FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees Years ended December 31, 2001 and 2000 with Report of Independent AuditorsL. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees Financial Statements and Other Financial Information Years ended December 31, 2001 and 2000 Contents Report of Independent Auditors ........................................... 1 Audited 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 4(i)--Schedule of Assets (Held at End of Year)........... 11
Report of Independent Auditors Plan Administrator L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees We have audited the accompanying statements of net assets available for benefits of L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees as of December 31, 2001 and 2000, and the related statement of changes in net assets available for benefits for the year ended December 31, 2001. 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 auditing standards generally accepted in the 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as 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, 2001 and 2000, and the changes in its net assets available for benefits for the year ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. 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, 2001 is presented for purpose 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 10, 2002
2 L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees Statements of Net Assets Available for Benefits December 31 2001 2000 - ------------------------------------------------------------------------------- Assets Investments at fair value $ 1,314,897 $ 1,326,645 Participant loans 73,240 87,666 - ------------------------------------------------------------------------------- 1,388,137 1,414,311 Receivables: Employee 10,068 12,452 Employer 2,450 2,529 - ------------------------------------------------------------------------------- 12,518 14,981 - ------------------------------------------------------------------------------- Net assets available for benefits $ 1,400,655 $ 1,429,292 =============================================================================== See accompanying notes.
3 L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees Statement of Changes in Net Assets Available for Benefits Year ended December 31, 2001 Additions: Investment income (loss): Interest and dividends $ 39,920 Net realized/unrealized depreciation in investment fair value (111,472) - ------------------------------------------------------------------------------ Total investment loss (71,552) Contributions: Employee 143,179 Employer 32,189 - ------------------------------------------------------------------------------ Total contributions 175,368 - ------------------------------------------------------------------------------ 103,816 Deductions: Benefit payments 132,453 - ------------------------------------------------------------------------------ 132,453 - ------------------------------------------------------------------------------ Decrease in net assets available for benefits (28,637) Net assets available for benefits, beginning of year 1,429,292 - ------------------------------------------------------------------------------ Net assets available for benefits, end of year $ 1,400,655 ============================================================================== See accompanying notes.
4 L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees Notes to Financial Statements December 31, 2001 1. Description of Plan The following brief description of the L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees (the Plan) is provided for general information purposes only. Participants should refer to the summary plan description as amended on January 1, 1999 for more complete information. General The Plan is a defined contribution plan extended to all non-union hourly employees of L. B. Foster Company (the Company) who have attained age 18 and are employed at locations specified by the Plan. 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 may elect to make deferred savings contributions on a pretax basis ranging from 2% to 10% of annual compensation subject to Internal Revenue Code limitations. A participant who elects to make deferred savings contributions of at least 5% can also elect to make additional voluntary contributions on an after-tax basis provided, however, that the sum of the deferred savings and voluntary employee contributions does not exceed 15% of the participant's annual compensation. Participant and company 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.
5 1. Description of Plan (continued) Beginning the first of the month following twelve months of employment, eligible employees of Grand Island, Nebraska; Pueblo, Colorado; Petersburg, Virginia; Hillsboro, TX; and Rail Take-up shall have a company matching contribution of fifty cents for every dollar contributed by the employee on the first 4% to 6% of annual compensation, based upon years of service, as defined by the Plan. Beginning the first of the month following twelve months of continuous employment, eligible employees of the Georgetown, Massachusetts facility shall have a company matching contribution of fifty cents for every dollar contributed by the employee, up to the first 5% of the employee's compensation. This matching contribution will only be made if the employee contributes to the Plan. For all other participants, the Company provides a contribution of twelve cents per eligible hour worked. The Company's contributions may be reduced by any forfeitures which accumulate. No forfeitures were utilized to reduce company contributions in 2001. At December 31, 2001 and 2000, forfeitures of $9,566 and $7,820, 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 are 100% vested in the Company's contributions after five years of eligible service or attaining age 65. Notwithstanding the above, a participant who terminates from the Plan by reason of retirement, disability or death is fully vested in his 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 distribution occurs and that the participant has completed at least five years of service.
6 1. Description of Plan (continued) As provided by the Plan, the distribution to which a participant is entitled by reason of normal, early, or disability retirement, death, or termination of employment may be made in the form of a 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. Withdrawals In the event of hardship and subject to certain restrictions and limitations, as defined by the plan document, a participant may withdraw his vested interest in the portion of his account attributable to deferred savings 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 his 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 without penalty at any time. 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 one-half percent. The interest rate is computed on the date the loan is requested and remains fixed for the full term of the loan.
7 1. Description of Plan (continued) 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. Securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the average of the last reported bid and ask quotations. 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 primarily consisting 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.
8 2. Summary of Significant Accounting Policies (continued) Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States 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. 3. Investments Effective January 1, 1999, the Plan was amended to establish an investment option in which employees may invest contributions in L. B. Foster Company common stock. Effective August 30, 2001, the Plan was further amended to discontinue the L. B. Foster Company Stock Fund as an investment option. All investments in the Company's common stock were transferred to other fund options during 2001.
9 3. Investments (continued) For the year ended December 31, 2001, 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 $ 270,248 $ (34,596) Equity Income Fund 16,288 (1,491) Growth and Income Fund 244,478 (29,589) Government Income Fund 79,662 775 Asset Manager Fund 34,747 (3,070) Freedom 2010 105 1 Freedom 2020 517 14 Freedom 2030 179 6 Freedom 2040 98 4 Managed Income Fund 12,909 - Retirement Government Money Market Fund 456,162 - Spartan U.S. Equity Index Fund 62,065 (9,869) Janus Worldwide Fund 119,880 (28,057) Credit Suisse Emerging Growth Fund 17,559 (5,722) L. B. Foster Company Stock Fund - 122 ---------------------------------- $ 1,314,897 $ (111,472) ================================== The fair value of investments representing 5% or more of the Plan's assets at December 31, 2001 and 2000 is as follows: 2001 2000 ----------- ----------- Fidelity Investments: Magellan Fund $ 270,248 $ 269,594 Growth and Income Fund 244,478 259,779 Government Income Fund 79,662 94,118 Retirement Government Money Market Fund 456,162 396,932 Spartan U.S. Equity Index Fund 62,065 78,908 Janus Worldwide Fund 119,880 122,751
10 4. Income Tax Status The Plan has received a determination letter from the Internal Revenue Service (IRS) dated April 22, 1996, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code of 1986 (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 administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax-exempt. 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.
Other Financial Information
11 L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees EIN: 25-1324733 Plan Number: 012 Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year) December 31, 2001 Identity of Issue, Borrower, Shares Fair Market Lessor, or Similar Party Description of Investment Held Value - ---------------------------------------------------------------------------------------------------------------- Fidelity Investments*: Magellan Fund Equities 2,593 $ 270,248 Equity Income Fund Equities 334 16,288 Growth and Income Fund Equities 6,540 244,478 Government Income Fund Government obligations 7,990 79,662 Asset Manager Fund Equities, money market, bonds 2,242 34,747 Freedom 2010 Equity funds, fixed income funds 8 105 Freedom 2020 Equity funds, fixed income funds 41 517 Freedom 2030 Equity funds, fixed income funds 14 179 Freedom 2040 Equity funds, fixed income funds 13 98 Managed Income Fund Guaranteed investment contracts 12,909 12,909 Retirement Government Money Market Government obligations, money Fund market securities 456,162 456,162 Spartan U.S. Equity Index Fund Equities 1,527 62,065 Janus Worldwide Fund Equities 2,734 119,880 Credit Suisse Emerging Growth Fund Equities 651 17,559 - ---------------------------------------------------------------------------------------------------------------- Total mutual funds 1,314,897 Outstanding participant loans Participant loans, interest rates ranging from 5.5% to 9.5%, various maturities ranging from 1 year to 20 years 73,240 - ---------------------------------------------------------------------------------------------------------------- $ 1,388,137 ================================================================================================================ *Party-in-interest
Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Administrative Committee of the Plan have duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized. L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees ----------------------------------- (Name of Plan) June 27, 2002 By:/s/Stan L. Hasselbusch ----------------------------------- Stan L. Hasselbusch President and Chief Executive Officer
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement No.
333-65885 of L. B. Foster Company, as amended and restated, of our report dated
June 10, 2002, with respect to the financial statements and schedule of the L.
B. Foster Company Retirement Savings Plan for Non-Hourly Employees included in
this Form 11-K for the year ended December 31, 2001.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
June 26, 2002