FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASES, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended December 31, 2003.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from ___________to_____________
Commission file number 0-10436.
L. B. Foster Company Voluntary Investment Plan
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(Full title of the plan and the address of plan, if different from that
of the issuer named below)
L. B. FOSTER COMPANY
415 Holiday Drive
Pittsburgh, PA 15222
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(Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office)
FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
L. B. Foster Company Voluntary Investment Plan
Years ended December 31, 2003 and 2002
with Report of Independent Registered Public Accounting Firm
L. B. Foster Company
Voluntary Investment Plan
Financial Statements
and Other Financial Information
Years ended December 31, 2003 and 2002
Contents
Report of Independent Registered Public Accounting Firm............ 1
Audited Financial Statements
Statements of Net Assets Available for Benefits.................... 2
Statement of Changes in Net Assets Available for Benefits.......... 3
Notes to Financial Statements...................................... 4
Other Financial Information
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)...... 10
1
Report of Independent Registered Public Accounting Firm
Plan Administrator
L. B. Foster Company
Voluntary Investment Plan
We have audited the accompanying statements of net assets available for benefits
of L. B. Foster Company Voluntary Investment Plan as of December 31, 2003 and
2002, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2003. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2003 and 2002, and the changes in its net assets available for
benefits for the year ended December 31, 2003, in conformity with U.S. generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2003 is presented for purpose of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/Ernst & Young LLP
June 13, 2004
2
L. B. Foster Company
Voluntary Investment Plan
Statements of Net Assets Available for Benefits
December 31
2003 2002
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Assets
Investments at fair value $31,655,890 $27,467,746
Participant loans 541,339 530,648
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32,197,229 27,998,394
Receivables:
Employee 85,404 77,854
Employer 251,932 34,746
Other 65 60
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337,401 112,660
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Net assets available for benefits $32,534,630 $28,111,054
===========================================================================
See accompanying notes.
3
L. B. Foster Company
Voluntary Investment Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2003
Additions
Investment income:
Interest and dividends $ 581,399
Net realized/unrealized appreciation
in investment fair value 4,591,129
------------------------------------------------------------------------
Total investment income 5,172,528
Contributions:
Employee 1,108,294
Employer 666,235
------------------------------------------------------------------------
Total contributions 1,774,529
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6,947,057
Deductions
Benefit payments 2,523,481
------------------------------------------------------------------------
2,523,481
Increase in net assets available for benefits 4,423,576
Net assets available for benefits, beginning of year 28,111,054
------------------------------------------------------------------------
Net assets available for benefits, end of year $32,534,630
========================================================================
See accompanying notes.
4
L. B. Foster Company
Voluntary Investment Plan
Notes to Financial Statements
Years ended December 31, 2003 and 2002
1. Description of Plan
The following brief description of the L. B. Foster Company Voluntary Investment
Plan (the Plan) as amended effective January 1, 1999 is provided for general
information purposes only. Participants should refer to the summary plan
description for more complete information.
General
The Plan is a defined contribution plan extended to all eligible salaried
employees of L. B. Foster Company (the Company) who have attained age 18. The L.
B. Foster Company Employee Benefits Policy and Review Committee, appointed by
the Board of Directors of the Company, collectively serves as the plan
administrator. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA) as amended.
Contributions
Contributions under the Plan are made by both the participants and the Company.
A participant may elect to make pretax contributions ranging from 2% to 10% of
annual compensation subject to Internal Revenue Code limitations. A participant
who elects to make pretax contributions of at least the maximum amount subject
to Company matching can also elect to make additional voluntary contributions on
an after-tax basis provided, however, that the sum of the pretax and voluntary
employee contributions does not exceed 15% of the participant's annual
compensation. Effective January 1, 2003, the limit on employee contributions was
increased to 30% subject to Internal Revenue Code limitations, and the
limitation on aggregate pretax and after-tax contributions was removed.
Participant contributions and employer matching contributions are invested in
accordance with participant elections. In the event that a participant does not
make an investment election, contributions are invested in the Fidelity Freedom
funds until such time as an election is made by the participant. The participant
may transfer contributions defaulted to these funds into other investment
options at the participant's discretion.
Beginning the first of the month following 12 months of employment, the Company
provides a 50% match of the participant's primary contribution on the first 4%
to 6% of annual compensation, based on years of service, as defined by the Plan.
Beginning the first of the month following 12 months of employment, the Company
contributes a fixed amount equal to 1% of eligible employees' annual
compensation regardless of whether the employee elects to contribute to the
Plan. Company contributions may be reduced by forfeitures that accumulate.
5
1. Description of Plan (continued)
The Plan also requires an additional matching employer contribution of up to
$.50 for each $1.00 of eligible pretax contributions based on a target ratio of
the Company's annual pretax income to equity as defined in the Plan. No
additional matching employer contributions were made in 2002.
The Company, upon resolution of the Board of Directors, may make a discretionary
additional contribution of an amount out of, but not in excess of, the Company's
current or accumulated profits. A discretionary contribution of $213,000 was
approved for 2003. No discretionary contribution was approved for 2002. The
Company's contributions may be reduced by any forfeitures which accumulate from
terminations of participants with nonvested employer contributions. Forfeitures
totaling $27,900 and $79,100 were utilized to offset contributions in 2003 and
2002, respectively. At December 31, 2003 and 2002, forfeitures of $6,200 and
$25,600, respectively, were available to reduce future company contributions.
Vesting
A participant's vested interest in the Plan on any date is equal to the sum of
the values of (a) that portion of the participant's account attributable to the
participant's contributions and (b) that portion of the participant's account
attributable to the Company's contributions multiplied by the applicable vesting
percentage plus or minus related earnings (losses). Participants that are active
as of January 1, 2002 or later are 100% vested in the Company's contributions
after three years of eligible service or after attaining age 65. Participants
that are inactive as of or terminated prior to January 1, 2002 are 100% vested
in the Company's contributions after five years of eligible service or after
attaining age 65.
Notwithstanding the above, a participant who terminates from the Plan by reason
of retirement, disability, or death is fully vested in his participant account.
Distributions
Normal retirement age is 65. Early retirement age is 55, provided that the
participant has at least five years of service. In addition, a participant may
obtain an early retirement distribution prior to reaching age 55, provided that
the participant will turn 55 in the year the distribution occurs and that the
participant has at least five years of service.
As provided by the Plan, the distribution to which a participant is entitled by
reason of normal, early, late, or disability retirement, death, or termination
of employment may be made in the form of direct rollover, annuity, cash, or
partly in cash and partly as an annuity. The amount of such distribution is
equal to the participant's vested account balance on the valuation date.
6
1. Description of Plan (continued)
Withdrawals
Under the Plan, a participant may elect to withdraw voluntary, after-tax
contributions made to the Plan prior to January 1, 1987. Such withdrawals are
subject to a $1,000 minimum. In the event of extreme hardship and subject to
certain restrictions and limitations, a participant may withdraw his vested
interest in the portion of his account attributable to matching, fixed and
discretionary contributions, and related earnings.
Participants' Accounts
Each participant's account is credited with the participant's pretax and
voluntary contributions, the participant's allocable share of company
contributions, and related earnings of the funds. Participants' accounts may be
invested in 10% increments into any of the mutual funds available under the Plan
at the direction of the participant.
Loans
A participant may obtain a loan from the vested portion of their account,
subject to spousal consent, if applicable. The loan proceeds (subject to a
minimum of $1,000 and a maximum of $50,000) are deducted from the participant's
account and are repaid by means of payroll deductions. Loans are required to be
repaid within 60 months from the date on which the loan is originally granted
and may be prepaid early without penalty. The repayment period for a loan that
is obtained for purchasing a primary residence may be as long as 360 months. The
loan carries an interest rate computed at the prime rate plus 0.5%. The interest
rate is computed on the date the loan is requested and remains fixed for the
full term of the loan.
Plan Termination
Although it has not expressed any intention to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. Should the Plan be terminated,
participants will become fully vested in their accounts, and the assets of the
Plan would be distributed to the participants based on their individual account
balances as determined under the plan provisions.
7
2. Summary of Significant Accounting Policies
Valuation of Investments
Mutual fund values are based on the underlying investments in securities. Mutual
fund securities traded on security exchanges are valued at the latest quoted
sales price. Securities traded on a national securities exchange are valued at
the last reported sales price on the last business day of the plan year.
Securities traded in the over-the-counter market and listed securities for which
no sale was reported on that fixed rate date are valued at the average of the
last reported bid and ask quotations. Loans receivable from participants are
valued at cost which approximates fair value.
Realized gain or loss includes recognized gains and losses on the sale of
investments. Unrealized appreciation or depreciation represents changes in value
from original cost. Dividend income is recorded on the ex-dividend date and
interest income is accrued as earned.
As described above, the assets of the Plan are concentrated in mutual funds
consisting primarily of stocks and bonds. Realization of amounts disclosed as
net assets available for benefits is dependent on the results of these markets.
Basis of Accounting
The financial statements of the Plan are maintained on the accrual basis.
Contributions receivable are recorded among the available investment options
based upon the participants' aggregate investment allocations in effect at the
end of the plan year.
Use of Estimates
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles requires management to make estimates that affect
the amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Expenses
The Company, as provided by the Plan, pays expenses of the Plan. Expenses
incurred to establish and maintain a loan are charged to the applicable
participant.
8
3. Investments
Profit sharing contributions occurring after the effective date will be directed
into the L. B. Foster Company Stock Fund. Participants may subsequently transfer
profit sharing contributions into other plan funds at their discretion. The L.
B. Foster Company Stock Fund is a unitized stock fund comprised of a 95% to 99%
investment in L. B. Foster Company common stock with the remaining 1% to 5%
invested in a short-term investment fund. As a result, participant accounts
receive units of participation in the fund rather than common shares. The
conversion grants participants the added flexibility of executing daily
transactions to increase or decrease participation in the fund that was not
present under the prior fund structure.
For the year ended December 31, 2003, the Plan's investments (including
investments bought, sold, and held during the year) appreciated (depreciated) in
value as follows:
Net Realized/
Fair Unrealized
Market Appreciation
Value (Depreciation)
--------------------------------------
Fidelity Investments:
Magellan Fund $ 5,906,948 $1,150,176
Equity Income Fund 2,644,991 558,514
Growth and Income Fund 3,868,823 583,922
Government Income Fund 2,183,722 (61,479)
Blue Chip Fund 56,073 2,469
Asset Manager Fund 995,550 121,219
Low Price Stock Fund 1,105,633 257,431
Small Cap Stock Fund 207,655 91,935
Freedom Income Fund 22,601 937
Freedom 2000 274,487 10,154
Freedom 2010 431,378 28,354
Freedom 2020 500,124 67,222
Freedom 2030 90,437 15,831
Freedom 2040 32,219 5,062
Managed Income Fund 2,439,606 -
Retirement Government
Money Market Fund 3,476,427 -
Spartan U.S. Equity Index Fund 2,375,468 487,367
Janus Worldwide Fund 1,702,147 462,534
Credit Suisse Emerging Growth Fund 845,279 212,644
PIMCO Total Return Fund 368,920 1,098
MSI International Equity Fund 493,920 39,593
L. B. Foster Company Stock Fund 1,633,482 556,146
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$ 31,655,890 $4,591,129
======================================
9
3. Investments (continued)
The fair value of investments representing 5% or more of the Plan's assets at
December 31, 2003 and 2002 is as follows:
2003 2002
----------------- ------------------
Fidelity Investments:
Magellan Fund $ 5,906,948 $ 5,153,645
Equity Income Fund 2,644,991 2,436,427
Growth and Income Fund 3,868,823 3,666,594
Government Income Fund 2,183,722 2,483,982
Retirement Government
Money Market Fund 3,476,427 3,572,069
Managed Income Fund 2,439,606 1,659,982
Spartan U.S. Equity Index Fund 2,375,468 1,763,652
Janus Worldwide Fund 1,702,147 2,354,417
L. B. Foster Company Stock Fund 1,633,482 1,197,518
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
(IRS) dated July 30, 2002, stating that the Plan is qualified under Section
401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust
is exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan was amended
subsequent to the IRS determination letter. The plan administrator believes the
Plan is being operated in compliance with the applicable requirements of the
Code and, therefore, believes that the Plan is qualified and the related trust
is tax-exempt.
5. Transactions with Parties-in-Interest
Certain trustee, accounting, and administrative expenses relating to the
maintenance of participant records and the Plan's administration are absorbed by
the Company.
Other Financial Information
10
L. B. Foster Company
Voluntary Investment Plan
EIN: 25-1324733 Plan Number: 201
Schedule H, Line 4i-Schedule of Assets
(Held at End of Year)
December 31, 2003
Identity of Issue, Borrower, Shares Fair Market
Lessor, or Similar Party Description of Investment Held Value
----------------------------------------------------------------------------------------------------------------
Fidelity Investments*:
Magellan Fund Equities 60,435 $ 5,906,948
Equity Income Fund Equities 53,166 2,644,991
Growth and Income Fund Equities 108,583 3,868,823
Government Income Fund Government obligations 213,671 2,183,722
Blue Chip Fund Equities 1,415 56,073
Asset Manager Fund Equities, money market, bonds 63,169 995,550
Low Price Stock Fund Equities 31,608 1,105,633
Small Cap Stock Fund Equities 12,144 207,655
Freedom Income Fund Equity funds, fixed income funds 2,038 22,601
Freedom 2000 Equity funds, fixed income funds 23,302 274,487
Freedom 2010 Equity funds, fixed income funds 33,132 431,378
Freedom 2020 Equity funds, fixed income funds 38,412 500,124
Freedom 2030 Equity funds, fixed income funds 6,984 90,437
Freedom 2040 Equity funds, fixed income funds 4,262 32,219
Managed Income Fund Guaranteed investment contracts 2,439,606 2,439,606
Retirement Government Money Market Fund Government obligations, money
market securities 3,476,427 3,476,427
Spartan U.S. Equity Index Fund Equities 60,276 2,375,468
Janus Worldwide Fund Equities 43,049 1,702,147
Credit Suisse Emerging Growth Fund Equities 30,850 845,279
PIMCO Total Return Fund Fixed income securities 34,446 368,920
MSI International Equity Fund Equities 26,064 493,920
-----------------
Total mutual funds 30,022,408
L. B. Foster Company Stock Fund Interest-bearing cash 76,543 76,543
Common stock 239,529 1,556,939
-----------------
1,633,482
Outstanding participant loans Participant loans, interest rates
ranging from 4.75% to 10.5%,
various maturities ranging
from 2 to 30 years 541,339
-----------------
$ 32,197,229
=================
*Party-in-interest
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the members
of the Administrative Committee of the Plan have duly caused this Annual Report
to be signed on its behalf by the undersigned hereunto duly authorized.
L. B. Foster Company
Voluntary Investment Plan
----------------------------------
(Name of Plan)
Date: June 28, 2004 By: /s/David J. Russo
----------------------------------
David J. Russo
Senior Vice President,
Chief Financial Officer and
Treasurer
INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
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23.1 Consent of Independent Registered Public Accounting Firm