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Valmont Recognizes Tax Benefits And Revises Guidance Upward













OMAHA, Neb., Dec. 20, 2011 /PRNewswire/ -- Valmont Industries, Inc. (NYSE: VMI), a leading global manufacturer of engineered products for infrastructure, and mechanized irrigation equipment for agriculture, and a provider of coating services, announced today that it has reorganized the legal entity structure of its Delta businesses acquired in May 2010. Under the new structure, Delta's U.S. entities will be consolidated into other Valmont U.S. entities. Delta's Asia Pacific entities will be organized directly under Valmont's Australian entities. The new simplified structure will result in certain operational benefits and enables Valmont to utilize certain tax-losses arising from the historic Delta businesses.

  • A combination of recognizing the value of tax loss carry forward's on the balance sheet and the increased income tax basis on Australian assets, results in a one-time positive impact to Valmont's net earnings of $71.8 million or approximately $2.70 per share that will take place in the fourth quarter.
  • On a cash flow basis, the Company expects approximately $4.3 million in annual cash tax savings for approximately the next 12 years. While cash taxes are expected to decline, the Company does not expect any significant change to its tax rate going forward due to offsetting deferred tax expenses.

 

In the fourth quarter, the company will also record the following one-time items:

  • During the fourth quarter, the Company will record an after-tax gain of $2.5 million related to an insurance settlement for fire and storm damages sustained to a galvanizing facility in Australia. This settlement will increase fourth quarter earnings per share by approximately $0.09.
  • During the fourth quarter, the Company evaluated the future use of certain trade names. As a result the Company will reduce the carrying value of these trade names by $2.4 million after-tax, which will negatively impact earnings by $0.09 per share in the fourth quarter.
  • During the quarter, the Company reorganized its pole operations in Europe and took action on reducing SG&A costs. As a result, one-time charges of $1.0 million after-tax will negatively impact earnings by approximately $0.04 per share in the fourth quarter.

 

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