EX-99.1 3 e15260ex99-1.txt PRESS RELEASE Exhibit 99.1 L. B. Foster Company Reports Improved Second Quarter Results PITTSBURGH, July 23 /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 $1,123,000 ($0.12 per share) in 2003 versus net income from continuing operations of $1,063,000 ($0.11 per share) in the second quarter of 2002. Including a net loss from discontinued operations (related to the Company's Foster Technologies subsidiary), the Company reported net income of $1,086,000 ($0.11 per share) for the second quarter of 2003. This compares to second quarter of 2002 net income of $731,000 ($0.08 per share) which included a loss from discontinued operations of $332,000 ($0.03 per share). Net sales for the second quarter of 2003 were $75.8 million compared to $70.8 million in 2002, an increase of 7% due principally to an increase in Rail Product sales. Gross margins declined slightly by 0.2 percentage points to 12.1%, while selling and administrative expenses increased $0.3 million or 5% over the same prior year period. The gross profit margin decline was due primarily to lower Construction Segment margins, while the selling and administrative cost increase was due primarily to additions to the sales force and related employee benefits, along with increased risk management costs. Other income declined $0.2 million primarily as a result of the mark-to-market adjustments recorded by the Company related to its interest rate collars. Second quarter interest expense declined 9% from the prior year due principally to an $8.4 million reduction in debt. For the six months ended June 30, 2003, the Company reported net income from continuing operations of $1,187,000 ($0.12 per diluted share) versus net income from continuing operations of $1,091,000 ($0.11 per diluted share) for the same period a year ago. Including a net loss from discontinued operations of $0.3 million ($0.03 per share), the Company reported net income of $0.9 million ($0.10 per share) for the first six months of 2003. This compares to the first six months of 2002 net loss of $3.9 million ($0.42 per share) which included a loss from discontinued operations of $0.6 million ($0.07 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 six months ended June 30, 2003 were $135.3 million compared to $134.0 million in 2002. Gross margins improved by 0.3 percentage points to 11.9%, while selling and administrative expenses increased $0.5 million or 4% over the same prior year period. The gross profit margin improvement was due primarily to improved Rail Segment margins, while the selling and administrative cost increase was due primarily to additions to the sales force and related employee benefits, along with increased risk management costs. Interest expense declined 11% as a result of the previously mentioned reduction in corporate borrowings. Cash flow from operations remained positive for the six months ended June 30, 2003, and combined with cash on hand from 2002 was adequate to fund a $2.3 million reduction in corporate borrowings for the period. Capital expenditures for the six months ended June 30, 2003 were $1.3 million as compared to $2.9 million for capital improvements and $2.2 million for the Greulich acquisition in the same period of 2002. Company President and CEO Stan Hasselbusch stated, "We are pleased with the performance of our entire Rail group in a market that continues to struggle. Second quarter sales and gross profit are up 10% and 20% respectively when compared to last year. Equally important was Rail's asset management and plant utilization performance, two areas targeted for improvement corporate-wide. Average assets are down $10 million year-to-year and plant contributions are $649,000 more than in 2002." Mr. Hasselbusch continued to say, "Our Tubular Product segment continues to improve over last year and we expect that trend to continue into the second half of 2003." Mr. Hasselbusch added, "In our construction markets, a 22% drop off in awarded highway contracts in the first quarter has led to weakness, particularly in Fabricated Products where revenues were down 32%. A large portion of these businesses are dependent upon government infrastructure spending, which has been declining as many states are experiencing budgetary shortfalls. While year-to-date net sales are still below last year, Foster's Piling Division's second quarter sales were stronger than in 2002 because of a consistent supply of sheet piling. We expect Piling Products to outperform 2002 in the second half of 2003. "Finally, in June we began to make tangible progress towards improving our manufacturing operations which we believe will result in improved efficiency levels and improved profitability," concluded Mr. Hasselbusch. 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 INCOME L. B. FOSTER COMPANY AND SUBSIDIARIES (In Thousands, Except Per Share Amounts) Three Months Ended Six Months Ended June 30, June 30, 2003 2002 2003 2002 (Unaudited) (Unaudited) NET SALES $75,796 $70,806 $135,315 $133,979 COSTS AND EXPENSES: Cost of goods sold 66,600 62,106 119,186 118,484 Selling and administrative expenses 6,830 6,518 13,397 12,891 Interest expense 578 633 1,157 1,307 Other income (54) (230) (374) (510) 73,954 69,027 133,366 132,172 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 1,842 1,779 1,949 1,807 INCOME TAXES 719 716 762 716 INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 1,123 1,063 1,187 1,091 DISCONTINUED OPERATIONS: LOSS FROM OPERATIONS OF FOSTER TECHNOLOGIES (60) (332) (440) (649) INCOME TAX BENEFIT (23) 0 (173) 0 LOSS ON DISCONTINUED OPERATIONS (37) (332) (267) (649) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAX 0 0 0 (4,390) NET INCOME (LOSS) $1,086 $731 $920 ($3,948) EARNINGS (LOSS) PER SHARE: BASIC: FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $0.12 $0.11 $0.12 $0.12 FROM DISCONTINUED OPERATIONS, NET OF TAX (0.00) (0.03) (0.03) (0.07) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAX 0.00 0.00 0.00 (0.46) NET BASIC EARNINGS (LOSS) PER SHARE $0.11 $0.08 $0.10 ($0.42) DILUTED: FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE $0.12 $0.11 $0.12 $0.11 FROM DISCONTINUED OPERATIONS, NET OF TAX (0.00) (0.03) (0.03) (0.07) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAX 0.00 0.00 0.00 (0.46) NET DILUTED EARNINGS (LOSS) PER SHARE $0.11 $0.08 $0.10 ($0.42) AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 9,568 9,495 9,546 9,468 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 9,671 9,722 9,633 9,692 L. B. Foster Company and Subsidiaries Consolidated Balance Sheet ($ 000's) June 30, December 31, 2003 2002 ASSETS (Unaudited) CURRENT ASSETS: Cash and cash items $2,319 $3,653 Accounts and notes receivable: Trade 44,047 39,294 Other 147 69 Inventories 40,690 32,925 Current deferred tax assets 1,494 1,494 Other current assets 1,122 696 Current assets of discontinued operations 7 138 Total Current Assets 89,826 78,269 OTHER ASSETS: Property, plant & equipment - net 34,993 36,083 Goodwill 350 350 Other intangibles - net 663 739 Investments 13,213 12,718 Deferred tax assets 4,436 4,454 Other non-current assets 1,026 1,175 Assets of discontinued operations 1 196 Total Other Assets 54,682 55,715 $144,508 $133,984 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $805 $825 Accounts payable-trade and other 34,354 24,094 Accrued payroll and employee benefits 2,602 2,413 Current deferred tax liabilities 1,474 1,474 Other accrued liabilities 3,591 2,695 Liabilities of discontinued operations 203 74 Total Current Liabilities 43,029 31,575 LONG-TERM BORROWINGS 21,000 23,000 OTHER LONG-TERM DEBT 3,712 3,991 DEFERRED TAX LIABILITIES 4,195 4,195 OTHER LONG-TERM LIABILITIES 5,313 5,210 STOCKHOLDERS' EQUITY: Class A Common stock 102 102 Paid-in Capital 35,013 35,143 Retained Earnings 36,128 35,208 Treasury Stock (3,253) (3,629) Accumulated Other Comprehensive Loss (731) (811) Total Stockholders' Equity 67,259 66,013 $144,508 $133,984