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 January 31, 2007
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 January 31, 2007, L.B. Foster Company (the "Company") issued a press
release announcing the Company's results of operations for the fourth quarter
ended December 31, 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, January 31, 2007.
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 31, 2007
----------------
/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 January 31, 2007, 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 REPORTS
OUTSTANDING FOURTH QUARTER
PITTSBURGH, PA, January 31, 2007 - 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 that its fourth quarter
earnings per diluted share from continuing operations increased to $0.27 from
$0.04 in last year's fourth quarter, more than a six-fold increase. This is the
eighth consecutive quarter the Company has recorded an earnings increase over
the prior year quarter, which concludes a very solid year as the Company's
annual income from continuing operations increased 121% over 2005.
2006 Fourth Quarter Results
In the fourth quarter of 2006, L. B. Foster had income from continuing
operations of $3.0 million or $0.27 per diluted share compared to income from
continuing operations of $0.4 million or $0.04 per diluted share in the fourth
quarter of 2005. The Company reported no income from discontinued operations in
the fourth quarter of 2006, compared to $0.4 million and $0.04 per diluted share
in last year's fourth quarter, which relates to its former Geotechnical Division
that was sold in the first quarter of 2006. Net income was $3.0 million or $0.27
per diluted share in 2006 compared to $0.9 million or $0.08 per diluted share in
2005.
Net sales increased 44% to $110.5 million compared to $76.7 million in the prior
year quarter.
Gross profit margin was 13.1%, up 200 basis points from the prior year quarter
primarily as a result of increased billing margins and to a lesser extent
decreased LIFO expense.
Selling and administrative expenses increased $1.6 million or 22% over last
year's quarter due primarily to employee related costs and benefit expenses
including incentive compensation and, to a lesser extent, bad debts and
advertising expenses. Fourth quarter interest expense increased $0.3 million or
40% 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 significant capital investments made
during the year. The Company's income tax rate from continuing operations was
34.1% in the fourth quarter compared to 10.6% in the prior year quarter. The low
tax rate in the 2005 fourth quarter was the result of adjustments related to the
reconciliation of certain tax accounts and releasing a portion of the valuation
allowance provided for state deferred assets.
"Fourth quarter sales were unusually strong. We normally see certain areas of
our business slow down late in the year as inclement weather begins to reduce
construction activity. This year, the seasonal slowdown was mitigated by a
number of factors: projects that were delayed from the third quarter to the
fourth quarter, milder than normal weather experienced in November and December,
and certain customers deciding to put product on the ground in an effort to
avoid product availability and delivery delays when weather conditions permit
construction continuation," commented Stan Hasselbusch, President and Chief
Executive Officer. "Overall, our Construction Products and Rail Products
Segments continued to deliver strong sales and gross profit margins. Our Rail
Products Segment performed substantially better than last year with the
exception of our concrete tie business where operating results were very
disappointing due primarily to permitting and operational issues at our Tucson
facility. Our Construction Products Segment also surpassed last year's fourth
quarter results due to significant across the board improvements in piling,
fabricated products and concrete buildings," remarked Mr. Hasselbusch. "While we
struggled at our Tucson concrete tie facility, our employees have worked
diligently to get all the equipment and related processes on line and in
production. We still have a way to go, but are making meaningful progress,"
added Mr. Hasselbusch.
2006 Full Year Results
For the twelve months ended December 31, 2006, L.B. Foster reported income from
continuing operations of $10.7 million or $0.99 per diluted share compared to
$4.8 million or $0.46 per diluted share in 2005. Income from discontinued
operations for 2006 was $2.8 million or $0.26 per diluted share compared to $0.6
million or $0.06 per diluted share. Income from discontinued operations in 2006
includes the gain on the sale of its former Geotechnical Division of $3.0
million. 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 2006 increased 20% to $389.8 million compared to $326.0 million in
2005. Gross profit margin was 13.2%, up 190 basis points from 2005, primarily as
a result of increased billing margins and, to a lesser extent decreased LIFO
expense.
Selling and administrative expenses increased $5.1 million or 18% over the prior
year due primarily to employee related costs including incentive compensation.
Interest expense increased $0.9 million over the prior year due to increased
interest rates and increased borrowings. The Company's income tax rate from
continuing operations was 32.1% compared to 31.0% in the prior year.
Cash used by operations was approximately $15.1 million for 2006 and capital
expenditures were $17.0 million. "We expect to generate positive cash from
operations in 2007 and also anticipate capital expenditures to be below $10
million," commented Mr. Hasselbusch, who concluded by reporting, "Overall
business activity remains strong and is reflected in our order bookings.
Bookings for 2006 were $431 million, 19% higher than last year. Backlog at
December 31, 2006 was $141 million, 41% higher than last year. We believe the
strong year-end backlog and the fact that orders already entered during January
2007 are 50% higher than January 2006 will translate into a strong 2007."
L. B. Foster Company will conduct a conference call and webcast to discuss its
fourth quarter 2006 operating results on Wednesday, January 31, 2007 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, production delays or
problems encountered at our manufacturing facilities, and the availability of
existing and new piling and rail products. In addition, neither backlog nor
orders entered are necessarily indicative of future performance. 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 Twelve Months Ended
December 31, December 31,
------------------------ --------------------------
2006 2005 2006 2005
------------------------ --------------------------
NET SALES $110,452 $76,730 $389,788 $325,990
COSTS AND EXPENSES:
Cost of goods sold 96,000 68,249 338,197 289,201
Selling and administrative
expenses 8,996 7,385 33,657 28,579
Interest expense 975 697 3,390 2,472
Other income (59) (81) (1,245) (1,286)
--------- ------- --------- ---------
105,912 76,250 373,999 318,966
--------- ------- --------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 4,540 480 15,789 7,024
INCOME TAXES 1,550 51 5,074 2,176
--------- ------- --------- ---------
INCOME FROM CONTINUING OPERATIONS, NET OF TAX 2,990 429 10,715 4,848
DISCONTINUED OPERATIONS:
(LOSS) INCOME FROM DISCONTINUED OPERATIONS (43) 482 3,153 714
INCOME TAXES (19) 51 338 128
--------- ------- --------- ---------
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX (24) 431 2,815 586
NET INCOME $2,966 $860 $13,530 $5,434
========= ======= ========= =========
BASIC EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $0.28 $0.04 $1.03 $0.48
FROM DISCONTINUED OPERATIONS (0.00) 0.04 0.27 0.06
--------- ------- --------- ---------
BASIC EARNINGS PER COMMON SHARE $0.28 $0.08 $1.30 $0.54
========= ======= ========= =========
DILUTED EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $0.27 $0.04 $0.99 $0.46
FROM DISCONTINUED OPERATIONS (0.00) 0.04 0.26 0.06
--------- ------- --------- ---------
DILUTED EARNINGS PER COMMON SHARE $0.27 $0.08 $1.25 $0.52
========= ======= ========= =========
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 10,529 10,186 10,403 10,122
========= ======= ========= =========
AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 10,877 10,585 10,809 10,492
========= ======= ========= =========