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 reported)
|
October
23, 2009 (October 23, 2009)
|
|||
|
L.
B. Foster Company
|
||||
|
(Exact
name of registrant as specified in its charter)
|
||||
|
Pennsylvania
|
000-10436
|
25-1324733
|
||
|
(State
or other jurisdiction of incorporation)
|
(CommissionFile
Number)
|
(I.R.S.
EmployerIdentification No.)
|
||
|
415
Holiday Drive, Pittsburgh, Pennsylvania
|
15220
|
|||
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|||
|
Registrant’s
telephone number, including area code
|
(412)
928-3417
|
|||
|
(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 October 23, 2009, L.B. Foster
Company (the “Company”) issued a press release announcing the Company’s results
of operations for the third quarter ended September 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, October 23, 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
(Registrant)
Date:
October
23, 2009
/s/ David J.
Russo
David J.
Russo
Senior
Vice President,
Chief
Financial Officer and Treasurer
EXHIBIT
INDEX
|
Exhibit
Number
|
Description
|
|
99.1
|
Press
Release dated October 23, 2009, of L. B. Foster
Company.
|
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 THIRD QUARTER
OPERATING
RESULTS
PITTSBURGH,
PA, October 23, 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 third quarter 2009
net sales decreased 36.5% to $92.4 million compared to $145.6 million in the
prior year quarter. Gross profit margin was 19.2%, an increase of 360
basis points from the prior year quarter primarily as a result of a favorable
LIFO credit partially offset by negative variances caused by reductions in
inventory values, increased unfavorable manufacturing variances and increased
charges for slow moving and obsolete inventory.
2009
Third Quarter Results
In the
third quarter of 2009, L.B. Foster had net income of $6.1 million or $0.60 per
diluted share compared to net income of $8.1 million or $0.76 per diluted share
in the third quarter of 2008.
Included
in third quarter 2009 results was a pretax gain on the sale of marketable
securities of $1.2 million ($0.07 per diluted share), $1.0 million of charges
($0.06 per diluted share) related to slow moving inventory and a $0.2 million
charge ($0.01 per diluted share) related to a reduction in salaried
workforce.
Selling
and administrative expenses decreased $1.0 million or 10.2% from last year’s
quarter due primarily to lower incentive compensation expense as well as
decreased bad debt and travel and entertainment expenses. Third
quarter interest expense was $0.3 million, a 34.4% 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 37.6% in the third
quarter compared to 35.9% in the prior year quarter.
“All of
our segments posted significant declines in net sales for the third
quarter. Tubular sales were down 69.1%, Rail sales declined 37.2% and
Construction Products sales declined by 31.1%. While we have won
several significant orders this quarter, business activity is inconsistent in
our Rail and Construction businesses and weak in our Tubular
divisions. Our sales force has done a good job finding and winning
available business in a very competitive environment. Our
manufacturing and yard operations continue to seek and implement cost reduction
opportunities, but certain facilities cannot cover their fixed costs at these
low volumes. Accordingly, we had further reductions in plant
personnel and we implemented a reduction in our salaried workforce as well,”
stated Stan Hasselbusch, President and Chief Executive Officer.
Mr.
Hasselbusch also commented, “Bookings for the quarter were $107.5 million
compared to $115.8 million last year, a 7.2% decline while year-to-date bookings
were down 23.4%. Backlog was $155.5 million, an increase of 10.7%
over June 2009, but 13.0% lower than last year, an indication of continued
weakness.”
Mr.
Hasselbusch added, “We continue to see opportunities generated from the Federal
stimulus legislation primarily in our transit and precast concrete building
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
Nine Month Results
For the
nine months ended September 30, 2009, L.B. Foster reported net income of $11.8
million or $1.15 per diluted share compared to net income of $22.1 million or
$2.01 per diluted share in 2008. In addition to the 2009 third
quarter adjustments described above, we also recorded warranty charges of $2.7
million ($0.17 per diluted share) and $2.6 million ($0.16 per diluted share) of
unfavorable gross profit adjustments including a sales reversal and inventory
write-downs related to our concrete tie business during the first half 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 current and prior year gains noted above, 2009
earnings per diluted share was $1.08 compared to $1.82 last year.
Net sales
for the first nine months of 2009 decreased 23.0% to $283.9 million compared to
$368.8 million in 2008. Gross profit margin was 15.6%, down 70 basis
points from 2008, primarily as a result of (i) decreased billing margins
including negative variances related to declining inventory values; (ii) the
previously mentioned $5.3 million of concrete tie adjustments; (iii) increased
unfavorable manufacturing variances of $3.5 million and (iv) increased
unfavorable slow moving inventory reserves of $0.9 million, partially offset by
a favorable change in LIFO adjustments of $14.5 million.
Selling
and administrative expenses decreased $2.7 million or 9.2% from the prior year
due primarily to lower incentive compensation expense as well as decreased
travel and entertainment and bad debt expenses. Interest expense
decreased $0.6 million from the prior year due to decreased borrowings and lower
interest rates. The Company’s income tax rate was 37.5% compared to
36.4% in the prior year.
Cash
generated from operations was approximately $7.2 million for the third quarter
and $18.0 million for the first nine months of 2009. Capital
expenditures were $2.5 million for the third quarter 2009 compared to $0.9
million in the prior year quarter. The increase is due to the
purchase of land and preliminary construction of a building related to a joint
venture we entered into with Lally Pipe and Tube that will manufacture, market
and sell various products in the utility and construction
markets. “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 the fourth quarter and into 2010, we expect to continue to be
challenged by a difficult business environment and will continue to implement
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 third
quarter 2009 operating results and general market activity and business
conditions on Friday, October 23, 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
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||||
|
NET
SALES
|
$ | 92,413 | $ | 145,550 | $ | 283,928 | $ | 368,824 | ||||||||
|
COSTS
AND EXPENSES:
|
||||||||||||||||
|
Cost
of goods sold
|
74,655 | 122,843 | 239,656 | 308,611 | ||||||||||||
|
Selling
and administrative expenses
|
9,068 | 10,092 | 26,707 | 29,417 | ||||||||||||
|
Interest
expense
|
328 | 500 | 989 | 1,543 | ||||||||||||
|
Gain
on sale of DM&E investment
|
- | - | - | (2,022 | ) | |||||||||||
|
Gain
on sale of Houston, TX property
|
- | - | - | (1,486 | ) | |||||||||||
|
Interest
income
|
(169 | ) | (617 | ) | (676 | ) | (2,018 | ) | ||||||||
|
Other
(income) / expense
|
(1,310 | ) | 48 | (1,639 | ) | 64 | ||||||||||
| 82,572 | 132,866 | 265,037 | 334,109 | |||||||||||||
|
INCOME
BEFORE INCOME TAXES
|
9,841 | 12,684 | 18,891 | 34,715 | ||||||||||||
|
INCOME
TAX EXPENSE
|
3,697 | 4,558 | 7,076 | 12,626 | ||||||||||||
|
NET
INCOME
|
$ | 6,144 | $ | 8,126 | $ | 11,815 | $ | 22,089 | ||||||||
|
BASIC
EARNINGS PER COMMON SHARE
|
$ | 0.60 | $ | 0.77 | $ | 1.16 | $ | 2.04 | ||||||||
|
DILUTED
EARNINGS PER COMMON SHARE
|
$ | 0.60 | $ | 0.76 | $ | 1.15 | $ | 2.01 | ||||||||
|
AVERAGE
NUMBER OF COMMON SHARES
|
||||||||||||||||
|
OUTSTANDING
- BASIC
|
10,160 | 10,561 | 10,170 | 10,812 | ||||||||||||
|
AVERAGE
NUMBER OF COMMON SHARES
|
||||||||||||||||
|
OUTSTANDING
- DILUTED
|
10,292 | 10,695 | 10,315 | 10,963 | ||||||||||||
|
Consolidated
Balance Sheets
|
||||||||
|
(In
thousands)
|
||||||||
|
September
30,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
ASSETS
|
(Unaudited)
|
|||||||
|
CURRENT ASSETS:
|
||||||||
|
Cash
and cash items
|
$ | 122,018 | $ | 115,074 | ||||
|
Accounts
and notes receivable:
|
||||||||
|
Trade
|
51,450 | 63,271 | ||||||
|
Other
|
318 | 1,042 | ||||||
|
Inventories
|
96,986 | 102,916 | ||||||
|
Current
deferred tax assets
|
2,911 | 2,931 | ||||||
|
Prepaid
income tax
|
247 | - | ||||||
|
Other
current assets
|
1,422 | 1,221 | ||||||
|
Total
Current Assets
|
275,352 | 286,455 | ||||||
|
OTHER ASSETS:
|
||||||||
|
Property,
plant & equipment-net
|
38,328 | 39,989 | ||||||
|
Goodwill
|
350 | 350 | ||||||
|
Other
intangibles - net
|
28 | 37 | ||||||
|
Deferred
tax assets
|
2,032 | 2,026 | ||||||
|
Investments
|
2,985 | 2,856 | ||||||
|
Other
non-current assets
|
367 | 407 | ||||||
|
Total
Other Assets
|
44,090 | 45,665 | ||||||
| $ | 319,442 | $ | 332,120 | |||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
CURRENT LIABILITIES:
|
||||||||
|
Current
maturities on long-term debt
|
$ | 5,360 | $ | 5,777 | ||||
|
Accounts
payable-trade and other
|
47,972 | 62,612 | ||||||
|
Accrued
payroll and employee benefits
|
5,612 | 8,000 | ||||||
|
Other
accrued liabilities
|
7,085 | 7,802 | ||||||
|
Total
Current Liabilities
|
66,029 | 84,191 | ||||||
|
LONG-TERM
DEBT, TERM LOAN
|
11,190 | 13,333 | ||||||
|
OTHER
LONG-TERM DEBT
|
5,463 | 8,401 | ||||||
|
DEFERRED
TAX LIABILITIES
|
1,963 | 2,046 | ||||||
|
OTHER
LONG-TERM LIABILITIES
|
6,454 | 6,587 | ||||||
|
STOCKHOLDERS' EQUITY:
|
||||||||
|
Class
A Common stock
|
111 | 111 | ||||||
|
Paid-in
capital
|
47,744 | 47,585 | ||||||
|
Retained
earnings
|
208,875 | 197,060 | ||||||
|
Treasury
stock
|
(27,574 | ) | (26,482 | ) | ||||
|
Accumulated
other comprehensive loss
|
(813 | ) | (712 | ) | ||||
|
Total
Stockholders' Equity
|
228,343 | 217,562 | ||||||
| $ | 319,442 | $ | 332,120 | |||||