UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark One) [x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITES EXCHANGE ACT OF 1934 (Fee Required) For the Fiscal Year Ended December 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) For the Transition Period from __________ to __________ Commission File Number 0-10436 L. B. FOSTER COMPANY (Exact name of registrant as specified in its charter) Delaware 25-1324733 (State of Incorporation) (I.R.S.Employer Identification No.) 415 Holiday Drive, Pittsburgh, Pennsylvania 15220 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (412) 928-3400 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange On Title of Each Class Which Registered None Securities registered pursuant to Section 12(g) of the Act: Class A Common Stock, Par Value $.01 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III or this Form 10-K or any amendment to this Form 10-K. [x] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The aggregate market value on March 20, 1996 of the voting stock held by nonaffiliates of the Company was $37,030,545. Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date. Class Outstanding at March 20, 1996 Class A Common Stock, Par Value $.01 9,937,738 Shares Documents Incorporated by Reference: Portions of the Proxy Statement prepared for the 1996 annual meeting of stockholders are incorporated by reference in Items 10, 11, 12 and 13 of Part III.
PART I ITEM 1. BUSINESS Summary Description of Businesses L. B. Foster Company is engaged in the manufacture, fabrication and distribution of rail and trackwork, piling, pile driving equipment, highway products and tubular products. As used herein, "Foster" or the "Company" means L. B. Foster Company and its divisions and subsidiaries, unless the context otherwise requires. For rail markets, Foster provides a full line of new and used rail, trackwork and accessories to railroads, mines and industry. The Company also designs and produces bonded rail joints, power rail, track fasteners, catenary systems, coverboards and special accessories for mass transit and other rail systems. For the construction industry, the Company sells and rents steel sheet piling and H-bearing pile for foundation and earth retention requirements and pile driving equipment and accessories for driving piling. In addition, Foster supplies bridge decking, expansion joints, overhead sign structures and other products for highway construction and repair. For tubular markets, the Company is a national distributor of standard, structural and line pipe for a variety of applications. The Company supplies pipe and pipe coatings for pipelines and utilities. Foster manufactures spiralweld pipe for water transmission lines, foundation piling, slurry lines and many other applications. In addition, the Company produces pipe-related products for special markets, including water wells and irrigation. The Company classifies its activities into three business segments: rail products, construction products and tubular products. Financial information concerning the segments is set forth in Note 21 to the financial statements included in the Company's Annual Report to Stockholders for 1995. The following table shows for the last three fiscal years the net sales generated by each of the current business segments as a percentage of total net sales. <TABLE> <CAPTION> Percentage of Net Sales 1995 1994 1993 <S> <C> <C> <C> Rail Products 42% 38% 36% Construction Products 34% 36% 32% Tubular Products 24% 26% 32% 100% 100% 100% </TABLE>
RAIL PRODUCTS L. B. Foster Company's rail products include heavy and light rail, relay rail, rail joints, rail accessories, and transit products. The Company is a major rail products supplier to industrial plants, contractors, railroads, mines and mass transit systems. The Company sells heavy rail mainly to transit authorities, industrial companies, and rail contractors for railroad sidings, plant trackage, and other carrier and material handling applications. Additionally, the Company makes some sales of heavy rail to railroad companies and to foreign buyers. The Company sells light rail for mining and material handling applications. Rail accessories include trackwork, ties, track spikes, bolts, angle bars and other products required to install or maintain rail lines. These products are sold to railroads, rail contractors and industrial customers and are manufactured within the company or purchased from other manufacturers. The Company's Allegheny Rail Products (ARP) division engineers and markets insulated rail joints and related accessories for the railroad and mass transit industries. Manufacturing of the insulated rail joint is subcontracted. The Company's Transit Products Division supplies power rail, direct fixation fasteners, catenary systems, coverboards and special accessories primarily for mass transit systems. Most of these products are manufactured by subcontractors and are usually sold by sealed bid to transit authorities or to rail contractors. The Company's Midwest Steel Division in Pomeroy, Ohio is the country's leading manufacturer of light trackwork for the mining industry. It also produces new heavy trackwork for industrial and export markets. CONSTRUCTION PRODUCTS L. B. Foster Company's construction products consist of sheet and bearing piling, fabricated highway products and pile driving/extracting and related equipment. Sheet piling products are interlocking structural steel sections that are generally used to provide lateral support at construction sites. Bearing piling products are steel H-beam sections which, in their principal use, are driven into the ground for support of structures such as bridge piers and high-rise buildings. Sheet piling is sold or leased and bearing piling is sold principally to contractors and construction companies. Other construction products consist of fabricated highway products and pile driving/extracting equipment. Fabricated highway products consist principally of bridge decking, aluminum bridge rail, overhead sign structures and other bridge products, which are fabricated by the Company. The major purchasers of these products are contractors for state, municipal and other governmental projects.
Two types of pile driving equipment, diesel and vibratory, have historically been sold or leased by the Company. Vibratory pile drivers also function as pile extractors. The majority of the Company's sales and leases of pile drivers, extractors and other construction equipment are to contractors. The Company also distributes a hydraulic pile driving hammer manufactured by a company located in the Netherlands. Sales of the Company's construction products are partly dependent upon the level of activity in the construction industry. Accordingly, sales of these products have traditionally been somewhat higher during the second and third quarters than during the first and fourth quarters of each year. TUBULAR PRODUCTS L. B. Foster Company is a distributor of coated, line, warehouse and structural grade pipe. Coated line pipe is used for oil and gas transmission and for refinery, petrochemical plant and power plant construction, as well as water transmission. Standard and structural pipe is used in a variety of construction and industrial applications. The Company, with the exception of Fosterweld pipe, generally purchases the pipe it sells from pipe manufacturers. The Company includes within the tubular products segment, line and standard pipe, manufactured Fosterweld pipe and oil country tubular goods. Generally, the Company adds value to purchased tubular products by preparing them to meet customer specifications using various fabricating processes, including the finishing of oil country tubular goods and the welding, coating, wrapping and lining of other pipe products. By converting purchased steel coils into pipe in continuous forming mills, Fosterweld pipe can be produced in sizes up to 120 inches in diameter and 100 feet or more in length for use in water transmission lines and other applications such as dredge pipe, slurry lines, pneumatic lines, ventilation pipe, foundation piling and caissons. The Company provides fusion bond and other coatings for corrosion protection on oil, gas and other pipelines. The Company also supplies special pipe products such as water well casing, column pipe, couplings, and related products for agricultural, municipal and industrial water wells. MARKETING AND COMPETITION L. B. Foster Company generally markets its rail, construction and tubular products directly in all major industrial areas of the United States through a national sales force of 52 salespeople. The Company maintains 11 sales offices and 14 plants or warehouses nationwide. During 1995, approximately 5% of the Company's total sales were for export.
The major markets for the Company's products are highly competitive. Product availability, quality, service and price are principal factors of competition within each of these markets. No other company provides the same product mix to the various markets the Company serves. There are one or more companies that compete with the Company in each product line. Therefore, the Company faces significant competition from different groups of companies. RAW MATERIALS AND SUPPLIES Most of the Company's inventory is purchased in the form of finished or semifinished product. With the exception of relay rail which is purchased from railroads or rail take-up contractors, the Company purchases most of its inventory from domestic and foreign steel producers. There are few domestic suppliers of new rail and piling products and the Company could be adversely affected if a domestic supplier ceased making such material available to the Company. Approximately 70% of the materials sold by the construction products segment are purchased from one supplier. The Company's purchases from foreign suppliers are subject to the usual risks associated with changes in international conditions and to United States laws which could impose import restrictions on selected classes of products and antidumping duties if products are sold in the United States below certain prices.
BACKLOG The dollar amount of firm, unfilled customer orders at December 31, 1995 and 1994 by segment follows (in thousands): <TABLE> <CAPTION> December 31, 1995 December 31, 1994 <S> <C> <C> Rail Products $43,879 $47,582 Construction Products 28,239 18,574 Tubular Products 8,857 14,776 $80,975 $80,932 </TABLE> Approximately 95% of the December 31, 1995 backlog is expected to be shipped in 1996. RESEARCH AND DEVELOPMENT The Company's expenditures for research and development are negligible. ENVIRONMENTAL DISCLOSURES While it is not possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly for future remediation and other compliance efforts, in the opinion of management compliance with environmental protection laws will not have a material adverse effect on the financial condition, competitive position, or capital expenditures of the Company. However, the Company's efforts to comply with increasingly stringent environmental regulations may have an adverse effect on the Company's future earnings. EMPLOYEES AND EMPLOYEE RELATIONS The Company has 575 employees, of whom 303 are hourly production workers and 272 are salaried employees. Approximately 88 of the hourly paid employees are represented by unions. The Company has not suffered any major work stoppages during the past five years and considers its relations with its employees to be satisfactory. Substantially all of the Company's hourly paid employees are covered by one of the Company's noncontributory, defined benefit plans or by one of the union sponsored plans. Hourly nonunion employees are also covered by a defined contribution plan with contributions fixed at $0.12 per hour worked. Substantially all of the Company's salaried employees are covered by a defined contribution plan established by the Company.
ITEM 2. PROPERTIES The location and general description of the principal properties which are owned or leased by L. B. Foster Company, together with the segment of the Company's business using the properties, are set forth in the following table: <TABLE> <CAPTION> <S> Business Lease Location Function Acres Segment Expires <C> <C> <C> <C> Birmingham, Alabama Pipe coating. 32 Tubular 1997 Doraville, Georgia Fabrication of 28 Tubular, Owned bridge components. Rail and Yard storage. Construction Newport, Kentucky Pipe coating. 20 Tubular 1998 Niles, Ohio Rail fabrication. 35 Rail Owned Yard storage. Pomeroy, Ohio Trackwork manufac- 5 Rail Owned turing. Houston, Texas Casing, upset tub- 127 Tubular, Owned ing, threading, Rail and heat treating and Construction painting. Yard storage. Bedford, Bridge component 10 Construction Owned Pennsylvania fabricating plant. Pittsburgh, Corporate Head- - Corporate 1997 Pennsylvania quarters. Parkersburg, Fosterweld pipe 93 Tubular 1998 West Virginia manufacturing. Pipe coating and wrapping. Yard storage. </TABLE> Including the properties listed above, the Company has 11 sales offices and 14 warehouse, plant and yard facilities located throughout the country. The Company's facilities are in good condition and the Company believes that its production facilities are adequate for its present and foreseeable requirements.
ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED MATTERS Stock Market Information The Company had 1,403 common shareholders of record on January 30, 1996. Common stock prices are quoted daily through the National Association of Security Dealers, Inc. in its over-the-counter NASDAQ quotation service (Symbol FSTRA). The quarterly high and low bid price quotations for common shares (which represent prices between broker-dealers and do not include markup, markdown or commission and may not necessarily represent actual transactions) follow: <TABLE> <CAPTION> 1995 1994 Quarter High Low High Low <S> <C> <C> <C> <C> First $ 4 $ 3 $ 4 $ 3 Second 4 1/8 3 1/2 3 7/8 2 7/8 Third 4 3/4 4 3 3/4 2 7/8 Fourth 4 1/2 4 3 3/4 2 7/8 </TABLE> Dividends No dividends were paid on the Company's Common stock during 1995 and 1994. Cash dividends on the Company's Common stock are restricted under the terms of the Company's Revolving Credit Agreement (see Note 8 to consolidated financial statements).
ITEM 6. SELECTED FINANCIAL DATA (All amounts are in thousands except per share data.) <TABLE> <CAPTION> Year Ended December 31, Income Statement Data 1995 (1) 1994 1993 (2) 1992 1991 <S> <C> <C> <C> <C> <C> Net sales $ 264,985 $ 234,262 $ 212,291 $ 204,961 $ 221,024 Income before cumulative effect of change in accounting principle 5,043 5,440 899 411 573 Net income 4,824 5,440 1,569 411 573 Earnings per common share before cumulative effect of change in accounting principle 0.51 0.55 0.09 0.04 0.06 Earnings per common share 0.49 0.55 0.16 0.04 0.06 </TABLE> <TABLE> <CAPTION> December 31, Balance Sheet Data 1995 (1) 1994 1993 (2) 1992 1991 <S> <C> <C> <C> <C> <C> Total assets $ 124,423 $ 122,585 $ 108,137 $ 104,952 $ 105,071 Working capital 57,859 52,519 49,755 48,163 50,611 Long-term debt 25,034 22,377 25,584 26,072 27,110 Stockholders' equity 63,173 58,319 52,879 51,310 50,899 </TABLE> (1) Effective January 1, 1995, the Company adopted Financial Accounting Standards Board (FASB) Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The effect of the adoption was to decrease net income by $219,000 or $0.02 per share. (2) Effective January 1, 1993, the Company adopted FASB Statement No. 109, "Accounting for Income Taxes." The effect of the adoption was to increase net income by $670,000 or $0.07 per share. As permitted, prior periods were not restated.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (Dollars in thousands) <TABLE> <CAPTION> Three Months Ended Twelve Months Ended December 31, December 31, 1995 1994 1995 1994 1993 <S> <C> <C> <C> <C> <C> Net Sales: Rail Products $ 29,262 $ 25,233 $111,582 $ 88,862 $ 75,141 Construction Products 19,161 25,645 88,735 85,488 68,633 Tubular Products 12,880 12,142 64,668 59,912 68,517 Total Net Sales $ 61,303 $ 63,020 $264,985 $234,262 $212,291 Gross Profit: Rail Products $ 4,178 $ 4,377 $ 14,507 $ 13,745 $ 11,828 Construction Products 2,222 3,185 9,780 10,350 8,740 Tubular Products 360 483 4,928 3,502 3,935 Total Gross Profit 6,760 8,045 29,215 27,597 24,503 Expenses: Selling and Admin- istrative Expenses 5,694 5,957 22,446 21,413 21,400 Interest Expense 697 617 2,840 2,067 2,408 Other (Income) Expense (186) 62 (777) (274) 157 Total Expenses 6,205 6,636 24,509 23,206 23,965 Income Before Income Tax Expense 555 1,409 4,706 4,391 538 Income Tax Benefit (337) (1,193) (337) (1,049) (361) Income Before Cumulative Effect of Changes in Accounting Principles 892 2,602 5,043 5,440 899 Cumulative Effect of Changes in Accounting Principles (219) 670 Net Income $ 892 $ 2,602 $ 4,824 $ 5,440 $ 1,569 Fourth Quarter of 1995 vs. Fourth Quarter of 1994 The net income for the current quarter was $0.9 million or $0.09 per share. This compares to a 1994 fourth quarter net income of $2.6 million or $0.26 per share. Net sales in 1995 were $61.3 million or 3% lower than the comparable period last year. Rail products' net sales of $29.3 million increased 16% from the comparable period last year principally as a result of higher shipments on major rail projects. Construction products' net sales in the 1995 fourth quarter were 25% lower than in 1994 due to a temporary shutdown by a major supplier to modernize its production facilities. Tubular products' net sales in the quarter were $12.9 million or an increase of 6% from 1994 due primarily to higher sales of Fosterweld pipe. Changes in net sales are primarily the result of changes in volume rather than changes in prices.
The gross margin percentage for the total company in the 1995 fourth quarter decreased to 11% versus 13% in the 1994 quarter. Rail products' gross margin percentage declined to 14% due primarily to reductions in the margins for used rail products which exceeded improvements in the margins for new rail products. Construction products' gross margin percentage remained relatively unchanged at 12%. The gross margin percentage for the Company's tubular products segment decreased to 3% from 4% in 1994 as improved margins for Fosterweld pipe only partly offset a decline in the performance of the pipe coating unit. The pipe coating unit's performance was affected by higher than anticipated plant operating costs primarily as a result of the shutdown of an older coating line and continued start-up problems at the Newport coating facility. Selling and administrative expenses decreased 4% in the 1995 fourth quarter from the same period in the prior year. Interest expense increased 13% due primarily to higher borrowings. The income tax rate is less than the statutory rate in both the 1995 and 1994 periods principally as a result of changes in net deferred tax assets and liabilities. See the year comparison section for a more detailed discussion of the income tax provisions. The Year 1995 Compared to the Year 1994 The net income for 1995 was $4.8 million or $0.49 per share. This compares to 1994 net income of $5.4 million or $0.55 per share. Net sales in 1995 were $265.0 million or 13% higher than last year. Rail products' net sales improved 26% in 1995 to $111.6 million as sales of new rail products increased. Despite a fourth quarter weakness in piling products, construction products' net sales for 1995 of $88.7 million were 4% higher than 1994 as increased shipments of piling and fabricated products offset reductions in pile driving equipment revenue. Tubular products' net sales in 1995 increased to $64.7 million or 8% from last year due to increased pipe coating volume at the Company's Birmingham, Alabama facility. Changes in net sales are primarily the result of changes in volume rather than changes in prices. The gross margin percentage for the total company declined to 11% from 12% in 1994. Rail products' gross margin percentage decreased to 13% from approximately 16% last year as a result of lower margins on running rail and used rail products. Construction products' gross margin percentage declined to 11% from 12% in 1994 as a result of lower margins on fabricated products and vibratory pile driving equipment. The gross margin percentage for the Company's tubular products increased to 8% from 6% last year. The increase was the result of a change in the mix of pipe coating products sold and improved Fosterweld pipe margins.
Selling and administrative expenses in 1995 of $22.4 million increased 5% from the prior year primarily as a result of the change in the employee vacation policy which reduced 1994 expense. Interest expense increased 37% principally as a result of higher borrowings. Other income in 1995 included $0.3 million of interest income and a $0.2 million gain on the sale of equipment held for disposal. Other income in 1994 included a gain of $0.3 million from the sale of the Company's Houston, Texas sales office and equipment depot. The income tax rate is less than the statutory rate in both the 1995 and 1994 periods principally as a result of changes in net deferred tax assets and liabilities. The Company's deferred tax assets include net operating loss (NOL) carryforwards. In 1993, the Company was required by accounting rules to record for book purposes all available NOL carryforwards as assets. Additionally, the Company was required to establish a valuation reserve to reduce the total carrying value of the NOL carryforwards to the amount projected to be actually used in future years (i. e., the net realizable value). The net realizable value of the Company's NOL carryforwards is computed based on the average taxable income for the most recent three years projected forward for three years. During 1995 and 1994, the net realizable value of the NOL carryforwards increased and the Company reduced the valuation reserve related to the NOL carryforwards by $2.5 million and $2.4 million, respectively. These favorable adjustments of the valuation reserve were recorded as reductions of income tax expense. Expected utilization of the net deferred tax assets is contingent upon the Company earning in the aggregate approximately $11 million of taxable income in future years. Because the deferred tax asset valuation reserve at December 31, 1995 is only $0.2 million, income tax expense reported for book purposes in future years will not be significantly reduced by changes in the reserve. As a result, income tax expense for book purposes in future years is anticipated to approximate the amount that would be reported by applying statutory rates. However, the Company will not make significant federal income tax payments until the Company earns additional taxable income in excess of $11 million. See Note 13 to the consolidated financial statements for additional information on income taxes. Effective January 1, 1995, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and recorded a charge of $0.2 million, net of income tax benefit, principally related to a Fosterweld facility held for sale (see Note 2 to consolidated financial statements).
The Year 1994 Compared to the Year 1993 For 1994, net income was $5.4 million or $0.55 per share compared to a 1993 net income of $1.6 million or $0.16 per share. In 1994, cost of goods sold was reduced by $0.3 million and selling and administrative expenses were reduced by $0.6 million as a result of a change in the Company's policy for employee vacations. Results for 1993 included a first quarter gain of $0.7 million from the initial adoption of SFAS No. 109, "Accounting for Income Taxes" (see Note 2 to consolidated financial statements). Net sales in 1994 were $234 million or an increase of 10% over the 1993 period. Rail products' net sales improved in 1994 to $88.9 million or 18% from 1993 as sales of new rail products for transit projects and used rail products substantially increased. Construction products' net sales for 1994 of $85.5 million were 25% higher than the 1993 period as a result of higher sales of piling and fabricated products. Tubular products' net sales in 1994 decreased to $59.9 million or 13% from 1993 as improvements in coated pipe operations were more than offset by declines in the other tubular units. Changes in net sales primarily are the result of changes in volume rather than changes in prices. The gross margin percentage for the total company in both years was approximately 12%. Rail products' gross margin percentage remained at approximately 16%. Improvements in margins for used rail products were offset by the lower margins earned on new rail products provided for transit projects and a higher LIFO provision. Construction products' gross margin percentage declined slightly as higher sales and margins in fabricated products were more than offset by reduced revenues and margins in pile driving equipment operations and the increase in lower margin piling sales. The gross margin percentage for the Company's tubular products segment remained approximately 6%. Improved selling margins in most tubular units were offset by reduced margins for the Company's threaded pipe unit and a higher LIFO provision. Selling and administrative expenses in 1994 were unchanged in total from 1993 as lower insurance expense and the effect of the change in the employee vacation policy offset an incentive compensation provision. Interest expense declined 14% as a result of lower interest rates due to the expiration of the Company's swap agreements. Other income in 1994 included a gain of $0.3 million from the sale of the Company's Houston, Texas sales office and equipment depot. Other expense in 1993 included a charge of $0.4 million for the shutdown of certain tubular yard and plant facilities. The income tax rate was less than the statutory rate in both the 1994 and 1993 periods principally as a result of changes in net deferred tax assets and liabilities. During 1994 and 1993, the Company reduced the valuation reserve related to the NOL carryforwards by $2.4 million and $0.3 million, respectively.
Liquidity and Capital Resources The Company's ability to generate internal cash flow ("liquidity") results from the sale of inventory and the collection of accounts receivable. During 1995, the average turnover rates for accounts receivables and inventories were relatively unchanged from the prior year. Working capital at December 31, 1995 was $57.9 million compared to $52.5 million at December 31, 1994. During 1995, the Company had capital expenditures of $4.1 million. The Company's capital expenditures were principally related to trackwork production equipment, the Newport coated pipe facility and the pile driving equipment rental pool. Capital expenditures in 1996 are expected to be approximately $3 million and are anticipated to be funded by cash flows from operations. During 1995, the Company executed a restated and amended revolving credit agreement. The amended agreement increased the borrowing commitment available to $45 million from $40 million, slightly reduced interest rates and extended the term of the agreement to July 1, 1999. Borrowings under the agreement are secured by accounts receivable and inventory. Total revolving credit agreement borrowings at December 31, 1995 were $29.8 million or a decrease of $4.2 million from the end of the prior year. Outstanding letters of credit at December 31, 1995 were $1.1 million. At December 31, 1995, the Company had approximately $14.1 million in unused borrowing commitment. Management believes its internal and external sources of funds are adequate to meet anticipated needs. Other Matters The Company currently owns stock with a book value of approximately $2.0 million in a privately-held corporation. The market value of the stock is not readily determinable and, therefore, the investment is recorded in the Company's accounts at its historical cost of $0.2 million (see Note 7 to consolidated financial statements). The Company has been advised that plans are being formulated to sell this business. Although no assurances can be given as to the timing or results of these plans, the Company believes that the potential sales price could significantly exceed the privately-held corporation's book value.
The Company has made a decision to divest its Fosterweld operations. Discussions with potential buyers concerning the Parkersburg, West Virginia facility, which has fixed assets and working capital with carrying values of approximately $3.0 million and $5.0 million, respectively, are currently ongoing. The outcome of these discussions, however, is uncertain at this time. Additionally, the Company has reached an agreement to sell its facility at Windsor, New Jersey, which has fixed assets with a carrying value of $1.0 million. These fixed assets have been classified on the consolidated balance sheet as property held for resale (see Note 5 to consolidated financial statements). Additionally, the Company has decided to reduce its investment in warehouse pipe products and concentrate its efforts on the sale and marketing of coated line pipe. These actions are not expected to have a material impact on the financial condition of the Company. Management continues to evaluate the overall performance of certain operations. A decision to terminate an existing operation could have a material effect on near-term earnings but would not be expected to have a material adverse effect on the financial condition of the Company. Outlook The Company's future operating results may be affected by a number of factors. The Company is dependent upon a number of major suppliers. If a critical supplier had operational problems or ceased making material available to the Company, operations could be adversely affected. In particular, approximately 70% of the materials sold by the construction products segment are purchased from one supplier. The Company's operations are in part dependent on governmental funding of infrastructure projects. Significant changes in the level of government funding of these projects could have a favorable or unfavorable impact on the operating results of the Company. Additionally, governmental actions concerning taxation, tariffs, the environment or other matters could impact the operating results of the Company. The Company's operations results may also be affected by the weather. Although backlog is not necessarily indicative of future operating results, total Company backlog at December 31, 1995 was approximately $81 million or equal to the backlog at the end of the previous year. The following table provides the backlog by business segment. </TABLE> <TABLE> <CAPTION> December 31, 1995 1994 1993 (Dollars in thousands) <S> <C> <C> <C> Backlog: Rail Products $43,879 $47,582 $34,502 Construction Products 28,239 18,574 27,172 Tubular Products 8,857 14,776 13,697 Total Backlog $80,975 $80,932 $75,371 </TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA <TABLE> <CAPTION> CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND 1994 ASSETS (In thousands) 1995 1994 <S> <C> <C> CURRENT ASSETS: Cash and cash equivalents $ 1,325 $ 1,180 Accounts receivable (Note 3) 48,277 46,421 Inventories (Note 4) 40,304 43,651 Current deferred tax assets (Note 13) 1,005 897 Other current assets 831 666 Property held for resale (Note 5) 985 Total Current Assets 92,727 92,815 PROPERTY, PLANT AND EQUIPMENT - at cost (Note 6) 22,605 23,367 PROPERTY HELD FOR RESALE (Note 5) 4,545 2,459 DEFERRED TAX ASSETS (Note 13) 2,018 1,428 OTHER ASSETS (Note 7) 2,528 2,516 TOTAL ASSETS $ 124,423 $ 122,585 LIABILITIES AND STOCKHOLDERS' EQUITY (In thousands, except share data) CURRENT LIABILITIES: Short-term borrowings (Note 8) $ 9,750 $ 13,920 Current maturities of long-term debt (Note 9) 1,266 798 Accounts payable - trade 18,065 19,775 Accrued payroll and employee benefits 2,682 2,524 Other accrued liabilities 3,105 3,279 Total Current Liabilities 34,868 40,296 LONG-TERM DEBT (Note 9) 25,034 22,377 OTHER LONG-TERM LIABILITIES 1,348 1,593 COMMITMENTS AND CONTINGENT LIABILITIES (Note 18) STOCKHOLDERS' EQUITY (Notes 8, 10 and 11): Class A Common stock, issued 10,188,739 shares in 1995 and 10,178,739 shares in 1994 102 102 Paid-in capital 35,148 35,118 Retained earnings 28,480 23,656 Treasury stock - at cost, Class A Common stock, 256,001 shares (557) (557) Total Stockholders' Equity 63,173 58,319 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 124,423 $ 122,585 </TABLE> See Notes to Consolidated Financial Statements.
<TABLE> <CAPTION> CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE YEARS ENDED DECEMBER 31, 1995 (In thousands, except per share) 1995 1994 1993 <S> <C> <C> <C> NET SALES $ 264,985 $ 234,262 $ 212,291 COSTS AND EXPENSES: Cost of goods sold 235,770 206,665 187,788 Selling and administrative expenses 22,446 21,413 21,400 Interest expense 2,840 2,067 2,408 Other (income) expense (777) (274) 157 260,279 229,871 211,753 INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 4,706 4,391 538 INCOME TAX BENEFIT (Note 13) (337) (1,049) (361) INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 5,043 5,440 899 CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES (Note 2) (219) 670 NET INCOME $ 4,824 $ 5,440 $ 1,569 EARNINGS PER COMMON SHARE: Income before cumulative effect of changes in accounting principles $ 0.51 $ 0.55 $ 0.09 Cumulative effect of changes in accounting principles (0.02) 0.07 EARNINGS PER COMMON SHARE (Note 12) $ 0.49 $ 0.55 $ 0.16 </TABLE> See Notes to Consolidated Financial Statements.
<TABLE> <CAPTION> CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED DECEMBER 31, 1995 (In thousands) 1995 1994 1993 <S> <C> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 4,824 $ 5,440 $ 1,569 Adjustments to reconcile net income to net cash provided (used) by operating activities: Deferred income taxes (565) (1,228) (427) Depreciation and amortization 2,774 2,932 2,763 Gain on sale of property, plant and equipment (532) (635) (558) Cumulative effect of change in accounting principle 219 (670) Change in operating assets and liabilities: Accounts receivable (1,856) (10,560) 74 Inventory 2,878 (4,240) 646 Other current assets (165) 49 (251) Other noncurrent assets (171) 309 483 Accounts payable - trade (1,710) 2,526 1,100 Accrued payroll and employee benefits 158 354 440 Other current liabilities (174) (238) (1,227) Other liabilites (245) (384) (19) Net Cash Provided (Used) by Operating Activities 5,435 (5,675) 3,923 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property, plant and equipment 3,880 2,107 2,428 Acquisition of business (Note 14) (4,784) Capital expenditures on property, plant and equipment (4,074) (2,800) (1,610) Net Cash Used by Investing Activities (194) (693) (3,966) CASH FLOWS FROM FINANCING ACTIVITIES: (Repayments) proceeds of revolving credit agreement borrowings (4,170) 7,420 45 Exercise of stock options 30 Repayments of long-term debt (Note 9) (956) (1,085) (1,130) Net Cash (Used) Provided by Financing Activities (5,096) 6,335 (1,085) Net Increase (Decrease) in Cash and Cash Equivalents 145 (33) (1,128) Cash and Cash Equivalents at Beginning of Year 1,180 1,213 2,341 Cash and Cash Equivalents at End of Year $ 1,325 $ 1,180 $ 1,213 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest Paid $ 2,906 $ 1,933 $ 2,481 Income Taxes Paid $ 188 $ 78 $ 70 </TABLE> During 1995, 1994, and 1993, the Company financed certain capital expenditures and related maintenance agreements totaling $4,081,000, $415,000 and $819,000, respectively, through the issuance of capital leases. See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE THREE YEARS ENDED DECEMBER 31, 1995 <TABLE> <CAPTION> Class A Common Paid-in Retained Treasury (In thousands) Stock Capital Earnings Stock Total <S> <C> <C> <C> <C> <C> Balance, January 1, 1993 $ 102 $ 35,118 $ 16,647 $ (557) $ 51,310 Net Income 1,569 1,569 Balance, December 31, 1993 102 35,118 18,216 (557) 52,879 Net Income 5,440 5,440 Balance, December 31, 1994 102 35,118 23,656 (557) 58,319 Net Income 4,824 4,824 Exercise of option to purch- ase 10,000 shares of Class A Common stock (Note 11) 30 30 Balance, December 31, 1995 $ 102 $ 35,148 $ 28,480 $ (557) $ 63,173 </TABLE> See Notes to Consolidated Financial Statements.
Notes to Consolidated Financial Statements Note 1. Summary of Significant Accounting Policies Basis of financial statement presentation - The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated. The term "Company" refers to L. B. Foster Company and its subsidiaries, as the context requires. Cash equivalents - The Company considers securities with maturities of three months or less, when purchased, to be cash equivalents. Inventories - Inventories are generally valued at the lower of the last-in, first-out (LIFO) cost or market. Other inventories of the Company, approximately 11% in 1995 and 1994, are valued at average cost or market, whichever is lower. Property, plant and equipment - Maintenance, repairs and minor renewals are charged to operations as incurred. Major renewals and betterments which substantially extend the useful life of the property are capitalized. Upon sale or other disposition of assets, the cost and related accumulated depreciation and amortization are removed from the accounts and the resulting gain or loss, if any, is reflected in income. Depreciation and amortization are provided based upon the estimated useful lives principally under the straight-line method. Leasehold improvements are amortized over the lives of the respective leases or the lives of the improvements, whichever is shorter. Pile driving equipment held for rental is classified as property, plant and equipment. Financial derivatives - To hedge against exposures to changes in interest rates on variable rate debt, the Company enters into interest rate swap agreements. The effects of movements in interest rates on these instruments are recognized as they occur. Environmental remediation and compliance - Environmental remediation costs are accrued, except to the extent costs can be capitalized, based on estimates of known environmental remediation exposures. Environmental compliance costs, which principally include the disposal of waste generated by routine operations, are expensed as incurred. Capitalized environmental costs are depreciated, when appropriate, over their useful life. Net sales - Customers are invoiced and income is recognized when material is shipped from stock or when the Company is billed for material shipped directly from the vendor. Gross sales are reduced by sales taxes, discounts and freight to determine net sales. Income taxes - The Company accounts for income tax expense and liabilities under the liability method.
Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Stock-based compensation - The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the date of grant. The Company follows the requirements of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," in accounting for stock-based compensation, and accordingly, recognizes no compensation expense for stock option grants. Note 2. Change in Accounting Principles The Company adopted the provisions of the Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," in its financial statements for the year ended December 31, 1995. The cumulative effect as of January 1, 1995 of adopting Statement 121 decreased net income by $219,000, net of an income tax benefit of $134,000, or $0.02 per share. The Company adopted the provisions of SFAS No. 109, "Accounting for Income Taxes," in its financial statements for the year ended December 31, 1993. The cumulative effect as of January 1, 1993 of adopting Statement 109 increased net income by $670,000 or $0.07 per share.
Note 3. Accounts Receivable Accounts receivable at December 31, 1995 and 1994 are summarized as follows (in thousands): <TABLE> <CAPTION> 1995 1994 <S> <C> <C> Trade $ 49,966 $ 47,872 Allowance for doubtful accounts (1,800) (1,615) Other 111 164 $48,277 $46,421 </TABLE> The Company's customers are in the rail, construction and tubular segments of the economy. As of December 31, 1995 and 1994, trade receivables, net of allowance for doubtful accounts, from customers in these markets were as follows (in thousands): <TABLE> <CAPTION> 1995 1994 <S> <C> <C> Rail $21,366 $20,304 Construction 17,169 17,719 Tubular 9,631 8,234 $48,166 $46,257 </TABLE> Credit is extended on an evaluation of the customer's financial condition and generally collateral is not required. Note 4. Inventories Inventories at December 31, 1995 and 1994 are summarized as follows (in thousands): <TABLE> <CAPTION> 1995 1994 <S> <C> <C> Finished goods $33,570 $28,495 Work-in-process 6,687 14,242 Raw materials 2,659 2,971 Total inventories at current costs 42,916 45,708 Less: Current cost over LIFO stated values (2,012) (1,457) Reserve for decline in market value of inventories (600) (600) $40,304 $43,651 </TABLE> At December 31, 1995 and 1994, the LIFO carrying value of inventories for book purposes exceeded the LIFO carrying value for tax purposes by approximately $3,516,000 and $3,374,000, respectively. During 1995, inventory quantities were reduced resulting in a liquidation of certain LIFO inventory layers carried at costs which were lower than the costs of current purchases. The effect of these reductions in 1995 was to decrease cost of goods sold by $287,000.
Note 5. Property Held for Resale Property held for resale at December 31, 1995 and 1994 consists of the following (in thousands): <TABLE> <CAPTION> Location 1995 1994 <S> <C> <C> Parkersburg, WV $2,920 Windsor, NJ 985 $1,253 Marrero, LA 615 615 Houston, TX 261 261 Navasota, TX 356 Other 393 330 Property held for resale 5,530 2,459 Assets having sales commit- ments within one year 985 $4,545 $2,459 </TABLE> The Parkersburg, WV location produces Fosterweld spiralweld pipe used for water transmission and other applications. During 1995, the Company decided that this product did not meet the Company's long-term strategic goals. The assets of this operation include machinery and equipment, buildings and leasehold improvements. During 1995, the location generated net sales and operating profit of approximately $10,300,000 and $300,000, respectively, which are included in the Company's tubular segment. The Company is currently negotiating with several buyers. However, the outcome of these discussions is uncertain at this time. The Windsor, NJ location formerly produced Fosterweld pipe and was used for yard storage. Assets of the location consist of land and land improvements no longer used in the Company's business. The cumulative effect of adopting SFAS No. 121 includes an impairment loss of $268,000 based upon the estimated sales value of the assets, net of related costs to sell. The Company anticipates disposing of these assets during 1996. The Marrero, LA location was formerly used for yard storage. Assets of the location consist of land no longer used in the Company's business. The land is currently being leased to a third party. The Company does not anticipate disposing of the land during 1996. The Houston, TX location was formerly a pipe coal tar coating facility. Assets of the location consist of land no longer used in the Company's business. The land has been listed for sale, although no assurances can be given that the land will be sold during 1996.
The Navasota, TX location produces couplings used in the Company's threaded products business and is included in the tubular products' business segment. The assets of this operation include machinery and equipment, buildings and land. During 1995, the Company received an offer from a third party to buy the facility and to produce couplings for use in the Company's operations. The Company has entered into an operating lease agreement with the third party for six months with an option to buy. If the third party does not purchase the property, the operating lease converts to a capital lease for five years based on a market value of $800,000, with an option to buy. Separate net sales and operating profits for this location cannot be identified. Other consists of various machinery and equipment. The cumulative effect of adopting SFAS No. 121 includes an impairment loss of $86,000 related to these assets based upon their estimated sales value net of related costs to sell. Note 6. Property, Plant and Equipment Property, plant and equipment at December 31, 1995 and 1994 consists of the following (in thousands): <TABLE> <CAPTION> 1995 1994 <S> <C> <C> Land $ 6,700 $ 6,700 Improvements to land and leaseholds 3,867 5,092 Buildings 2,563 4,808 Machinery and equipment, including equipment under capitalized leases of $7,728 in 1995 and $4,114 in 1994 23,862 31,424 Rental pile driving equipment 6,251 6,872 Construction in progress 318 222 43,561 55,118 Less accumulated depreciation and amortization, including accumulated amortization of capitalized leases of $1,663 in 1995 and $1,117 in 1994 20,956 31,751 $ 22,605 $ 23,367 </TABLE>
Property, plant and equipment include certain capitalized leases. The following is a schedule, by year, of the future minimum payments under these leases, together with the present value of the net minimum payments as of December 31, 1995 (in thousands): <TABLE> <CAPTION> Year ending December 31, Amount <S> <C> 1996 $1,718 1997 1,663 1998 1,566 1999 1,176 2000 and thereafter 1,494 Total minimum lease payments 7,617 Less amount representing interest 1,317 Total present value of minimum payments (Note 9) 6,300 Less current portion of such obligations 1,266 Long-term obligations with interest rates ranging from 6.92% to 11.42% $5,034 </TABLE> Note 7. Other Assets At December 31, 1995 and 1994, other assets include notes receivable and accrued interest totaling $1,896,000 and $1,573,000, respectively, from investors in a private corporation. The notes, which are recorded at face value, are due if there is a change in ownership of the private corporation or March 31, 1997, whichever occurs earlier. Additionally, the Company owns stock in the private corporation which is recorded at historical cost of $193,000. Note 8. Short-Term Borrowings Effective November 1, 1995, the Company renegotiated its $45,000,000 revolving credit agreement. The interest rate is, at the Company's option, based on the prime rate, the domestic certificate of deposit rate (CD rate) or the Euro-bank rate. The interest rates are adjusted quarterly based on the fixed charge coverage ratio defined in the agreement. The ranges are prime to prime plus 0.25% , the CD rate plus 0.45% to the CD rate plus 1.125%, and the Euro-bank rate plus 0.45% to the Euro-bank rate plus 1.125%. Borrowings under the agreement, which expires July 1, 1999, are secured by accounts receivable and inventory. The agreement includes financial covenants requiring a minimum net worth, a fixed charge coverage ratio, a leverage ratio and a current ratio. The agreement also places restrictions on dividends, investments, capital expenditures, indebtedness and sales of certain assets. As of December 31, 1995, the Company was in compliance with all the agreement's covenants. At December 31, 1995, the Company had borrowed $29,750,000 under the agreement of which $20,000,000 was classified as long- term (see Note 9). Under the agreement, the Company had approximately $14,122,000 in unused borrowing commitment at December 31, 1995. At December 31, 1995, $2,497,000 was available for future dividend payments.
Note 9. Long-Term Debt and Related Matters Long-term debt at December 31, 1995 and 1994 consists of the following (in thousands): <TABLE> <CAPTION> 1995 1994 <S> <C> <C> Revolving Credit Agreement with weighted average interest rate of 6.57% at December 31, 1995 and 7.33% at December 31, 1994, expiring July 1, 1999 $20,000 $20,000 Lease obligations payable in installments through 2002 with a weighted average interest rate of 8.0% at December 31, 1995 and 9.45% at December 31, 1994 6,300 3,175 26,300 23,175 Less current maturities 1,266 798 $25,034 $22,377 </TABLE> The $20,000,000 revolving credit borrowings included in long-term debt were obtained under the revolving loan agreement discussed in Note 8 and are subject to the same terms and conditions. This portion of the borrowings is classified as long-term because the Company does not anticipate reducing the borrowings below $20,000,000 during 1996. During 1995, the Company entered into an interest rate swap agreement to reduce the impact of changes in interest rates on a portion of its revolving credit borrowings. The LIBOR interest rate on the $10,000,000 swap agreement, which expires June 1999, is 6.142%. The Company believes that the credit and market risks associated with this agreement are not material. Any additional interest expense incurred under the agreement is accrued currently and paid quarterly. The maturities of long-term debt for each of the succeeding five years subsequent to December 31, 1995 are as follows: 1996 - $1,266,000; 1997 - $1,312,000; 1998 - $1,322,000; 1999 - $21,030,000; and 2000 and beyond - $1,370,000. Note 10. Stockholders' Equity At December 31, 1995 and 1994, the number of authorized shares of the Company's Class A Common stock were 20,000,000 shares and Class B Common stock were 1,391,000 shares. No Class B Common shares were issued. The Company's Class A and Class B Common stock each have a par value of $.01 per share and are generally identical except that the Class B Common stock has no stockholder voting rights, and except that such holders shall be entitled to one vote per share on matters such as consolidation or merger of the Company. Class B Common stock may be converted at any time on a share-for-share basis into Class A Common stock.
No cash dividends on Common stock were paid in 1995, 1994, and 1993. Note 11. Stock Options The 1985 Long-Term Incentive Plan (Plan) of the Company, as amended and restated in March 1994, provides for the award of options to key employees and directors to purchase up to 1,500,000 shares of Common stock at no less than 100% of fair market value on the date of the grant. The Plan provides for the granting of "nonqualified options" and "incentive stock options" with a duration of not more than ten years from the date of grant. The Plan also provides that, unless otherwise set forth in the option agreement, options are exercisable in installments of up to 25% annually beginning one year from date of grant. Stock to be offered under the Plan may be authorized but unissued Common stock or previously issued shares which have been reacquired by the Company and held as Treasury shares. At December 31, 1995, 1994 and 1993, Common stock options outstanding under the Plan had option prices ranging from $2.63 to $6.00, with a weighted average price of $3.35, $3.33, and $3.25 per share, respectively. The Option Committee of the Board of Directors which administers the Plan may, at its discretion, grant stock appreciation rights at any time prior to six months before an option's expiration date. Upon exercise of such rights, the participant surrenders the exercisable portion of the option in exchange for payment (in cash and/or Common stock valued at its fair market value) of an amount not greater than the spread, if any, by which the average of the high and low sales prices quoted in the Over-the-Counter Exchange on the trading day immediately preceding the date of exercise of the stock appreciation right exceeds the option price. No stock appreciation rights were issued or outstanding during 1995, 1994 or 1993. Options exercised during 1995 totaled 10,000 shares at an exercise price of $3.00 per share. There were no options exercised during 1994 and 1993. Certain information for the three years ended December 31, 1995 relative to employee stock options is summarized as follows: <TABLE> <CAPTION> 1995 1994 1993 <S> <C> <C> <C> Number of shares under Incentive Plan option: Outstanding at begin- ning of year 975,000 725,000 651,625 Granted 25,000 256,000 74,000 Canceled (25,000) (6,000) (625) Exercised (10,000) Outstanding at end of year 965,000 975,000 725,000 Exercisable at end of year 748,000 712,500 649,500 Number of shares available for future grant: Beginning of year 316,250 66,250 139,625 End of year 316,250 316,250 66,250 </TABLE>
Note 12. Earnings Per Common Share Earnings per common share are computed by dividing net income by the average number of Class A Common shares and common stock equivalents outstanding during the year. The weighted average number of Class A Common shares outstanding during the year ended December 31, 1995 were approximately 9,927,000 and approximately 9,923,000 during the years ended 1994 and 1993. Common stock equivalents are the net additional number of shares which would be issuable upon the exercise of the outstanding common stock options (see Note 11), assuming that the Company used the proceeds to purchase additional shares at market value. Common stock equivalents had no material effect on the computation of earnings per share for the three years ended December 31, 1995. Note 13 Income Taxes Effective January 1, 1993, the Company changed its method of accounting for income taxes as required by Statement No. 109, "Accounting for Income Taxes," (see Note 2). The cumulative effect of adopting Statement 109 as of January 1, 1993 was to increase net income by $670,000. At December 31, 1995, the Company has available net operating loss carryforwards of approximately $7,800,000 for federal income tax purposes that expire in 2001. The federal carryforwards resulted from losses generated in 1986. The tax benefit of net operating loss carryforwards available for state income tax purposes was approximately $800,000 as of December 31, 1995. The Company also has alternative minimum federal tax credit carryforwards at December 31, 1995 of approximately $1,000,000. For financial purposes, a valuation allowance of $200,000 has been recognized to offset the deferred tax assets related to the state income carryforwards. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of December 31, 1995 and 1994 are as follows (in thousands):
<TABLE> <CAPTION> 1995 1994 <S> <C> <C> Deferred tax liabilities: Depreciation $1,227 $ 602 Other - net (60) 68 Total deferred tax liabilities 1,167 670 Deferred tax assets: Net operating loss carryforwards 3,419 4,496 Tax credit carryforwards 971 886 Other - net 312 Total deferred tax assets 4,390 5,694 Valuation allowance for deferred tax assets 200 2,699 Deferred tax assets 4,190 2,995 Net deferred tax assets $3,023 $2,325 </TABLE> The valuation allowance for deferred tax assets was reduced by $2,499,000, $2,374,000 and $322,000 during 1995, 1994 and 1993, respectively. Significant components of the provision for income taxes are as follows (in thousands): <TABLE> <CAPTION> 1995 1994 1993 <S> <C> <C> <C> Current: Federal $ 102 $ 81 $ 13 State 126 98 53 Total current 228 179 66 Deferred: Federal (339) (1,182) (388) State (360) (46) (39) Total deferred (699) (1,228) (427) Total income tax benefit $ (471) $(1,049) $ (361) </TABLE> Income tax benefit is included in the consolidated statements of income as follows (in thousands): <TABLE> <CAPTION> 1995 1994 1993 <S> <C> <C> <C> Continuing operations $(337) $(1,049) $(361) Cumulative effect of accounting change (134) $(471) $(1,049) $(361) </TABLE>
The reconciliation of income tax computed at statutory rates to income tax benefit is as follows: <TABLE> <CAPTION> 1995 1994 1993 <S> <C> <C> <C> Statutory rate 34.0% 34.0% 34.0% State income tax (3.0) 0.7 1.6 Nondeductible expenses 3.0 3.1 11.7 Net operating loss (22.9) (28.6) (64.5) Change in valuation reserve (30.2) (25.5) (61.7) Prior period tax 13.2 (11.5) Other (1.3) 3.9 11.8 (7.2)% (23.9)% (67.1)% </TABLE> Note 14. Acquisitions In May 1993, the Company acquired the rail-related assets and assumed the trade payables of Midwest Corporation, a subsidiary of UNR Industries for $4,784,000. The purchase includes a plant in Pomeroy, Ohio for manufacturing light trackwork and Midwest's distribution business for new and used rail products. The acquisition has been reported using the purchase method of accounting and has been included in operations since the date of acquisition. The purchase price was allocated to the assets and liability based on the estimated fair values as of the acquisition date. Cost in excess of net assets acquired is being amortized on a straight-line basis over 25 years. Note 15. Rental and Lease Information The Company leases certain plant facilities, office facilities and equipment. Rental expense for the years ended December 31, 1995, 1994 and 1993 amounted to $1,867,000, $1,693,000, and $1,877,000, respectively. At December 31, 1995, the Company is committed to total minimal rental payments under all noncancellable operating leases of $1,417,000 . Generally, these leases include escalation clauses. The minimum future rental commitments are payable as follows: 1996 - $863,000; 1997 - $377,000; 1998 - $87,000; 1999 - $70,000; and 2000 - $20,000.
Note 16. Retirement Plans Substantially all of the Company's hourly paid employees are covered by one of the Company's noncontributory, defined benefit plans. Hourly nonunion employees are also covered by a defined contribution plan with contributions fixed at $0.12 per hour worked. Substantially all of the Company's salaried employees are covered by a defined contribution plan established by the Company. Benefits for hourly employees over age 21 are generally based on hours of service. The salaried plan for employees over age 21 is based on years of qualifying service. The Company's funding policy for defined benefit plans is to contribute the minimum required by the Employee Retirement Income Security Act of 1974. Net periodic pension cost for the three years ended December 31, 1995 is summarized as follows (in thousands): <TABLE> <CAPTION> 1995 1994 1993 <S> <C> <C> <C> Service cost $ 71 $ 78 $ 61 Interest cost 121 110 99 Actual return on plan assets (131) (120) (114) Other (3) (3) (11) Net periodic pension cost $ 58 $ 65 $ 35 </TABLE> The hourly plan assets consist of allocated and unallocated insurance contracts. The following table presents a reconciliation of the funded status of the defined benefit plans at December 31, 1995 and 1994 with the accrued pension cost included in other current liabilities on the Company's balance sheet (in thousands): <TABLE> <CAPTION> 1995 1994 Underfunded Overfunded Underfunded Plans Plan Plan <S> <C> <C> <C> Projected benefit obligation: Vested benefits $1,810 $1,106 $ 268 Nonvested benefits 67 25 24 Total projected benefit obligation 1,877 1,131 292 Fair value of plan assets 1,718 1,404 190 Excess (deficit) of plan assets over projected benefit obligation (159) 273 (102) Unrecognized net transition asset (121) (125) (5) Unrecognized prior service cost 88 8 86 Unrecognized net (gain) loss 31 (266) (20) Adjustment for minimum liability (126) (61) Accrued pension cost $ (287) $ (110) $ (102) </TABLE>
The Company's defined contribution plan, available to substantially all salaried employees, contains a matched savings provision that permits both pretax and after-tax employee contributions. Participants can contribute from 2% to 15% of their annual compensation and receive a 50% matching employer contribution on up to 6% of their annual compensation. Further, the plan requires an additional matching employer contribution, based on the ratio of the Company's pretax income to equity, up to 50% of 6% of the employee's annual compensation. Additionally, the Company contributes 1% of all salaried employees' annual compensation to the plan without regard for employee contribution. The Company may also make additional discretionary contributions to the plan. The defined contribution plan expense was: $727,000 in 1995, $710,000 in 1994 and $431,000 in 1993. Assumptions used to measure the projected benefit obligation and develop net periodic pension costs for the three years ended December 31, 1995 were: <TABLE> <CAPTION> 1995 1994 1993 <S> <C> <C> <C> Assumed discount rate 7% 8% 7 1/4% Expected rate of return on plan assets 8% 8% 8% </TABLE> As a result of the change in the discount rate, the projected benefit obligation as of December 31, 1995 is approximately $270,000 more than it would have been using the previous 8% discount rate. The change had no effect on net pension cost in 1995. Note 17. Related Party Transactions As of January 1, 1993, the Company entered into an agreement with Foster Industries, Inc. ("FII"), the Company's predecessor, to share the environmental remediation costs up to $2,700,000 associated with a former coal tar pipe coating operation. For the three years ended December 31, 1995, the Company's president and chief executive officer and a director were officers, shareholders and directors of FII. During 1994 and 1993, the Company contributed $89,000 and $1,372,000, respectively, and FII contributed $56,000 and $918,000, respectively, to remediate the site. This cleanup was completed during 1994.
Note 18. Commitments and Contingent Liabilities The Company is subject to laws and regulations relating to the protection of the environment. While it is not possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly any future remediation and other compliance efforts, in the opinion of management, compliance with the present environmental protection laws will not have a material adverse effect on the financial condition, competitive position, or capital expenditures of the Company. However, the Company's efforts to comply with increasingly stringent environmental regulations may have an adverse effect on the Company's future earnings. The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial position of the Company. At December 31, 1995, the Company had outstanding letters of credit of approximately $1,128,000. Note 19. Risks and Uncertainties The Company's future operating results may be affected by a number of factors. The Company is dependent upon a number of major suppliers. If a critical supplier had operational problems or ceased making material available to the Company, operations could be adversely affected. In particular, approximately 70% of the materials sold by the construction products segment are purchased from one supplier. The Company's operations are in part dependent on governmental funding of infrastructure projects. Significant changes in the level of government funding of these projects could have a favorable or unfavorable impact on the operating results of the Company. Additionally, governmental actions concerning taxation, tariffs, the environment or other matters could impact the operating results of the Company. The Company's operations results may also be affected by the weather. Note 20. Fair Values of Financial Instruments The following methods and assumptions were used to estimate the fair value of financial instruments: Cash and cash equivalents: The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value. Accounts receivable and accounts payable: The carrying amount of accounts receivable and accounts payable approximates fair value.
Short-term and Long-term debt: The carrying amount of the revolving credit facility approximates fair value. The carrying amounts of the Company's financial instruments at December 31, 1995, approximate fair value with the exception of the interest rate swap agreement. At December 31, 1995, the interest rate swap agreement had no book value but had an intrinsic value of ($260,000) if the swap agreement had been canceled according to its terms on December 31, 1995. Note 21. Business Segments L. B. Foster Company is engaged in the manufacture, fabrication and distribution of rail, construction and tubular products. The Company's rail segment provides a full line of new and used rail, trackwork and accessories to railroads, mines and industry. The Company also designs and produces bonded rail joints, power rail, track fasteners, catenary systems, coverboards and special accessories for mass transit and other rail systems. The Company's construction segment sells and rents steel sheet piling and H-bearing pile for foundation and earth retention requirements and pile driving equipment and accessories for driving piling. In addition, the Company sells bridge decking, expansion joints, sign structures and other products for highway construction and repair. The Company's tubular segment supplies pipe and pipe coatings for pipelines and utilities. Additionally, the Company manufactures spiralweld pipe for water transmission lines, foundation piling, slurry lines and many other applications. The Company also produces pipe-related products for special markets, including water wells and irrigation. The Company markets its products directly in all major industrial areas of the United States through a national sales force.
A summary of revenues, operating profit, identifiable assets, depreciation and amortization, and capital expenditures of each business segment for the three years ended December 31, 1995 follows (in thousands): <TABLE> <CAPTION> 1995 Net Operating Identifiable Depreciation/ Capital Sales Profit Assets Amortization Expenditures <S> <C> <C> <C> <C> <C> Rail products $111,582 $ 5,705 $ 48,622 $ 570 $ 347 Construction products 88,735 2,592 32,652 1,018 1,346 Tubular products 64,668 720 33,658 1,160 2,375 264,985 9,017 114,932 2,748 4,068 Corporate and other 9,491 26 6 Total $264,985 9,017 $124,423 $ 2,774 $ 4,074 Nonoperating income (expense): General corp- orate expense and unallocated other income and expense - net (1,471) Interest expense (2,840) Income before income taxes $ 4,706 </TABLE> <TABLE> <CAPTION> 1994 Net Operating Identifiable Depreciation/ Capital Sales Profit/Loss Assets Amortization Expenditures <S> <C> <C> <C> <C> <C> Rail products $ 88,862 $ 6,052 $ 46,426 $ 357 $ 319 Construction products 85,488 4,245 34,923 1,079 1,709 Tubular products 59,912 (2,063) 33,579 1,347 763 234,262 8,234 114,928 2,783 2,791 Corporate and other 7,657 149 9 Total $234,262 8,234 $122,585 $ 2,932 $ 2,800 Nonoperating income (expense): General corp- orate expense and unallocated other income and expense - net (1,776) Interest expense (2,067) Income before income taxes $ 4,391 </TABLE>
<TABLE> <CAPTION> 1993 Net Operating Identifiable Depreciation/ Capital Sales Profit/Loss Assets Amortization Expenditures <S> <C> <C> <C> <C> <C> Rail products $ 75,141 $ 5,444 $ 34,323 $ 233 $ 149 Construction products 68,633 2,701 32,060 1,103 514 Tubular products 68,517 (2,867) 34,838 1,107 813 212,291 5,278 101,221 2,443 1,476 Corporate and other 6,916 320 134 Total $212,291 5,278 $108,137 $ 2,763 $ 1,610 Nonoperating income (expense): General corp- orate expense and unallocated other income and expense - net (2,332) Interest expense (2,408) Income before income taxes $ 538 </TABLE> Sales for export were $14,286,000 in 1995, $16,597,000 in 1994 and $23,062,000 in 1993. Sales to any individual customer do not exceed 10% of consolidated net sales. Sales between segments are immaterial. Identifiable assets by segment are those assets that are used exclusively by such segments. Corporate assets are principally cash, investments and deferred tax assets. Depreciation and capital expenditure amounts for the construction products segment include the regular replacement and depreciation of rental pool assets. Note 22. Quarterly Financial Information (Unaudited) Quarterly financial information for the years ended December 31, 1995 and 1994 is presented below (in thousands, except per share amounts):
<TABLE> <CAPTION> 1995 First Second Third Fourth Quarter Quarter Quarter Quarter Total <S> <C> <C> <C> <C> <C> Net sales $ 55,456 $ 72,564 $ 75,662 $ 61,303 $264,985 Gross profit $ 6,424 $ 7,748 $ 8,283 $ 6,760 $ 29,215 Income before cumulative effect of change in accounting principle $ 402 $ 1,724 $ 2,025 $ 892 $ 5,043 Net income $ 183 $ 1,724 $ 2,025 $ 892 $ 4,824 Earnings per common share before cumulative effect of change in accounting principle $ 0.04 $ 0.17 $ 0.21 $ 0.09 $ 0.51 Earnings per common share $ 0.02 $ 0.17 $ 0.21 $ 0.09 $ 0.49 </TABLE> Effective January 1, 1995, the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." This change in accounting reduced net income reported for the first quarter of 1995 by $219,000 or $0.02 per share and increased income from continuing operations in the third quarter of 1995 by $250,000 or $0.03 per share. The second quarter of 1995 includes additional interest income of $197,000. The third quarter of 1995 includes a gain of $180,000 from the sale of equipment held for disposal. The fourth quarter of 1995 includes a tax benefit of $337,000 principally for changes in net operating loss recognition and the valuation reserve. <TABLE> <CAPTION> 1994 First Second Third Fourth Quarter Quarter Quarter Quarter Total <S> <C> <C> <C> <C> <C> Net sales $ 45,045 $ 60,670 $ 65,527 $ 63,020 $234,262 Gross profit $ 4,831 $ 7,061 $ 7,660 $ 8,045 $ 27,597 Net income (loss) $ (291) $ 1,203 $ 1,926 $ 2,602 $ 5,440 Earnings (loss) per common share $ ( 0.03) $ 0.12 $ 0.20 $ 0.26 $ 0.55 </TABLE> The third quarter of 1994 includes the following: 1) a $622,000 reduction of costs and expenses related to a change in the Company's policy for employee vacations, 2) a LIFO provision of $475,000, and 3) a gain of $307,000 from the sale of the Company's Houston, TX sales office and equipment depot. The fourth quarter of 1994 includes the following: 1) a $270,000 reduction of costs and expenses related to the change in the Company's policy for employee vacations, 2) a LIFO provision of $305,000, 3) a $399,000 favorable adjustment of the reserve for market decline in inventories, and 4) a tax benefit of $1,193,000 principally for changes in net operating loss recognition and the valuation reserve.
REPORT OF INDEPENDENT AUDITORS AND RESPONSIBILITY FOR FINANCIAL STATEMENTS To the Board of Directors and Stockholders of L. B. Foster Company: We have audited the accompanying consolidated balance sheets of L. B. Foster Company as of December 31, 1995 and 1994, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995. Our audits also included the financial statement schedule listed in the index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of L. B. Foster Company at December 31, 1995 and 1994, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. As discussed in Note 2 to the financial statements, in 1995 and 1993, the Company changed its methods of accounting for long-lived assets and income taxes, respectively. /s/Ernst & Young LLP (Ernst & Young LLP) January 24, 1996 Pittsburgh, PA
To the Stockholders of L. B. Foster Company: The management of L. B. Foster Company is responsible for the integrity of all information in the accompanying consolidated financial statements and other sections of the annual report. Management believes the financial statements have been prepared in conformity with generally accepted accounting principles that reflect, in all material respects, the substance of events and transactions, and that the other information in the annual report is consistent with those statements. In preparing the financial statements, management makes informed judgments and estimates of the expected effects of events and transactions being accounted for currently. The Company maintains a system of internal accounting control designed to provide reasonable assurance that assets are safeguarded and that transactions are executed in accordance with management's authorization and are properly recorded to permit the preparation of financial statements in accordance with generally accepted accounting principles. Underlying the concept of reasonable assurance is the evaluation of the costs and benefits derived from control. This evaluation requires estimates and judgments by the Company. The Company believes that its internal accounting controls provide an appropriate balance between costs and benefits. The Board of Directors pursues its oversight role with respect to the financial statements through the Finance and Audit Committee which is composed of outside directors. The Finance and Audit Committee meets periodically with management, internal auditors and our independent auditors to discuss the adequacy of the internal accounting control, the quality of financial reporting and the nature, extent and results of the audit effort. Both the internal auditors and the independent auditors have free access to the Finance and Audit Committee. /s/Lee B. Foster II (Lee B. Foster II President and Chief Executive Officer) January 24, 1996 /s/Roger F. Nejes (Roger F. Nejes Senior Vice President Finance and Administration and Chief Financial Officer) January 24, 1996
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning the directors is set forth under "Election of Directors" in the Company's Proxy Statement for the 1996 annual meeting of stockholders ("1996 Proxy Statement"). Such information is incorporated herein by reference. Information concerning the executive officers who are not directors of the Company is set forth below. With respect to the period prior to August 18, 1977, references to the Company are to the Company's predecessor, Foster Industries, Inc. Name Age Position William S. Cook, Jr. 54 Vice President - Strategic Planning & Acquisitions Paul V. Dean 64 Vice President - Piling Products Dean A. Frenz 52 Senior Vice President - Rail and Tubular Products Stan L. Hasselbusch 48 Senior Vice President - Construction Products David L. Minor 52 Treasurer Roger F. Nejes 53 Senior Vice President - Finance and Administration and Chief Financial Officer Henry M. Ortwein, Jr. 53 Vice President - Rail Manufacturing John L. Rice 48 Vice President - Rail Distribution Robert W. Sigle 66 Vice President - Tubular Products Linda M. Terpenning 50 Vice President - Human Resources David L. Voltz 43 Vice President, General Counsel and Secretary Donald F. Vukmanic 44 Controller
Mr. Cook was elected Vice President - Strategic Planning & Acquisitions in October 1993. Prior to joining the Company in March 1993 as Director of Strategic Planning and Acquisitions, he was President of Cook Corporate Development, a business and financial advisory firm serving midsized public and private companies. Mr. Dean was named a Vice President in September 1987. Prior to September 1987, he served in various other capacities with the Company since his employment in 1964. Mr. Frenz was elected Senior Vice President - Rail and Tubular Products in September, 1995 having served as Senior Vice President - Product Management from October 1993, Vice President - Rail Products from June 1992 to September 1993 and having served as Vice President - Sales from August 1987 to May 1992. Mr. Frenz joined the Company in 1966. Mr. Hasselbusch was elected Senior Vice President - Construction Products in September 1995 having served as Senior Vice President - Sales from October 1993. Previously, he served as the Company's Central/Western Regional Sales Manager since September 1990, and Chicago Sales District Manager from 1987. Mr. Hasselbusch joined the Company in 1972. Mr. Minor was elected Treasurer in February 1988. Mr. Minor joined the Company in 1983. Mr. Nejes was elected Senior Vice President - Finance and Administration and Chief Financial Officer in October 1993, having served as Vice President - Finance and Chief Financial Officer from February 1988. Mr. Ortwein was elected Vice President - Rail Manufacturing in October 1993. Additionally, he served as President of Allegheny Rail Products, Inc. from May 1992 and as its Chief Operating Officer from January 1992. Previously, he was Vice President of Sales for Midwest Steel Corporation from January 1991 to December 1991 and National Sales Manager from November 1989 to December 1990. Prior to joining Midwest Steel Corporation, he was a Regional Sales Manager for Bethlehem Steel Corporation from July 1986 to October 1989. Mr. Rice was elected Vice President - Rail Distribution in October 1993, after having served as Manager - New Rail Products since 1985. Mr. Rice has served in various capacities since joining the Company in 1972. Mr. Sigle was elected Vice President - Tubular Products in December 1990, having served as Vice President - Tubular and Coating Sales Development since September 1987, and in various capacities with the Company since his employment in 1965. Ms. Terpenning was elected Vice President - Human Resources in October 1987. Ms. Terpenning joined the Company in 1985.
Mr. Voltz was elected Vice President, General Counsel and Secretary in December 1987, having previously served as General Counsel and Secretary since December 1986. Mr. Voltz joined the Company in 1981. Mr. Vukmanic was elected Controller in February 1988. Mr. Vukmanic joined the Company in 1977. Officers are elected annually at the organizational meeting of the Board of Directors following the annual meeting of stockholders. ITEM 11. EXECUTIVE COMPENSATION The information set forth under "Executive Compensation" in the 1996 Proxy Statement is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information set forth under "Ownership of Securities by Management" and "Principal Stockholders" in the 1996 Proxy Statement is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information set forth under "Certain Transactions" in the 1996 Proxy Statement is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of this Report: 1. Financial Statements The following consolidated financial statements, accompanying notes and report of independent auditors in the Company's Annual Report to stockholders for 1995 have been included in Item 8 of this Report: Consolidated Balance Sheets at December 31, 1995 and 1994. Consolidated Statements of Income For the Three Years Ended December 31, 1995. Consolidated Statements of Cash Flows For the Three Years Ended December 31, 1995. Consolidated Statements of Stockholders' Equity for the Three Years Ended December 31, 1995. Notes to Consolidated Financial Statements. Report of Independent Auditors.
2. Financial Statement Schedule Schedules for the Three Years Ended December 31, 1995: II - Valuation and Qualifying Accounts. The remaining schedules are omitted because of the absence of the conditions upon which they are required. 3. Exhibits The exhibits marked with an asterisk are filed herewith. All exhibits are incorporated herein by reference: 3.1 Restated Certificate of Incorporation as amended to date, filed as Exhibit 3.1 to Form 10-Q for the quarter ended March 31, 1987. 3.2 Bylaws of the Registrant, as amended to date, filed as Exhibit 3.2 to Form 10-K for the year ended December 31, 1993. * 4.1 Amended and Restated Loan Agreement by and among the Registrant and Mellon Bank, N.A., NBD Bank, and Corestates Bank, N.A. dated as of November 1, 1995. 10.15 Lease between the Registrant and Amax, Inc. for manufacturing facility at Parkersburg, West Virginia, dated as of October 19, 1978, filed as Exhibit 10.15 to Registration Statement No. 2-72051. 10.16 Lease between Registrant and Greentree Building Associates for Headquarters office, dated as of June 9, 1986, as amended to date, filed as Exhibit 10.16 to Form 10-K for the year ended December 31, 1988. 10.16.1 Amendment dated June 19, 1990 to lease between Registrant and Greentree Building Associates, filed as Exhibit 10.16.1 to Form 10-Q for the quarter ended June 30, 1990. 10.19 Lease Between the Registrant and American Cast Iron Pipe Company for Pipe-Coating Facility in Birmingham, Alabama dated December 11, 1991 and filed as Exhibit 10.19 to Form 10-K for the year ended December 31, 1991. 10.33.2 Amended and Restated 1985 Long Term Incentive Plan, as amended and restated March 2, 1994 and filed as Exhibit 10.33.2 to Form 10-K for the year ended December 31, 1993. ** 10.44 Amended Agreement between the Registrant and James W. Wilcock dated as of February 19, 1991 and filed as Exhibit 10.44 to Form 10-K for the year ended December 31, 1990. ** 10.45 Medical Reimbursement Plan, filed as Exhibit 10.45 to Form 10-K for the year ended December 31, 1992. ** 10.46 Leased Vehicle Plan, as amended to date. Filed as Exhibit 10.46 to Form 10-K for the year ended December 31, 1993. **
10.49 Lease agreement between Newport Steel Corporation and L.B. Foster Company dated as of October 12, 1994 and filed as Exhibit 10.49 to Form 10-Q for the quarter ended September 30, 1994. * 10.50 L. B. Foster Company 1996 Incentive Compensation Plan. ** 10.51 Supplemental Executive Retirement Plan. Filed as Exhibit 10.51 to form 10-K for the year ended December 31, 1994. ** 19 Exhibits marked with an asterisk are filed herewith. * 23.7 Consent of Independent Auditors. ** Identifies management contract or compensatory plan or arrangement required to be filed as an Exhibit. (b) Reports on Form 8-K No reports on Form 8-K were filed during the fourth quarter of 1995.
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. L. B. FOSTER COMPANY March 28, 1996 By /s/ Lee B. Foster II (Lee B. Foster II, President and Chief Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Name Position Date By: /s/ Lee B. Foster II President, Chief Executive March 28, 1996 (Lee B. Foster II) Officer and Director By: /s/ Roger F. Nejes Senior Vice President - March 28, 1996 (Roger F. Nejes) Finance & Administration and Chief Financial Officer By: /s/ John W. Puth Director March 28, 1996 (John W. Puth) By: /s/ Richard L. Shaw Director March 26, 1996 (Richard L. Shaw) By: /s/Donald F. Vukmanic Controller March 28, 1996 (Donald F. Vukmanic) By: /s/ James W. Wilcock Chairman of the Board March 28, 1996 (James W. Wilcock)
<TABLE> <CAPTION> L. B. FOSTER COMPANY AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993 (In Thousands) Additions Balance at Charged to Balance Beginning Costs and Deduc- at End of Year Expenses Other tions of Year <S> <C> <C> <C> <C> <C> 1995 Deducted from assets to which they apply: Allowance for doubtful accounts $ 1,615 $ 232 $ $ 47(1) $ 1,800 Provision for de- cline in market value of inventories $ 600 $ $ $ $ 600 Not deducted from assets: Provision for spec- ial termination benefits $ 82 $ 10 $ $ 29(3) $ 63 Provision for envir- onmental compliance & remediation $ 279 $ 91 $ $ 110(3) $ 260 1994 Deducted from assets to which they apply: Allowance for doubtful accounts $ 1,598 $ 345 $ $ 328(1) $ 1,615 Provision for de- cline in market value of inventories $ 999 $ $ $ 399(2) $ 600 Not deducted from assets: Provision for spec- ial termination benefits $ 113 $ 12 $ $ 43(3) $ 82 Provision for envir- onmental compliance & remediation $ 452 $ 172 $ $ 345(3) $ 279
1993 Deducted from assets to which they apply: Allowance for doubtful accounts $ 1,521 $ 335 $ $ 258(1) $ 1,598 Provision for de- cline in market value of inventories $ 999 $ $ $ $ 999 Not deducted from assets: Provision for spec- ial termination benefits $ 161 $ 21 $ $ 69(3) $ 113 Provision for envir- onmental compliance & remediation $ 1,363 $ 339 $ $1,250(3) $ 452 </TABLE> (1) Notes and accounts receivable written off as uncollectible. (2) The deduction is the result of a reduction in the specific tubular inventories to which the reserve applies. (3) Payments made on amounts accrued and reversals of accruals.