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, 2002.
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, 2002 and 2001
with Report of Independent Auditors
L. B. Foster Company
Voluntary Investment Plan
Financial Statements
and Other Financial Information
Years ended December 31, 2002 and 2001
Contents
Report of Independent Auditors.......................................... 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 4(i)--Schedule of Assets (Held at End of Year)......... 10
1
Report of Independent Auditors
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, 2002 and
2001, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2002. 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 auditing standards generally accepted
in the 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, 2002 and 2001, and the changes in its net assets available for
benefits for the year ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States.
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, 2002 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.
June 2, 2003
2
L. B. Foster Company
Voluntary Investment Plan
Statements of Net Assets Available for Benefits
December 31
2002 2001
-------------------------------------
Assets
Investments at fair value $27,467,746 $34,487,003
Participant loans 530,648 498,971
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27,998,394 34,985,974
Receivables:
Employee 77,854 78,006
Employer 34,746 104,921
Other 60 113
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112,660 183,040
-------------------------------------
Net assets available for benefits $28,111,054 $35,169,014
=====================================
See accompanying notes.
3
L. B. Foster Company
Voluntary Investment Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2002
Additions
Investment (loss) income:
Interest and dividends $ 558,878
Net realized/unrealized depreciation in
investment fair value (5,322,240)
------------------
Total investment loss (4,763,362)
Contributions:
Employee 1,099,187
Employer 367,763
------------------
Total contributions 1,466,950
------------------
(3,296,412)
Deductions
Benefit payments 3,761,548
------------------
3,761,548
------------------
Decrease in net assets available for benefits (7,057,960)
Net assets available for benefits, beginning of year 35,169,014
------------------
Net assets available for benefits, end of year $28,111,054
==================
See accompanying notes.
4
L. B. Foster Company
Voluntary Investment Plan
Notes to Financial Statements
Years ended December 31, 2002 and 2001
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. 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 twelve 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 twelve 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
L. B. Foster Company
Voluntary Investment Plan
Notes to Financial Statements (continued)
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. Additional
matching employer contributions were not required 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. 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 $79,100 were utilized to offset
contributions in 2002. At December 31, 2002 and 2001, forfeitures of $25,600 and
$109,800, 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
L. B. Foster Company
Voluntary Investment Plan
Notes to Financial Statements (continued)
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 his 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 one-half percent.
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
L. B. Foster Company
Voluntary Investment Plan
Notes to Financial Statements (continued)
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 accounting principles
generally accepted in the United States 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
L. B. Foster Company
Voluntary Investment Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
Effective January 1, 1999, the Plan was amended to establish an investment
option in which employees may invest contributions in L. B. Foster Company
common stock. All 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. During 2001, the Company converted the L. B. Foster Company
Stock Fund into a unitized stock fund. The unitized fund will be 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 of the conversion,
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, 2002, 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 $ 5,153,645 $(1,828,809)
Equity Income Fund 2,436,427 (616,944)
Growth and Income Fund 3,666,594 (906,109)
Government Income Fund 2,483,982 108,320
Asset Manager Fund 960,366 (138,803)
Low Price Stock Fund 663,234 (68,767)
Freedom Income Fund 18,870 (150)
Freedom 2000 124,740 (3,178)
Freedom 2010 152,831 (6,905)
Freedom 2020 211,411 (36,873)
Freedom 2030 35,461 (3,760)
Freedom 2040 2,455 (332)
Managed Income Fund 1,659,982 -
Retirement Government Money Market Fund 3,572,069 -
Spartan U.S. Equity Index Fund 1,763,652 (584,049)
Janus Worldwide Fund 2,354,417 (903,529)
Credit Suisse Emerging Growth Fund 558,525 (317,649)
PIMCO Total Return Fund 451,567 (1,471)
L. B. Foster Company Stock Fund 1,197,518 (13,232)
------------------------------------------
$ 27,467,746 $(5,322,240)
==========================================
9
L. B. Foster Company
Voluntary Investment Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The fair value of investments representing 5% or more of the Plan's assets at
December 31, 2002 and 2001 is as follows:
2002 2001
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Fidelity Investments:
Magellan Fund $ 5,153,645 $ 7,720,290
Equity Income Fund 2,436,427 2,834,987
Growth and Income Fund 3,666,594 5,046,509
Government Income Fund 2,483,982 2,168,979
Retirement Government Money Market Fund 3,572,069 4,941,431
Managed Income Fund 1,659,982 927,999
Spartan U.S. Equity Index Fund 1,763,652 2,708,239
Janus Worldwide Fund 2,354,417 3,948,328
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.
10
OTHER FINANCIAL INFORMATION
L. B. Foster Company
Voluntary Investment Plan
EIN: 25-1324733 Plan Number: 201
Schedule H, Line 4(i)--Schedule of Assets
(Held at End of Year)
December 31, 2002
Identity of Issue, Borrower, Shares Fair Market
Lessor or Similar Party Description of Investment Held Value
----------------------------------------------------------------------------------------------------------------------
Fidelity Investments*:
Magellan Fund Equities 65,269 $ 5,153,645
Equity Income Fund Equities 61,417 2,436,427
Growth and Income Fund Equities 120,970 3,666,594
Government Income Fund Government obligations 237,021 2,483,982
Asset Manager Fund Equities, money market, bonds 69,592 960,366
Low Price Stock Fund Equities 26,350 663,234
Freedom Income Fund Equity funds, fixed income funds 1,780 18,870
Freedom 2000 Equity funds, fixed income funds 11,329 124,740
Freedom 2010 Equity funds, fixed income funds 13,359 152,831
Freedom 2020 Equity funds, fixed income funds 19,869 211,411
Freedom 2030 Equity funds, fixed income funds 3,463 35,461
Freedom 2040 Equity funds, fixed income funds 419 2,455
Managed Income Fund Guaranteed investment contracts 1,659,982 1,659,982
Retirement Government Money Market Fund Government obligations, money
market securities 3,572,069 3,572,069
Spartan U.S. Equity Index Fund Equities 56,618 1,763,652
Janus Worldwide Fund Equities 73,278 2,354,417
Credit Suisse Emerging Growth Fund Equities 29,630 558,525
PIMCO Total Return Fund Fixed income securities 42,321 451,567
------------------
Total mutual funds 26,270,228
L. B. Foster Company Stock Fund Interest-bearing cash 51,432 51,432
Common stock 264,075 1,146,086
------------------
1,197,518
Outstanding participant loans Participant loans, interest rates
ranging from 4.75% to 10.5%,
various maturities ranging
from 1 to 30 years 530,648
------------------
$ 27,998,394
==================
*Party-in-interest
INDEX TO EXHIBITS
Exhibit 23 Consent of Independent Auditors, Ernst & Young, LLP.
Exhibit 99.1 Certification of Chief Executive Officer under Section 906
of the Sarbanes-Oxley Act of 2002.
Exhibit 99.2 Certification of Chief Financial Officer under Section 906
of the Sarbanes-Oxley Act of 2002.
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
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(Name of Plan)
Date: June 24, 2003 By: /s/David J. Russo
-------------------------------
David J. Russo
Senior Vice President,
Chief Financial Officer and
Treasurer