasury shares are reissued, the Company uses the last-in, first-out method, and the difference between the repurchase cost and re-issuance price is charged or credited to “Additional paid-in capital”.

In May 2014, the Company announced a capital allocation philosophy which covered a share repurchase program.

Repurchased shares are recorded as “Treasury stock, at cost” and result in a reduction of “Shareholders’ equity” in the Consolidated Balance Sheets.

When treasury shares are reissued, the Company uses the last-in, first-out method, and the difference between the repurchase cost and re-issuance price is charged or credited to “Additional paid-in capital”.

In May 2014, the Company announced a capital allocation philosophy that covered a share repurchase program.

Specifically, the Board of Directors at that time authorized the purchase of up to $ 500,000 of the Company’s outstanding common stock from time to time over twelve months at prevailing market prices, through open market or privately negotiated transactions.

In February 2015 and again in October 2018, the Board of Directors authorized an additional purchase of up to $ 250,000 of the Company’s outstanding common stock with no stated expiration date.

In February 2023, the Board of Directors increased the amount remaining under the program by an additional $ 400,000 , with no stated expiration date, bringing the total authorization to $ 1,400,000 .

As of December 30, 2023, the Company has acquired 7,895,724 shares for approximately $ 1,263,900 under this share repurchase program.

Subsequent to year end, on February 27, 2023, the Board of Directors increased the amount remaining under the program by an additional $ 400,000 , with no stated expiration date.

In November 2023, the Company entered into an accelerated purchase agreement to repurchase $ 120,000 of the Company’s outstanding common stock (“November 2023 ASR”) with CitiBank, N.A.

as counterparty.

The November 2023 ASR was entered into under the Company’s previously announced share repurchase program described above.

In the fourth quarter of fiscal 2023, the Company pre-paid $ 120,000 and received an initial delivery of 438,917 shares of common stock from CitiBank, which represented 75 % of the prepayment amount divided by the closing price of $ 205.05 per share on November 28, 2023.

The final number of shares to be delivered and the average price paid per share will be based on the daily volume weighted average share price during the term of the November 2023 ASR less a discount, which will be completed during the first quarter of fiscal 2024.

Research and Development

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

These costs are a component of “Selling, general, and administrative expenses” on the Consolidated Statements of Earnings.

Research and development expenses were approximately $ 46,000 in 2022, $ 37,000 in 2021, and $ 21,400 in 2020.

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

These costs are a component of “Selling, general, and administrative expenses” in the Consolidated Statements of Earnings.

During the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021, research and development costs were approximately $ 55,000 , $ 46,000 , and $ 37,000 , respectively.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Recently Adopted Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (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.

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

In December 2022, the FASB issued ASU No 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 (ASU 2022-06).

ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

As the Company no longer has any LIBOR based contracts, ASU 2020-04 and ASU 2022-06 did not have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

Supplier Finance Program

In the first quarter of fiscal 2023, the Company adopted Accounting Standards Update No.

2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations , as well as early adopted the amendment on rollforward information.

During fiscal 2019, the Company entered into an agreement with a third-party financial institution to facilitate a supplier finance program that allows qualifying suppliers to sell their receivables from the Company to the financial institution.

These participating suppliers negotiate their outstanding receivable arrangements directly with the financial institution and the Company’s rights and obligations to suppliers are not impacted.

The Company has no economic interest in a supplier’s decision to enter into these agreements.

Once a qualifying supplier elects to participate in the supplier finance program and reaches an agreement with a financial institution, they elect which individual Company invoices they sell to the financial institution.

The Company’s obligation is to make payment in the invoice amount negotiated with participating suppliers to the financial institution on the invoice due date, regardless of whether the individual invoice is sold by the supplier to the financial institution.

The financial institution pays the supplier on the invoice due date for any invoices that were not previously sold under the supplier finance program.

The invoice amounts and scheduled payment terms are not impacted by the suppliers’ decisions to sell amounts under these arrangements.

The payment of these obligations is included in “Cash flows from operating activities” in the Consolidated Statements of Cash Flows.

As of December 30, 2023 and December 31, 2022, there were $ 41,916 and $ 48,880 of outstanding payment obligations, respectively, that were sold to the financial institution under the Company’s supplier finance program included in “Accounts payable” in the Consolidated Balance Sheets.

Confirmed obligations outstanding as of December 31, 2022

Invoices confirmed during the period

Confirmed invoices paid during the period

Confirmed obligations outstanding as of December 30, 2023

Redeemable Noncontrolling Interests

Subsequent to the issuance of the Company’s Consolidated Financial Statements as of and for the year ended December 31, 2022, the Company identified an error in the presentation of “Noncontrolling interests in consolidated subsidiaries” of $ 60,865 as of December 31, 2022 , $ 26,750 as of December 25, 2021 , and $ 25,774 as of December 26, 2020 , that has been corrected in the current year.

Such amounts were previously reported within “Total shareholders’ equity” and have been revised in the December 31, 2022 Consolidated Balance Sheets and the Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests to be presented as “Redeemable noncontrolling interests” outside of “Total shareholders’ equity”.

We have evaluated the materiality of this error based on an analysis of quantitative and qualitative factors and concluded it was not material to the prior period financial statements, individually or in aggregate.

Noncontrolling interests with redemption features that are not solely within the Company’s control are considered redeemable noncontrolling interests.

The Company has redeemable noncontrolling interests in certain entities.

The seller can require the Company to purchase their remaining ownership, known as a put right, for an amount and on a date specified in the applicable operating agreement.

Likewise, the Company can require the seller to sell the Company their remaining ownership based on the same amount and timing, known as a call option.

As a result of these redemption features, the Company records the noncontrolling interests as redeemable and classifies the balances in temporary equity in the Consolidated Balance Sheets initially at its acquisition-date fair value.

The Company adjusts the redeemable noncontrolling interests each reporting period for the net income (loss) attributable to the noncontrolling interests and any redemption value adjustments.

The redeemable noncontrolling interest is accreted to the future redemption value using the effective interest method up to the date on which the put right becomes effective.

Any accretion adjustment in the current reporting period of the redeemable noncontrolling interest is offset against retained earnings and impacts earnings used in the calculation of earnings per share in the reporting period.

As of December 30, 2023 and December 31, 2022, the redeemable noncontrolling interests were $ 62,792 and $ 60,865 , respectively.

The ultimate amount paid for the redeemable noncontrolling interests could be significantly different because the redemption amounts depend on the future results of operations of the businesses.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

Recently Issued Accounting Pronouncements (Not Yet Adopted)

In September 2022, the FASB issued Accounting Standards Update No.

2022-04 (ASU 2022-04), Liabilities - Supplier Finance Programs (Topic 450-50):

Disclosure of Supplier Finance Program Obligations , which requires all buyers that use supplier finance programs to enhance the transparency of such programs to allow financial statement users to understand the effect on working capital, liquidity, and cash flows.

The new guidance requires disclosure of key terms of the program, including a description of the payment terms, payment timing, and assets pledged as security or other forms of guarantees provided to the finance provider or intermediary.

Other requirements include the disclosure of the amount that remains unpaid as of the end of the reporting period, a description of where these obligations are presented in the balance sheet, and a rollforward of the obligation during the annual period.

The guidance is effective in the first quarter of 2023, except for the rollforward, which is effective in 2024.

Early adoption is permitted.

The new guidance will have no effect on the Company’s results of operations as the changes are primarily disclosure related.

The Company intends to adopt the new standard in 2023 with enhanced disclosure where required.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which improves the disclosures about reportable segments including more detailed information about a reportable segment’s expenses.

This guidance will be effective for the fiscal year ending December 28, 2024 and the interim periods thereafter, with early adoption permitted.

The guidance will have no effect on the Company’s results of operations as the changes are primarily disclosure related.

In December 2023, the FASB issued Accounting Standards Update No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which enhances the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.

This guidance will be effective on a prospective basis for the fiscal year ending December 27, 2025, with early adoption permitted.

The guidance will have no effect on the Company’s results of operations as the changes are primarily disclosure related.

(2) ACQUISITIONS

Acquisitions of Businesses

On June 1, 2022, the Company acquired approximately 51 % of ConcealFab for $ 39,287 in cash (net of cash acquired) and subject to working capital adjustments.

Approximately $ 1,850 of the purchase price is contingent on seller representations and warranties that will be settled within 18 months of the acquisition date.

On August 31, 2023, the Company acquired HR Products for $ 58,044 Australian dollars ($ 37,302 United States (“U.S.”) dollars) in cash (net of cash acquired) and subject to working capital adjustments.

Of this amount, $ 7,200 Australian dollars ($ 4,626 U.S.

dollars) was withheld by the Company at closing as a retention fund, to be settled in two equal payments at 12 and 24 months from the acquisition date for contingencies and disagreements.

HR Products provides a broad range of irrigation products to serve the agriculture and landscaping industries and its operations are reported in the Agriculture segment.

The acquisition strengthens the Company’s value proposition to customers in the key agriculture market of Australia by expanding its geographic footprint and accelerating its aftermarket parts presence.

The amount allocated to goodwill is attributable to anticipated synergies and other intangibles that do not qualify for separate recognition and is no t deductible for tax purposes.

The Company is currently completing its fair value assessment and expects to finalize the purchase price allocation by the third quarter of fiscal 2024.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed of HR Products as of the date of acquisition:

Current assets

Property, plant, and equipment

Customer relationships

Other non-current assets

Total fair value of assets acquired

Current liabilities

Operating lease liabilities

Deferred income taxes

Total fair value of liabilities assumed

Net assets acquired

On June 1, 2022, the Company acquired approximately 51 % of ConcealFab for $ 39,287 in cash (net of cash acquired).

Approximately $ 1,850 of the purchase price was contingent on seller representations and warranties that were settled in the fourth quarter of fiscal 2023.

ConcealFab is located in Colorado Springs, Colorado, and its operations are reported in the Infrastructure segment.

The acquisition was made to allow the Company to incorporate innovative 5G infrastructure and passive intermodulation mitigation solutions into the Company’s advanced infrastructure portfolio.

Goodwill is not deductible for tax purposes.

The acquisition was made to allow the Company to incorporate innovative 5G infrastructure and passive intermodulation mitigation solutions into its advanced Infrastructure portfolio.

Goodwill was not 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.

The Company expects to finalize the purchase price allocation early in the first quarter of 2023.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed of ConcealFab as of the date of acquisition:

The Company finalized the purchase price allocation in the first quarter of fiscal 2023.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

As of June 1,

Pursuant to the operating agreement and subject to the terms and conditions thereof, the minority owners have the right to sell all of the remaining interest in ConcealFab to the Company, and the Company has the right to purchase all of the remaining interest in ConcealFab from the minority owners, in each case generally at any time following the fifth anniversary of the effective date of the transaction.

The purchase price for any remaining interest put to, or called by, the Company will be determined based on a pre-defined formula as stated in the operating agreement.

As a result of this redemption feature, the Company recorded the noncontrolling interest as redeemable and classified it in temporary equity within the Consolidated Balance Sheets.

See Note 1 for discussion of the Company’s redeemable noncontrolling interests.

The following table summarizes the fair values of the assets acquired and liabilities assumed of ConcealFab as of the date of acquisition:

Current assets

Property, plant, and equipment

Customer relationships

Property, plant & equipment

Other non-current assets

Total fair value of assets acquired

2 unchanged sentences

Operating lease liabilities

Deferred taxes

Other noncurrent liabilities

Deferred income taxes

Other non-current liabilities

Total fair value of liabilities assumed

Non-controlling interest in consolidated subsidiaries

Redeemable noncontrolling interest

Net assets acquired

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 Agriculture segment.

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

The amount allocated to goodwill was primarily attributable to anticipated synergies and other intangibles that do no t qualify for separate recognition.

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

(2) ACQUISITIONS – CONTINUED

Goodwill was no t deductible for tax purposes, the trade name was assigned an estimated useful life of seven years , and the developed technology asset was assigned an estimated useful life of five years .

The amount allocated to goodwill was primarily attributable to anticipated synergies and other intangibles that did no t qualify for separate recognition.

See Note 8 for details of impairments of goodwill and other intangible assets recognized during the fiscal year ended December 30, 2023.

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

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

The following table summarizes the fair values of the assets acquired and liabilities assumed of Prospera as of the date of acquisition:

As of May 12,

Current assets

Property, plant, and equipment

Developed technology

Property, plant & equipment

Total fair value of assets acquired

Current liabilities

Deferred taxes

Deferred income taxes

Total fair value of liabilities assumed

Net assets acquired

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

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

1 unchanged sentence

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 Agriculture segment.

The 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 eight years .

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

Goodwill was no t deductible for tax purposes and the customer relationships will be amortized over eight years .

The amount allocated to goodwill was primarily attributable to anticipated synergies and other intangibles that do no t qualify for separate recognition.

The Company finalized the purchase price allocation 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 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 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 eight years .

The acquisition of Solbras, located in Brazil, was made to allow the Company to expand its product offerings in the Agriculture 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 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.

The acquisition was made to expand the Company’s utility substation product offering.

In the purchase price allocation, goodwill of $ 1,100 , customer relationships of $ 4,000 , and other intangibles of $ 500 were recorded.

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

The Company finalized the purchase price allocation in the second quarter of fiscal 2022.

Proforma disclosures were omitted for these acquisitions as they do not have a significant impact on the Company’s financial results.

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

Acquisitions of Noncontrolling Interests

In August 2022, the Company acquired the remaining 9 % of Convert Italia S.p.A.

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

Acquisitions of Redeemable Noncontrolling Interests

Subsequent to fiscal 2023, on January 26, 2024, the Company acquired approximately 9 % of ConcealFab for $ 7,227 .

Additionally, subsequent to fiscal 2023, the minority owner of a consolidated subsidiary exercised their put option to require the Company to purchase their remaining ownership.

As such, $ 10,518 is expected to be paid to acquire the remaining portion of this entity prior to the end of the first quarter of fiscal 2024.

On August 10, 2022, the Company acquired the remaining 9 % of Convert Italia S.p.A.

for $ 3,046 .

As this transaction was for the acquisition of all remaining shares of consolidated subsidiary with no change in control, it was recorded within shareholders’ equity and as a financing cash flow in the Consolidated Statements of Cash Flows.

In May 2022, the Company acquired the remaining 20 % of Valmont West Coast Engineering, Ltd.

On May 10, 2022, the Company acquired the remaining 20 % of Valmont West Coast Engineering, Ltd.

for $ 4,292 .

As this transaction was for the acquisition of all of the remaining shares of consolidated subsidiary with no change in control, it was recorded within shareholders’ equity and as a financing cash flow in the Consolidated Statements of Cash Flows.

(2) ACQUISITIONS – CONTINUED

In February 2020, the Company acquired the remaining 49 % of AgSense that it did not own for $ 43,983 , which includes a holdback payment of $ 2,200 that was made in the second quarter of 2020.

The accounting for owning 100 % of AgSense resulted in the recognition of a deferred tax asset of approximately $ 7,700 .

In December 2020, the Company acquired the remaining 40 % of Torrent Engineering and Equipment that it did not own for $ 3,500 .

In the first quarter of 2020, the Company acquired 16 % of the remaining 25 % that it did not own of Convert Italia S.p.A.

for a cash payment of $ 11,750 .

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

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

These transactions were for the acquisitions of portions of the remaining shares of consolidated subsidiaries with no changes in control.

(3) DIVESTITURES

On April 30, 2023, the Company completed the sale of Torrent Engineering and Equipment, an integrator of prepackaged pump stations in Indiana, reported in the Agriculture segment, for net proceeds of $ 6,369 .

In the second quarter of fiscal 2023, a pre-tax gain of $ 2,994 was reported in “ Other income (expenses) ” in the Consolidated Statements of Earnings.

On November 30, 2022, the Company completed the sale of Valmont SM, the offshore wind energy structures business in Denmark, reported in the Other segment.

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

The offshore wind energy structures business’ historical annual sales, operating profit, and net assets are not significant for discontinued operations presentation.

The offshore wind energy structures business had operating income of $ 2,259 for the year ended December 31, 2022, and an operating loss of $ 40,192 (inclusive of a $ 27,900 impairment of long-lived assets) for the year ended December 25, 2021.

The Company received Danish Krone 90,000 (U.S.

$ 12,570 ) at closing with an additional Danish Krone 28,000 (U.S.

$ 4,027 ) held in an escrow account subject to normal closing conditions before it will be released to the Company.

The assets and liabilities of the offshore wind energy structures business at closing on November 30, 2022 were as follows:

The offshore wind energy structures business’ historical annual sales, operating income, and net assets were not significant for discontinued operations presentation.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

The offshore wind energy structures business had an operating income of $ 2,259 for the fiscal year ended December 31, 2022, and an operating loss of $ 40,192 (inclusive of an approximately $ 27,900 impairment of long-lived assets) for the fiscal year ended December 25, 2021.

The Company received 90,000 Danish kroner ($ 12,570 U.S.

dollars) at closing.

An additional 15,000 Danish kroner ($ 2,189 U.S.

dollars) had been held in an escrow account subject to normal closing conditions before it was released to the Company in the first quarter of fiscal 2024.

The assets and liabilities of the offshore wind energy structures business as of closing on November 30, 2022 were as follows:

Cash and cash equivalents

1 unchanged sentence

Contract assets

Prepaid expenses and other assets

Net property, plant, and equipment

Intangible assets

Prepaid expenses and other current assets

Property, plant, and equipment, net

Other intangible assets, net

Other non-current assets

Accounts payable

Contract liabilities

Accrued expenses

Other accrued expenses

Deferred income taxes

Total liabilities

The pre-tax loss from divestiture is reported in “Other income (expenses)”.

The loss is comprised of the proceeds and an asset recognized for the escrow funds not yet released from buyer, less deal-related costs and the net assets of the business, which resulted in a loss of $ 12,123 .

In addition to this amount is a $ 21,150 realized loss on foreign exchange translation adjustments and net investment hedges previously reported in shareholders’ equity.

Net assets divested

The pre-tax loss from divestiture was reported in “Other income (expenses)” in the Consolidated Statements of Earnings for the fiscal year ended December 31, 2022.

The loss was comprised of the proceeds and an asset recognized for the escrow funds not at the time released from the buyer, less deal-related costs, and the net assets of the business, which resulted in a loss of $ 12,123 .

In addition to this amount was a $ 21,150 realized loss on foreign exchange translation adjustments and net investment hedges previously reported in “Shareholders’ equity” in the Consolidated Balance Sheets.

Pre-tax loss from divestitures, before recognition of currency translation loss

1 unchanged sentence

Net pre-tax loss from divestiture of offshore wind energy structures business

The transaction did not result in a taxable capital loss.

The transaction did not result in a tax-deductible capital loss.

(4) REALIGNMENT ACTIVITIES

During the third quarter of fiscal 2023, management initiated a plan to streamline segment support across the Company and reduce costs through an organizational realignment program (the “Realignment Program”).

The Realignment Program provided for a reduction in force through a voluntary early retirement program and other headcount reduction actions, which were completed as of December 30, 2023.

The Board of Directors authorized the incurrence of cash charges up to $ 36,000 in connection with the Realignment Program.

During the fiscal year ended December 30, 2023, the Company recorded the following pre-tax expenses for the Realignment Program:

Infrastructure

Severance and other employee benefit costs

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(4) RESTRUCTURING ACTIVITIES

During 2020, the Company executed certain regional restructuring activities (the "2020 Plan") and a U.S.

specific early retirement program.

The 2020 Plan included the closure of one U.S.

galvanizing facility.

All 2020 restructuring activities were completed by December 26, 2020.

The Company recorded the following pre-tax expenses:

Infrastructure

Other cash restructuring expenses

Impairments of fixed assets/net loss on disposals

Total cost of sales

Other cash restructuring expenses

Impairments of assets / net loss on disposals

Total selling, general and administrative expenses

Consolidated total

Changes in liabilities recorded for the Realignment Program were as follows:

Balance as of

Costs Paid or

Balance as of

Severance and other employee benefit costs

(5) CASH FLOW SUPPLEMENTARY INFORMATION

The Company considers all highly liquid temporary cash investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents.

Cash payments for interest and income taxes (net of refunds) for the fifty-three weeks ended December 31, 2022 and the fifty-two weeks ended December 25, 2021 and December 26, 2020 were as follows:

The sale of the offshore wind energy structures business in 2022 included a hold back receivable contingent on normal closing conditions that is expected to be resolved in the first half of 2023.

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

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.

Cash payments for interest and income taxes (net of refunds) for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021 were as follows:

Fiscal Year Ended

(6) INVENTORIES

Inventories consisted of the following at December 31, 2022 and December 25, 2021:

Inventories as of December 30, 2023 and December 31, 2022 consisted of the following:

Raw materials and purchased parts

1 unchanged sentence

Finished goods and manufactured goods

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

Total inventories

(7) PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment, at cost, consist of the following:

Property, plant, and equipment, at cost, as of December 30, 2023 and December 31, 2022 consisted of the following:

Land and improvements

4 unchanged sentences

Construction in progress

(8) GOODWILL AND INTANGIBLE ASSETS

Amortized Intangible Assets

The components of amortized intangible assets at December 31, 2022 and December 25, 2021 were as follows:

December 31, 2022

Customer Relationships

Patents & Proprietary Technology

December 25, 2021

Customer Relationships

Patents & Proprietary Technology

Amortization expense for intangible assets was $ 22,120 , $ 21,320 , and $ 18,147 for the fiscal years ended December 31, 2022, December 25, 2021, and December 26, 2020, 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 offshore wind energy structures business.

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

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

(8) GOODWILL AND INTANGIBLE ASSETS – CONTINUED

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

The useful lives assigned to finite‑lived intangible assets included consideration of factors such as the Company’s past and expected experience related to customer retention rates, the remaining legal or contractual life of the underlying arrangement that resulted in the recognition of the intangible asset, and the Company’s expected use of the intangible asset.

Non-Amortized Intangible Assets

Intangible assets with indefinite lives are not amortized.

The carrying values of these trade names at December 31, 2022 and December 25, 2021 were as follows:

Convert Italia S.p.A.

Ingal EPS / Ingal Civil Products

In its determination of these intangible assets as indefinite‑lived, the Company considered such factors as its expected future use of the intangible asset, legal, regulatory, technological, and competitive factors that may impact the useful life or value of the intangible asset, and the expected costs to maintain the value of the intangible asset.

The Company expects that these intangible assets will maintain their value indefinitely.

Accordingly, these assets are not amortized.

Indefinite-lived intangibles, although not amortized, are still subject to annual impairment assessments, and interim date assessments should events arise that suggest their value may be diminished.

The Company’s trade names were tested for impairment as of August 27, 2022.

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 year 2021, an impairment test was required when the Company received clarifying information on the competitive environment of the offshore wind energy structures business.

As a result, an impairment charge of approximately $ 2,013 was recognized against the related 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.

As a result, an impairment charge of approximately $ 3,900 was recognized against these two trade names in fiscal year 2020.

Total property, plant, and equipment, at cost

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(8) GOODWILL AND INTANGIBLE ASSETS – CONTINUED

(8) GOODWILL AND INTANGIBLE ASSETS

The carrying amount of goodwill by segment as of December 30, 2023 and December 31, 2022 was as follows:

Infrastructure

Gross balance at December 25, 2021

Gross balance as of December 31, 2022

Accumulated impairment losses

Balance at December 25, 2021

Balance as of December 31, 2022

Foreign currency translation

Balance at December 31, 2022

Balance as of December 30, 2023

Infrastructure

Gross balance at December 26, 2020

Gross balance as of December 25, 2021

Accumulated impairment losses

Balance at December 26, 2020

Balance as of December 25, 2021

Foreign currency translation

Balance at December 25, 2021

The Company’s annual impairment test of goodwill was performed as of August 27, 2022, 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, the Company 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 year 2022, no goodwill impairment was recorded.

Balance as of December 31, 2022

In the third quarter of fiscal 2023, the Company performed its annual goodwill impairment assessment utilizing a quantitative test on all of its reporting units using a measurement date of September 2, 2023.

The fair values of the reporting units were estimated using a discounted cash flow analysis which requires the Company to estimate the future cash flows as well as select a risk-adjusted discount rate to measure the present value of the anticipated cash flows.

The carrying value for two of the reporting units, Agriculture Technology and India Structures, exceeded their respective estimated fair value.

As a result, impairments of $ 120,000 and $ 1,915 were recognized in the Agriculture and Infrastructure segments, respectively, and recorded as “Impairment of goodwill and intangible assets” in the Consolidated Statements of Earnings.

For the Agriculture Technology reporting unit, the recent less favorable outlook for the agriculture market in North America and the slower-than-expected adoption rate of the agronomy software solution led to a reduction in forecasted sales.

These reduced forecasted cash flows resulted in a lower fair value of the Agriculture Technology reporting unit when discounted back to the present value.

For the India Structures reporting unit, assumptions around future cash flows including working capital requirements resulted in the impairment of its goodwill.

Intangible Assets

The components of intangible assets as of December 30, 2023 and December 31, 2022 were as follows:

December 30, 2023

December 31, 2022

Amortizing intangible assets:

Customer relationships

Patents & proprietary technology

Non-amortizing intangible assets:

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Amortizing intangible assets carry a remaining weighted average life of approximately four years .

Amortization expense was $ 19,455 , $ 22,120 , and $ 21,320 for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021, respectively.

Based on amortizing intangible assets recognized in the Consolidated Balance Sheets as of December 30, 2023, amortization expense is estimated to average $ 11,158 for each of the next five fiscal years.

The Company’s indefinite-lived trade names were tested for impairment as of September 2, 2023.

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

Based on this evaluation, the carrying value of one trade name exceeded its estimated fair value.

An impairment charge of $ 1,656 was recognized within the Infrastructure segment and recorded as “Impairment of goodwill and intangible assets” in the Consolidated Statements of Earnings.

In the fourth quarter of fiscal 2021, an impairment test was required when the Company received clarifying information on the competitive environment of the offshore wind energy structures business.

As a result, an impairment charge of approximately $ 2,013 was recognized against the related trade name and recorded as “Impairment of goodwill and intangible assets” in the Consolidated Statements of Earnings.

In the third quarter of fiscal 2023, the Company tested the recoverability of a certain amortizing proprietary technology intangible asset related to Prospera included within the Agriculture Technology reporting unit due to identified impairment indicators.

The Company determined the carrying value of the asset exceeded the total undiscounted estimated future cash flows and reduced the asset to its fair value.

An impairment charge of $ 17,273 was recognized within the Agriculture segment and recorded as “Impairment of goodwill and intangible assets” in the Consolidated Statements of Earnings.

In the fourth quarter of fiscal 2021, an impairment test was required when the Company received clarifying information on the competitive environment of the offshore wind energy structures business.

As a result, an impairment charge of $ 4,483 was recognized against the remaining net book value of the related customer relationships and recorded as “Impairment of goodwill and intangible assets” in the Consolidated Statements of Earnings.

(9) BANK CREDIT ARRANGEMENTS

The Company maintains various lines of credit for short-term borrowings totaling $ 125,034 available at December 31, 2022.

The Company maintains various lines of credit for short-term borrowings totaling $ 39,336 available as of December 30, 2023.

As of December 30, 2023 and December 31, 2022, $ 3,205 and $ 5,846 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 was 6.52 % at December 31, 2022.

The unused and available borrowings under the lines of credit were $ 119,188 at December 31, 2022.

The weighted average interest rate on short-term borrowings was 5.16 % as of December 30, 2023.

The unused and available borrowings under the lines of credit were $ 36,131 as of December 30, 2023.

The lines of credit can be modified at any time at the option of the banks.

The Company pays no fees in connection with unused lines of credit.

(10) INCOME TAXES

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries are as follows:

Earnings before income taxes and equity in loss of nonconsolidated subsidiaries for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021 were as follows:

Fiscal Year Ended

United States

Earnings before income taxes and equity in loss of nonconsolidated subsidiaries

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(10) INCOME TAXES – CONTINUED

Income tax expense (benefit) consists of:

The reconciliations of the statutory federal income tax rate and the effective tax rate follows:

Income tax expense (benefit) for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021 consisted of:

Fiscal Year Ended

Total current income tax expense

Total deferred income tax expense (benefit)

Total income tax expense

The reconciliations of the statutory federal income tax rate and the effective tax rate for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021 were as follows:

Fiscal Year Ended

Statutory federal income tax rate

3 unchanged sentences

Changes in unrecognized tax benefits

Goodwill and intangible impairment

Loss on divestiture of offshore wind energy structures business

Fiscal year 2022 includes $ 8,166 of tax expense related to the divestiture of the offshore wind energy structures business for which no benefit has been recorded.

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

Impairment of long-lived assets

Excess tax benefit on equity compensation

Loss from divestiture of offshore wind energy structures business

Effective tax rate

The fiscal year ended December 30, 2023 included $ 28,079 of tax expense related to non-tax deductible impairment of goodwill.

The fiscal year ended December 31, 2022 included $ 8,166 of tax expense related to the divestiture of the offshore wind energy structures business for which no benefit was recorded.

The fiscal year ended December 25, 2021 included $ 1,894 of U.S.

tax benefits related to foreign taxes paid offset by $ 5,102 of valuation allowance recorded against the offshore wind energy structures business’ 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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(10) INCOME TAXES – CONTINUED

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 assets/liabilities are as follows:

The tax effects of significant items comprising the Company’s net deferred income tax assets (liabilities) as of December 30, 2023 and December 31, 2022 were as follows:

Deferred income tax assets:

1 unchanged sentence

Tax credits and loss carryforwards

Defined benefit pension liability

Inventory allowances

1 unchanged sentence

Lease liabilities

Research and development expenditures

Deferred compensation

8 unchanged sentences

Total deferred income tax liabilities

Net deferred income tax asset (liability)

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

Balance Sheet Caption

Net deferred income tax assets (liabilities)

Deferred income tax assets (liabilities) were presented as follows as of December 30, 2023 and December 31, 2022 in the Consolidated Balance Sheets:

Other non-current assets

Deferred income taxes

Net deferred income tax asset (liability)

Net deferred income tax assets (liabilities)

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

The Company’s belief that realization of its net deferred tax assets is more likely than not is based on, among other factors, changes in operations that have occurred in recent years and available tax planning strategies.

At December 31, 2022 and December 25, 2021 respectively, there were $ 67,249 and $ 83,690 relating to tax credits and loss carryforwards.

The Company’s belief that realization of its net deferred tax assets is more likely than not is based on, among other factors, changes in operations that have occurred in recent fiscal years and available tax planning strategies.

As of December 30, 2023 and December 31, 2022, respectively, there were $ 58,519 and $ 67,249 relating to tax credits and loss carryforwards.

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 wind energy structures business, based in Denmark, would generate future taxable income so a valuation allowance of $ 5,102 was recognized against their tax loss carryforwards.

During fiscal year 2022, the offshore wind energy structures business was sold.

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 31, 2022 that are associated with tax loss and tax credit carryforwards not reduced by valuation allowances expire in periods starting in 2023.

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

Uncertain tax positions included in other non-current liabilities are evaluated in a two-step process, whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than fifty percent likely to be realized upon ultimate settlement with the related tax authority.

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

The deferred tax assets as of December 30, 2023 that are associated with tax loss and tax credit carryforwards not reduced by valuation allowances expire in periods starting in 2024.

Uncertain tax positions included in “Other non-current liabilities” in the Consolidated Balance Sheets are evaluated in a two-step process, whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than fifty percent likely to be realized upon ultimate settlement with the related tax authority.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(10) INCOME TAXES – CONTINUED

The following summarizes the activity related to the unrecognized tax benefits in 2022 and 2021:

Gross unrecognized tax benefits—beginning of year

The following summarizes the activity related to the unrecognized tax benefits for the fiscal years ended December 30, 2023 and December 31, 2022:

Fiscal Year Ended

Gross unrecognized tax benefits—beginning of period

Gross increases—tax positions in prior period

Gross decreases—tax positions in prior period

Gross increases—current‑period tax positions

Settlements with taxing authorities

Lapse of statute of limitations

Gross unrecognized tax benefits—end of year

There are approximately $ 1,141 of uncertain tax positions for which reversal is reasonably possible during the next 12 months due to the closing of the statute of limitations.

The nature of these uncertain tax positions is generally the computation of a tax deduction or tax credit.

During 2022, the Company recorded a reduction of its gross unrecognized tax benefit of $ 208 with $ 165 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the United States.

During 2021, the Company recorded a reduction of its gross unrecognized tax benefit of $ 749 with $ 592 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the United States.

In addition to these amounts, there was an aggregate of $ 172 and $ 1,758 of interest and penalties at December 31, 2022 and December 25, 2021, respectively.

Lapses of statutes of limitation

Gross unrecognized tax benefits—end of period

There are approximately $ 1,514 of uncertain tax positions for which reversal is reasonably possible during the next 12 months due to the closing of the statutes of limitation.

The nature of these uncertain tax positions is generally the computation of a tax deduction or a tax credit.

During the fiscal year ended December 30, 2023, the Company recorded a reduction of its gross unrecognized tax benefit of $ 742 , with $ 586 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the U.S.

During the fiscal year ended December 31, 2022, the Company recorded a reduction of its gross unrecognized tax benefit of $ 208 , with $ 165 recorded as a reduction of income tax expense, due to the expiration of statutes of limitation in the U.S.

In addition to these amounts, there was an aggregate of $ 442 and $ 172 of interest and penalties as of December 30, 2023 and December 31, 2022, respectively.

The Company’s policy is to record interest and penalties directly related to income taxes as “Income tax expense” in the Consolidated Statements of Earnings.

3 unchanged sentences

statutes of limitation.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $ 2,447 and $ 4,324 at December 31, 2022 and December 25, 2021, respectively.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $ 4,372 and $ 2,447 as of December 30, 2023 and December 31, 2022, respectively.

The Organisation for Economic Co-operation and Development (“OECD”) has released the Pillar Two Model Rules Framework (the “Framework”) defining the global minimum tax rules, which contemplate a minimum tax rate of 15% and continues to release additional guidance.

Although it is uncertain whether the U.S.

will enact legislation to adopt the minimum tax directive, certain countries in which the Company operates have adopted legislation effective January 1, 2024, and other countries are in the process of introducing legislation to implement the minimum tax directive.

Further, the OECD issued administrative guidance providing transition and safe harbor rules that could delay the impact of the minimum tax directive.

The Company will continue to monitor the implementation of the Framework by the countries in which the Company operates.

The Company does not expect the Framework to have a material impact on its Consolidated Financial Statements.

(11) LONG-TERM DEBT

Long-term debt is as follows:

5.00 % senior unsecured notes due 2044 (a)

5.25 % senior unsecured notes due 2054 (b)

Long-term debt as of December 30, 2023 and December 31, 2022 was as follows:

5.00 % senior unsecured notes due in fiscal 2044 (a)

5.25 % senior unsecured notes due in fiscal 2054 (b)

Unamortized discount on 5.00 % and 5.25 % senior unsecured notes (a) (b)

4 unchanged sentences

Long-term debt, excluding current installments

(a) The 5.00 % senior unsecured notes due 2044 include an aggregate principal amount of $ 450,000 on which interest is paid and an unamortized discount balance of $ 12,820 at December 31, 2022.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(a) The 5.00 % senior unsecured notes due in fiscal 2044 include an aggregate principal amount of $ 450,000 on which interest is paid and an unamortized discount balance of $ 12,503 as of December 30, 2023.

The notes bear interest at 5.00 % per annum and are due on October 1, 2044.

2 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 31, 2022

(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 $ 7,233 at December 31, 2022.

(b) The 5.25 % senior unsecured notes due in fiscal 2054 include an aggregate principal amount of $ 305,000 on which interest is paid and an unamortized discount balance of $ 7,162 as of December 30, 2023.

The notes bear interest at 5.25 % per annum and are due on October 1, 2054.

2 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 31, 2022

(Dollars in thousands, except per share amounts)

(11) LONG-TERM DEBT – CONTINUED

5 unchanged sentences

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

(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.;

(i) term Secured Overnight Financing Rate (“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 S&P Global Ratings and Moody’s Investors Service, Inc.;

(ii) the higher of

1 unchanged sentence

● the overnight bank rate plus 50 basis points, and

● term SOFR (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, 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 31, 2022, the Company had $ 140,513 outstanding borrowings under the revolving credit facility.

● term SOFR (based on a one-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 unsecured long-term debt published by S&P Global Ratings and Moody’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 S&P Global Ratings and Moody’s Investors Service, Inc.

As of December 30, 2023, the Company had $ 377,899 outstanding borrowings under the revolving credit facility.

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 31, 2022, the Company had the ability to borrow $ 659,401 under this facility, after consideration of standby letters of credit of $ 162 associated with certain insurance obligations.

The Company also maintains certain short-term bank lines of credit totaling $ 125,034 , of which $ 119,188 was unused at December 31, 2022.

As of December 30, 2023, the Company had the ability to borrow $ 421,939 under this facility, after consideration of standby letters of credit of $ 162 associated with certain insurance obligations.

The Company also maintains certain short-term bank lines of credit totaling $ 39,336 , of which $ 36,131 were unused as of December 30, 2023.

The revolving credit facility includes a financial leverage covenant.

The Company was in compliance with this covenant at December 31, 2022.

The minimum aggregate maturities of long-term debt for each of the five years following 2022 are:

$ 1,194 , $ 860 , $ 679 , $ 141,081 , and $ 10 .

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.

(12) STOCK-BASED COMPENSATION

The Company maintains stock‑based compensation plans approved by the shareholders, which provide that the Human Resource Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and bonuses of common stock.

At December 31, 2022, 1,722,643 shares of common stock remained available for issuance under the plans.

Shares and options issued and available are subject to changes in

The Company was in compliance with this covenant as of December 30, 2023.

The minimum aggregate maturities of long-term debt for each of the five fiscal years following the fiscal year ended December 30, 2023 are $ 719 ;

The obligations arising under the 5.00 % senior unsecured notes due in fiscal 2044, the 5.25 % senior unsecured notes due in fiscal 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 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

capitalization.

(12) STOCK-BASED COMPENSATION

The Company maintains stock‑based compensation plans approved by the shareholders, which provide that the Human Resources Committee of the Board of Directors may grant incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and bonuses of common stock.

As of December 30, 2023, 1,513,652 shares of common stock remained available for issuance under the plans.

Shares and options issued and available are subject to changes in capitalization.

The Company’s policy is to issue shares upon exercise of stock options or vesting of restricted stock units or issuance of restricted stock from treasury shares held by the Company.

Under the stock option plans, the exercise price of each option equals the market price at the time of the grant.

Options vest beginning on the first anniversary of the grant in equal amounts over three years or on the fifth anniversary of the grant.

Expiration of grants is seven to ten years from the date of grant.

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

The Company recorded $ 41,850 , $ 28,720 , and $ 14,874 of compensation expense (included in selling, general and administrative expenses) in the 2022, 2021, and 2020 fiscal years for all share-based compensation programs, respectively.

The associated tax benefits recorded in the 2022, 2021, and 2020 fiscal years was $ 10,463 , $ 7,180 , and $ 3,719 , respectively.

(12) STOCK-BASED COMPENSATION – CONTINUED

At December 31, 2022, the amount of unrecognized stock option compensation expense, to be recognized over a weighted average period of 2.37 years, was approximately $ 6,814 .

Compensation expense for stock options was $ 3,120 in 2022, $ 2,538 in 2021, and $ 2,628 in 2020.

Stock options granted under the plans call for the exercise price of each option to equal the closing market price as of the date of the grant.

Options vest beginning on the first anniversary of the grant date in equal amounts over three years or on the grant’s fifth anniversary date.

Expiration of grants is seven to ten years from the date of the award.

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

For the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021, the Company recorded $ 39,219 , $ 41,850 , and $ 28,720 of compensation expense (included in “Selling, general, and administrative expenses” in the Consolidated Statements of Earnings) for all share-based compensation programs, respectively.

The associated tax benefits recorded for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021, were $ 7,092 , $ 10,463 , and $ 7,180 , respectively.

As of December 30, 2023, the amount of unrecognized stock option compensation expense, to be recognized over a weighted average period of 2.00 years, was approximately $ 6,408 .

During the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021, compensation expense for stock options was $ 3,687 , $ 3,120 , and $ 2,538 , respectively.

The Company uses a binomial option pricing model to value its stock options.

The fair value of each option grant made in 2022, 2021 and 2020 was estimated using the following assumptions:

The fair value of each option grant made as of December 30, 2023, December 31, 2022, and December 25, 2021 was estimated using the following assumptions:

Expected volatility

2 unchanged sentences

Dividend yield

Following is a summary of the stock option activity during 2020, 2021 and 2022:

Outstanding at December 28, 2019

Outstanding at December 26, 2020

Options vested or expected to vest at December 26, 2020

Options exercisable at December 26, 2020

The following is a summary of the stock option activity during the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021:

Outstanding as of December 31, 2022

Outstanding as of December 30, 2023

Options vested or expected to vest as of December 30, 2023

Options exercisable as of December 30, 2023

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

The weighted average per share fair value of options granted during 2020 was $ 45.49 .

Outstanding at December 26, 2020

Outstanding at December 25, 2021

Options vested or expected to vest at December 25, 2021

Options exercisable at December 25, 2021

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

The weighted average per share fair value of options granted during the fiscal year ended December 31, 2023 was $ 72.60 .

Outstanding as of December 25, 2021

Outstanding as of December 31, 2022

Options vested or expected to vest as of December 31, 2022

Options exercisable as of December 31, 2022

The weighted average per share fair value of options granted during the fiscal year ended December 31, 2022 was $ 104.01 .

Outstanding as of December 26, 2020

Outstanding as of December 25, 2021

Options vested or expected to vest as of December 25, 2021

Options exercisable as of December 25, 2021

The weighted average per share fair value of options granted during the fiscal year ended December 25, 2021 was $ 67.81 .

In accordance with shareholder-approved plans, the Human Resources 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.

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.

During the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021, 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):

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(12) STOCK-BASED COMPENSATION – CONTINUED

Outstanding at December 25, 2021

Outstanding at December 31, 2022

Options vested or expected to vest at December 31, 2022

Options exercisable at December 31, 2022

The weighted average per share fair value of options granted during 2022 was $ 104.01 .

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 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 the Consolidated Balance Sheets.

During fiscal 2022, 2021 and 2020, 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):

Fiscal Year Ended

Restricted stock units granted

1 unchanged sentence

Recognized compensation expense

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

During the second half of fiscal 2021, the Company granted 159,982 restricted stock units, worth $ 36,916 , to certain employees of Prospera, of which 50,141 remain outstanding as of December 30, 2023.

These restricted stock units 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 31, 2022 the amount of deferred stock‑based compensation granted, to be recognized over a weighted‑average period of 2.73 years, was approximately $ 50,422 .

Performance-based restricted stock units (“PSU”) awards consist of shares of the Company’s stock which are payable upon the determination that the Company achieve certain established performance targets and can range from 0 % to 200 % of the targeted payout based on the actual results.

PSUs granted in 2022 and 2021 have a performance period of three years .

As of December 30, 2023, the amount of deferred stock‑based compensation granted, to be recognized over a weighted‑average period of 2.12 years, was approximately $ 33,933 .

Performance-based restricted stock units (“PSUs”) awards consist of shares of the Company’s stock which are payable upon the determination that the Company achieves certain established performance targets and can range from 0 % to 200 % of the targeted payout based on the actual results.

PSUs granted in the fiscal years ended December 30, 2023 and December 31, 2022 have a performance period of three years .

The fair value of each PSU granted is equal to the fair market value of the Company’s common stock on the date of grant.

PSUs granted generally have a three years period cliff vesting schedule;

PSUs granted generally have a three-year period cliff vesting schedule;

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.

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

During fiscal 2022, 2021 and 2020, the Company granted PSU awards as follows (which are not included in the above stock plan activity tables):

During the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021, the Company granted PSU awards as follows (which are not included in the above stock plan activity tables):

Fiscal Year Ended

Shares granted

1 unchanged sentence

Recognized compensation expense

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

(13) EARNINGS PER SHARE

The following table provides a reconciliation between basic and diluted earnings per share (“EPS”):

The following table provides a reconciliation between the earnings and average share amounts used to compute both basic and diluted earnings per share:

Fiscal Year Ended

Net earnings attributable to Valmont Industries, Inc.

Weighted average shares outstanding (000’s)

Per share amount

including change in redemption value of redeemable noncontrolling interest:

Net earnings attributable to Valmont Industries, Inc.

Weighted average shares outstanding (000’s)

Per share amount

Change in redemption value of redeemable noncontrolling interest

Net earnings attributable to Valmont Industries, Inc.

including change in redemption value of redeemable noncontrolling interest

Weighted average shares outstanding (000s):

Per share amount

Basic and diluted net earnings and earnings per share in fiscal year 2022 were impacted by a loss from the divestiture of the offshore wind energy structures’ business of $ 33,273 ( no associated tax benefit) ($ 1.54 per share).

Basic and diluted net earnings and earnings per share in fiscal year 2021 were impacted by impairments of long-lived assets (customer relationship intangible asset, trade name, and property, plant and equipment) associated with the offshore wind energy structures business of $ 21,678 after-tax ($ 1.01 per share) and a valuation allowance against the deferred tax assets of the offshore wind energy structures business of $ 5,076 after-tax ($ 0.24 per share).

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

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.

At the end of fiscal years 2022, 2021, and 2020 there were 40,564 , 47,223 , and 0 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.

Dilutive effect of various stock awards

Net earnings per share attributable to common shareholders:

Dilutive effect of various stock awards

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Basic and diluted net earnings and earnings per share in the fiscal year ended December 30, 2023 were impacted by the impairment of certain long-lived assets of $ 136,457 after-tax ($ 6.45 per share) and realignment charges of $ 26,490 after-tax ($ 1.25 per share).

Basic and diluted net earnings and earnings per share in the fiscal year ended December 31, 2022 were impacted by a loss from the divestiture of the offshore wind energy structures business of $ 33,273 ( no associated tax benefit) ($ 1.54 per share).

Basic and diluted net earnings and earnings per share in the fiscal year ended December 25, 2021 were impacted by impairments of long-lived assets associated with the offshore wind energy structures business of $ 21,678 after-tax ($ 1.01 per share) and a valuation allowance against the deferred tax assets of the offshore wind energy structures business of $ 5,076 after-tax ($ 0.24 per share).

As of December 30, 2023, December 31, 2022, and December 25, 2021, there were 127,774 ;

and 47,223 outstanding stock options with exercise prices exceeding the average market price of common stock during the applicable period that were excluded from the computation of diluted earnings per share, respectively.

(14) EMPLOYEE RETIREMENT SAVINGS PLAN

Established under Internal Revenue Code Section 401(k), the Valmont Employee Retirement Savings Plan (“VERSP”) is a defined contribution plan available to all eligible employees.

Participants can elect to contribute up to 60 % of annual pay, on a pre-tax and/or after-tax basis.

Participants can elect to contribute up to 60 % of their annual pay, on a pre-tax and/or after-tax basis.

The Company also makes contributions to the VERSP and a non-qualified deferred compensation plan for certain Company executives.

The 2022, 2021, and 2020 Company contributions to these plans amounted to approximately $ 18,300 , $ 16,000 , and $ 14,800 , respectively.

The Company’s contributions to these plans for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021, amounted to approximately $ 20,000 , $ 18,300 , and $ 16,000 , respectively.

The Company sponsors a fully‑funded, non-qualified deferred compensation plan for certain Company executives who otherwise would be limited in receiving Company contributions into the VERSP under Internal Revenue Service regulations.

The invested assets and related liabilities of these participants were $ 25,008 and $ 29,982 at December 31, 2022 and December 25, 2021, respectively.

Such amounts are included in “Other assets” and “Deferred compensation” on the Consolidated Balance Sheets.

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

Amounts distributed from the Company’s non-qualified deferred compensation plan to participants under the transition rules of section 409A of the Internal Revenue Code were approximately $ 4,691 and $ 8,900 at December 31, 2022 and December 25, 2021, respectively.

The invested assets and related liabilities of these participants were $ 26,803 and $ 25,008 as of December 30, 2023 and December 31, 2022, respectively.

Such amounts are included in “Other non-current assets” and “Deferred compensation” in the Consolidated Balance Sheets.

Amounts distributed from the Company’s non-qualified deferred compensation plan to participants under the transition rules of Section 409A of the Internal Revenue Code were approximately $ 5,476 and $ 4,691 as of December 30, 2023 and December 31, 2022, respectively.

All distributions were made in cash.

(15) FAIR VALUE MEASUREMENTS

The carrying amounts of cash and cash equivalents, receivables, accounts payable, notes payable to banks, and accrued expenses approximate fair value because of the short maturity of these instruments.

The fair values of each of the Company’s long-term debt instruments are based on the amount of future cash flows associated with each instrument discounted using the Company’s current borrowing rate for similar debt instruments of comparable maturity.

The fair value estimates are made at a specific point in time and the underlying assumptions are subject to change based on market conditions.

As of December 30, 2023, the carrying amount of the Company’s long-term debt was $ 1,108,604 with an estimated fair value of approximately $ 1,064,916 .

As of December 31, 2022, the carrying amount of the Company’s long-term debt was $ 872,129 with an estimated fair value of approximately $ 807,281 .

ASC 820 establishes a three‑level hierarchy for fair value measurements based on the transparency of inputs to the valuation of an asset or liability as of the measurement date used.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk.

Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Unobservable inputs for the asset or liability.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(15) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents, receivables, accounts payable, notes payable to banks, and accrued expenses approximate fair value because of the short maturity of these instruments.

The fair value estimates are made at a specific point in time and the underlying assumptions are subject to change based on market conditions.

At December 31, 2022, the carrying amount of the Company’s long-term debt was $ 872,129 with an estimated fair value of approximately $ 807,281 .

At December 25, 2021, the carrying amount of the Company’s long-term debt was $ 951,956 with an estimated fair value of approximately $ 1,175,332 .

ASC 820 establishes a three‑level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date is used.

Inputs refers broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk.

Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Quoted market prices in active markets for identical assets or liabilities.

Observable market based inputs or unobservable inputs that are corroborated by market data.

Unobservable inputs that are not corroborated by market data.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Following is a description of the valuation methodologies used for assets and liabilities measured at fair value.

The categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The following are descriptions of the valuation methodologies used for assets and liabilities measured at fair value:

Trading Securities:

The assets and liabilities recorded for the investments held in the Valmont Deferred Compensation Plan of $ 25,008 ($ 29,982 in 2021 ) represent mutual funds, invested in debt and equity securities, classified as trading securities, considering the employee’s ability to change investment allocation of their deferred compensation at any time.

The Company’s remaining ownership in Delta EMD Pty.

(JSE:DTA) of $ 0 ($ 94 in 2021) is recorded at fair value at December 31, 2022.

Quoted market prices are available for these securities in an active market and therefore categorized as a Level 1 input.

These securities are included in “Other assets” on the Consolidated Balance Sheets.

The Company’s trading securities represent the investments held in the Valmont Deferred Compensation Plan (the “DCP”).

As of December 30, 2023 and December 31, 2022, the assets of the DCP were $ 26,803 and $ 25,008 , respectively.

These assets represent mutual funds, invested in debt and equity securities, classified as trading securities, considering the employee’s ability to change investment allocation of their deferred compensation at any time.

Quoted market prices are available for these securities in an active market and therefore are categorized as Level 1 inputs.

These securities are included in “Other non-current assets” in the Consolidated Balance Sheets.

Derivative Financial Instruments:

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.

The fair values of foreign currency, commodity, and cross currency swap derivative contracts are based on valuation models that use market observable inputs including forward and spot prices for commodities and currencies.

Mutual Funds:

The Company has short-term investments in various mutual funds.

Marketable Securities:

The Company’s marketable securities consist of short-term investments in certificates of deposit.

Fair Value Measurement Using:

Quoted Prices in

Significant Other

Active Markets

Carrying Value

for Identical

Fair Value Measurement Using:

December 30, 2023

Assets (Level 1)

Trading securities

1 unchanged sentence

Cash and cash equivalents - mutual funds

Cash and cash equivalents - marketable securities

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

(15) DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS – CONTINUED

Fair Value Measurement Using:

Quoted Prices in

Significant Other

Carrying Value

Active Markets

for Identical

Assets (Level 1)

Assets (Liabilities):

Fair Value Measurement Using:

December 31, 2022

Trading securities

Derivative financial instruments, net

Cash and cash equivalents - mutual funds

(16) DERIVATIVE FINANCIAL INSTRUMENTS

2 unchanged sentences

Some derivative financial instruments are marked to market and recorded in the Company’s Consolidated Statements of Earnings, while others may be accounted for as fair value, cash flow, or net investment hedges.

The Company had open foreign currency forward contracts that are marked to market at December 31, 2022 and December 25, 2021, which are insignificant and thus excluded from the tables below.

Derivative financial instruments have credit and market risk.

The Company manages these risks of derivative instruments by monitoring limits as to the types and degree of risk that can be taken and by entering into transactions with counterparties who are recognized, stable multinational banks.

Fair value of derivative instruments at December 31, 2022 and December 25, 2021 are as follows:

Any gains or losses from net investment hedge activities remain in AOCI until either the sale or substantially complete liquidation of the related subsidiaries.

The fair value of derivative instruments as of December 30, 2023 and December 31, 2022 was as follows:

Derivatives designated as hedging instruments:

Balance sheet location

Commodity forward contracts

Accrued expenses

Foreign currency forward contracts

Prepaid expenses and other assets

Balance Sheets location

Commodity contracts

Prepaid expenses and other current assets

Commodity contracts

Other accrued expenses

Foreign currency forward contracts

Accrued expenses

Prepaid expenses and other current assets

Cross currency swap contracts

Prepaid expenses and other assets

Prepaid expenses and other current assets

Cross currency swap contracts

Accrued expenses

Gains (losses) on derivatives recognized in the Consolidated Statements of Earnings for the years ended December 31, 2022, December 25, 2021, and December 26, 2020 are as follows:

Derivatives designated as hedging instruments:

Statements of earnings location

Commodity forward contracts

Other accrued expenses

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Gains (losses) on derivatives recognized in the Consolidated Statements of Earnings for the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021 were as follows:

Fiscal Year Ended

Derivatives designated as

Statements of

hedging instruments:

Earnings location

Commodity contracts

Product cost of sales

Foreign currency forward contracts

Product sales

Foreign currency forward contracts

Other income (expenses)

Interest rate hedge amortization

1 unchanged sentence

Cross currency swap contracts

Loss from divestiture of wind energy structures business

Other income (expenses)

Cross currency swap contracts

Interest expense

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

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.

During the second quarter of 2022, the Company entered into additional steel 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 $ 14,010 for the total purchase of 15,000 short tons.

As of December 31, 2022, the forward contracts had a notional amount of $ 9,766 for the total purchase of 10,300 short tons from January 2023 to March 2023.

The gain (loss) realized upon settlement will be recorded in product cost of sales in the Consolidated Statements of Earnings over average inventory turns.

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

(16) DERIVATIVE FINANCIAL INSTRUMENTS – CONTINUED

During the third quarter of 2022, the Company entered into natural gas commodity forward contracts that qualify as a cash flow hedge of the variability in cash flows attributable to future natural gas purchases.

The forward contracts had a notional amount of $ 5,211 for the total purchase of 770,000 mmBtu from October 2022 to October 2023.

During the fourth quarter of 2022, the Company entered into additional natural gas commodity forward contracts that also qualify as a cash flow hedge.

The forward contracts had a notional amount of $ 3,088 for the total purchase of 620,000 mmBtu from January 2023 to October 2024.

As of December 31, 2022, the forward contracts had a notional amount of $ 7,043 for the total purchase of 1,230,000 mmBtu from January 2023 to October 2024.

The gain (loss) realized upon settlement will be recorded in “Product cost of sales” in the Consolidated Statements of Earnings in the period consumed.

During the third quarter of 2022, 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, matures in February 2023 and has a notional amount to sell $ 1,800 in exchange for a stated amount of euros.

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 qualified 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 qualified 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 qualified 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 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 qualified 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.

The Company enters into commodity forward, swap, and option contracts that qualify as cash flow hedges of the variability in cash flows attributable to future purchases.

The gain (loss) realized upon settlement for each will be recorded in “Product cost of sales” in the Consolidated Statements of Earnings in the period consumed.

Notional amounts, purchase quantities, and maturity dates of these contracts as of December 30, 2023 were as follows:

Commodity Type

Purchase Quantity

Maturity Dates

Hot rolled steel coil

8,500 short tons

December 2023 to April 2024

960,475 MMBtu

January 2024 to October 2025

1,890,000 gallons

January 2024 to September 2024

Net Investment Hedges

In the second quarter of 2020, the Company early settled its Australian dollar denominated foreign currency forward contracts and received proceeds of $ 11,983 .

Amounts will remain in OCI until either the sale or substantially complete liquidation of the related subsidiaries.

In the second quarter of 2019, the Company entered into two fixed-for-fixed cross currency swaps ("CCS"), swapping U.S.

dollar principal and interest payments on a portion of its 5.00 % senior unsecured notes due 2044 for Danish krone (“DKK”) and euro denominated payments.

In fiscal 2019, the Company entered into two fixed-for-fixed cross currency swaps ("CCS"), swapping U.S.

dollar principal and interest payments on a portion of its 5.00 % senior unsecured notes due in fiscal 2044 for Danish krone (“DKK”) and Euro denominated payments.

The CCS were entered into in order to mitigate foreign currency risk on the Company’s Euro and DKK investments and to reduce interest expense.

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

The Company designated the full notional amount of the two CCS ($ 130,000 ) as a hedge of the net investment in certain Danish and European subsidiaries under the spot method, with all changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) are recorded as cumulative foreign currency translation within AOCI.

The Company designated the initial full notional amount of the two CCS ($ 130,000 ) as a hedge of the net investment in certain Danish and European subsidiaries under the spot method, with all changes in the fair value of the CCS that are included in the assessment of effectiveness (changes due to spot foreign exchange rates) recorded as cumulative foreign currency translation within AOCI.

Net interest receipts will be recorded as a reduction of interest expense over the life of the CCS.

During the second half of 2022, the Company settled the DKK CCS and received proceeds of $ 3,532 .

Due to the sale of the offshore wind energy structures business in the fourth quarter of 2022, the Company reclassified the cumulative net investment hedge

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

gain of $ 4,827 ($ 3,620 after tax) from OCI to “Loss from divestiture of offshore wind energy structures business” in the Consolidated Statements of Earnings.

In the third and fourth quarters of fiscal 2022, the Company settled the DKK CCS and received proceeds of $ 3,532 .

Due to the sale of the offshore wind energy structures business in the fourth quarter of fiscal 2022, the Company reclassified the cumulative net investment hedge gain of $ 4,827 ($ 3,620 after-tax) from AOCI to “Other income (expenses)” in the Consolidated Statements of Earnings.

Key terms of the Euro CCS are as follows:

3 unchanged sentences

April 1, 2024

(17) GUARANTEES

The Company’s product warranty accrual reflects management’s best estimate of probable liability under its product warranties.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(17) WARRANTIES

The Company’s product warranty accrual reflects management’s best estimate of the probable liability under its product warranties.

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

Changes in the product warranty accrual, which is recorded in “Accrued expenses”, for the years ended December 31, 2022 and December 25, 2021, were as follows:

Changes in the product warranty accrual, which are recorded in “Other accrued expenses” in the Consolidated Balance Sheets, for the fiscal years ended December 30, 2023 and December 31, 2022 were as follows:

Fiscal Year Ended

Balance, beginning of period

4 unchanged sentences

(18) COMMITMENTS & CONTINGENCIES

Various claims and lawsuits are pending against Company and certain of its subsidiaries.

Various claims and lawsuits are pending against the Company and certain of its subsidiaries.

The Company cannot fully determine the effect of all asserted and unasserted claims on its consolidated results of operations, financial condition, or liquidity.

2 unchanged sentences

(19) DEFINED BENEFIT RETIREMENT PLAN

Delta Ltd., a wholly-owned subsidiary of the Company, is the sponsor of the Delta Pension Plan ("Plan").

The Plan provides defined benefit retirement income to eligible employees in the United Kingdom.

Delta Ltd., a wholly-owned subsidiary of the Company, is the sponsor of the Delta Pension Plan (the "Plan").

The Plan provides defined benefit retirement income to eligible employees in the United Kingdom (“U.K.”).

Pension retirement benefits to qualified employees are 1.67 % of final salary per year of service upon reaching the age of 65 years .

This Plan has no active employees as members at December 31, 2022.

The Plan has no active employees as members as of December 30, 2023.

Funded Status

3 unchanged sentences

Plan assets are measured at fair value.

Because the pension plan is denominated in British pounds sterling, the Company used exchange rates of $ 1.209 /£ and $ 1.356 /£ to translate the net pension liability into U.S.

dollars at December 31, 2022 and December 25, 2021, respectively.

The PBO was $ 435,711 at December 31, 2022.

The net funded status of $ 24,216 at December 31, 2022 is recorded as a noncurrent asset reflecting, in part, a significant actuarial gain for the period from December 25, 2021 to December 31, 2022 attributed to an increase in the discount rate.

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

Because the Plan is denominated in British pounds, the Company used exchange rates of $ 1.273 /£ and $ 1.209 /£ to translate the net pension asset into U.S.

dollars as of December 30, 2023 and December 31, 2022, respectively.

The PBO was $ 477,763 as of December 30, 2023.

The net funded status of $ 15,404 as of December 30, 2023 is recorded as a non-current asset reflecting, in part, an actuarial loss for the period from December 31, 2022 to December 30, 2023 attributed to a slight decrease 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 overfunded ABO represents the difference between the PBO and the fair value of plan assets.

(19) DEFINED BENEFIT RETIREMENT PLAN – CONTINUED

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:

Fair Value at December 26, 2020

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Changes in the PBO and fair value of plan assets for the Plan for the period from December 31, 2022 to December 30, 2023 were as follows:

Fair value as of December 31, 2022

Employer contributions

2 unchanged sentences

Benefits paid

Actuarial gain

Actuarial loss

Currency translation

Fair Value at December 25, 2021

Changes in the PBO and fair value of plan assets for the pension plan for the period from December 25, 2021 to December 31, 2022 were as follows:

Fair Value at December 25, 2021

Fair value as of December 30, 2023

The actuarial loss increased the projected benefit obligation and resulted primarily from a decrease in the discount rate from 4.80 % in fiscal 2022 to 4.50 % in fiscal 2023.

Changes in the PBO and fair value of plan assets for the Plan for the period from December 25, 2021 to December 31, 2022 were as follows:

Fair value as of December 25, 2021

Employer contributions

4 unchanged sentences

Currency translation

Fair Value at December 31, 2022

Actuarial gain decreased the projected benefit obligation resulted from an increase in the discount rate to 4.80 % in 2022 versus 1.90 %.

Fair value as of December 31, 2022

The actuarial gain decreased the project benefit obligation and resulted from an increase in the discount rate from 1.90 % in fiscal 2021 to 4.80 % in fiscal 2022.

Pre-tax amounts recognized in accumulated other comprehensive income (loss) as of December 30, 2023 and December 31, 2022 consisted of actuarial losses, as follows:

Balance as of December 25, 2021

Actuarial loss

Amortization of prior service costs

Currency translation gain

Balance as of December 31, 2022

Actuarial loss

Amortization of prior service costs

Currency translation loss

Balance as of December 30, 2023

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Pre-tax amounts recognized in accumulated other comprehensive income (loss) as of December 31, 2022 and December 25, 2021 consisted of actuarial gains (losses):

Balance December 26, 2020

Actuarial gain

Prior service costs amortization

Currency translation gain

Balance December 25, 2021

Actuarial loss

Prior service costs amortization

Currency translation gain

Balance December 31, 2022

Assumptions — The weighted-average actuarial assumptions used to determine the benefit obligation at December 31, 2022 and December 25, 2021 were as follows:

Assumptions — The weighted-average actuarial assumptions used to determine the benefit obligation as of December 30, 2023 and December 31, 2022 were as follows:

Discount rate

Salary increase

CPI inflation

RPI inflation

(19) DEFINED BENEFIT RETIREMENT PLAN – CONTINUED

Expense/(Benefit)

Pension benefit is determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets.

Consumer Price Index ("CPI") inflation

Retail Price Index ("RPI") inflation

Cost/(Benefit)

Pension cost (benefit) is determined based on the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets.

The interest cost component is calculated using the full yield curve approach to estimate the interest cost by applying the specific spot rates along the yield curve used to determine the present value of the benefit plan obligations to relevant cash outflows for the corresponding year.

The expected long-term rate of return on plan assets is applied to the fair value of plan assets.

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.

The components of the net periodic pension benefit for the fiscal years ended December 31, 2022 and December 25, 2021 were as follows:

Net periodic (benefit) expense:

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

The components of the net periodic pension cost (benefit) for the fiscal years ended December 30, 2023 and December 31, 2022 were as follows:

Fiscal Year Ended

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of actuarial loss

Net periodic benefit

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

Assumptions — The weighted-average actuarial assumptions used to determine expense are as follows for fiscal years 2022 and 2021:

Amortization of prior service costs

Net periodic pension cost (benefit)

Assumptions —The weighted-average actuarial assumptions used to determine the cost (benefit) were as follows for the fiscal years ended December 30, 2023 and December 31, 2022:

Discount rate for benefit obligations

5 unchanged sentences

The expected return on plan assets is based on the asset allocation mix and the historical return, taking into account current and expected market conditions.

The expected return of plan assets decreased from 3.96 % to 3.48 % for 2022 as the investment composition has more liability matching versus return seeking assets.

Inflation is based on expected changes in the consumer price index or the retail price index in the U.K.

The expected return on plan assets increased from 3.48 % to 4.85 % for fiscal 2023 as the investment composition has more liability matching versus return-seeking assets.

Inflation is based on expected changes in the CPI or the RPI in the U.K.

depending on the relevant plan provisions.

Cash Contributions

The Company completed negotiations with Plan trustees in 2022 regarding annual funding for the Plan.

The annual contributions into the Plan are $ 16,000 (/£ 13,100 ) per annum as part of the Plan’s recovery plan, along with a contribution to cover the administrative costs of the Plan of approximately $ 1,600 (/£ 1,300 ) per annum.

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.

Benefit Payments

The following table details expected pension benefit payments for the years 2023 through 2032:

Years 2028 - 2032

The Company completed negotiations with Plan trustees in fiscal 2022 regarding annual funding for the Plan.

The annual contributions into the Plan are approximately $ 16,700 (£ 13,100 ) per annum as part of the Plan’s recovery plan, along with a contribution to cover the administrative costs of the Plan of approximately $ 1,700 (£ 1,300 ) per annum.

In the fourth quarter of fiscal 2020, the Company made its required fiscal 2021 annual contribution in addition to the required fiscal 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 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(19) DEFINED BENEFIT RETIREMENT PLAN – CONTINUED

Benefit Payments

The following table details expected pension benefit payments for the fiscal years 2024 through 2033:

Asset Allocation Strategy

9 unchanged sentences

The pension plan investments are held in a trust.

The weighted‑average maturity of the corporate bond portfolio was 13 years at December 31, 2022.

The weighted average maturity of the corporate bond portfolio was 13 years as of December 30, 2023.

Fair Value Measurements

1 unchanged sentence

The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.

Leveraged Inflation-Linked Gilts (“LDIs”) —LDIs are a combination of U.K.

Leveraged Inflation-Linked Gilts —These investments are a combination of U.K.

government-backed securities (such as bonds or other fixed income securities issued directly by the U.K.

4 unchanged sentences

The fair value recorded by the Plan is calculated using net asset value (“NAV”) for each investment.

Temporary Cash Investments —These investments consist of British pound sterling, reported in terms of U.S.

Temporary Cash Investments —These investments consist of British pounds, reported in terms of U.S.

dollars based on currency exchange rates readily available in active markets.

6 unchanged sentences

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

Secured Income Asset (“SIA”) Funds —This investment category consists of holdings which will have a high level of expected inflation linkage.

Examples of underlying assets classes are rental streams and infrastructure debt.

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Secured Income Asset Funds —This investment category consists of holdings that have a high level of expected inflation linkage.

Examples of underlying asset classes are rental streams and infrastructure debt.

Due to the private nature of these investments, pricing inputs are not readily observable.

2 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 31, 2022

(Dollars in thousands, except per share amounts)

(19) DEFINED BENEFIT RETIREMENT PLAN – CONTINUED

At December 31, 2022 and December 25, 2021, the pension plan assets measured at fair value on a recurring basis were as follows:

Quoted Prices in

Significant Other

Active Markets

for Identical

As of December 30, 2023 and December 31, 2022, the pension plan assets measured at fair value on a recurring basis were as follows:

Fair Value Measurement Using:

December 30, 2023

Inputs (Level 1)

Plan assets at fair value:

Temporary cash investments

Total plan net assets at fair value

Plan assets at NAV:

5 unchanged sentences

Total plan assets

Quoted Prices in

Significant Other

Active Markets

for Identical

Fair Value Measurement Using:

December 31, 2022

Inputs (Level 1)

Plan assets at fair value:

Temporary cash investments

Total plan net assets at fair value

Plan assets at NAV:

6 unchanged sentences

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

Outstanding leases at December 31, 2022 have remaining lease terms of one year to twenty-five years , some of which include options to extend leases for up to ten years .

Outstanding leases as of December 30, 2023 have remaining lease terms of one year to twenty-three 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.

The Company elected to not separate lease and non-lease components for all classes of underlying assets.

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

Operating leases are included in “Other assets”, “Other accrued expenses”, and “Operating lease liabilities” in the Consolidated Balance Sheets.

Operating leases are included in “Other non-current assets”, “Other accrued expenses”, and “Operating lease liabilities” in the Consolidated Balance Sheets.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make future lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

The Company used its collateralized incremental borrowing rate in determining the present value of future lease payments.

The operating lease ROU assets are adjusted for any lease payments made, lease incentives, and impairments.

The lease terms for some of the Company’s facility leases include options to extend the lease when it is reasonably certain that the option will be exercised.

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

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

The Company used its collateralized incremental borrowing rate in determining the present value of future lease payments.

The operating lease ROU asset also includes any lease payments made and excludes any lease incentives and impairments.

Some of the Company’s facility leases include options to extend the lease when it is reasonably certain that the option will be exercised.

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.

(20) LEASES – CONTINUED

Lease cost and other information related to the Company’s operating leases at December 31, 2022 and December 25, 2021 are as follows:

Lease cost and other information related to the Company’s operating leases as of and for the fiscal year ended December 30, 2023 and December 31, 2022 were as follows:

Operating lease cost

3 unchanged sentences

Weighted average discount rate

Operating lease cost includes approximately $ 1,600 for short-term lease costs and approximately $ 4,400 for variable lease payments in 2022.

Supplemental balance sheet information related to operating leases as of December 31, 2022 and December 25, 2021 is as follows:

Operating lease cost includes approximately $ 1,900 for short-term lease costs and approximately $ 4,800 for variable lease payments in fiscal 2023.

Supplemental balance sheet information related to operating leases as of December 30, 2023 and December 31, 2022 was as follows:

Classification

Operating lease assets

Other non-current assets

Operating lease short-term liabilities

3 unchanged sentences

Total lease liabilities

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

Minimum lease payments under operating leases expiring subsequent to December 30, 2023 are as follows:

2 unchanged sentences

Present value of minimum lease payments

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

(21) BUSINESS SEGMENTS

During the first quarter of 2022, the Company’s CODM changed the Company’s management structure and began to manage the business, allocate resources, and evaluate performance based on the new structure.

As a result, the Company has realigned to a two reportable segment structure organized by market dynamics (Infrastructure and Agriculture).

Three operating segments resulted from the new management structure and two are aggregated into the Agriculture reportable segment.

The Company considers gross profit margins, nature of products sold, nature of the production processes, type and class of customer, and methods used to distribute products when assessing aggregation of operating segments.

The Infrastructure segment includes the previous reportable segments of Utility Support Structures, Engineered Support Structures, and Coatings.

All prior period segment information has been recast to reflect this change in reportable segments.

The Company has two reportable segments based on its management structure.

Each segment is global in nature with a manager responsible for segment operational performance and the allocation of capital within the segment.

Net corporate expense is net of certain service‑related expenses that are allocated to business units generally on the basis of employee headcounts and sales dollars.

Net corporate expense is net of certain service‑related expenses that are allocated to business units generally based on employee headcounts and sales dollars.

Reportable segments are as follows:

INFRASTRUCTURE:

In addition to these two reportable segments, the Company had a business and related activities that is not more than 10% of consolidated sales, operating income or assets.

This includes the offshore wind energy structures business and was reported in the “Other” segment until its divestiture in 2022.

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’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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

(21) BUSINESS SEGMENTS – CONTINUED

In addition to these two reportable segments, the Company had a business and related activities in fiscal 2022 that were not more than 10% of consolidated sales, operating income, or assets.

This business, the offshore wind energy structures business, was reported in the “Other” segment until its divestiture in the fourth quarter of fiscal 2022.

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

The Company evaluates the performance of its reportable segments based on operating income and return on invested capital.

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.

Summary by Business

Fiscal Year Ended

Infrastructure

1 unchanged sentence

Infrastructure

Total intersegment sales

Infrastructure

Total net sales

OPERATING INCOME (LOSS):

Infrastructure

Fifty-three weeks ended December 31, 2022

Total operating income

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Fiscal year ended December 30, 2023

Infrastructure

Intersegment Sales

Geographical market:

5 unchanged sentences

Telecommunications

Renewable Energy

Irrigation Equipment and Parts, excluding Technology

Irrigation Equipment and Parts

Technology Products and Services

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

(21) BUSINESS SEGMENTS – CONTINUED

Fifty-two weeks ended December 25, 2021

Fiscal year ended December 31, 2022

Infrastructure

Intersegment Sales

Geographical market:

5 unchanged sentences

Telecommunications

Renewable Energy

Irrigation Equipment and Parts, excluding Technology

Irrigation Equipment and Parts

Technology Products and Services

Fifty-two weeks ended December 26, 2020

Fiscal year ended December 25, 2021

Infrastructure

Intersegment Sales

Geographical market:

5 unchanged sentences

Telecommunications

Renewable Energy

Irrigation Equipment and Parts, excluding Technology

Irrigation Equipment and Parts

Technology Products and Services

1 unchanged sentence

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

OPERATING INCOME (LOSS):

Fiscal Year Ended

EARNINGS BEFORE INCOME TAXES AND EQUITY IN LOSS OF NONCONSOLIDATED SUBSIDIARIES:

Infrastructure

Total operating income

Interest expense, net

Loss from divestiture of wind energy structures business

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

(21) BUSINESS SEGMENTS – CONTINUED

TOTAL ASSETS:

Other income (expenses)

Earnings before income taxes and equity in loss of nonconsolidated subsidiaries

Infrastructure

Fiscal Year Ended

CAPITAL EXPENDITURES:

Infrastructure

Total capital expenditures

Fiscal Year Ended

DEPRECIATION AND AMORTIZATION:

Infrastructure

Total depreciation and amortization expense

VALMONT INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Summary by Geographical Area by Location of Valmont Facilities

Fiscal Year Ended

United States

Total net sales

LONG-LIVED ASSETS:

United States

Valmont Industries, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

Three-year period ended December 31, 2022

(Dollars in thousands, except per share amounts)

No single customer accounted for more than 10% of net sales in 2022, 2021, or 2020.

Total long-lived assets

No single customer accounted for more than 10% of net sales in fiscal 2023, 2022, or 2021.

Net sales by geographical area are based on the location of the facility producing the sales and do not include sales to other operating units of the Company.

Brazil and Australia accounted for approximately 8 % and 7 % of the Company’s net sales in 2022, respectively;

Brazil and Australia each accounted for approximately 7 % of the Company’s net sales in fiscal 2023;

no other foreign country accounted for more than 4% of the Company’s net sales.

Operating income by business segment are based on net sales less identifiable operating expenses and allocations and includes profits recorded on sales to other operating units of the Company.

Long-lived assets consist of property, plant, and equipment, net of depreciation, goodwill, other intangible assets, and other assets.

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

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

Operating income by business segment is based on net sales less identifiable operating expenses and allocations and includes profits recorded on sales to other operating units of the Company.

Long-lived assets consist of property, plant, and equipment, net of depreciation;

other intangible assets, net of amortization;

and other non-current assets.

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

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL

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