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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) if the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): July 23, 2003
L. B. FOSTER COMPANY
(Exact name of registrant as specified in charter)
Pennsylvania 000-10436 25-1324733
(State of Incorporation) (Commission File Number) (I. R. S. Employer
Identification No.)
415 Holiday Drive, Pittsburgh, Pennsylvania 15220
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (412) 928-3417
Item 9. Regulation FD Disclosure
On July 23, 2003, L. B. Foster Company (the "Company") issued a press release
announcing the Company's results of operations for the second quarter ended June
30, 2003. A copy of that press release is furnished with this report as Exhibit
99.1 and is incorporated herein by reference. In accordance with Securities Act
Release No. 33-8216 and Exchange Act Release 34-47583, this report on Form 8-K
shall be deemed provided under Items 9 and 12 of Form 8-K.
INDEX TO EXHIBITS
99.1 Press release dated July 23, 2003.
SIGNATURES
Pursuant to the requirements of the Securities and 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: July 23, 2003 By: /s/ David J. Russo
----------------------------------
David J. Russo
Senior Vice President,
Chief Financial Officer and
Treasurer
Exhibit 99.1
L. B. Foster Company Reports Improved Second Quarter Results
PITTSBURGH, July 23 /PRNewswire-FirstCall/ -- L.B. Foster Company
(Nasdaq: FSTR), a manufacturer, fabricator, and distributor of rail,
construction, and tubular products, today reported net income from continuing
operations of $1,123,000 ($0.12 per share) in 2003 versus net income from
continuing operations of $1,063,000 ($0.11 per share) in the second quarter of
2002.
Including a net loss from discontinued operations (related to the
Company's Foster Technologies subsidiary), the Company reported net income of
$1,086,000 ($0.11 per share) for the second quarter of 2003. This compares to
second quarter of 2002 net income of $731,000 ($0.08 per share) which included
a loss from discontinued operations of $332,000 ($0.03 per share).
Net sales for the second quarter of 2003 were $75.8 million compared to
$70.8 million in 2002, an increase of 7% due principally to an increase in
Rail Product sales. Gross margins declined slightly by 0.2 percentage points
to 12.1%, while selling and administrative expenses increased $0.3 million or
5% over the same prior year period. The gross profit margin decline was due
primarily to lower Construction Segment margins, while the selling and
administrative cost increase was due primarily to additions to the sales force
and related employee benefits, along with increased risk management costs.
Other income declined $0.2 million primarily as a result of the mark-to-market
adjustments recorded by the Company related to its interest rate collars.
Second quarter interest expense declined 9% from the prior year due
principally to an $8.4 million reduction in debt.
For the six months ended June 30, 2003, the Company reported net income
from continuing operations of $1,187,000 ($0.12 per diluted share) versus net
income from continuing operations of $1,091,000 ($0.11 per diluted share) for
the same period a year ago.
Including a net loss from discontinued operations of $0.3 million ($0.03
per share), the Company reported net income of $0.9 million ($0.10 per share)
for the first six months of 2003. This compares to the first six months of
2002 net loss of $3.9 million ($0.42 per share) which included a loss from
discontinued operations of $0.6 million ($0.07 per share) and a non-cash
charge of $4.4 million ($0.46 per share) from the cumulative effect of a
change in accounting principle as a result of the adoption of Financial
Accounting Standards No. 142 "Goodwill and Other Intangible Assets".
Net sales for the six months ended June 30, 2003 were $135.3 million
compared to $134.0 million in 2002. Gross margins improved by 0.3 percentage
points to 11.9%, while selling and administrative expenses increased $0.5
million or 4% over the same prior year period. The gross profit margin
improvement was due primarily to improved Rail Segment margins, while the
selling and administrative cost increase was due primarily to additions to the
sales force and related employee benefits, along with increased risk
management costs. Interest expense declined 11% as a result of the previously
mentioned reduction in corporate borrowings.
Cash flow from operations remained positive for the six months ended June
30, 2003, and combined with cash on hand from 2002 was adequate to fund a $2.3
million reduction in corporate borrowings for the period. Capital expenditures
for the six months ended June 30, 2003 were $1.3 million as compared to $2.9
million for capital improvements and $2.2 million for the Greulich acquisition
in the same period of 2002.
Company President and CEO Stan Hasselbusch stated, "We are pleased with
the performance of our entire Rail group in a market that continues to
struggle. Second quarter sales and gross profit are up 10% and 20%
respectively when compared to last year. Equally important was Rail's asset
management and plant utilization performance, two areas targeted for
improvement corporate-wide. Average assets are down $10 million year-to-year
and plant contributions are $649,000 more than in 2002." Mr. Hasselbusch
continued to say, "Our Tubular Product segment continues to improve over last
year and we expect that trend to continue into the second half of 2003."
Mr. Hasselbusch added, "In our construction markets, a 22% drop off in
awarded highway contracts in the first quarter has led to weakness,
particularly in Fabricated Products where revenues were down 32%. A large
portion of these businesses are dependent upon government infrastructure
spending, which has been declining as many states are experiencing budgetary
shortfalls. While year-to-date net sales are still below last year, Foster's
Piling Division's second quarter sales were stronger than in 2002 because of a
consistent supply of sheet piling. We expect Piling Products to outperform
2002 in the second half of 2003.
"Finally, in June we began to make tangible progress towards improving our
manufacturing operations which we believe will result in improved efficiency
levels and improved profitability," concluded Mr. Hasselbusch.
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, adequate funding for
infrastructure projects, the Company's ability to obtain special trackwork
products and continued availability of existing and new piling products.
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.
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
L. B. FOSTER COMPANY AND SUBSIDIARIES
(In Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
(Unaudited) (Unaudited)
NET SALES $75,796 $70,806 $135,315 $133,979
COSTS AND EXPENSES:
Cost of goods sold 66,600 62,106 119,186 118,484
Selling and administrative expenses 6,830 6,518 13,397 12,891
Interest expense 578 633 1,157 1,307
Other income (54) (230) (374) (510)
73,954 69,027 133,366 132,172
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 1,842 1,779 1,949 1,807
INCOME TAXES 719 716 762 716
INCOME FROM CONTINUING OPERATIONS
BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 1,123 1,063 1,187 1,091
DISCONTINUED OPERATIONS:
LOSS FROM OPERATIONS OF FOSTER
TECHNOLOGIES (60) (332) (440) (649)
INCOME TAX BENEFIT (23) 0 (173) 0
LOSS ON DISCONTINUED OPERATIONS (37) (332) (267) (649)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX 0 0 0 (4,390)
NET INCOME (LOSS) $1,086 $731 $920 ($3,948)
EARNINGS (LOSS) PER SHARE:
BASIC:
FROM CONTINUING OPERATIONS BEFORE
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE $0.12 $0.11 $0.12 $0.12
FROM DISCONTINUED OPERATIONS,
NET OF TAX (0.00) (0.03) (0.03) (0.07)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX 0.00 0.00 0.00 (0.46)
NET BASIC EARNINGS (LOSS) PER SHARE $0.11 $0.08 $0.10 ($0.42)
DILUTED:
FROM CONTINUING OPERATIONS BEFORE
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE $0.12 $0.11 $0.12 $0.11
FROM DISCONTINUED OPERATIONS,
NET OF TAX (0.00) (0.03) (0.03) (0.07)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF TAX 0.00 0.00 0.00 (0.46)
NET DILUTED EARNINGS (LOSS) PER SHARE $0.11 $0.08 $0.10 ($0.42)
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 9,568 9,495 9,546 9,468
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 9,671 9,722 9,633 9,692
L. B. Foster Company and Subsidiaries
Consolidated Balance Sheet
($ 000's)
June 30, December 31,
2003 2002
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash items $2,319 $3,653
Accounts and notes receivable:
Trade 44,047 39,294
Other 147 69
Inventories 40,690 32,925
Current deferred tax assets 1,494 1,494
Other current assets 1,122 696
Current assets of discontinued
operations 7 138
Total Current Assets 89,826 78,269
OTHER ASSETS:
Property, plant & equipment - net 34,993 36,083
Goodwill 350 350
Other intangibles - net 663 739
Investments 13,213 12,718
Deferred tax assets 4,436 4,454
Other non-current assets 1,026 1,175
Assets of discontinued
operations 1 196
Total Other Assets 54,682 55,715
$144,508 $133,984
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current maturities of long-term
debt $805 $825
Accounts payable-trade and other 34,354 24,094
Accrued payroll and employee
benefits 2,602 2,413
Current deferred tax liabilities 1,474 1,474
Other accrued liabilities 3,591 2,695
Liabilities of discontinued
operations 203 74
Total Current Liabilities 43,029 31,575
LONG-TERM BORROWINGS 21,000 23,000
OTHER LONG-TERM DEBT 3,712 3,991
DEFERRED TAX LIABILITIES 4,195 4,195
OTHER LONG-TERM LIABILITIES 5,313 5,210
STOCKHOLDERS' EQUITY:
Class A Common stock 102 102
Paid-in Capital 35,013 35,143
Retained Earnings 36,128 35,208
Treasury Stock (3,253) (3,629)
Accumulated Other Comprehensive
Loss (731) (811)
Total Stockholders' Equity 67,259 66,013
$144,508 $133,984