EX-99 2 exb991.txt 2008 THIRD QUARTER PRESS RELEASE EXHIBIT -------------------------------------------------------------------------------- PRESS RELEASE L.B. Foster Company 415 Holiday Drive, Pittsburgh, PA 15220 Contact: David J. Russo Phone: (412) 928-3417 FAX: (412) 928-7891 Email: investors@LBFosterCo.com FOR IMMEDIATE RELEASE L.B. FOSTER REPORTS INCREASED SALES AND INCREASED ADJUSTED OPERATING RESULTS PITTSBURGH, PA, October 23, 2008 - L.B. Foster Company (NASDAQ: FSTR), a leading manufacturer, fabricator, and distributor of products and services for rail, construction, energy and utility markets, today reported that net sales increased 7.2% to $145.6 million compared to $135.8 million in the prior year quarter. Gross profit margin was 15.6%, up 14 basis points from the prior year quarter primarily as a result of increased billing margins and decreased unfavorable manufacturing variances partially offset by increased LIFO expense. Third quarter LIFO expense was approximately $5.1 million compared to $0.6 million in the prior year. 2008 Third Quarter Results In the third quarter of 2008, L.B. Foster had income from continuing operations of $8.1 million or $0.76 per diluted share compared to income from continuing operations of $14.5 million or $1.32 per diluted share in the third quarter of 2007. The prior year third quarter results included $8.5 million of incremental dividend income related to the sale of the Company's investment in the DM&E Railroad. Excluding this incremental dividend income, income from continuing operations was $7.0 million or $0.64 per diluted share in the third quarter of 2007. Accordingly, the third quarter of 2008 was $0.12 per share or 19% higher than the 2007 third quarter adjusted earnings per diluted share. Selling and administrative expenses increased $0.2 million or 2.0% over last year's quarter due primarily to increased salaries and advertising expenses. Third quarter interest expense was $0.5 million, a 46% decrease from the prior year quarter due principally to decreased average borrowings as the Company generated strong positive cash flows in the second half of 2007. The Company also generated $0.6 million of investment income in the third quarter of 2008. The Company's income tax rate from continuing operations was 35.9% in the third quarter compared to 22.8% in the prior year quarter. The low tax rate in the prior year third quarter was due to the fact that only 30% of the incremental $8.5 million of dividend income was taxable. "We are pleased to report that sales increased 7.2% in the third quarter as compared to the prior year. This increase was driven by Construction Products and Rail Products. While our Tubular segment was off of last year's brisk sales pace, it continues to have a very strong year. Gross profit margins increased slightly over the prior year quarter, but fell short of first half margins due primarily to increased LIFO expense. Bookings for the quarter totaled $115.8 million compared to $119.3 million last year and backlog is $178.9 million, up 7.9% from last year. Due to efficiencies, our plants and yards continued to perform extremely well even in certain areas where activity levels have declined," commented Stan Hasselbusch, President and Chief Executive Officer. Mr. Hasselbusch also announced, "L.B. Foster purchased 156,547 shares of its stock during the third quarter for approximately $6.0 million and an additional 224,400 shares in early October for approximately $4.9 million pursuant to a share repurchase program authorized by our Board of Directors in May 2008. Our 2008 Foster share purchases now total $24.8 million of the $25.0 million authorized." 2008 Nine Month Results For the nine months ended September 30, 2008, L.B. Foster reported income from continuing operations of $22.1 million or $2.01 per diluted share. These results include a $2.0 million first quarter pretax gain related to a favorable working capital adjustment pursuant to the prior year sale of the Company's investment in the DM&E Railroad, as well as a $1.5 million pretax gain on the sale and lease-back of our threaded products facility in Houston, Texas. Excluding these gains and the aforementioned 2007 incremental dividend income, earnings per diluted share from continuing operations were $1.82 compared to $1.55 in 2007, an increase of 17%. Net sales for the nine months of 2008 decreased 6.6% to $368.8 million compared to $395.0 million in 2007. Gross profit margin was 16.3%, up 200 basis points from 2007, primarily as a result of increased billing margins and improved manufacturing variances, partially offset by increased LIFO expense. Selling and administrative expenses increased $1.3 million or 4.8% over the prior year due primarily to salaries, benefits and advertising. Interest expense decreased $1.8 million from the prior year due principally to decreased average borrowings. The Company's income tax rate from continuing operations was 36.4% compared to 28.6% in the prior year. Cash provided from operations was approximately $12.3 million for the third quarter of 2008 compared to a $24.4 million in the third quarter of 2007. Third quarter capital expenditures were $0.9 million compared to $1.1 million during the prior year quarter. Year-to-date capital expenditures were $4.0 million, $0.2 million higher than 2007. "We continue to expect to generate positive cash flows from operations well in excess of our capital expenditures in 2008," noted Mr. Hasselbusch as he concluded, "We have strong liquidity, access to credit and we continue to exercise prudence and look for value as we target synergistic and accretive acquisitions." L.B. Foster Company will conduct a conference call and webcast to discuss its third quarter 2008 operating results and general market activity and business conditions on Thursday, October 23, 2008 at 1:00pm ET. The call will be hosted by Mr. Stan Hasselbusch, President and Chief Executive Officer. Listen via audio on the L.B. Foster web site: www.lbfoster.com, by accessing the Investor Relations page. The Company wishes to caution readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements in news releases, and other communications, including oral statements, such as references to future profitability, made from time to time by representatives of the Company. Specific risks and uncertainties that could affect the Company's profitability include, but are not limited to, general economic conditions, sudden and/or sharp declines in steel prices, adequate funding for infrastructure projects, production delays or problems encountered at our manufacturing facilities, and the availability of existing and new piling and rail products. There are also no assurances that the Canadian Pacific Railway will proceed with the Powder River Basin project and trigger any contingent payments to L.B. Foster related to the Company's sale of its investment in the DM&E. Matters discussed in such communications are forward-looking statements that involve risks and uncertainties. Sentences containing words such as "anticipates," "expects," or "will," generally should be considered forward-looking statements. More detailed information on these and additional factors which could affect the Company's operating and financial results are described in the Company's Forms 10-K, 10-Q and other reports, filed or to be filed with the Securities and Exchange Commission. The Company urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the Company faces. The forward-looking statements contained in this press release are made only as of the date hereof, and the Company undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. CONDENSED STATEMENTS OF CONSOLIDATED INCOME L.B. FOSTER COMPANY AND SUBSIDIARIES (In Thousands, Except Per Share Amounts)

Three Months Ended Nine Months Ended September 30, September 30, ---------------------- ----------------------- 2008 2007 2008 2007 ---------------------- ----------------------- (Unaudited) (Unaudited) NET SALES $145,550 $135,753 $368,824 $394,966 COSTS AND EXPENSES: Cost of goods sold 122,843 114,759 308,611 338,544 Selling and administrative expenses 10,092 9,890 29,417 28,081 Interest expense 500 926 1,543 3,331 Dividend income - (8,719) - (9,214) Gain on sale of DM&E investment - - (2,022) - Gain on sale of property - - (1,486) - Interest income (617) (15) (2,018) (21) Other expense (income) 48 62 64 (41) ---------- ---------- ---------- ---------- 132,866 116,903 334,109 360,680 ---------- ---------- ---------- ---------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 12,684 18,850 34,715 34,286 INCOME TAXES 4,558 4,301 12,626 9,796 ---------- ---------- ---------- ---------- INCOME FROM CONTINUING OPERATIONS, NET OF TAX 8,126 14,549 22,089 24,490 DISCONTINUED OPERATIONS: LOSS FROM DISCONTINUED OPERATIONS - (26) - (45) INCOME TAX BENEFIT - (8) - (16) ---------- ---------- ---------- ---------- LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX - (18) - (29) NET INCOME $8,126 $14,531 $22,089 $24,461 ========== ========== ========== ========== BASIC EARNINGS PER COMMON SHARE: FROM CONTINUING OPERATIONS $0.77 $1.37 $2.04 $2.31 FROM DISCONTINUED OPERATIONS 0.00 (0.00) 0.00 (0.00) ---------- ---------- ---------- ---------- BASIC EARNINGS PER COMMON SHARE $0.77 $1.36 $2.04 $2.31 ========== ========== ========== ========== DILUTED EARNINGS PER COMMON SHARE: FROM CONTINUING OPERATIONS $0.76 $1.32 $2.01 $2.24 FROM DISCONTINUED OPERATIONS 0.00 (0.00) 0.00 (0.00) ---------- ---------- ---------- ---------- DILUTED EARNINGS PER COMMON SHARE $0.76 $1.32 $2.01 $2.24 ========== ========== ========== ========== AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 10,561 10,654 10,812 10,601 ========== ========== ========== ========== AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 10,695 10,990 10,963 10,941 ========== ========== ========== ==========

L.B. Foster Company and Subsidiaries Consolidated Balance Sheet (In thousands)

September 30, December 31, 2008 2007 ---------- ---------- ASSETS (Unaudited) CURRENT ASSETS: --------------- Cash and cash items $111,755 $121,097 Accounts and notes receivable: Trade 68,865 52,856 Other 567 754 Inventories 120,336 102,447 Current deferred tax assets 3,553 3,615 Other current assets 1,304 1,131 Property held for resale - 2,497 ---------- ---------- Total Current Assets 306,380 284,397 ---------- ---------- OTHER ASSETS: ------------- Property, plant & equipment-net 41,361 44,136 Goodwill 350 350 Other intangibles - net 41 50 Deferred tax assets 1,434 1,411 Other non-current assets 392 428 ---------- ---------- Total Other Assets 43,578 46,375 ---------- ---------- $349,958 $330,772 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: -------------------- Current maturities on long-term debt $5,833 $6,191 Short-term borrowings 238 - Accounts payable-trade and other 76,664 53,489 Accrued payroll and employee benefits 7,269 11,490 Current deferred tax liabilities 3,541 3,541 Other accrued liabilities 7,321 8,841 Current liabilities of discontinued operations 200 200 ---------- ---------- Total Current Liabilities 101,066 83,752 ---------- ---------- LONG-TERM DEBT, TERM LOAN 14,048 16,190 ---------- ---------- OTHER LONG-TERM DEBT 9,169 11,866 ---------- ---------- DEFERRED TAX LIABILITIES 1,638 1,638 ---------- ---------- OTHER LONG-TERM LIABILITIES 5,190 3,500 ---------- ---------- STOCKHOLDERS' EQUITY: --------------------- Class A Common stock 110 109 Paid-in capital 47,798 45,147 Retained earnings 191,403 169,314 Treasury stock (19,830) - Accumulated other comprehensive loss (634) (744) ---------- ---------- Total Stockholders' Equity 218,847 213,826 ---------- ---------- $349,958 $330,772 ========== ==========