EX-99.1 2 e19446ex99-1.txt PRESS RELEASE Exhibit 99.1 L. B. Foster Company Reports Third Quarter Results PITTSBURGH, Oct. 26 /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 $1.3 million ($0.13 per share) in the third quarter of 2004 versus $1.4 million ($0.14 per share) in the third quarter of 2003. Pre-tax earnings were $2.1 million compared to $2.3 million in the prior year quarter, a 6.6% decline. Included in the current quarter results was a $1.0 million LIFO charge, due primarily to higher steel prices. Net income for the third quarter of 2004 was $1.3 million ($0.13 per share) versus net income of $2.9 million ($0.30 per share) for the third quarter of 2003. Net income for the third quarter of 2003 included $1.5 million or $0.16 per share from discontinued operations related to the tax benefits from the dissolution of the Company's Foster Technologies subsidiary. Net sales for the third quarter of 2004 were $85.9 million compared to $75.8 million in 2003, an increase of 13% while gross margins declined by 1.7 percentage points to 10.9%. The increase in net sales was due primarily to a 43% increase in new rail distribution sales and a 31% increase in piling sales. The decline in gross profit margin percentage was principally due to the effects of escalating steel prices, which include a $1.0 million noncash LIFO charge and to the fact that our third quarter sales increases came from our lower margin distribution businesses. Selling and administrative expenses declined slightly by $0.1 million or 1% from the same prior year period. Third quarter interest expense declined 22% from the prior year due principally to the retirement of a $10.0 million LIBOR based interest rate collar agreement in April 2004 that had a minimum annual interest rate. Other income declined by $0.2 million primarily as a result of a decrease in the mark-to-market adjustment recorded by the Company related to its interest rate collar agreement in the third quarter of 2004. For the nine months ended September 30, 2004, the Company reported net income from continuing operations of $2.5 million ($0.25 per share) versus net income from continuing operations of $2.6 million ($0.27 per share) for the same period a year ago. Net income for the first nine months of 2004 was $2.5 million ($0.25 per share) versus net income of $3.8 million ($0.40 per share) for the first nine months of 2003. The 2003 results included $1.3 million of income ($0.13 per share) from discontinued operations primarily related to the previously mentioned tax benefits from the dissolution of the Company's Foster Technologies subsidiary. Net sales for the nine months ended September 30, 2004 were $228.1 million compared to $211.1 million in 2003, an increase of 8% while gross margins declined by 1.4 percentage points to 10.8%. The increase in net sales came primarily from our new rail and piling distribution businesses. The decline in gross profit margin percentage was attributable to the effects of escalating steel prices, which include a $1.1 million noncash LIFO charge and to the fact that our sales increases came from our lower margin distribution businesses. Selling and administrative expenses remained stable as compared to the same prior year period. Interest expense declined 20% as a result of the previously mentioned collar retirement and a reduction in average borrowing levels during the current year. Other income increased $0.5 million primarily as a result of the first quarter sale of the Company's former Newport, KY pipe coating machinery and equipment which had been classified as "held for resale" and the mark-to-market adjustment recorded by the Company related to its remaining interest rate collar. Cash flow from operations was negative for the first nine months of 2004 as the Company's working capital has increased with the increased sales volume. The cash requirements were funded primarily from existing cash and revolving credit facility borrowings. Capital expenditures for the nine months ended September 30, 2004 were $2.1 million as compared to $2.0 million in the same period of 2003. President and CEO, Stan Hasselbusch commented, "Although we continue to capitalize on market improvements in Rail Distribution and Piling, we are negatively impacted by escalating steel costs in the fixed price contract areas of Fabricated and Transit Products. Third quarter Rail Distribution and Piling sales were up 43% and 31%, respectively. However, the increased income generated from these businesses was essentially offset by declines from our Fabricated and Transit Products businesses." Hasselbusch continued, "Additionally, a non-cash LIFO provision reduced pretax earnings by $990,000 for the third quarter. We expect an additional LIFO provision will be necessary in the fourth quarter." 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 (including the passage of an adequate highway and transit bill), the potential value or viability of the DM&E, the ability to secure significant sales contracts, 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. 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 Sept. 30, Sept. 30, 2004 2003 2004 2003 (Unaudited) (Unaudited) NET SALES $85,858 $75,802 $228,137 $211,117 COSTS AND EXPENSES: Cost of goods sold 76,534 66,261 203,498 185,447 Selling and administrative expenses 6,993 7,096 20,448 20,493 Interest expense 452 576 1,384 1,733 Other income (222) (381) (1,266) (755) 83,757 73,552 224,064 206,918 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 2,101 2,250 4,073 4,199 INCOME TAXES 759 871 1,549 1,633 INCOME FROM CONTINUING OPERATIONS 1,342 1,379 2,524 2,566 DISCONTINUED OPERATIONS: LOSS FROM OPERATIONS OF FOSTER TECHNOLOGIES 0 (70) 0 (510) INCOME TAX BENEFIT 0 (1,616) 0 (1,789) INCOME FROM DISCONTINUED OPERATIONS 0 1,546 0 1,279 NET INCOME $1,342 $2,925 $2,524 $3,845 BASIC AND DILUTED EARNINGS PER SHARE: FROM CONTINUING OPERATIONS $0.13 $0.14 $0.25 $0.27 FROM DISCONTINUED OPERATIONS 0.00 0.16 0.00 0.13 BASIC AND DILUTED EARNINGS PER SHARE $0.13 $0.30 $0.25 $0.40 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 10,018 9,593 9,924 9,562 AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 10,306 9,774 10,237 9,682 L. B. Foster Company and Subsidiaries Consolidated Balance Sheet ($ 000's) September 30, December 31, 2004 2003 ASSETS (Unaudited) CURRENT ASSETS: Cash and cash items $183 $4,134 Accounts and notes receivable: Trade 49,495 34,668 Other 39 105 Inventories 46,034 36,894 Current deferred tax assets 1,413 1,413 Other current assets 916 877 Property held for resale 0 446 Total Current Assets 98,080 78,537 OTHER ASSETS: Property, plant & equipment-net 31,237 33,135 Goodwill 350 350 Other intangibles - net 470 585 Investments 14,450 13,707 Deferred tax assets 4,107 4,095 Other non-current assets 72 750 Total Other Assets 50,686 52,622 $148,766 $131,159 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities on long-term debt $459 $611 Short-term borrowings 775 0 Accounts payable-trade and other 32,160 23,874 Accrued payroll and employee benefits 3,448 2,909 Current deferred tax liabilities 1,749 1,749 Other accrued liabilities 3,603 2,550 Total Current Liabilities 42,194 31,693 LONG-TERM BORROWINGS 22,000 17,000 OTHER LONG-TERM DEBT 3,505 3,858 DEFERRED TAX LIABILITIES 3,653 3,653 OTHER LONG-TERM LIABILITIES 2,707 4,411 STOCKHOLDERS' EQUITY: Class A Common stock 102 102 Paid-in Capital 35,100 35,018 Retained Earnings 40,923 38,399 Treasury Stock (724) (2,304) Accumulated Other Comprehensive Loss (694) (671) Total Stockholders' Equity 74,707 70,544 $148,766 $131,159 SOURCE L. B. Foster Company -0- 10/26/2004 /CONTACT: Stan L. Hasselbusch of L. B. Foster Company, +1-412-928-3417, or fax, +1-412-928-7891, or email, investors@LBFosterCo.com / (FSTR) CO: L. B. Foster Company ST: Pennsylvania IN: CST TRN SU: ERN