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 26, 2007
reported) -------------------------------
L. B. Foster Company
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(Exact name of registrant as specified in its charter)
Pennsylvania 000-10436 25-1324733
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
415 Holiday Drive, Pittsburgh, Pennsylvania 15220
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (412) 928-3417
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(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 26, 2007, L.B. Foster Company (the "Company") issued a press
release announcing the Company's results of operations for the second quarter
ended June 30, 2007. 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 26, 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
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(Registrant)
Date: July 26, 2007
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/s/ David J. Russo
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David J. Russo
Senior Vice President,
Chief Financial Officer and Treasurer
EXHIBIT INDEX
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Exhibit Number Description
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99.1 Press Release dated July 26, 2007, of L. B. Foster Company.
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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 RECORD SECOND QUARTER
SALES INCREASE 50%
EPS FROM CONTINUING OPERATIONS UP 117%
PITTSBURGH, PA, July 26, 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 second quarter
earnings per diluted share from continuing operations increased to $0.63 from
$0.29 in last year's second quarter, a 117% increase. This is the tenth
consecutive quarter the Company has recorded an earnings increase over the prior
year quarter.
2007 Second Quarter Results
In the second quarter of 2007, L.B. Foster had income from continuing operations
of $6.8 million or $0.63 per diluted share compared to income from continuing
operations of $3.1 million or $0.29 per diluted share in the second quarter of
2006. The Company reported no income from discontinued operations in the second
quarter of 2007, compared to a $0.1 million ($0.01 per diluted share) loss in
last year's second quarter, which relates to its former Geotechnical Division
that was sold in the first quarter of 2006. Net income was $6.8 million or $0.63
per diluted share in 2007 compared to $3.0 million or $0.28 per diluted share in
2006.
Net sales increased 50% to $148.5 million compared to $99.3 million in the prior
year quarter.
Gross profit margin was 14.3%, up 80 basis points from the prior year quarter
primarily as a result of increased billing margins before manufacturing and
other variances.
Selling and administrative expenses increased $1.1 million or 13% over last
year's quarter due primarily to increased employee related costs including
salaries and incentive compensation. Second quarter interest expense increased
$0.3 million or 38% over the prior year quarter due to increased average
borrowings. The increase in borrowings was due primarily to an increase in
working capital requirements as well as significant capital investments made
during the past twelve months. The Company's income tax rate from continuing
operations was 35.5% in the second quarter compared to 29.0% in the prior year
quarter. The low tax rate in the 2006 second quarter was the result of releasing
a portion of the valuation allowance provided for state deferred assets.
"Overall, Rail, Tubular and Construction Products sales were very strong and
bottom line results increased across all segments. However, while our Tubular
and Construction Segments expanded gross profit margins, the Rail Segment was
hampered by lower distribution and concrete tie margins. On a positive note,
Rail margins including concrete tie margins were improved over the first quarter
of this year," commented Stan Hasselbusch, President and Chief Executive
Officer. Our Tucson tie facility has made great progress with the efficiency of
the new equipment and with the quality of the concrete mix, but we have
struggled with employee turnover as new companies offering higher wages have
recently entered the Tucson marketplace. We are working to address this issue
and stabilize the workforce at this facility," remarked Mr. Hasselbusch. Mr.
Hasselbusch concluded by adding, "We also wanted to acknowledge that Chaparral
Steel, our primary supplier of steel sheet and beam piling, recently announced
that they have agreed to be purchased by Gerdau Ameristeel Corporation. We look
forward to continuing to work with Chaparral during this transition period and
with the new Gerdau/Chaparral team in the future."
2007 Half Year Results
For the six months ended June 30, 2007, L.B. Foster reported income from
continuing operations of $9.9 million or $0.91 per diluted share compared to
$4.3 million or $0.40 per diluted share in 2006. Income from discontinued
operations in 2006 was $2.6 million or $0.24 per diluted share and included the
gain on the sale of our former Geotechnical Division of $3.0 million. Net income
was $9.9 million or $0.91 per diluted share in 2007 compared to $6.9 million or
$0.64 per diluted share in 2006.
Net sales for the first half of 2007 increased 41% to $259.2 million compared to
$183.5 million in 2006. Gross profit margin was 13.7%, up 100 basis points from
2006, primarily as a result of increased billing margins offset, in part, by
increased manufacturing, scrap and obsolescence variances.
Selling and administrative expenses increased $1.8 million or 11% over the prior
year due primarily to employee related costs including salaries and incentive
compensation. Interest expense increased $0.9 million over the prior year due to
increased average borrowings. The Company's income tax rate from continuing
operations was 35.6% compared to 30.6% in the prior year.
Cash provided from operations was approximately $12.4 million for the second
quarter of 2007 and $4.6 million on a year-to-date basis, compared to cash used
by operations of $8.3 million and $14.2 million for the second quarter and first
half of 2006, respectively. Capital expenditures were $2.8 million for the first
six months of 2007 compared to $8.7 million during the prior year period. "We
expect to continue to generate positive cash from operations in the second half
of 2007 and anticipate capital expenditures to be below $10 million for the
year," commented Mr. Hasselbusch, who concluded by reporting, "Overall business
activity remains robust and is reflected in our order bookings. Bookings for the
first half of 2007 were $295 million, 21% higher than last year. Backlog at June
30, 2007 was $179 million, 13% higher than last year, which we continue to
expect to translate into a strong 2007."
L.B. Foster Company will conduct a conference call and webcast to discuss its
second quarter 2007 operating results on Thursday, July 26, 2007 at 10:00am 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. 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,
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2007 2006 2007 2006
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(Unaudited) (Unaudited)
NET SALES $148,547 $99,313 $259,213 $183,468
Cost of goods sold 127,309 85,868 223,785 160,219
Selling and administrative
expenses 9,790 8,685 18,191 16,416
Interest expense 1,183 858 2,405 1,523
Other income (346) (433) (604) (864)
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137,936 94,978 243,777 177,294
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INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 10,611 4,335 15,436 6,174
INCOME TAXES 3,762 1,256 5,495 1,889
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INCOME FROM CONTINUING OPERATIONS, NET OF TAX 6,849 3,079 9,941 4,285
(LOSS) INCOME FROM DISCONTINUED OPERATIONS (31) (118) (19) 2,701
INCOME TAX (BENEFIT) EXPENSE (12) (21) (8) 120
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(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX (19) (97) (11) 2,581
NET INCOME $6,830 $2,982 $9,930 $6,866
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BASIC EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $0.65 $0.30 $0.94 $0.42
FROM DISCONTINUED OPERATIONS (0.00) (0.01) (0.00) 0.25
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BASIC EARNINGS PER COMMON SHARE $0.64 $0.29 $0.94 $0.67
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DILUTED EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $0.63 $0.29 $0.91 $0.40
FROM DISCONTINUED OPERATIONS (0.00) (0.01) (0.00) 0.24
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DILUTED EARNINGS PER COMMON SHARE $0.63 $0.28 $0.91 $0.64
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 10,593 10,372 10,574 10,284
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 10,926 10,802 10,912 10,729
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L. B. Foster Company and Subsidiaries
Consolidated Balance Sheet
(In thousands)
June 30, December 31,
2007 2006
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ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash items $1,387 $1,309
Accounts and notes receivable:
Trade 70,233 60,771
Other 52 779
Inventories 104,670 99,803
Current deferred tax assets 2,653 2,653
Other current assets 1,373 1,133
Prepaid income tax 123 836
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Total Current Assets 180,491 167,284
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OTHER ASSETS:
Property, plant & equipment-net 48,530 49,919
Goodwill 350 350
Other intangibles - net 56 62
Investments 17,171 16,676
Deferred tax assets 1,293 1,149
Other non-current assets 315 393
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Total Other Assets 67,715 68,549
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$248,206 $235,833
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities on long-term debt $3,227 $3,105
Short-term borrowings 1,388 726
Accounts payable-trade and other 59,903 57,446
Accrued payroll and employee benefits 9,488 6,892
Current deferred tax liabilities 3,153 3,203
Other accrued liabilities 5,825 4,215
Current liabilities of discontinued operations 233 235
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Total Current Liabilities 83,217 75,822
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LONG-TERM BORROWINGS 36,830 39,161
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OTHER LONG-TERM DEBT 13,532 15,112
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DEFERRED TAX LIABILITIES 2,163 1,853
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OTHER LONG-TERM LIABILITIES 3,361 5,852
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STOCKHOLDERS' EQUITY:
Class A Common stock 106 105
Paid-in capital 41,239 39,696
Retained earnings 68,551 58,843
Accumulated other comprehensive loss (793) (611)
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Total Stockholders' Equity 109,103 98,033
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$248,206 $235,833
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