UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event July 28, 2009 (July 28, 2009)
reported) -------------------------------
L. B. Foster Company
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(Exact name of registrant as specified in its charter)
Pennsylvania 000-10436 25-1324733
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
415 Holiday Drive, Pittsburgh, Pennsylvania 15220
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (412) 928-3417
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On July 28, 2009, L.B. Foster Company (the "Company") issued a press
release announcing the Company's results of operations for the second quarter
ended June 30, 2009. A copy of that press release is furnished with this report
as Exhibit 99.1.
The information contained in this Current Report shall not be deemed to be
"filed" for the purposes of Section 18 of the Securities and Exchange Act of
1934 (the "Exchange Act"), as amended, or otherwise subject to the liabilities
of that section, nor shall such information be deemed incorporated by reference
in any filing under the Securities and Exchange Act of 1933, as amended, except
as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Press Release issued by L.B. Foster Company, July 28, 2009.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
L.B. Foster Company
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(Registrant)
Date: July 28, 2009
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/s/ David J. Russo
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David J. Russo
Senior Vice President,
Chief Financial Officer and Treasurer
EXHIBIT INDEX
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Exhibit Number Description
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99.1 Press Release dated July 28, 2009, of L. B. Foster Company.
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PRESS RELEASE
L.B. Foster Company
415 Holiday Drive, Pittsburgh, PA 15220
Contact: David J. Russo
Phone: (412) 928-3417
FAX: (412) 928-7891
Email: investors@LBFosterCo.com
FOR IMMEDIATE RELEASE
L.B. FOSTER REPORTS SECOND QUARTER
OPERATING RESULTS
PITTSBURGH, PA, July 28, 2009 - L.B. Foster Company (NASDAQ: FSTR), a leading
manufacturer, fabricator, and distributor of products and services for rail,
construction, energy and utility markets, today reported that second quarter
2009 net sales decreased 27.8% to $93.8 million compared to $129.8 million in
the prior year quarter. Gross profit margin was 13.7%, down 320 basis points
from the prior year quarter primarily as a result of a $1.1 million ($0.07 per
diluted share) warranty charge taken to recognize the revised number of concrete
ties that failed in track as well as $2.6 million ($0.16 per diluted share) of
unfavorable gross profit adjustments including a sales reversal and inventory
write-downs related to a separate concrete tie issue. These adjustments were
partially offset by a $1.5 million ($0.09 per diluted share) favorable LIFO
credit recorded during the second quarter.
2009 Second Quarter Results
In the second quarter of 2009, L.B. Foster had net income of $2.7 million or
$0.26 per diluted share compared to net income of $7.7 million or $0.69 per
diluted share in the second quarter of 2008.
Selling and administrative expenses decreased $1.3 million or 13.5% from last
year's quarter due primarily to lower incentive compensation expense as well as
decreased outside services and lower bad debt expense. Second quarter interest
expense was $0.3 million, a 31.8% decrease from the prior year quarter due
principally to decreased borrowings and, to a lesser extent, lower interest
rates. The Company's income tax rate was 38.1% in the second quarter compared to
37.0% in the prior year quarter.
"Pursuant to our original concrete tie warranty issue disclosed in the first
quarter earnings release, we believe we have identified, analyzed and accounted
for all of the concrete ties that failed in track. Those ties were produced in
2004 and 2005 before we installed our new manufacturing equipment. We believe
that the problem was related to older manufacturing equipment that was
decommissioned when we retrofitted our facilities with new equipment late in
2005," stated Stan Hasselbusch, President and Chief Executive Officer.
Mr. Hasselbusch continued, "We recently identified an additional and separate
concrete tie issue whereby certain vendor certified, yet non-conforming raw
material used in the tie production process caused a number of ties in our
customer's inventory to be out of specification. We therefore took back ties
with non-conforming raw material and wrote them down to our expected realizable
value. We have identified and isolated the remainder of the defective material
and returned it to our supplier. We will be pursuing reimbursement for damages
incurred from this supplier."
Mr. Hasselbusch also commented, "All of our segments posted significant declines
in net sales for the second quarter. Tubular sales were down 44.0%, Rail sales
declined 27.2% and Construction Products sales declined by 25.9%. Bookings for
the quarter were $111.3 million compared to $164.1 million last year, a 32.2%
decline. Backlog was $140.5 million, down 26.9% from last year, which indicates
continued short-term weakness."
Mr. Hasselbusch added, "We are beginning to see areas of opportunity generated
from the recent stimulus legislation in our Transit and Piling businesses and
expect further increases in activity as funding progresses, but this activity
will not compensate for the shortfalls created by the current economic
downturn."
2009 Half Year Results
For the six months ended June 30, 2009, L.B. Foster reported net income of $5.7
million or $0.55 per diluted share compared to net income of $14.0 million or
$1.26 per diluted share in 2008. In addition to the aforementioned second
quarter charges taken related to our concrete tie business, we also recorded a
$1.6 million ($0.10 per diluted share) warranty expense in the first quarter of
2009. The 2008 results included a pretax gain related to additional proceeds
from the October 2007 sale of the Company's investment in the DM&E Railroad of
$2.0 million, as well as a $1.5 million pretax gain on the sale and lease-back
of our threaded products facility in Houston, Texas. Excluding the prior year
gains noted above, earnings per diluted share were $1.06 last year.
Net sales for the first half of 2009 decreased 14.2% to $191.5 million compared
to $223.3 million in 2008. Gross profit margin was 13.8%, down 300 basis points
from 2008, primarily as a result of the previously mentioned concrete tie
adjustments as well as increased unfavorable manufacturing variances of $2.7
million, partially offset by decreased LIFO costs of $4.5 million. Selling and
administrative expenses decreased $1.7 million or 8.7% from the prior year due
primarily to lower incentive compensation expense as well as decreased outside
services and travel and entertainment expense. Interest expense decreased $0.4
million from the prior year due to decreased borrowings and lower interest
rates. The Company's income tax rate was 37.3% compared to 36.6% in the prior
year.
Cash generated from operations was approximately $22.9 million for the second
quarter of 2009 due primarily to a decrease in working capital. Capital
expenditures were $1.7 million compared to $1.0 million in the prior year. "We
continue to anticipate that in 2009, we will generate positive cash flow in
excess of our capital expenditures, debt service and share repurchases. As we
navigate through 2009, we expect to continue to be challenged by a difficult
business environment and will continue to implement certain measures to control
costs, focus on ways to maximize free cash flow, improve our operational
processes and continue to look for opportunities to leverage our strong balance
sheet, all with the goal of maintaining sales and minimizing profit erosion,"
noted Mr. Hasselbusch as he concluded, "We continue to have strong liquidity and
access to credit and we continue to look for value through synergistic and
accretive acquisitions."
L.B. Foster Company will conduct a conference call and webcast to discuss its
second quarter 2009 operating results and general market activity and business
conditions on Tuesday, July 28, 2009 at 11:00am ET. The call will be hosted by
Mr. Stan Hasselbusch, President and Chief Executive Officer. Listen via audio on
the L.B. Foster web site: www.lbfoster.com, by accessing the Investor Relations
page.
The Company wishes to caution readers that various factors could cause the
actual results of the Company to differ materially from those indicated by
forward-looking statements in news releases, and other communications, including
oral statements, such as references to future profitability, made from time to
time by representatives of the Company. Specific risks and uncertainties that
could affect the Company's profitability include, but are not limited to,
general economic conditions, sudden and/or sharp declines in steel prices,
adequate funding for infrastructure projects, production delays or problems
encountered at our manufacturing facilities, additional concrete tie defects and
the availability of existing and new piling and rail products. There are also no
assurances that the Canadian Pacific Railway will proceed with the Powder River
Basin project and trigger any contingent payments to L.B. Foster related to the
Company's sale of its investment in the DM&E. Matters discussed in such
communications are forward-looking statements that involve risks and
uncertainties. Sentences containing words such as "anticipates," "expects," or
"will," generally should be considered forward-looking statements. More detailed
information on these and additional factors which could affect the Company's
operating and financial results are described in the Company's Forms 10-K, 10-Q
and other reports, filed or to be filed with the Securities and Exchange
Commission. The Company urges all interested parties to read these reports to
gain a better understanding of the many business and other risks that the
Company faces. The forward-looking statements contained in this press release
are made only as of the date hereof, and the Company undertakes no obligation to
update or revise these forward-looking statements, whether as a result of new
information, future events or otherwise.
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
L.B. FOSTER COMPANY AND SUBSIDIARIES
(In Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
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2009 2008 2009 2008
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(Unaudited) (Unaudited)
NET SALES $93,771 $129,833 $191,515 $223,274
COSTS AND EXPENSES:
Cost of goods sold 80,939 107,948 165,001 185,768
Selling and Administrative expenses 8,612 9,959 17,639 19,325
Interest expense 333 488 661 1,043
Gain on sale of DM&E investment - - - (2,022)
Gain on sale of Houston, TX property - - - (1,486)
Interest income (212) (586) (507) (1,401)
Other (income) / expense (186) (135) (329) 16
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89,486 117,674 182,465 201,243
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INCOME BEFORE INCOME TAXES 4,285 12,159 9,050 22,031
INCOME TAX EXPENSE 1,633 4,502 3,379 8,068
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NET INCOME $2,652 $7,657 $5,671 $13,963
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BASIC EARNINGS PER COMMON SHARE $0.26 $0.70 $0.56 $1.28
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DILUTED EARNINGS PER COMMON SHARE $0.26 $0.69 $0.55 $1.26
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 10,148 10,900 10,176 10,939
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 10,275 11,040 10,318 11,097
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L.B. Foster Company and Subsidiaries
Consolidated Balance Sheet
(In thousands)
June 30, December 31,
2009 2008
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ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash items $118,090 $115,074
Accounts and notes receivable:
Trade 49,688 63,271
Other 343 1,042
Inventories 94,293 102,916
Current deferred tax assets 2,911 2,931
Prepaid income tax 1,520 -
Other current assets 1,641 1,221
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Total Current Assets 268,486 286,455
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OTHER ASSETS:
Property, plant & equipment-net 38,016 39,989
Goodwill 350 350
Other intangibles - net 31 37
Deferred tax assets 2,035 2,026
Investments 4,541 2,856
Other non-current assets 367 407
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Total Other Assets 45,340 45,665
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$313,826 $332,120
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities on long-term debt $5,813 $5,777
Accounts payable-trade and other 45,926 62,612
Accrued payroll and employee benefits 4,323 8,000
Other accrued liabilities 7,502 7,802
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Total Current Liabilities 63,564 84,191
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LONG-TERM DEBT, TERM LOAN 11,905 13,333
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OTHER LONG-TERM DEBT 6,754 8,401
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DEFERRED TAX LIABILITIES 2,426 2,046
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OTHER LONG-TERM LIABILITIES 6,497 6,587
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STOCKHOLDERS' EQUITY:
Class A Common stock 111 111
Paid-in capital 47,698 47,585
Retained earnings 202,731 197,060
Treasury stock (27,836) (26,482)
Accumulated other comprehensive loss (24) (712)
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Total Stockholders' Equity 222,680 217,562
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$313,826 $332,120
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