Management's discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which the Company operates, as well as management's perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond the Company's control) and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions. Many factors could affect the Company's actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, risk factors described from time to time in the Company's reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, and actions and policy changes of domestic and foreign governments.

This discussion should be read in conjunction with the financial statements and the notes thereto, and the management's discussion and analysis, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 27, 2008. We aggregate our businesses into four reportable segments. See Note 7 to the Condensed Consolidated Financial Statements.

Dollars in thousands, except per share amounts

                                                        Thirteen Weeks Ended
                                               March 28,    March 29,     % Increase
                                                  2009         2008       (Decrease)
     Consolidated
        Net sales                               $ 455,154    $ 422,286            7.8 %
        Gross profit                              128,316      115,808           10.8 %
             as a percent of sales                   28.2 %       27.4 %
        SG&A expense                               69,997       65,342            7.1 %
             as a percent of sales>                  15.4 %       15.5 %
        Operating income                           58,319       50,466           15.6 %
             as a percent of sales                   12.8 %       12.0 %
        Net interest expense                        3,952        3,853            2.6 %
        Effective tax rate                           32.8 %       33.3 %
        Net earnings attributable to Valmont
        Industries, Inc.                           35,864       29,699           20.8 %
        Earnings per share attributable to
        Valmont Industries, Inc-diluted         $    1.37    $    1.13           21.2 %
     Engineered Support Structures segment
        Net sales                               $ 137,969    $ 143,451           -3.8 %
        Gross profit                               35,258       37,591           -6.2 %
        SG&A expense                               27,189       27,509           -1.2 %
        Operating income                            8,069       10,082          -20.0 %
     Utility Support Structures segment
        Net sales                               $ 175,503    $ 100,489           74.6 %
        Gross profit                               53,574       26,600          101.4 %
        SG&A expense                               14,618       11,927           22.6 %
        Operating income                           38,956       14,673          165.5 %
     Coatings segment
        Net sales                               $  23,869    $  27,447          -13.0 %
        Gross profit                                9,479        9,932           -4.6 %
        SG&A expense                                3,488        3,386            3.0 %
        Operating income                            5,991        6,546           -8.5 %
     Irrigation segment
        Net sales                               $ 103,057    $ 130,769          -21.2 %
        Gross profit                               24,292       35,143          -30.9 %
        SG&A expense                               12,280       12,748           -3.7 %
        Operating income                           12,012       22,395          -46.4 %
     Other
        Net sales                               $  14,756    $  20,130          -26.7 %
        Gross profit                                5,772        6,493          -11.1 %
        SG&A expense                                2,298        2,081           10.4 %
        Operating income                            3,474        4,412          -21.3 %
     Net Corporate expense
        Gross profit                            $     (59 )  $      49         -120.4 %
        SG&A expense                               10,124        7,691           31.6 %
        Operating loss                            (10,183 )     (7,642 )         33.3 %

On a consolidated basis, the sales increase in the first quarter of fiscal 2009, as compared with 2008, was mainly due to the impact of acquisitions completed after the close of the first quarter of 2008 (approximately $17.6 million) and higher selling prices due to steel cost increases that occurred throughout most of 2008. These increases were offset somewhat by currency translation effects (approximately $9.7 million), as the U.S. dollar was stronger in relation to the euro and Brazilian real in the first quarter of 2009, as compared with the same period in 2008. For the company as a whole our sales unit volumes were slightly lower in 2009, as compared with 2008. On a reportable segment basis, we realized a significant sales unit volume increase in the Utility Support Structures ("Utility") segment. This sales unit volume increase was more than offset by lower unit sales volumes in our other reportable segments. These decreases were mainly due to the global economic recession that began in late 2009, resulting in weaker sales demand for these businesses. While sales unit prices were higher in the first quarter of 2009, as compared with 2008, pricing levels have generally decreased as compared with late 2008, due to pricing pressures associated with weaker sales demand and lower raw material prices.

The increase in gross profit margin (gross profit as a percent of sales) in the first quarter of 2009 over the same period in 2008 was mainly due to the strong sales and operational performance of the Utility segment and improved gross margins in the Coatings segment. The Engineered Support Structures (ESS) and Irrigation segments reported weaker gross margins in 2009, as compared with 2008, mainly due to lower sales and production levels.

Selling, general and administrative (SG&A) spending increased mainly due to increased salary and benefit costs (approximately $3.1 million), the effect of acquisitions completed after March 29, 2008 (approximately $2.3 million), higher group medical expenses in 2009, as compared with 2008 (approximately $1.1 million) and increased deferred compensation expense related to the improved investment performance in the marketable securities underlying the deferred compensation plan as compared with the first quarter of 2008 (approximately $0.9 million). We recorded the investment gains and losses in these securities as "Miscellaneous" in our condensed consolidated statements of operations for the thirteen weeks ended March 28, 2009 and March 29, 2008, respectively. These increases were somewhat offset by currency translation effects of approximately $1.5 million.

On a reportable segment basis, the substantial increase in operating income in the Utility segment more than offset decreased operating income of our other segments, resulting in an overall increase in 2009 first quarter operating income of $7.9 million, or 15.6%, as compared with the first quarter of 2008.

Net interest expense in the first quarter of 2009 was comparable to the same period of 2008. While our first quarter 2009 average borrowing levels were approximately $90 million higher than the same period in 2008, we benefited from lower interest rates on our variable rate debt. "Miscellaneous" expense was higher in 2009, as compared with 2008, mainly due to foreign currency transaction losses, offset to a degree by improved investment performance in assets in our deferred compensation plan.

The decrease in the effective income tax rate in the first quarter of 2009, as compared with the same period in 2008, was mainly due to reduced income tax contingency liabilities. Our cash flows provided by operations was $37.5 million in the first quarter of 2009, as compared with $15.9 million in the first quarter of 2008. Improved net earnings and a smaller increase working capital in 2009, as compared with 2008, were the main reasons for the improved operating cash flow in 2008.

Engineered Support Structures (ESS) segment

The decrease in ESS segment sales in the first quarter of 2009, as compared with 2008, was mainly due to weaker sales demand in worldwide markets and foreign currency translation effects

(approximately $5.3 million). These decreases were offset somewhat by the impact of acquisitions (approximately $16.9 million) and higher selling prices, as compared with the first quarter of 2008.

In North America, lighting and traffic structure sales were lower than 2008 levels due to decreased demand for lighting and traffic control support structures. In particular, sales demand for lighting structures for residential and commercial outdoor lighting applications were lower in 2009, as compared with 2008, due to weaker residential and commercial construction activity that resulted from the global economic recession and tightness in credit markets. Net sales in the transportation market channel likewise were lower in 2009 as compared with 2008. In addition to the recession in the U.S. economy, we believe that state budget deficits and uncertainty over the U.S. economic stimulus plan also contributed to weaker sales order flows in late 2008 and early 2009, which impacted first quarter 2009 shipments. We believe that any positive impact from the U.S. economic stimulus plan directed towards street and highway construction projects will likely be realized beginning in the fourth quarter of 2009. In Europe, sales in the first quarter of 2009 were comparable with 2008, as the impact from the Mitas and Stainton acquisitions in late 2008 were offset by lower sales demand due to economic weakness in Europe and currency translation effects.

Sales of Specialty Structures products in the first quarter of 2009 increased as compared with the same period in 2008. In North America, market conditions for sales of structures and components for the wireless communication market in 2009 were comparable to 2008, but sales were higher due mainly to the acquisition of Site Pro 1 (Site Pro) in July 2008. Sales of wireless communication poles in China in the first quarter of 2009 were stronger as compared with a relatively weak 2008, when there was some delay in demand for wireless communication structures due to industry reorganization.

In the utility product line, China's sales of utility structures in the China market were lower in 2009, as compared with 2008, offset somewhat by stronger sales of products exported from China.

The decrease in the operating income of the ESS segment in the first quarter of 2009 as compared with the same period in 2008 was mainly due to the decrease in sales volumes in worldwide markets, offset to a degree by the impact of acquisitions (approximately $1.5 million). For the segment, SG&A expense in the first quarter of 2009 was comparable with the same period in 2008, as the impact from acquisitions (approximately $2.1 million) was offset by currency translation impacts (approximately $1.0 million) and lower management incentive expenses (approximately $1.1 million).

Utility Support Structures segment

In the Utility Support Structures segment, the sales increase in the first quarter of 2009 as compared with the first quarter of 2008 was due to continued strong demand for steel and concrete transmission and substation structures and higher average sales prices. We entered the 2009 fiscal year with a record backlog and the strong first quarter 2009 sales performance relates directly to the large backlogs from year-end 2008. Our customers, who are mainly utility companies, are continuing their investment commitments in transmission and substation structures over the past several years to improve the reliability and capacity of the electrical grid in the U.S. Sales demand for pole structures for electrical distribution was weaker in 2009, as compared with 2008. This weakness relates directly to the downturn in residential and commercial construction in the U.S. that started in late 2008 due to the economic recession and credit crisis.

The improved operating earnings for this segment in 2009, as compared with 2008, related to the increased sales levels, improved operating leverage associated with higher sales volumes and a more favorable sales mix than the first quarter of 2008. The increase in SG&A spending was principally due to higher salary and employee benefit costs ($0.8 million) to support the higher sales volumes and higher employee incentives (approximately $0.8 million) associated with improved operating earnings of this segment.

Coatings segment

The decrease in Coatings segment sales in the first quarter of 2009 as compared with the first quarter of 2008 was predominantly due to decreased sales volumes from both internal and external customers along with lower selling prices due to lower per pound zinc costs in 2009, as compared with 2008. The decrease in sales volumes in our galvanizing operations in the first quarter of 2009 was approximately 15%, as compared with the same period in 2008. The decrease in sales demand was related to industrial economic conditions in our served markets due to the U.S. economic recession.

Operating income in the first quarter of 2009 was modestly below the same period in 2008, mainly as a result of lower sales demand. The impact of lower sales volumes was mitigated by cost reductions in factory operations, which included reduced utilization of contracted temporary workers. SG&A spending in the first quarter of 2009 was comparable with the first quarter of 2008, as the impact of an acquisition completed in the fourth quarter of 2008 was offset by lower management incentive expense.

Irrigation segment

The sales decrease in the Irrigation segment for the first quarter of 2009, as compared with the same period in 2008, was mainly due to weaker sales volumes in both domestic and international markets. In 2009, lower farm commodity prices and lower anticipated farm income, as compared with the first quarter of 2008, resulted in decreased demand for mechanized irrigation machines in global markets. In addition, we believe that the global economic recession and an uncertain outlook for world economies caused some customers to delay capital investments in irrigation technology in 2009. In North America, average selling prices were slightly higher than last year, in response to increasing raw material prices that we experienced throughout most of 2008. In 2009, selling prices have decreased somewhat from the fourth quarter of 2008, due to price competition in our various markets and lower raw material prices. International irrigation sales in the first quarter of 2009 were down in most markets, as compared with the first quarter of 2008, although sales in China and Brazil in 2009 were comparable with 2008. Sales pricing in international markets in the first quarter of 2009 was similar to the same period in 2008.

The decrease in operating income for the first quarter of 2009, as compared with the same period in 2008, was due to the effect of lower sales unit volumes and the associated operating deleverage realized as a result of lower sales and production levels. SG&A spending in 2009 was comparable with 2008, as lower incentive expense accruals related to decreased operating income this year were essentially offset by higher salary and employee benefits costs.

This mainly includes our tubing and industrial fastener operations. The decrease in sales and operating income in the first quarter of 2009, as compared with the same period in 2008, mainly related to weaker sales of industrial tubing due to the economic recession in the U.S. this year.

Net corporate expense

The increase in net corporate expense in the first quarter of 2009 as compared with the first quarter of 2008 was mainly due to higher group medical benefit costs in 2009 (approximately $1.1 million) and increased deferred compensation liabilities related to higher investment returns on the assets of the deferred compensation plan of approximately $0.9 million. The investment gains and losses were recorded in "Miscellaneous" in our condensed consolidated statement of earnings for the thirteen-week periods ended March 28, 2009 and March 29, 2008.

Liquidity and Capital Resources

Working Capital and Operating Cash Flows-Net working capital was $499.6 million at March 28, 2009, as compared with $475.2 million at December 27, 2008. The ratio of current assets to current liabilities was 2.93:1 at March 28, 2009, as compared with 2.69:1 at December 27, 2008. Operating cash flow was $37.5 million for the thirteen week period ended March 28, 2009, as compared with $15.9 million for the same period in 2008. The improved operating cash flow in 2009 was the result of higher net earnings and a lower increase in working capital in 2009, as compared with 2008. Accounts receivable turnover in the first quarter of 2009 was slightly lower than the same period in 2008, due mainly to a shift in our sales mix from irrigation to other product lines. Inventory levels increased modestly in the first quarter of 2009, as compared to December 27, 2008, mainly due to higher inventories in the Utility segment to support the sales volume in that segment. Other reportable segments reported modestly lower inventory levels. We plan to continue to reduce inventories throughout the balance of 2009, depending on business conditions and provided that vendor delivery performance is at acceptable levels.

Investing Cash Flows-Capital spending during the thirteen weeks ended March 28, 2009 was $14.0 million, as compared with $10.9 million for the same period in 2008. We expect our capital spending for the 2009 fiscal year to be approximately $50 million. Investing cash flows in 2008 reflected the aggregate of $89.4 million of cash paid for the West Coast and Penn Summit acquisitions.

Financing Cash Flows-Our total interest-bearing debt decreased from $357.6 million at December 27, 2008 to $345.6 million as of March 28, 2009. The decrease in borrowings in the first quarter of 2009 was predominantly associated with payments on our borrowings under our revolving credit agreement and short-term notes payable.

We have historically funded our growth, capital spending and acquisitions through a combination of operating cash flows and debt financing. We have an internal long-term objective to maintain long-term debt as a percent of invested capital at or below 40%. At March 28, 2009, our long-term debt to invested capital ratio was 30.5%, as compared with 31.7% at December 27, 2008. Subject to our level of acquisition activity and steel industry operating conditions (which could affect the levels of inventory we need to fulfill customer commitments), we plan to maintain this ratio below 40% in 2009.

Our debt financing at March 28, 2009 consisted primarily of long-term debt. We also maintain certain short-term bank lines of credit totaling $33.2 million, $30.0 million of which was unused at March 28, 2009. Our long-term debt principally consists of:

º •
º $150 million of senior subordinated notes that bear interest at 6.875% per annum and are due in May 2014. We are allowed to repurchase the notes starting in May 2009 at specified prepayment premiums. These notes are guaranteed by certain of our U.S. subsidiaries.

º •
º $280 million revolving credit agreement with a group of banks. We may increase the credit facility by up to an additional $100 million at any time, subject to participating banks increasing the amount of their lending commitments. The interest rate on our borrowings will be, at our option, either:

º (a)
º LIBOR (based on a 1, 2, 3 or 6 month interest period, as selected by us) plus 125 to 200 basis points (inclusive of facility fees), depending on our ratio of debt to earnings before taxes, interest, depreciation and amortization (EBITDA), or;

º (b)
º the higher of

º •
º The higher of (a) the prime lending rate and (b) the Federal Funds rate plus 50 basis points plus in each case, 25 to 100 basis points (inclusive of facility fees), depending on our ratio of debt to EBITDA, or

º •
º LIBOR (based on a 1 week interest period) plus 125 to 200 basis points (inclusive of facility fees), depending on our ratio of debt to EBITDA

At March 28, 2009, we had $163.0 in outstanding borrowings under the revolving credit agreement, at an interest rate of 1.74%. The revolving credit agreement has a termination date of October 16, 2013 and contains certain financial covenants that may limit our additional borrowing capability under the agreement. At March 28, 2009, we had the ability to borrow an additional $91 million under this facility.

These debt agreements contain covenants that require us to maintain certain coverage ratios and may limit us with respect to certain business activities, including capital expenditures. Our key debt covenants are that interest-bearing debt is not to exceed 3.75x EBITDA of the prior four quarters and that our EBITDA over our prior four quarters must be at least 2.50x our interest expense over the same period. At March 28, 2009, we were in compliance with all covenants related to these debt agreements.

Our businesses are cyclical, but we have diversity in our markets, from a product, customer and a geographical standpoint. We have demonstrated the ability to effectively manage through business cycles and maintain liquidity. We have consistently generated operating cash flows in excess of our capital expenditures. Based on our available credit facilities and our history of positive operational cash flows, we believe that we have adequate liquidity to meet our needs.

Financial Obligations and Financial Commitments

There have been no material changes to our financial obligations and financial commitments as described beginning on page 35 in our Form 10-K for the year ended December 27, 2008.

Off Balance Sheet Arrangements

There have been no changes in our off balance sheet arrangements as described on page 36 in our Form 10-K for the fiscal year ended December 27, 2008.

Critical Accounting Policies

There have been no changes in our critical accounting policies during the quarter ended March 28, 2009. We described these policies on pages 38-41 in our Form 10-K for fiscal year ended December 27, 2008.