L.B. Foster Reports Increased Sales and Increased Adjusted Operating Results

PITTSBURGH, Oct. 23 /PRNewswire-FirstCall/ -- 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.
Contact: David J. Russo
Phone: (412) 928-3417
FAX: (412) 928-7891
Email: investors@LBFosterCo.com

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

SOURCE L.B. Foster Company

David J. Russo of L.B. Foster Company, +1-412-928-3417, Fax +1-412-928-7891,
investors@LBFosterCo.com