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 October 25, 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 October 25, 2007, L.B. Foster Company (the "Company") issued a press
release announcing the Company's results of operations for the third quarter
ended September 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
(d) Exhibits
99.1 Press Release issued by L.B. Foster Company, October 25, 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: October 25, 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 October 25, 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 THIRD QUARTER EARNINGS
SALES INCREASE 42%
PITTSBURGH, PA, October 25, 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 third quarter
earnings per diluted share from continuing operations increased to $1.32. These
results include an incremental $8.5 million of dividend income recorded in the
third quarter related to the DM&E Railroad. Excluding this incremental income,
earnings per diluted share from continuing operations were $0.64 compared to
$0.32 in last year's third quarter, a 100% increase. This marks the eleventh
consecutive quarter the Company has recorded an earnings increase over the prior
year quarter.
The incremental dividend income recorded in the third quarter was related to
previously unrecorded preferred stock dividends payable by the DM&E to the
Company that had not been recognized due to the uncertainty as to when they
might be paid. This uncertainty was eliminated when the DM&E agreed to be
acquired by the Canadian Pacific Railway on September 4, 2007. The Company
received approximately $148.8 million when the transaction eventually closed on
October 5, 2007. The gain on the sale of the Company's investment in the DM&E
(which is expected to be approximately $122.9 million) will be recorded in the
fourth quarter.
2007 Third Quarter Results
In the third quarter of 2007, L.B. Foster had income from continuing operations
of $14.5 million or $1.32 per diluted share compared to income from continuing
operations of $3.4 million or $0.32 per diluted share in the third quarter of
2006. The Company reported no income from discontinued operations in the third
quarter of 2007, compared to $0.3 million ($0.02 per diluted share) in last
year's third quarter, which relates to its former Geotechnical Division that was
sold in the first quarter of 2006. Net income was $14.5 million or $1.32 per
diluted share in 2007 compared to $3.7 million or $0.34 per diluted share in
2006.
Net sales increased 42% to $135.8 million compared to $95.9 million in the prior
year quarter. Gross profit margin was 15.5%, up 100 basis points from the prior
year quarter primarily as a result of increased billing margins before
manufacturing and other variances and, to a lesser extent, decreased unfavorable
manufacturing variances.
Selling and administrative expenses increased $1.6 million or 20% over last
year's quarter due primarily to increased employee related costs including
salaries and incentive compensation. Third quarter interest expense was $0.9
million, a 4% increase over the prior year quarter due to slightly increased
borrowings, however, interest expense has decreased 24% and 22% from the first
and second quarters, respectively, of this year as the Company has generated
strong positive cash flow in the second and third quarter of 2007. The Company's
income tax rate from continuing operations was 22.8% in the third quarter
compared to 32.2% in the prior year quarter. The low tax rate in this year's
third quarter was due primarily to the incremental $8.5 million of dividend
income as only 30% of this dividend income was taxable.
"Overall, Rail, Tubular and Construction Products sales were very strong and
bottom line results as well as operating margins increased across all segments.
We should note, however that Rail sales, as expected, were lower than the second
quarter of this year, primarily due to decreased new rail sales," commented Stan
Hasselbusch, President and Chief Executive Officer. CXT Concrete Tie sales
increased considerably over the prior year due to higher volumes at our Tucson
tie facility and increased production at our Grand Island tie facility. The
employee turnover issues in Tucson that we referred to in our second quarter
release have improved and we are working toward an accelerated training schedule
designed to mitigate the risk of a similar occurrence in the future. We are also
pleased to announce that our Spokane workforce represented by the United
Steelworkers Local number 338 have ratified a new four year agreement," remarked
Mr. Hasselbusch. Mr. Hasselbusch concluded by adding, "To create additional
value for our organization and our stakeholders, it is our strategy to
continually improve our existing businesses while we work at identifying and
evaluating potentially synergistic acquisitions."
2007 Year-to-Date Results
For the nine months ended September 30, 2007, L.B. Foster reported income from
continuing operations of $24.5 million or $2.24 per diluted share compared to
$7.7 million or $0.72 per diluted share in 2006. As mentioned above, these
results include an incremental $8.5 million of dividend income recorded in the
third quarter related to the DM&E Railroad. Excluding this incremental income,
earnings per diluted share from continuing operations were $1.55 compared to
$0.72 in last year's third quarter, a 115% increase.
Income from discontinued operations in 2006 was $2.8 million or $0.26 per
diluted share and included the gain on the sale of our former Geotechnical
Division of $3.0 million. Net income in 2007 was $24.5 million or $2.24 per
diluted share in 2007 compared to $10.6 million or $0.98 per diluted share in
2006.
Net sales for the first nine months of 2007 increased 41% to $395.0 million
compared to $279.3 million in 2006. Gross profit margin was 14.3%, up 100 basis
points from 2006, primarily as a result of increased billing margins before
manufacturing and other variances.
Selling and administrative expenses increased $3.4 million or 14% 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 28.6% compared to 31.3% in the prior year.
Cash provided from operations was approximately $24.3 million for the third
quarter of 2007 and $29.0 million on a year-to-date basis, compared to cash used
by operations of $7.0 million for the first nine months of 2006. Capital
expenditures were $3.8 million for the first nine months of 2007 compared to
$12.8 million during the prior year period. "We expect to continue to generate
positive cash from operations in the fourth quarter of 2007 and anticipate
capital expenditures to be below $7 million for the year," commented Mr.
Hasselbusch, who concluded by reporting, "Overall business activity remains
favorable and is reflected in our order bookings. Bookings for the first nine
months of 2007 were $413.9 million, 20% higher than last year. While third
quarter bookings were $119.3 million, 19% higher than last year's third quarter,
our backlog at September 30, 2007 was $165.8 million, 2.9% lower than last year
as third quarter sales exceeded the prior year quarter by almost $40 million.
L.B. Foster Company will conduct a conference call and webcast to discuss its
third quarter 2007 operating results and general market activity and business
conditions on Thursday, October 25, 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,
production delays or problems encountered at our manufacturing facilities, and
the availability of existing and new piling and rail products. There are also no
assurances that the Canadian Pacific Railway will proceed with the Powder River
Basin project and trigger any contingent payments to L.B. Foster. 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 Nine Months Ended
September 30, September 30,
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2007 2006 2007 2006
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(Unaudited) (Unaudited)
NET SALES $135,753 $95,868 $394,966 $279,336
COSTS AND EXPENSES:
Cost of goods sold 114,759 81,978 338,544 242,197
Selling and administrative
expenses 9,890 8,245 28,081 24,661
Interest expense 926 892 3,331 2,415
Dividend income (8,719) (247) (9,214) (742)
Other (income) expense 47 (75) (62) (444)
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116,903 90,793 360,680 268,087
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INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 18,850 5,075 34,286 11,249
INCOME TAXES 4,301 1,635 9,796 3,524
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INCOME FROM CONTINUING OPERATIONS, NET OF TAX 14,549 3,440 24,490 7,725
DISCONTINUED OPERATIONS:
(LOSS) INCOME FROM DISCONTINUED OPERATIONS (26) 495 (45) 3,196
INCOME TAX (BENEFIT) EXPENSE (8) 237 (16) 357
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(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX (18) 258 (29) 2,839
NET INCOME $14,531 $3,698 $24,461 $10,564
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BASIC EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $1.37 $0.33 $2.31 $0.75
FROM DISCONTINUED OPERATIONS (0.00) 0.02 (0.00) 0.27
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BASIC EARNINGS PER COMMON SHARE $1.36 $0.35 $2.31 $1.02
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DILUTED EARNINGS PER COMMON SHARE:
FROM CONTINUING OPERATIONS $1.32 $0.32 $2.24 $0.72
FROM DISCONTINUED OPERATIONS (0.00) 0.02 (0.00) 0.26
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DILUTED EARNINGS PER COMMON SHARE $1.32 $0.34 $2.24 $0.98
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 10,654 10,510 10,601 10,360
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 10,990 10,872 10,941 10,780
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L. B. Foster Company and Subsidiaries
Consolidated Balance Sheet
(In thousands)
September 30, December 31,
2007 2006
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ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash items $5,746 $1,309
Accounts and notes receivable:
Trade 62,821 60,771
Other 196 779
Inventories 93,680 99,803
Current deferred tax assets 2,653 2,653
Other current assets 1,121 1,133
Prepaid income tax - 836
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Total Current Assets 166,217 167,284
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OTHER ASSETS:
Property, plant & equipment-net 47,426 49,919
Goodwill 350 350
Other intangibles - net 53 62
Investments 25,890 16,676
Deferred tax assets 1,297 1,149
Other non-current assets 361 393
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Total Other Assets 75,377 68,549
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$241,594 $235,833
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities on long-term debt $5,900 $3,105
Short-term borrowings - 726
Accounts payable-trade and other 55,457 57,446
Accrued payroll and employee benefits 10,666 6,892
Current deferred tax liabilities 3,153 3,203
Other accrued liabilities 6,965 4,215
Current liabilities of discontinued operations 233 235
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Total Current Liabilities 82,374 75,822
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LONG-TERM BORROWINGS - 39,161
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LONG-TERM DEBT, TERM LOAN 16,905 -
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OTHER LONG-TERM DEBT 12,698 15,112
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DEFERRED TAX LIABILITIES 2,163 1,853
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OTHER LONG-TERM LIABILITIES 3,247 5,852
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STOCKHOLDERS' EQUITY:
Class A Common stock 107 105
Paid-in capital 41,825 39,696
Retained earnings 83,082 58,843
Accumulated other comprehensive loss (807) (611)
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Total Stockholders' Equity 124,207 98,033
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$241,594 $235,833
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