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 July 28, 2006
reported) -------------------------------
L. B. Foster Company
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 000-10436 25-1324733
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification 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 July 28, 2006, L.B. Foster Company (the "Company") issued a press
release announcing the Company's results of operations for the second quarter
ended June 30, 2006. 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
(c) Exhibits
99.1 Press Release issued by L.B. Foster Company, July 28, 2006.
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 July 28, 2006
- ------------------
/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 July 28, 2006, of L. B. Foster Company.
PRESS RELEASE
- --------------------------------------------------------------------------------
L. B. Foster Company
415 Holiday Drive, Pittsburgh, PA 15220
Contact: Stan L. Hasselbusch
Phone: (412) 928-3417
FAX: (412) 928-7891
Email: investors@LBFosterCo.com
FOR IMMEDIATE RELEASE
L. B. FOSTER COMPANY
REPORTS STRONG SECOND QUARTER
RESULTING IN 93% INCREASE IN INCOME FROM
CONTINUING OPERATIONS
PITTSBURGH, PA, July 28, 2006 - L.B. Foster Company (NASDAQ: FSTR), a leading
manufacturer, fabricator, and distributor of rail, construction, and tubular
products, today reported that its second quarter earnings per diluted share from
continuing operations increased to $0.29 from $0.15, a 93% increase, the sixth
consecutive quarter the Company has recorded an earnings increase over the prior
year.
2006 Second Quarter Results
In the second quarter of 2006, L. B. Foster had earnings per diluted share of 28
cents and net income of $3.0 million compared to 15 cents per diluted share and
net income of $1.6 million in the second quarter of 2005. The $0.1 million loss
from discontinued operations reflects the winding down of our former
Geotechnical Division, which was sold in the first quarter of 2006. Diluted
earnings per share from continuing operations were 29 cents on earnings of $3.1
million compared to 15 cents on earnings of $1.6 million in 2005.
Net sales increased 9% to $99.3 million compared to $90.7 million in the prior
year quarter.
Gross profit margin was 13.5%, up 230 basis points from the prior year quarter
primarily as a result of increased billing margins.
Selling and administrative expenses increased $1.3 million or 18% over last
year's quarter due primarily to employee related costs and benefit expenses.
Second quarter interest expense increased $0.3 million over the prior year due
to increased interest rates and increased borrowings. The increase in borrowings
was due primarily to an increase in working capital requirements as well as
higher than typical capital investments made during the past three quarters. The
Company's income tax rate from continuing operations was 29.0% in the second
quarter compared to 34.6% in the prior year quarter. The lower tax rate in 2006
is the result of releasing a portion of the valuation allowance provided for
state net operating losses due to a change in the Company's estimate of its
ability to utilize those net operating losses in future periods.
"Construction Products and Rail Products continued to deliver strong sales and
more importantly, improved gross profit margins. Our concrete tie business
results improved again due to strong activity at our Spokane facility. Our
precast buildings business also contributed significantly improved margins on
moderately increased sales and our Fabricated Products Division continued its
improvement over last year's second quarter as well as the first quarter of this
year," remarked Stan Hasselbusch, President and Chief Executive Officer. "We are
pleased to report that our recently refurbished Grand Island facility continued
to increase tie production to anticipated levels. Additionally, our Tucson
concrete tie facility has recently commenced test-casting of concrete ties and
will continue to work through mix design and mechanical issues as it prepares
for commissioning in the September to October time frame," added Mr.
Hasselbusch.
2006 First Half Results
In the first half of 2006, L.B. Foster had income from continuing operations of
$4.3 million or 40 cents per diluted share compared to $2.2 million or 21 cents
per diluted share for the first six months of 2005. Income from discontinued
operations for the first half of 2006 was $2.6 million which includes the gain
on the sale of our former Geotechnical Division of $3.0 million, reduced by a
$0.4 million loss from operations and wind down costs. The discontinued
operations income tax provision was favorably affected by the release of a
valuation allowance recorded in 2003 related to a capital loss carryforward.
Net sales for the first six months of 2006 increased 16% to $183.5 million
compared to $158.3 million in 2005. Gross profit margin was 12.7%, up 160 basis
points from the first six months of 2005, primarily as a result of increased
billing margins.
Selling and administrative expenses increased $2.5 million or 18% over the same
prior year period due primarily to employee related costs and benefit expenses.
Interest expense increased $0.5 million over the prior year due to increased
interest rates and increased borrowings. The Company's income tax rate from
continuing operations was 30.6% compared to 33.5% in the prior year due to the
same reasons stated in the first quarter discussion.
Cash used from operations was approximately $14 million for the first half of
2006, due to an expected ramp up in activity in anticipation of a seasonally
strong spring/summer period. Capital expenditures for the same period were $8.7
million as we continued to progress toward completion of the Tucson concrete tie
facility and substantially completed our new rail products manufacturing
facility in Pueblo, Co.
Mr. Hasselbusch concluded, "Overall business activity remains strong and is
reflected in our first quarter order bookings. Bookings for the first half were
$243 million, 32% higher than the same period last year. Backlog at June 30,
2006 was $159 million, which was 60% higher than last year."
L. B. Foster Company will conduct a conference call and webcast to discuss its
second quarter operating results on Friday, July 28, 2006 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, adequate funding for infrastructure projects, the
potential value of the Dakota Minnesota & Eastern Railroad, delays or problems
encountered during construction or implementation at our concrete tie
facilities, and the continued availability of existing and new piling and rail
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. 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 Six Months Ended
June 30, June 30,
------------------------- --------------------------
2006 2005 2006 2005
------------------------- --------------------------
(Unaudited) (Unaudited)
NET SALES $ 99,313 $ 90,712 $ 183,468 $ 158,345
COSTS AND EXPENSES:
Cost of goods sold 85,868 80,577 160,219 140,873
Selling and administrative
expenses 8,685 7,348 16,416 13,878
Interest expense 858 573 1,523 997
Other income (433) (227) (864) (727)
--------- -------- --------- ---------
94,978 88,271 177,294 155,021
--------- -------- --------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 4,335 2,441 6,174 3,324
INCOME TAXES 1,256 844 1,889 1,112
--------- -------- --------- ---------
INCOME FROM CONTINUING OPERATIONS, NET OF TAX 3,079 1,597 4,285 2,212
DISCONTINUED OPERATIONS:
(LOSS) INCOME FROM DISCONTINUED OPERATIONS (118) 2 2,701 26
INCOME TAX (BENEFIT) EXPENSE (21) 1 120 12
--------- -------- --------- ---------
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX (97) 1 2,581 14
NET INCOME $ 2,982 $ 1,598 $ 6,866 $ 2,226
========= ======== ========= =========
BASIC EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $ 0.30 $ 0.16 $ 0.42 $ 0.22
FROM DISCONTINUED OPERATIONS (0.01) 0.00 0.25 0.00
--------- -------- --------- ---------
BASIC EARNINGS PER COMMON SHARE $ 0.29 $ 0.16 $ 0.67 $ 0.22
========= ======== ========= =========
DILUTED EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $ 0.29 $ 0.15 $ 0.40 $ 0.21
FROM DISCONTINUED OPERATIONS (0.01) 0.00 0.24 0.00
--------- -------- --------- ---------
DILUTED EARNINGS PER COMMON SHARE $ 0.28 $ 0.15 $ 0.64 $ 0.21
========= ======== ========= =========
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 10,372 10,085 10,284 10,076
========= ======== ========= =========
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 10,802 10,409 10,729 10,402
========= ======== ========= =========
L. B. Foster Company and Subsidiaries
Consolidated Balance Sheet
($ 000's)
June 30, December 31,
2006 2005
----------- -------------
ASSETS (Unaudited)
CURRENT ASSETS:
- ---------------
Cash and cash items $ 1,401 $ 1,596
Accounts and notes receivable:
Trade 54,737 44,087
Other 510 1,354
Inventories 74,855 67,044
Current deferred tax assets 1,779 1,779
Other current assets 1,570 703
Current assets of discontinued operations 0 3,867
----------- ------------
Total Current Assets 134,852 120,430
----------- ------------
OTHER ASSETS:
- -------------
Property, plant & equipment-net 47,195 38,761
Goodwill 350 350
Other intangibles - net 104 144
Investments 16,181 15,687
Deferred tax assets 1,214 1,183
Other non-current assets 398 177
Assets of discontinued operations 0 1,554
----------- ------------
Total Other Assets 65,442 57,856
----------- ------------
$ 200,294 $ 178,286
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
- --------------------
Current maturities on long-term debt $ 2,200 $ 1,759
Short-term borrowings 6,558 5,881
Accounts payable-trade and other 40,752 41,087
Accrued payroll and employee benefits 4,854 5,875
Current deferred tax liabilities 4,845 4,845
Other accrued liabilities 1,732 3,128
Current liabilities of discontinued operations 399 1,760
----------- ------------
Total Current Liabilities 61,340 64,335
----------- ------------
LONG-TERM BORROWINGS 32,884 20,848
----------- ------------
OTHER LONG-TERM DEBT 10,287 8,428
----------- ------------
DEFERRED TAX LIABILITIES 1,615 1,615
----------- ------------
OTHER LONG-TERM LIABILITIES 3,561 3,071
----------- ------------
STOCKHOLDERS' EQUITY:
- ---------------------
Class A Common stock 105 102
Paid-in Capital 39,227 35,598
Retained Earnings 52,179 45,313
Treasury Stock 0 (126)
Accumulated Other Comprehensive Loss (904) (898)
----------- ------------
Total Stockholders' Equity 90,607 79,989
----------- -------------
$ 200,294 $ 178,286
============ =============