Valmont Industries, Inc. Reduces Investment in Delta EMD Triggering
Deconsolidation Under Accounting Rules
OMAHA, Neb., Feb. 4, 2014
OMAHA, Neb., Feb. 4, 2014 /PRNewswire/ -- Valmont Industries, Inc. (NYSE:
VMI), a leading global provider of engineered products and services for
infrastructure and mechanized irrigation equipment for agriculture, announced
today that a reduction of its share ownership of Delta EMD Limited, a South
African company listed on theJohannesburg exchange, will trigger a
deconsolidation of Delta EMD from Valmont's consolidated financial statements.
Valmont acquired a 56% holding in Delta EMD, a global supplier of electrolytic
manganese dioxide, when it acquired Delta plc in 2010. Accordingly, the
ownership interest in Delta EMD and its results attributable to Valmont were
historically reported on a consolidated basis in Valmont's financial
statements. Also as part of the acquisition of Delta plc in 2010, Valmont
acquired a substantial minority interest in Manganese Metal Company (MMC), a
South African based producer of manganese metal.
At the time of the acquisition of Delta plc in May 2010, Valmont indicated its
intention to explore options to exit the two South African manganese
businesses that were not core to Valmont's strategy.
Step one of that process was completed with the February 2013 sale of
Valmont's interest in Manganese Metals Company, (MMC). Valmont received $29.0
million of cash consideration from the sale of its interest in MMC plus $9.0
million of dividends between the acquisition and sale date.
Step two is the deconsolidation of Delta EMD. In December 2013 Valmont reduced
its ownership interest to approximately 49% of the outstanding shares of Delta
EMD, which resulted in the deconsolidation of Delta EMD. Valmont will
recognize a non-cash after-tax loss in the fourth quarter of 2013 in the
amount of $12.0 million or $0.45 cents per share. The non-cash loss results
from a combination of recording the remaining value of the investment at fair
value, as required under generally accepted accounting principles and the
negative cumulative effect of currency translation. Additionally, prior to
Valmont's ownership reduction and the deconsolidation of Delta EMD from
Valmont's consolidated financial statements, Delta EMD recognized an
impairment of fixed assets. Valmont's share of the non-cash impairment loss
after tax was $4.6 million, or $0.17 per share. To date, Valmont has received
$12.9 million of dividends from Delta EMD, since May 2010.
Excluding the $0.62 combined income statement impact of the deconsolidation
and fixed asset impairment, Valmont currently expects fiscal year 2013 diluted
earnings per share to be approximately $10.97, subject to final audit
completion. Valmont plans to report fourth quarter results on February 20,
2014 and will take questions related to the deconsolidation at that time. The
Company will be in a quiet period until fourth quarter earnings are finalized
Valmont is a global leader in designing and manufacturing poles, towers and
structures for lighting and traffic, wireless communication and utility
markets, industrial access systems, highway safety barriers and a provider of
protective coating services. Valmont also leads the world in mechanized
irrigation equipment for agriculture, enhancing food production while
conserving and protecting natural water resources. In addition, Valmont
produces a wide variety of tubing for commercial and industrial applications.
This release contains forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based
on management's current views and estimates and are subject to uncertainty and
changes in circumstances. Future economic and market circumstances, industry
conditions, Company performance and financial results, operating efficiencies,
availability and price of raw materials, availability and market acceptance of
new products, product pricing, domestic and international competitive
environment, actions and policy changes of domestic and international
governments and other risks described from time to time in Valmont's reports
to the Securities and Exchange Commission are examples of factors, among
others, that could cause results to differ materially from those described in
the forward-looking statement. The Company cautions that any forward-looking
statement included in this press release is made as of the date of this press
release and the Company does not undertake to update any forward-looking
SOURCE Valmont Industries, Inc.
Contact: Jeff Laudin, 402-963-1158
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