SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1995
Commission File Number 0-10436
L. B. Foster Company
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
25-1324733
(I.R.S. Employer Identification No.)
415 Holiday Drive, Pittsburgh, Pennsylvania
(Address of principal executive offices)
15220
(Zip Code)
(412) 928-3400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest
practicable date.
Class Outstanding at May 10, 1995
Class A Common Stock, Par Value $.01 9,922,738 Shares
L. B. FOSTER COMPANY AND SUBSIDIARIES
INDEX
PART I. Financial Information Page
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets 2
Condensed Consolidated Statements of Income 3
Condensed Consolidated Statements of Cash Flows 4
Notes to Condensed Consolidated
Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. Other Information
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 10
Signature 13
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
L. B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31, December 31,
1995 1994
ASSETS
Current Assets:
Cash and cash equivalents $1,106 $1,180
Accounts and notes receivable (Note 3):
Trade 44,117 46,257
Other 127 164
44,244 46,421
Inventories (Note 4) 48,415 43,651
Current deferred tax assets 613 897
Other current assets 529 666
Total current assets 94,907 92,815
Property, Plant & Equipment-At Cost 55,340 55,118
Less Accumulated Depreciation (31,976) (31,751)
23,364 23,367
Property Held for Resale 2,458 2,459
Deferred Tax Assets 1,428 1,428
Other Assets 2,591 2,516
TOTAL ASSETS $124,748 $122,585
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $794 $798
Short-term borrowings (Note 5) 14,120 13,920
Accounts payable 22,644 19,775
Accrued payroll and employee benefits
payable 1,918 2,524
Other current liabilities 2,750 3,279
Total current liabilities 42,226 40,296
Long-Term Debt 22,174 22,377
Other Long-Term Liabilities 1,627 1,593
Stockholders' Equity:
Class A Common stock 102 102
Paid-in capital 35,118 35,118
Retained earnings 24,058 23,656
Treasury stock (557) (557)
Total stockholders' equity 58,721 58,319
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $124,748 $122,585
See Notes to Condensed Consolidated Financial Statements.
L. B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
Three Months
Ended
March 31,
1995 1994
Net Sales $55,456 $45,045
Costs and Expenses:
Cost of Goods Sold 49,032 40,214
Selling and Administrative Expenses 5,221 4,936
Interest Expense 580 458
Other Expense (Income) 13 (122)
54,846 45,486
Income Before Income Taxes 610 (441)
Income Taxes (Benefit) 208 (150)
Net Income (Loss) $402 ($291)
Earnings (Loss) Per Common Share (Note 6) $0.04 ($0.03)
Average Number of Common
Shares Outstanding 9,923 9,923
Cash Dividend per Common Share 0 0
See Notes to Condensed Consolidated Financial Statements.
L. B. FOSTER COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Three Months
Ended March 31,
1995 1994
Cash Flows from Operating Activities:
Net Income (Loss) $402 ($291)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided (Used) by Operating Activities:
Deferred income taxes 284 0
Depreciation and amortization 649 690
Gain on sale of property, plant and equipment (46) (190)
Change in Operating Assets and Liabilities:
Accounts receivable 2,177 1,641
Inventories (4,785) 1,440
Other current assets 137 (152)
Other non-current assets (80) (5)
Accounts payable-trade 2,869 (4,985)
Accrued payroll and employee benefits (606) 10
Other current liabilities (529) (917)
Other liabilities 34 75
Net Cash Provided (Used) by Operating Activities 506 (2,684)
Cash Flows from Investing Activities:
Proceeds from sale of property, plant and
equipment 182 302
Capital expenditures on property, plant and
equipment (755) (384)
Net Cash Used by Investing Activities (573) (82)
Cash Flows from Financing Activities:
Proceeds from issuance of revolving credit
agreement borrowings 200 3,233
Repayments of long-term debt (207) (182)
Net Cash (Used) Provided by Financing Activities (7) 3,051
Net Decrease (Increase) in Cash and Cash Equivalents (74) 285
Cash and Cash Equivalents at Beginning of Period 1,180 1,213
Cash and Cash Equivalents at End of Period 1,106 1,498
Supplemental Disclosures of Cash Flow Information:
Interest Paid $583 $503
Income Taxes Paid $30 $4
During 1994, the Company financed the purchase of certain
capital expenditures totaling $111,000 through the issuance of
capital leases.
See Notes to Condensed Consolidated Financial Statements.
L. B. FOSTER COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three months ended
March 31, 1995 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1995. For
further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1994.
2. ACCOUNTING PRINCIPLES
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of". This statement is effective for
fiscal years beginning after December 15, 1995, although earlier
application is permitted. Management has not yet determined the
impact the statement will have on the Company's financial
statements.
3. ACCOUNTS RECEIVABLE
Credit is extended on an evaluation of the customer's financial
condition and, generally, collateral is not required. Credit
terms are consistent with industry standards and practices.
Trade accounts receivable at March 31, 1995 and December 31,
1994 have been reduced by an allowance for doubtful accounts of
$1,676,000 and $1,615,000, respectively. Bad debt expense was
$67,000 and $79,000 for the three month periods ended March 31,
1995 and 1994, respectively.
4. INVENTORIES
Inventories of the Company at March 31, 1995 and December 31,
1994 are summarized as follows
(in thousands):
March 31, December 31,
1995 1994
Finished goods $34,136 $28,495
Work-in-process 14,067 14,242
Raw materials 2,419 2,971
Total inventories at current costs: 50,622 45,708
(Less):
Current costs over LIFO
stated values (1,607) (1,457)
Reserve for decline in
market value of inventories (600) (600)
$48,415 $43,651
Inventories of the Company are generally valued at the lower of
last-in, first-out (LIFO) cost or market. Other inventories of
the Company are valued at average cost or market, whichever is
lower. An actual valuation of inventory under the LIFO method
can be made only at the end of each year based on the inventory
levels and costs at that time. Accordingly, interim LIFO
calculations must necessarily be based on management's estimates
of expected year-end levels and costs.
5. SHORT-TERM BORROWINGS
In May 1995, the Company's revolving loan agreement was amended
to increase the borrowing commitment by $5,000,000 to
$45,000,000. The increased borrowing commitment is effective
until October 31, 1995.
6. EARNINGS PER COMMON SHARE
Earnings per common share are computed by dividing net income by
the average number of Class A common shares and common stock
equivalents outstanding during the periods March 31, 1995 and
1994 of approximately 9,923,000. Common stock equivalents are
the net additional number of shares which would be issuable upon
the exercise of the outstanding common stock options, assuming
that the Company used the proceeds to purchase additional shares
at market value. Common stock equivalents had no material effect
on the computation of earnings per share for the periods ending
March 31, 1995 and 1994.
7. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is subject to laws and regulations relating to the
protection of the environment. While it is not possible to
quantify with certainty the potential impact of actions
regarding environmental matters, particularly any future
remediation and other compliance efforts, in the opinion of
management, compliance with the present environmental protection
laws will not have a material adverse effect on the financial
position, competitive position, or capital expenditures of the
Company. However, the Company's efforts to comply with
increasingly stringent environmental regulations may have an
adverse effect on the Company's future earnings.
In March 1994, Livermore Amador Valley Wastewater Management
Agency ("LAVWMA") notified the Company that it had supplied
LAVWMA with pipe for a pipeline constructed between 1978 and
1979, and alleged that a substantial portion of the interior
lining of the pipe had delaminated. On August 26, 1994, LAVWMA
filed suit against the Company in Superior Court of California,
Eastern District of the County of Alameda and alleged that the
Company is liable under theories of negligence and strict
liability for the cost of repairing or replacing the pipe and
punitive damages. LAVWMA contends that the cost of repairing
and/or replacing the pipeline will be between $10 million and
$30 million. The Company subsequently removed the case to the
United States District Court in the Northern District of
California. Although no assurances can be given, the Company
believes it has meritorious defenses to this action and will
defend itself vigorously.
The Company is subject to legal proceedings and claims which
arise in the ordinary course of its business. In the opinion of
management, the amount of ultimate liability with respect to
these actions will not materially affect the financial position
of the Company.
At March 31, 1995, the Company had outstanding letters of credit
of approximately $2,248,000.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Three Months Ended
March 31,
1995 1994
(Dollars in thousands)
Net Sales:
Rail Products $21,130 $17,414
Construction Products 19,215 13,950
Tubular Products 15,111 13,681
Total Net Sales $55,456 $45,045
Gross Profit
Rail Products $ 2,751 $ 2,395
Construction Products 2,125 1,546
Tubular Products 1,548 890
Total Gross Profit 6,424 4,831
Expenses:
Selling and administrative expenses 5,221 4,936
Interest expense 580 458
Other (income) expense 13 (122)
Total Expenses 5,814 5,272
Income Before Income Taxes 610 (441)
Income Tax Expense (Benefit) 208 (150)
Net Income (Loss) $ 402 $ (291)
First Quarter 1995 Results of Operations
The net income for the 1995 first quarter was $0.4 million or
$0.04 per share. This compares to a 1994 first quarter net loss
of $0.03 million or $0.03 per share. Last year's first quarter
results were adversely impacted by severe winter weather.
Net sales in 1995 were $55.5 million or 23% higher than the
comparable period in 1994. Rail products' net sales of $21.1
million increased 21% from the comparable period last year
principally as a result of higher billings for used rail
products. Tubular products' net sales were $15.1 million or 10%
higher than in 1994. An increase in the sales of coated pipe
products more than offset a decline in warehouse pipe sales.
Changes in net sales are primarily the result of changes in
volume rather than changes in prices.
The gross margin percentage for the Company in the 1995 first
quarter increased to 12% versus 11% in the 1994 quarter. Rail
products' gross margin percentage declined to 13% from 14% in
the year earlier quarter due primarily to lower margins on used
rail and transit products. Construction products' gross margin
of 11% was unchanged from the comparable period in 1994. The
gross margin percentage for the Company's tubular products
segment increased to 10% from 7% in 1994. This improvement was
due to increased pipe coating volume.
Selling and administrative expenses increased 6% in the 1995
first quarter from the same period last year due in part to
performance related accruals. Interest expense increased 27%
from the first quarter of 1994 as a result of both higher
borrowings to finance working capital and higher interest rates.
Liquidity and Capital Resources
The Company's ability to generate internal cash flow
("liquidity") results from the sale of inventory and the
collection of accounts receivable. During the first quarter of
1995, the average turnover rates for accounts receivable and
inventories were relatively unchanged from the prior year.
Working capital at March 31, 1995 was $52.7 million compared to
$52.5 million at December 31, 1994.
During the first quarter of 1995, the Company had capital
expenditures of $0.8 million, the majority of which was for the
Newport pipe coating facility. Capital expenditures in 1995 are
expected to be approximately $6 million. Capital expenditures
are anticipated to be funded by cash flows from operations, the
proceeds from capital leases and the normal disposition of used
rental pool assets.
Total revolving credit agreement borrowings at March 31, 1995
were $34.1 million or relatively unchanged from the end of 1994.
At March 31, 1995, the Company had approximately $5.9 million
in unused borrowing commitment of which $3.6 million was
available. Management believes its internal and external
sources of funds are adequate to meet anticipated needs.
Other Matters
Management continues to evaluate the overall performance and
return of each of the Company's operations. The operating
results of certain tubular business units have been
disappointing. While some progress has been made, the Company
continues to review its alternatives to improve the
profitability of these units or to dispose of them.
In March 1994, Livermore Amador Valley Wastewater Management
Agency ("LAVWMA") notified the Company that it had supplied
LAVWMA with pipe for a pipeline constructed between 1978 and
1979, and alleged that a substantial portion of the interior
lining of the pipe had delaminated. In August 1994, LAVWMA
filed suit against the Company in Superior Court of California,
Eastern District of the County of Alameda and alleged that the
Company is liable under theories of negligence and strict
liability for the cost of repairing or replacing the pipe and
punitive damages. LAVWMA contends that the cost of repairing
and/or replacing the pipeline will be between $10 million and
$30 million. The Company subsequently removed the case to the
United States District Court in the Northern District of
California. Although no assurances can be given, the Company
believes it has meritorious defenses to this action and will
defend itself vigorously.
The Company is responsible for certain waste previously
generated at its former tie treating facility in Winslow,
Indiana. Recent test results performed for the Company indicate
possible contamination and additional testing is required.
Until such testing is completed, the Company can not determine
what additional actions, if any, may be necessary. Although no
assurances can be given, the Company believes that additional
costs will not be material.
It is not possible to quantify with certainty the potential
impact of all actions regarding environmental matters,
particularly future remediation and other compliance efforts.
However, in the opinion of management, compliance with present
environmental protection laws will not have a material adverse
effect on the financial position of the Company. The Company's
efforts to comply with increasingly stringent environmental
matters may have an adverse effect on the Company's future
earnings.
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of". This statement is effective for
fiscal years beginning after December 15, 1995, although earlier
application is permitted. Management has not yet determined the
impact the statement will have on the Company's financial
statements.
Outlook
The Company's future operating results may be affected by a
number of factors. The Company is dependent upon a number of
major suppliers. If a supplier had operational problems or
ceased making material available to the Company, operations
could be adversely affected. The Company's operations are in
part dependent on governmental funding of infrastructure
projects. Significant changes in the level of government funding
of these projects could have a favorable or unfavorable impact
on the operating results of the Company. Additionally,
governmental actions concerning taxation, tariffs, the
environment or other matters could impact the operating
results of the Company. The Company's operations results may
also be affected by the weather.
Although backlog is not necessarily indicative of future
operating results, total Company backlog at March 31, 1995, was
approximately $107 million or 32% higher than at the end of the
previous year. At March 31, 1995, backlog for the Company's
rail products segment increased to $59 million from $48 million
at the end of the previous year. The increase was principally
from municipal transit projects. Construction products' backlog
was $30 million at March 31, 1995, and $19 million at December
31, 1994. The increase was principally in piling products.
Tubular products' backlog improved to $18 million at March 31,
1995, from $15 million at the end of the previous year due to an
increase in orders for coated pipe products.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See Note 5, "Commitments and Contingent Liabilities", to the
Condensed Consolidated Financial Statements.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
Unless marked by an asterisk, all exhibits are incorporated
herein by reference:
3.1 Restated Certificate of Incorporation as amended to date
filed as Exhibit 3.1 to Form 10-Q for the quarter ended
March 31, 1987.
3.2 Bylaws of the Registrant, as amended to date, filed as
Exhibit 3.2 to Form 10-K for the year ended December 31,
1993.
4.1 Loan Agreement by and among the Registrant and Mellon Bank,
N.A., Continental Bank, N.A. and Philadelphia National Bank
dated as of February 15, 1990, filed as Exhibit 4.1 to Form
10-K for the year ended December 31, 1989.
4.1.1 First Amendment to Loan Agreement dated as of November 27,
1990 and filed as Exhibit 4.1.1 to Form 10-K for the year
ended December 31, 1990.
4.1.2 Second Amendment to Loan Agreement dated as of May 22, 1991
and filed as Exhibit 4.1.2 or Form 10-Q for the quarter
ended June 30, 1991.
4.1.3 Assignment and Assumption Agreement by and among the
Registrant, Continental Bank, N.A. and NBD Bank, N.A. dated
as of May 22, 1991 and filed as Exhibit 4.1.3 to Form
10-Q for the quarter ended June 30, 1991.
4.1.4 Third Amendment to Loan Agreement dated as of December 31,
1991, filed as Exhibit 4.1.4 to Form 10-K for the year ended
December 31, 1991.
4.1.5 Security Agreement by and among the Registrant and Mellon
Bank, N.A., NBD Bank, N.A., and Philadelphia National Bank
dated as of January 29, 1992, filed as Exhibit 4.1.5 to
Form 10-K for the year ended December 31, 1991.
4.1.6 Fourth Amendment to Loan Agreement dated as of May 11, 1992,
filed as Exhibit 4.1.6 to Form 10-Q for the quarter ended
June 30, 1992.
4.1.7 Security Agreement by and among Allegheny Rail Products,
Inc. and Mellon Bank, N. A., NBD Bank, N. A., and Core
States Bank, N. A. dated as of May 11, 1992, filed as
Exhibit 4.1.7 to Form 10-Q for the quarter ended June 30,
1992.
4.1.8 Fifth Amendment to Loan Agreement dated as of September 25,
1992, filed as Exhibit 4.1.8 to Form 10-Q for the
quarter ended September 30, 1992.
4.1.9 Sixth Amendment to Loan Agreement dated as of April 30,
1993, filed as Exhibit 4.1.9 to Form 10-Q for the
quarter ended March 31, 1993.
4.1.10 Seventh Amendment to Loan Agreement dated as of December
31, 1993, filed as Exhibit 4.1.10 to Form 10-K for the
year ended December 31, 1993.
4.1.11 Eighth Amendment to Loan Agreement dated as of
February 22, 1995, filed as Exhibit 4.1.11 to Form 10-K
for the year ended December 31, 1994.
* 4.1.12 Ninth Amendment to Loan Agreement dated as of May 3, 1995.
10.15 Lease between the Registrant and Amax, Inc. for
manufacturing facility at Parkersburg, West Virginia,
dated as of October 19, 1978, filed as Exhibit 10.15
to Registration Statement No. 2-72051.
10.16 Lease between Registrant and Greentree Building Associates
for Headquarters office, dated as of June 9, 1986,
as amended to date, filed as Exhibit 10.16 to Form
10-K for the year ended December 31, 1988.
10.16.1 Amendment dated June 19, 1990 to lease between Registrant
and Greentree Building Associates, filed as Exhibit
10.16.1 to Form 10-Q for the quarter ended June
30, 1990.
10.19 Lease between the Registrant and American Cast Iron Pipe
Company for Pipe Coating Facility in Birmingham,
Alabama dated December 11, 1991 and filed as Exhibit
10.19 to Form 10-K for the year ended December 31, 1991.
10.33.2 Amended and Restated 1985 Long-Term Incentive Plan, as
amended and restated March 2, 1994 and filed as Exhibit
10.33.2 to Form 10-K for the year ended December 31,
1993. **
10.44 Amended Agreement between the Registrant and James W.
Wilcock dated as of February 19, 1991 and filed as
Exhibit 10.44 to Form 10-K for the year ended
December 31, 1990. **
10.45 Medical Reimbursement Plan filed as Exhibit 10.45 to Form
10-K for the year ended December 31, 1992. **
10.46 Leased Vehicle Plan as amended to date. Filed as Exhibit
10.46 to Form 10-K for the year ended December 31, 1993. **
10.49 Lease agreement between Newport Steel Corporation and L. B.
Foster Company dated as of October 12, 1994 and filed as
Exhibit 10.49 to Form 10-Q for the quarter ended September
30, 1994.
10.50 L. B. Foster Company 1995 Incentive Compensation Plan.
Filed as Exhibit 10.50 to Form 10-K for the year ended
December 31, 1995. **
10.51 Supplemental Executive Retirement Plan. Filed as Exhibit
10.51 to Form 10-K for the year ended December 31, 1994. **
19 Exhibits marked with an asterisk are filed herewith.
** Identified management contract or compensatory plan or
arrangement required to be filed as an exhibit.
b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Registrant during the three
month period ended March 31, 1995.
SIGNATURE
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 thereunto duly authorized.
L. B. FOSTER COMPANY
(Registrant)
Date: May 11, 1995 By /Roger F. Nejes/
Roger F. Nejes
Sr. Vice President-
Finance and Administration
& Chief Financial Officer
(Principal Financial Officer
and Duly Authorized Officer
of Registrant)
5
1000
3-MOS
DEC-31-1995
MAR-31-1995
1106
0
44244
1676
48415
94907
55340
31976
124748
42226
22174
102
0
0
59176
58721
55456
55456
49032
49032
0
0
580
610
208
402
0
0
0
402
.04
.04
NINTH AMENDMENT TO LOAN AGREEMENT
THIS NINTH AMENDMENT (this "Amendment") dated as of May 3,
1995, by and among L.B. FOSTER COMPANY, a Delaware corporation,
ALLEGHENY RAIL PRODUCTS, INC., a Pennsylvania corporation,
MELLON BANK, N . A. ( "Mellon" ), NBD BANK ( "NBD" ) and
CORESTATES BANK, N. A. ("CoreStates") (Mellon, NBD and
CoreStates are hereinafter separately called a "Bank" and
collectively the "Banks") and MELLON BANK, N.A., as agent for
the Banks (in such capacity, the "Agent");
W I T N E S S E T H :
WHEREAS, the Borrower and the Banks are parties to a Loan
Agreement dated February 15, 1990, as amended by the First
Amendment to Loan Agreement dated November 29, 1990, by the
Second Amendment to Loan Agreement dated May 22, 1991, by the
Third Amendment to Loan Agreement dated as of January 29, 1992,
by the Fourth Amendment to Loan Agreement dated as of May 11,
1992, by the Fifth Amendment to Loan Agreement dated as of
September 25, 1992, by the Sixth Amendment to Loan Agreement
dated as of April 20, 1993, by the Seventh Amendment to Loan
Agreement dated as of December 31, 1993 and by the Eighth
Amendment to Loan Agreement dated as of February 22, 1995 (as so
amended and as the same may hereafter be amended from time to
time called the "Agreement");
WHEREAS, the Borrower has requested a temporary increase
in the Commitment;
WHEREAS, the Banks are prepared to make such an increase
until October 31, 1995 pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises
and covenants herein contained, and intending to be legally
bound hereby, the parties hereto covenant and agree as follows:
1. Commitment. Section 2.01 of the Agreement is hereby amended
and restated in its entirety as follows:
Section 2.01. Commitments. Subject to the terms and conditions
hereof, and relying upon the representations and warranties of
the Borrower herein set forth, each Bank severally agrees to
make Loans to Borrower, on any Business Day, at any time or from
time to time prior to the Expiration Date, in an aggregate
principal amount not exceeding at any one time outstanding the
amount set forth opposite its name below (such amount, as the
same may be reduced from time to time hereafter in accordance
with Section 2.10(b) hereof, being herein referred to as the
"Commitment"):
Name and address Commitment until Commitment Percentage
of Bank October 31, 1995 from
November 1,
1995 until
Expiration
Date
Mellon Bank, N.A. $19,406,250 $17,250,000 43.125%
One Mellon Bank Center
Pittsburgh, PA 15258
NBD Bank $12,796,875 $11,375,000 28.4375%
611 Woodward Avenue
Detroit, MI 48226
CoreStates Bank, N.A. $12,796,875 $11,375,000 28.4375%
Broad & Chestnut Sts.
Philadelphia, PA 19101
Total $45,000,000 $40,000,000 100%
provided, that the aggregate amount of Debt attributable to the
Loans outstanding at any one time shall not exceed an amount
equal to the sum of (a) 75% of Eligible Accounts plus (b) 45% of
Eligible Inventory (the sum of such percentage of Eligible
Accounts and Eligible Inventory being referred to herein
collectively as the "Borrowing Base"); provided, further, that
the sum of all Loans outstanding at any one time plus the face
amount of all outstanding Letters of Credit shall not exceed the
sum of the Banks' Commitments' provided, further, that the sum
of the face amounts of all outstanding Letters of Credit shall
not exceed $10,000,000 at any time; and provided, further, that
the aggregate principal amount of Loans outstanding to Allegheny
plus the face amount of all outstanding Letters of Credit issued
for the account of Allegheny shall not in the aggregate exceed
at any time the amount of $3,500,000.
It is the intention of the parties that (a) the aggregate
outstanding principal balances of all Loans hereunder shall at
no time exceed the lesser of (i) the sum of the Banks'
Commitments less the face amounts of all outstanding Letters of
Credit and (ii) the Borrowing Base, and if, at any time, an
excess shall for any reason exist, the Borrower shall forthwith
repay to the Agent for the ratable account of the Banks, in
funds immediately available, the amount of such excess, together
with all interest on the amount so repaid.
Within such limits of time and amount and provided that the
conditions of lending set forth in Section 4.02 hereof are
satisfied and that no Event of Default or Potential Event of
Default has occurred and is continuing or exists, Borrower may
borrow, prepay, repay and reborrow hereunder until the
Expiration Date, when the Commitment of each Bank shall cease
and all Loans shall become immediately due and payable in full.
The proceeds of the Loans shall be used by Borrower for working
capital, general corporate purposes.
2. Conditions Precedent. The effectiveness of this
Amendment is conditioned upon the satisfaction of the following
conditions precedent:
(a) the representations and warranties of the Borrower
contained in the Agreement shall be true and no Event of Default
shall have occurred and no condition or event shall have
occurred or existed which would, after notice or lapse of time
or both, constitute such an Event of Default;
(b) there shall have been delivered to the Agent copies of
all documents evidencing corporate action taken by the Borrower
permitting the increased borrowing contemplated by this
Amendment and such corporate action shall be in form and scope
satisfactory to the Agent and special counsel for the Agent,
certified by the Secretary of the Borrower;
(c) Foster and Allegheny shall have acknowledged that the
full amount of the Commitment constitutes Guaranteed
Indebtedness under the Guaranty and Suretyship Agreements;
(d) Foster shall have acknowledged that the full amount of
the commitment constitutes Debt under the Pledge Agreement;
(e) the Notes shall be amended and restated to reflect the
full amount of each Bank's Commitment; and
(f) all details in connection with this Amendment shall be
satisfactory in form and substance to the Agent and its special
counsel and there shall have been delivered to the Agent and its
special counsel counterpart originals, certificates or other
copies of such documents and proceedings in connection with this
Agreement and in such quantities as the Agent or its special
counsel may reasonably request.
3. General.
(a) Effect of Amendment. Except as expressly amended
hereby, this Amendment shall not constitute (a) an amendment,
modification or alteration of the terms, conditions or covenants
of the Agreement, the Notes, the Security Agreements or any and
all documents or agreements executed pursuant to the foregoing,
(b) a waiver, release or limitation upon the exercise by any of
the Banks of any of their respective rights, legal or equitable,
under the Agreement, the Notes, the Security Agreements or any
and all documents or agreements executed pursuant to the
foregoing, or (c) a waiver of any Event of Default or Potential
Event of Default under the Agreement. Except as expressly stated
herein, this Amendment shall not relieve or release the Borrower
in any way or to any extent from any of the duties, obligations,
covenants or agreements imposed upon the Borrower by the
Agreement, the Notes, the Security Agreements and any and all
documents or agreements executed thereunder. Except as
expressly amended hereby, the Agreement remains in full force
and effect.
(b) Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank.]
IN WITNESS WHEREOF, the parties hereunto have executed
this Amendment as of the day and year first above written.
ATTEST: L. B. FOSTER COMPANY
David L. Voltz By: Lee B. Foster, II
Title: CEO
David L. Voltz ALLEGHENY RAIL PRODUCTS, INC.
By: Henry M. Ortwein, Jr.
Title: President
MELLON BANK, N.A., individually
and as Agent
By: Charles H. Staub
Title: Vice President
NBD BANK
By: Thomas W. Doddridge
Title: Vice President
CORESTATES BANK, N.A.
By: Michael Schmittlein
Title: Vice President
