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
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Date
of Report (Date of earliest event reported)
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January
29, 2010 (January 29, 2010)
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L.
B. Foster Company
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(Exact
name of registrant as specified in its charter)
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Pennsylvania
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000-10436
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25-1324733
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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415
Holiday Drive, Pittsburgh, Pennsylvania
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15220
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
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(412)
928-3417
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(Former
name or former address, if changed since last report.)
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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):
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[ ]
Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
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[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR
240.13e-4(c))
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Item
2.02 Results
of Operations and Financial Condition
On January 29, 2010, L.B. Foster
Company (the “Company”) issued a press release announcing the Company’s results
of operations for the fourth quarter ended December 31, 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, January 29, 2010.
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:
January
29, 2010
/s/ David J.
Russo
David J.
Russo
Senior
Vice President,
Chief
Financial Officer and Treasurer
EXHIBIT
INDEX
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Exhibit Number
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Description
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99.1
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Press
Release dated January 29, 2010, 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 FOURTH QUARTER
NET
INCOME OF $3.9 MILLION
PITTSBURGH,
PA, January 29, 2010 – 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 net income of $3.9
million or $0.38 per diluted share in the fourth quarter of 2009, compared to
net income of $5.7 million or $0.55 per diluted share in the fourth quarter of
2008.
2009
Fourth Quarter Results
Fourth
quarter 2009 net sales decreased 31.8% to $98.0 million compared to $143.8
million in the prior year quarter. Gross profit margin was 15.9%, an
increase of 200 basis points from the prior year quarter primarily as a result
of a favorable LIFO credit partially offset by increased unfavorable
manufacturing variances and increased charges for market-related inventory
issues.
Selling
and administrative expenses decreased $2.8 million or 23.9% from last year’s
quarter due primarily to lower bad debt expense as well as decreased incentive
compensation and travel and entertainment expenses. Fourth quarter
interest expense declined 33.0% 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 40.7% in the fourth quarter
compared to 33.9% in the prior year quarter due to a lower manufacturing
deduction and state return to provision adjustments.
“All of
our segments posted significant declines in net sales for the fourth quarter;
however, cost controls and pay for performance incentive plans mitigated the
negative impact to income. While we have won several large orders
this quarter, business activity continues to be inconsistent in our Rail and
Construction businesses and very weak in our Tubular divisions," stated Stan
Hasselbusch, President and Chief Executive Officer.
Mr.
Hasselbusch also commented, “Bookings for the quarter were $114.7 million
compared to $99.5 million last year, a 15.3% increase while year-to-date
bookings were down 15.9%. Backlog was $172.7 million, an increase of
30.2% over the prior year; however, the gross margins associated with that
backlog are lower than the prior year due to decreased pricing and an increased
competitive environment across all product lines.”
Mr.
Hasselbusch added, “We won several attractive awards in 2009 that were related
to the Federal stimulus legislation, primarily in our transit and precast
concrete building businesses. While we expect a significant portion
of those 2009 awards to be reflected as sales in 2010, we also anticipate that
the volume of new stimulus-related opportunities will slow in
2010.”
2009
Total Year Results
For the
twelve months ended December 31, 2009, L.B. Foster reported net income of $15.7
million or $1.53 per diluted share compared to net income of $27.7 million or
$2.57 per diluted share in 2008. In 2009, we recorded warranty
charges of $2.7 million ($0.17 per diluted share) and unfavorable gross profit
adjustments of $2.6 million ($0.16 per diluted share) including a
return and subsequent inventory write-down that was related to our concrete tie
business which occurred during the first half of 2009. Other income
in 2009 included a pretax gain on the sale of marketable securities of $1.2
million ($0.07 per diluted share). 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 ($0.12 per diluted share),
as well as a $1.5 million ($0.09 per diluted share) pretax gain on the sale and
lease-back of our threaded products facility in Houston, Texas.
Net sales
for 2009 decreased 25.5% to $382.0 million compared to $512.6 million in
2008. Gross profit margin was 15.7%, flat with 2008. The
gross profit margin reflects (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 $5.2 million and (iv) increased slow moving inventory
charges of $2.0 million, partially offset by a favorable change in LIFO
adjustments of $23.7 million.
Selling
and administrative expenses decreased $5.5 million or 13.3% from the prior year
due primarily to lower incentive compensation and bad debt expense as well as
decreased travel and entertainment expense. Interest expense
decreased $0.7 million or 35.2% from the prior year due to decreased borrowings
and lower interest rates. The Company generated $2.0 million of
investment income in 2009 compared to $2.7 million in 2008. The
decline was due to a $1.9 million decrease in interest income, partially offset
by a gain on the sale of marketable securities. The decline in
interest income was due to a significant reduction in interest
rates. The Company’s income tax rate was 38.3% compared to 35.9% in
the prior year due to the reasons previously mentioned as well as reduced tax
exempt interest income.
Cash
generated from operations was approximately $7.7 million for the fourth quarter
and $25.7 million for all of 2009 compared to $24.1 million in
2008. Capital expenditures were $1.3 million for the fourth quarter
2009 and $6.1 million for the year compared to $4.8 million in
2008. The increase is principally due to the purchase of land and
construction of a building related to a joint venture we entered into that will
manufacture, market and sell various products in the utility and construction
markets. “In 2009, we used that $25.7 million of positive cash flow
to fund the $6.1 million in capital expenditures, to pay down $8.9 million of
debt and to purchase $1.9 million of our common stock." Mr.
Hasselbusch noted, “As we navigate through 2010, we expect to remain challenged
by a difficult business environment and we 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. The Company has strong liquidity and ample 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 fourth
quarter 2009 operating results and general market activity and business
conditions on Friday, January 29, 2010 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.
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L.B.
FOSTER COMPANY AND SUBSIDIARIES
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(In
Thousands, Except Per Share Amounts)
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Three
Months Ended
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Twelve
Months Ended
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December
31,
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December
31,
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2009
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2008
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2009
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2008
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(Unaudited)
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(Unaudited)
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NET
SALES
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$ | 98,034 | $ | 143,768 | $ | 381,962 | $ | 512,592 | ||||||||
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COSTS
AND EXPENSES:
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Cost
of goods sold
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82,448 | 123,763 | 322,104 | 432,374 | ||||||||||||
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Selling
and administrative expenses
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8,794 | 11,552 | 35,501 | 40,969 | ||||||||||||
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Interest
expense
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303 | 452 | 1,292 | 1,995 | ||||||||||||
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Gain
on sale of DM&E investment
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- | - | - | (2,022 | ) | |||||||||||
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Gain
on sale of Houston, TX property
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- | - | - | (1,486 | ) | |||||||||||
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Interest
income
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(113 | ) | (657 | ) | (789 | ) | (2,675 | ) | ||||||||
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Other
expense / (income)
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10 | 94 | (1,629 | ) | 158 | |||||||||||
| 91,442 | 135,204 | 356,479 | 469,313 | |||||||||||||
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INCOME
BEFORE INCOME TAXES
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6,592 | 8,564 | 25,483 | 43,279 | ||||||||||||
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INCOME
TAX EXPENSE
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2,680 | 2,907 | 9,756 | 15,533 | ||||||||||||
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NET
INCOME
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$ | 3,912 | $ | 5,657 | $ | 15,727 | $ | 27,746 | ||||||||
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BASIC
EARNINGS PER COMMON SHARE
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$ | 0.38 | $ | 0.55 | $ | 1.55 | $ | 2.60 | ||||||||
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DILUTED
EARNINGS PER COMMON SHARE
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$ | 0.38 | $ | 0.55 | $ | 1.53 | $ | 2.57 | ||||||||
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AVERAGE
NUMBER OF COMMON SHARES
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OUTSTANDING
- BASIC
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10,164 | 10,248 | 10,169 | 10,670 | ||||||||||||
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AVERAGE
NUMBER OF COMMON SHARES
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OUTSTANDING
- DILUTED
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10,289 | 10,365 | 10,304 | 10,811 | ||||||||||||
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L.B.
Foster Company and Subsidiaries
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Consolidated
Balance Sheets
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(In
thousands)
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December
31,
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December
31,
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2009
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2008
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ASSETS
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(Unaudited)
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CURRENT ASSETS:
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Cash
and cash items
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$ | 124,845 | $ | 115,074 | ||||
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Accounts
and notes receivable:
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Trade
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59,884 | 63,271 | ||||||
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Other
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1,294 | 1,042 | ||||||
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Inventories
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98,982 | 102,916 | ||||||
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Current
deferred tax assets
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3,678 | 2,931 | ||||||
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Prepaid
income tax
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248 | - | ||||||
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Other
current assets
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1,161 | 1,221 | ||||||
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Total
Current Assets
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290,092 | 286,455 | ||||||
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OTHER ASSETS:
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Property,
plant & equipment-net
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37,407 | 39,989 | ||||||
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Goodwill
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350 | 350 | ||||||
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Other
intangibles - net
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25 | 37 | ||||||
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Deferred
tax assets
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1,574 | 2,026 | ||||||
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Investments
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3,358 | 2,856 | ||||||
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Other
non-current assets
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362 | 407 | ||||||
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Total
Other Assets
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43,076 | 45,665 | ||||||
| $ | 333,168 | $ | 332,120 | |||||
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
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Current
maturities on long-term debt
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$ | 5,406 | $ | 5,777 | ||||
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Accounts
payable-trade and other
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61,839 | 62,612 | ||||||
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Accrued
payroll and employee benefits
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6,106 | 8,000 | ||||||
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Other
accrued liabilities
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6,409 | 7,802 | ||||||
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Total
Current Liabilities
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79,760 | 84,191 | ||||||
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LONG-TERM
DEBT, TERM LOAN
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10,476 | 13,333 | ||||||
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OTHER
LONG-TERM DEBT
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2,721 | 8,401 | ||||||
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DEFERRED
TAX LIABILITIES
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1,870 | 2,046 | ||||||
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OTHER
LONG-TERM LIABILITIES
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5,749 | 6,587 | ||||||
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STOCKHOLDERS' EQUITY:
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||||||||
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Class
A Common stock
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111 | 111 | ||||||
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Paid-in
capital
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47,660 | 47,585 | ||||||
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Retained
earnings
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212,787 | 197,060 | ||||||
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Treasury
stock
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(27,574 | ) | (26,482 | ) | ||||
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Accumulated
other comprehensive loss
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(392 | ) | (712 | ) | ||||
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Total
Stockholders' Equity
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232,592 | 217,562 | ||||||
| $ | 333,168 | $ | 332,120 | |||||