UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the fiscal year ended December 31, 2006.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the transition period from ___________to_____________
Commission file number 0-10436.
L. B. Foster Company Voluntary Investment Plan
- --------------------------------------------------------------------------------
(Full title of the plan and the address of plan,
if different from that of the issuer named below)
L. B. FOSTER COMPANY
415 Holiday Drive
Pittsburgh, PA 15222
- --------------------------------------------------------------------------------
(Name of issuer of the securities held pursuant to
the plan and the address of its principal executive office)
FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
L. B. Foster Company Voluntary Investment Plan
December 31, 2006 and 2005, and the Year Ended December 31, 2006
With Report of Independent Auditors
L. B. Foster Company
Voluntary Investment Plan
Financial Statements
and Other Financial Information
December 31, 2006 and 2005,
and the Year Ended December 31, 2006
Contents
Report of Independent Registered Public Accounting Firm........................1
Financial Statements
Statements of Net Assets Available for Benefits................................2
Statement of Changes in Net Assets Available for Benefits......................3
Notes to Financial Statements..................................................4
Other Financial Information
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)................11
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Plan Administrator
L. B. Foster Company
Voluntary Investment Plan
We have audited the accompanying statements of net assets available for benefits
of the L. B. Foster Company Voluntary Investment Plan as of December 31, 2006
and 2005, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2006. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2006 and 2005, and the changes in its net assets available for
benefits for the year ended December 31, 2006, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2006 is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
June 22, 2007
L. B. Foster Company
Voluntary Investment Plan
Statements of Net Assets Available for Benefits
December 31
2006 2005
-----------------------------
Assets
Investments, at fair value $39,141,654 $35,128,054
Participant loans 444,114 463,220
----------- -----------
39,585,768 35,591,274
Receivables:
Employee 82,093 88,418
Employer 1,058,306 533,451
Other 1,134 563
----------- -----------
1,141,533 622,432
Net assets available for benefits,
at fair value 40,727,301 36,213,706
Adjustment from fair value to
contract value for investments in
fully benefit-responsive
investment contracts 14,370 20,235
----------- -----------
Net assets available for benefits $40,741,671 $36,233,941
=========== ===========
See accompanying notes.
L. B. Foster Company
Voluntary Investment Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2006
Additions
Investment income:
Interest and dividends $ 3,357,460
Net realized/unrealized appreciation
in investment fair value 2,588,365
-----------
Total investment income 5,945,825
Contributions:
Employee 1,361,494
Rollover 422,076
Employer 1,569,083
-----------
Total contributions 3,352,653
-----------
9,298,478
Deductions
Benefit payments 4,790,748
-----------
4,790,748
-----------
Increase in net assets available for benefits 4,507,730
Net assets available for benefits, beginning of year 36,233,941
-----------
Net assets available for benefits, end of year $40,741,671
===========
See accompanying notes.
L. B. Foster Company
Voluntary Investment Plan
Notes to Financial Statements
December 31, 2006 and 2005
1. Description of Plan
The following brief description of the L. B. Foster Company Voluntary Investment
Plan (the Plan) as amended effective January 1, 1999, is provided for general
information purposes only. Participants should refer to the summary plan
description for more complete information.
General
The Plan is a defined contribution plan extended to all eligible salaried
employees of L. B. Foster Company (the Company) who have attained age 18. The L.
B. Foster Company Employee Benefits Policy and Review Committee, appointed by
the Board of Directors of the Company, collectively serves as the plan
administrator. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA) as amended.
Contributions
Contributions under the Plan are made by both the participants and the Company.
A participant who elects to make pretax contributions of at least the maximum
amount subject to company matching can also elect to make additional voluntary
contributions on an after-tax basis. Employees may contribute up to 41% of their
annual compensation subject to Internal Revenue Code limitations. There is no
limit on aggregate pretax and after-tax contributions. Participant contributions
and employer matching contributions are invested in accordance with participant
elections. In the event that a participant does not make an investment election,
contributions are invested in the Fidelity Freedom funds until such time as an
election is made by the participant. The participant may transfer contributions
defaulted to these funds into other investment options at the participant's
discretion.
Beginning the first of the month following 12 months of employment, the Company
provides a 50% match of the participant's primary contribution on the first 4%
to 6% of annual compensation, based on years of service, as defined by the Plan.
Beginning the first of the month following 12 months of employment, the Company
contributes a fixed amount equal to 1% of eligible employees' annual
compensation regardless of whether the employee elects to contribute to the
Plan. Company contributions may be reduced by forfeitures that accumulate.
The Plan also requires an additional matching employer contribution of up to
$.50 for each $1.00 of eligible pretax contributions based on a target ratio of
the Company's annual pretax income to equity as defined in the Plan. An
additional matching employer contribution of $381,000 was made in 2006. No such
contributions were made in 2005.
1. Description of Plan (continued)
The Company, upon resolution of the Board of Directors, may make a discretionary
additional contribution of an amount out of, but not in excess of, the Company's
current or accumulated profits. Discretionary contributions of $626,000 and
$494,000 were approved for 2006 and 2005, respectively. Forfeitures of
discretionary contributions are reallocated to the Plan's remaining, eligible
participants. The Company's matching contributions may be reduced by any
forfeitures that accumulate from terminations of participants with nonvested
employer matching contributions. No forfeitures were utilized during 2006.
Forfeitures totaling $300 were utilized to offset contributions in 2005. At
December 31, 2006 and 2005, forfeitures approximating $4,800 and $400,
respectively, were available to reduce future company contributions.
Vesting
A participant's vested interest in the Plan on any date is equal to the sum of
the values of (a) that portion of the participant's account attributable to the
participant's contributions and (b) that portion of the participant's account
attributable to the Company's contributions multiplied by the applicable vesting
percentage plus or minus related earnings (losses). Participants that are active
as of January 1, 2002, or later are 100% vested in the Company's contributions
after three years of eligible service or after attaining age 65. Participants
that are inactive as of or terminated prior to January 1, 2002, are 100% vested
in the Company's contributions after five years of eligible service or after
attaining age 65.
Notwithstanding the above, a participant who terminates from the Plan by reason
of retirement, disability, or death is fully vested in their participant
account.
Distributions
Normal retirement age is 65. Early retirement age is 55, provided that the
participant has at least five years of service. In addition, a participant may
obtain an early retirement distribution prior to reaching age 55, provided that
the participant will turn 55 in the year the distribution occurs and that the
participant has at least five years of service.
As provided by the Plan, the distribution to which a participant is entitled by
reason of normal, early, late, or disability retirement, death, or termination
of employment may be made in the form of direct rollover, annuity, cash, or
partly in cash and partly as an annuity. The amount of such distribution is
equal to the participant's vested account balance on the valuation date.
1. Description of Plan (continued)
Withdrawals
Under the Plan, a participant may elect to withdraw voluntary, after-tax
contributions made to the Plan prior to January 1, 1987. Such withdrawals are
subject to a $1,000 minimum. In the event of extreme hardship and subject to
certain restrictions and limitations, a participant may withdraw their vested
interest in the portion of their account attributable to matching, fixed, and
discretionary contributions, and related earnings.
Participants' Accounts
Each participant's account is credited with the participant's pretax and
voluntary contributions, the participant's allocable share of company
contributions, and related earnings of the funds. Participants' accounts may be
invested in 10% increments into any of the mutual funds available under the Plan
at the direction of the participant.
Loans
A participant may obtain a loan from the vested portion of their account,
subject to spousal consent, if applicable. The loan proceeds (subject to a
minimum of $1,000 and a maximum of $50,000) are deducted from the participant's
account and are repaid by means of payroll deductions. Loans are required to be
repaid within 60 months from the date on which the loan is originally granted
and may be prepaid early without penalty. The repayment period for a loan that
is obtained for purchasing a primary residence may be as long as 360 months. The
loan carries an interest rate computed at the prime rate plus 0.5%. The interest
rate is computed on the date the loan is requested and remains fixed for the
full term of the loan.
Plan Termination
Although it has not expressed any intention to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. Should the Plan be terminated,
participants will become fully vested in their accounts, and the assets of the
Plan would be distributed to the participants based on their individual account
balances as determined under the plan provisions.
2. Summary of Significant Accounting Policies
Valuation of Investments
Mutual fund values are based on the underlying investments in securities. Mutual
fund securities traded on security exchanges are valued at the latest quoted
sales price. Securities traded on a national securities exchange are valued at
the last reported sales price on the last business day of the plan year. The
contract value of participation units owned in the collective trust fund is
based on quoted redemption values, as determined by the Trustee, on the last
business day of the plan year. The fair value of participation units owned by
the collective trust fund is determined based on the present value of the
underlying contracts' cash flows, discounted at current market rates for
investments of similar quality and duration. Loans receivable from participants
are valued at cost which approximates fair value.
Realized gain or loss includes recognized gains and losses on the sale of
investments. Unrealized appreciation or depreciation represents changes in value
from original cost. Dividend income is recorded on the ex-dividend date and
interest income is accrued as earned.
As described above, the assets of the Plan are concentrated in mutual funds
consisting primarily of stocks and bonds. Realization of amounts disclosed as
net assets available for benefits is dependent on the results of these markets.
Basis of Accounting
The financial statements of the Plan are maintained on the accrual basis.
Contributions receivable are recorded among the available investment options
based upon the participants' aggregate investment allocations in effect at the
end of the plan year.
Use of Estimates
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates that affect
the amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Expenses
The Company, as provided by the Plan, pays expenses of the Plan. Expenses
incurred to establish and maintain a loan are charged to the applicable
participant.
2. Summary of Significant Accounting Policies (continued)
New Accounting Pronouncement
In December 2005, the Financial Accounting Standards Board (FASB) issued FASB
Staff Position AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive
Investment Contracts Held by Certain Investment Companies Subject to the AICPA
Investment Company Guide and Defined-Contribution Health and Welfare and Pension
Plans (the FSP). The FSP defines the circumstances in which an investment
contract is considered fully benefit-responsive and provides certain reporting
and disclosure requirements for fully benefit-responsive investment contracts in
defined contribution health and welfare and pension plans. The financial
statement presentation and disclosure provisions of the FSP are effective for
financial statements issued for annual periods ending after December 15, 2006,
and are required to be applied retroactively to all prior periods presented for
comparative purposes. The Plan has adopted the provisions of the FSP as of
December 31, 2006.
As required by the FSP, investments in the accompanying Statements of Net Assets
Available for Benefits include fully benefit-responsive investment contracts
recognized at fair value. AICPA Statement of Position 94-4-1, Reporting of
Investment Contracts Held by Health and Welfare Benefit Plans and Defined
Contribution Pension Plans, as amended, requires fully benefit-responsive
investment contracts to be reported at fair value in the Plan's Statement of Net
Assets Available for Benefits with a corresponding adjustment to reflect these
investments at contract value. The requirements of the FSP have been applied
retroactively to the Statement of Net Assets Available for Benefits as of
December 31, 2005, presented for comparative purposes. Adoption of the FSP had
no effect on the Statement of Changes in Net Assets Available for Benefits for
any period presented.
3. Investments
Profit-sharing contributions are directed into the L. B. Foster Company Stock
Fund. Participants may subsequently transfer profit-sharing contributions into
other plan funds at their discretion. The L. B. Foster Company Stock Fund is a
unitized stock fund comprised of a 95% to 99% investment in L. B. Foster Company
common stock with the remaining 1% to 5% invested in a short-term investment
fund. As a result, participant accounts receive units of participation in the
fund rather than common shares.
3. Investments (continued)
For the year ended December 31, 2006, the Plan's investments (including
investments bought, sold, and held during the year) appreciated (depreciated) in
value as follows:
Net Realized/
Fair Unrealized
Market Appreciation
Value (Depreciation)
---------------------------------
Fidelity investments:
Magellan Fund $ 3,934,234 $(665,164)
Equity Income Fund 2,658,469 279,362
Growth and Income Fund 3,663,699 (266,054)
Government Income Fund 1,201,297 (13,240)
Blue Chip Fund 365,075 10,038
Asset Manager Fund 1,040,373 2,250
Low Price Stock Fund 2,192,096 139,065
Small Cap Stock Fund 1,049,586 24,809
Freedom Income Fund 110,217 1,212
Freedom 2000 27,839 1,818
Freedom 2010 934,726 33,305
Freedom 2020 1,518,605 72,226
Freedom 2030 540,554 29,217
Freedom 2040 324,377 17,226
Managed Income Portfolio 1,429,775 -
Retirement Government Money Market Fund 2,393,482 -
Spartan U.S. Equity Index Fund 3,311,564 389,718
Credit Suisse Emerging Growth Fund 534,849 4,803
PIMCO Total Return Fund 1,448,064 (18,961)
Allianz NFJ Small Cap Value Fund 1,012,470 33,548
MSI International Equity Fund 3,336,370 22,089
L. B. Foster Company Stock Fund 6,113,933 2,491,098
---------------------------------
$ 39,141,654 $2,588,365
=================================
3. Investments (continued)
The fair value of investments representing 5% or more of the Plan's assets at
December 31, 2006 and 2005, is as follows:
2006 2005
------------------------------
Fidelity investments:
Magellan Fund $ 3,934,234 $ 3,863,455
Equity Income Fund 2,658,469 2,933,547
Growth and Income Fund 3,663,699 3,797,262
Low Price Stock Fund 2,192,096 1,827,715
Retirement Government Money Market Fund 2,393,482 2,198,890
Spartan U.S. Equity Index Fund 3,311,564 2,897,159
MSI International Equity Fund 3,336,370 2,930,920
L. B. Foster Company Stock Fund 6,113,933 3,511,840
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
(IRS) dated July 30, 2002, stating that the Plan is qualified under Section
401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust
is exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan was amended
subsequent to the IRS determination letter. The plan sponsor has indicated that
it will take the necessary steps, if any, to bring the Plan's operations into
compliance with the Code.
5. Transactions With Parties in Interest
Certain trustee, accounting, and administrative expenses relating to the
maintenance of participant records and the Plan's administration are absorbed by
the Company.
6. Reconciliation between Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500 at December 31, 2006 and 2005:
2006 2005
------------ ------------
Net assets available for benefits
per the financial statements $40,741,671 $36,233,941
Adjustment to report collective
trust fund at fair value (14,370) (20,235)
------------ ------------
Net assets available for benefits per the Form 5500 $40,727,301 $36,213,706
============ ============
The following is a reconciliation of net realized/unrealized appreciation in
investment fair value per the financial statements to the Form 5500 for the year
ended December 31, 2006:
Net realized/unrealized appreciation
per the financial statements $2,588,365
Adjustment to report collective trust
fund at fair value (14,370)
-----------
Net assets available for benefits per the Form 5500 $2,573,995
===========
7. Subsequent Event - Plan Merger
Effective March 1, 2007, the Company merged the L. B. Foster Company Retirement
Savings Plan into the Plan. Upon completion, the L. B. Foster Company Retirement
Savings Plan has been terminated. The consolidated plan is the L. B. Foster
Company 401(k) and Profit Sharing Plan. Certain operational provisions were also
amended as a result of this Plan Merger.
Other Financial Information
L. B. Foster Company
Voluntary Investment Plan
EIN #25-1324733 Plan #201
Schedule H, Line 4i - Schedule of Assets
(Held at End of Year)
December 31, 2006
Identity of Issue, Borrower, Shares Fair Market
Lessor, or Similar Party Description of Investment Held Value
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments*:
Magellan Fund Equities 43,948 $ 3,934,234
Equity Income Fund Equities 45,405 2,658,469
Growth and Income Fund Equities 117,615 3,663,699
Government Income Fund Government obligations 119,651 1,201,297
Blue Chip Fund Equities 8,239 365,075
Asset Manager Fund Equities, money market, bonds 64,579 1,040,373
Low Price Stock Fund Equities 50,347 2,192,096
Small Cap Stock Fund Equities 55,312 1,049,586
Freedom Income Fund Equity funds, fixed income funds 9,551 110,217
Freedom 2000 Equity funds, fixed income funds 2,234 27,839
Freedom 2010 Equity funds, fixed income funds 63,935 934,726
Freedom 2020 Equity funds, fixed income funds 97,785 1,518,605
Freedom 2030 Equity funds, fixed income funds 33,721 540,554
Freedom 2040 Equity funds, fixed income funds 34,217 324,377
Managed Income Portfolio Guaranteed investment contracts 1,444,145 1,429,775
Retirement Government Money Market Fund Government obligations, money
market securities 2,393,482 2,393,482
Spartan U.S. Equity Index Fund Equities 65,994 3,311,564
Credit Suisse Emerging Growth Fund Equities 15,805 534,849
PIMCO Total Return Fund Fixed income securities 139,505 1,448,064
Allianz NFJ Small Cap Value Fund Equities 32,399 1,012,470
MSI International Equity Fund Equities 163,548 3,336,370
-------------
Total mutual funds 33,027,721
L. B. Foster Company Stock Fund Interest-bearing cash 260,683 260,683
Common stock 225,907 5,853,250
-------------
6,113,933
Outstanding participant loans Participant loans, interest rates
ranging from 4.5% to 10.5%,
various maturities ranging
from 2 to 30 years 444,114
-------------
$ 39,585,768
=============
*Party in interest
EXHIBIT INDEX
Exhibit 23.1 Consent of Independent Registered Public Accounting Firm
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
L.B. Foster Company
Voluntary Investment Plan
-----------------------------
(Name of Plan)
Date: June 27, 2007 By: /s/ David J. Russo
------------- -----------------------------
David J. Russo
Senior Vice President,
Chief Financial Officer and
Treasurer
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-65885) pertaining to the L. B. Foster Company Voluntary Investment
Plan of our report dated June 22, 2007, with respect to the financial statements
and schedule of the L. B. Foster Company Voluntary Investment Plan included in
this Annual Report (Form 11-K) for the year ended December 31, 2006.
/s/ Ernst & Young LLP
June 22, 2007