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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): October 21, 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 12. Results of Operations and Financial Condition
On October 21, 2003, L. B. Foster Company (the "Company") issued a press release
announcing the Company's results of operations for the third quarter ended
September 30, 2003. A copy of that press release is furnished with this report
as Exhibit 99.1 and is incorporated herein by reference.
The information furnished in this item 12 shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, 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 Exchange
Act of 1933, as amended, except as shall be expressly set forth by specific
reference in such filing.
INDEX TO EXHIBITS
99.1 Press release dated October 21, 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: October 21, 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 Third Quarter Results
PITTSBURGH, Oct. 21 /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 $1.4 million ($0.14 per share) in 2003 versus a net loss from
continuing operations of $2.4 million ($0.26 per share) in the third quarter
of 2002.
Net income for the third quarter of 2003 was $2.9 million ($0.30 per
share) versus a net loss of $2.7 million ($0.29 per share) for the third
quarter of 2002. Net income for the third quarter of 2003 includes $1.5
million in net income from discontinued operations (related to the Company's
Foster Technologies subsidiary), versus a net loss from discontinued
operations of $0.3 million in 2002. The income from discontinued operations
for the current quarter of 2003 comes primarily from the release of a $1.6
million valuation allowance against foreign net operating losses that are
expected to be utilized as a result of the imminent dissolution of this
subsidiary.
Net sales for the third quarter of 2003 were $75.8 million compared to
$67.0 million in 2002, an increase of 13%. Gross margins improved slightly by
0.1 percentage point to 12.6%. Selling and administrative expenses increased
$0.4 million or 5% over the same prior year period, primarily due to personnel
related costs accrued in the current quarter. Other (income) expense improved
by $4.2 million compared to the prior year third quarter due primarily to last
year's adjustments which included a $2.3 million charge related to mark-to-
market accounting for derivative instruments and a $1.8 million charge related
to the impairment of the Company's equity investment in a specialty trackwork
supplier. Third quarter interest expense declined 14% from the prior year due
to a $5.5 million reduction in debt.
For the nine months ended September 30, 2003, the Company reported net
income from continuing operations of $2.6 million ($0.27 per share) versus a
net loss from continuing operations of $1.4 million ($0.14 per share) for the
same period a year ago.
Including net income from discontinued operations of $1.3 million ($0.13
per share), the Company reported net income of $3.8 million ($0.40 per share)
for the first nine months of 2003. This compares to the first nine months of
2002 net loss of $6.7 million ($0.71 per share) which included a loss from
discontinued operations of $1.0 million ($0.10 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 nine months ended September 30, 2003 were $211.1 million
compared to $200.9 million in 2002, an increase of 5% resulting from increases
in the Rail and Pipe Products segments. Gross margins improved by 0.3
percentage points to 12.2%, while selling and administrative expenses
increased $0.9 million or 4% over the same prior year period. The gross profit
margin improvement was due to improved margins in both the Rail and Pipe
Products segments. The increase in selling and administrative costs was due to
additions to the sales force and personnel related costs, as well as increased
risk management costs. Other (income) expense improved by $4.1 million over
the same prior year period primarily as a result of the previously mentioned
prior year $2.3 million charge related to mark-to-market accounting for
derivative instruments and a $1.8 million charge related to the impairment of
the Company's equity investment in a specialty trackwork supplier. Interest
expense declined 12% as a result of the previously mentioned reduction in
corporate borrowings.
Cash flow from operations was slightly negative for the nine months ended
September 30, 2003 primarily due to increased accounts receivable balances
from the higher sales activity and increased inventory over prior year end
levels. Capital expenditures for the nine months ended September 30, 2003 were
$2.0 million as compared to $3.9 million for capital improvements and $2.2
million for the Greulich acquisition in the same period of 2002. Additionally,
the Company reduced its corporate borrowings by approximately $1.3 million
during the first nine months of 2003.
"We are extremely pleased with our operating performance in the third
quarter despite the continued weak industrial and uncertain public works
markets," stated Stan Hasselbusch, President and Chief Executive Officer.
"Consistent with the first two quarters, rail distribution and tubular
products led the way in the third quarter. Rail distribution revenue
increased 20% and tubular sales were up 48% over the same period in 2002. The
profitability from increased sales in these two areas, combined with improved
plant contributions, fueled our operating profit improvement.
On a concerning note, we are disappointed in the federal government's
delay in reauthorizing a meaningful highway and transit bill. The current
bill, TEA-21, which expired September 30th, has been extended five months.
Since public funding under this legislation impacts over 40% of our business,
passage of a new, improved bill is vital for growth and improved profitability
in the future, and we expect Washington to press diligently for successor
legislation."
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 OPERATIONS
L. B. FOSTER COMPANY AND SUBSIDIARIES
(In Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(Unaudited) (Unaudited)
NET SALES $75,802 $66,965 $211,117 $200,944
COSTS AND EXPENSES:
Cost of goods sold 66,261 58,621 185,447 177,104
Selling and administrative
expenses 7,096 6,732 20,493 19,624
Interest expense 576 669 1,733 1,976
Other (income) expense (381) 3,834 (755) 3,324
73,552 69,856 206,918 202,028
INCOME (LOSS) FROM CONTINUING
OPERATIONS
BEFORE INCOME TAXES AND
CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING
PRINCIPLE 2,250 (2,891) 4,199 (1,084)
INCOME TAXES 871 (446) 1,633 270
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 1,379 (2,445) 2,566 (1,354)
DISCONTINUED OPERATIONS:
LOSS FROM OPERATIONS OF FOSTER
TECHNOLOGIES (70) (302) (510) (951)
INCOME TAX BENEFIT (1,616) 0 (1,789) 0
INCOME (LOSS) ON DISCONTINUED
OPERATIONS 1,546 (302) 1,279 (951)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE, NET OF
TAX 0 0 0 (4,390)
NET INCOME (LOSS) $2,925 ($2,747) $3,845 ($6,695)
BASIC AND DILUTED EARNINGS
(LOSS) PER SHARE:
FROM CONTINUING OPERATIONS
BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE $0.14 ($0.26) $0.27 ($0.14)
FROM DISCONTINUED
OPERATIONS, NET OF TAX 0.16 (0.03) $0.13 ($0.10)
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE,
NET OF TAX 0.00 0.00 0.00 ($0.46)
BASIC AND DILUTED EARNINGS
(LOSS) PER SHARE $0.30 ($0.29) $0.40 ($0.71)
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC 9,593 9,519 9,562 9,485
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - DILUTED 9,774 9,526 9,682 9,500
* Since the Company incurred losses applicable to common
stockholders in all 2002 periods presented, the inclusion of
dilutive securities in the calculation of weighted average common
shares is anti-dilutive and therefore, there is no difference
between basic and diluted earnings per share.
L. B. Foster Company and Subsidiaries
Consolidated Balance Sheet
($ 000's)
September 30, December 31,
2003 2002
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash items $17 $3,653
Accounts and notes receivable:
Trade 49,741 39,294
Other 144 69
Inventories 36,910 32,925
Current deferred tax assets 1,494 1,494
Other current assets 1,044 696
Property held for resale 446 -
Current assets of discontinued
operations - 138
Total Current Assets 89,796 78,269
OTHER ASSETS:
Property, plant & equipment-net 33,924 36,083
Goodwill 350 350
Other intangibles - net 625 739
Investments 13,460 12,718
Deferred tax assets 6,021 4,454
Other non-current assets 979 1,175
Assets of discontinued
operations 1 196
Total Other Assets 55,360 55,715
$145,156 $133,984
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current maturities of long-term
debt $724 $825
Short-term borrowings 1,172 -
Accounts payable-trade and other 30,490 24,094
Accrued payroll and employee
benefits 3,172 2,413
Current deferred tax liabilities 1,474 1,474
Other accrued liabilities 4,146 2,695
Liabilities of discontinued
operations 148 74
Total Current Liabilities 41,326 31,575
LONG-TERM BORROWINGS 21,000 23,000
OTHER LONG-TERM DEBT 3,615 3,991
DEFERRED TAX LIABILITIES 4,195 4,195
OTHER LONG-TERM LIABILITIES 4,762 5,210
STOCKHOLDERS' EQUITY:
Class A Common stock 102 102
Paid-in Capital 34,972 35,143
Retained Earnings 39,053 35,208
Treasury Stock (3,155) (3,629)
Accumulated Other Comprehensive
Loss (714) (811)
Total Stockholders' Equity 70,258 66,013
$145,156 $133,984
SOURCE L. B. Foster Company
-0- 10/21/2003
/CONTACT: / Stan L. Hasselbusch of LB Foster Company, +1-412-928-3417, or
fax, +1-412-928-7891, or email, investors@LBFosterCo.com /
(FSTR)
CO: L. B. Foster Company
ST: Pennsylvania
IN: CST TRN
SU: ERN SLS