FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION
L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees
Years ended December 31, 2001 and 2000
with Report of Independent Auditors
L. B. Foster Company
Retirement Savings Plan for
Non-Union Hourly Employees
Financial Statements
and Other Financial Information
Years ended December 31, 2001 and 2000
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)........... 11
Report of Independent Auditors
Plan Administrator
L. B. Foster Company
Retirement Savings Plan for
Non-Union Hourly Employees
We have audited the accompanying statements of net assets available for benefits
of L. B. Foster Company Retirement Savings Plan for Non-Union Hourly Employees
as of December 31, 2001 and 2000, and the related statement of changes in net
assets available for benefits for the year ended December 31, 2001. 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, 2001 and 2000, and the changes in its net assets available for
benefits for the year ended December 31, 2001, 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, 2001 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 10, 2002
2
L. B. Foster Company
Retirement Savings Plan for
Non-Union Hourly Employees
Statements of Net Assets Available for Benefits
December 31
2001 2000
- -------------------------------------------------------------------------------
Assets
Investments at fair value $ 1,314,897 $ 1,326,645
Participant loans 73,240 87,666
- -------------------------------------------------------------------------------
1,388,137 1,414,311
Receivables:
Employee 10,068 12,452
Employer 2,450 2,529
- -------------------------------------------------------------------------------
12,518 14,981
- -------------------------------------------------------------------------------
Net assets available for benefits $ 1,400,655 $ 1,429,292
===============================================================================
See accompanying notes.
3
L. B. Foster Company
Retirement Savings Plan for
Non-Union Hourly Employees
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2001
Additions:
Investment income (loss):
Interest and dividends $ 39,920
Net realized/unrealized depreciation in investment fair value (111,472)
- ------------------------------------------------------------------------------
Total investment loss (71,552)
Contributions:
Employee 143,179
Employer 32,189
- ------------------------------------------------------------------------------
Total contributions 175,368
- ------------------------------------------------------------------------------
103,816
Deductions:
Benefit payments 132,453
- ------------------------------------------------------------------------------
132,453
- ------------------------------------------------------------------------------
Decrease in net assets available for benefits (28,637)
Net assets available for benefits, beginning of year 1,429,292
- ------------------------------------------------------------------------------
Net assets available for benefits, end of year $ 1,400,655
==============================================================================
See accompanying notes.
4
L. B. Foster Company
Retirement Savings Plan for
Non-Union Hourly Employees
Notes to Financial Statements
December 31, 2001
1. Description of Plan
The following brief description of the L. B. Foster Company Retirement Savings
Plan for Non-Union Hourly Employees (the Plan) is provided for general
information purposes only. Participants should refer to the summary plan
description as amended on January 1, 1999 for more complete information.
General
The Plan is a defined contribution plan extended to all non-union hourly
employees of L. B. Foster Company (the Company) who have attained age 18 and are
employed at locations specified by the Plan. 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 deferred savings contributions on a pretax basis
ranging from 2% to 10% of annual compensation subject to Internal Revenue Code
limitations. A participant who elects to make deferred savings contributions of
at least 5% can also elect to make additional voluntary contributions on an
after-tax basis provided, however, that the sum of the deferred savings and
voluntary employee contributions does not exceed 15% of the participant's annual
compensation. Participant and company 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.
5
1. Description of Plan (continued)
Beginning the first of the month following twelve months of employment, eligible
employees of Grand Island, Nebraska; Pueblo, Colorado; Petersburg, Virginia;
Hillsboro, TX; and Rail Take-up shall have a company matching contribution of
fifty cents for every dollar contributed by the employee on the first 4% to 6%
of annual compensation, based upon years of service, as defined by the Plan.
Beginning the first of the month following twelve months of continuous
employment, eligible employees of the Georgetown, Massachusetts facility shall
have a company matching contribution of fifty cents for every dollar contributed
by the employee, up to the first 5% of the employee's compensation. This
matching contribution will only be made if the employee contributes to the Plan.
For all other participants, the Company provides a contribution of twelve cents
per eligible hour worked. The Company's contributions may be reduced by any
forfeitures which accumulate. No forfeitures were utilized to reduce company
contributions in 2001. At December 31, 2001 and 2000, forfeitures of $9,566 and
$7,820, 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 are 100% vested
in the Company's contributions after five years of eligible service or 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 distribution occurs and that the
participant has completed at least five years of service.
6
1. Description of Plan (continued)
As provided by the Plan, the distribution to which a participant is entitled by
reason of normal, early, or disability retirement, death, or termination of
employment may be made in the form of a 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.
Withdrawals
In the event of hardship and subject to certain restrictions and limitations, as
defined by the plan document, a participant may withdraw his vested interest in
the portion of his account attributable to deferred savings 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 without penalty at any time. 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.
7
1. Description of Plan (continued)
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.
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 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
primarily consisting 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.
8
2. Summary of Significant Accounting Policies (continued)
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.
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. Effective August 30, 2001, the Plan was further amended to
discontinue the L. B. Foster Company Stock Fund as an investment option. All
investments in the Company's common stock were transferred to other fund options
during 2001.
9
3. Investments (continued)
For the year ended December 31, 2001, 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 $ 270,248 $ (34,596)
Equity Income Fund 16,288 (1,491)
Growth and Income Fund 244,478 (29,589)
Government Income Fund 79,662 775
Asset Manager Fund 34,747 (3,070)
Freedom 2010 105 1
Freedom 2020 517 14
Freedom 2030 179 6
Freedom 2040 98 4
Managed Income Fund 12,909 -
Retirement Government Money Market Fund 456,162 -
Spartan U.S. Equity Index Fund 62,065 (9,869)
Janus Worldwide Fund 119,880 (28,057)
Credit Suisse Emerging Growth Fund 17,559 (5,722)
L. B. Foster Company Stock Fund - 122
----------------------------------
$ 1,314,897 $ (111,472)
==================================
The fair value of investments representing 5% or more of the Plan's assets at
December 31, 2001 and 2000 is as follows:
2001 2000
----------- -----------
Fidelity Investments:
Magellan Fund $ 270,248 $ 269,594
Growth and Income Fund 244,478 259,779
Government Income Fund 79,662 94,118
Retirement Government Money Market Fund 456,162 396,932
Spartan U.S. Equity Index Fund 62,065 78,908
Janus Worldwide Fund 119,880 122,751
10
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
(IRS) dated April 22, 1996, stating that the Plan is qualified under Section
401(a) of the Internal Revenue Code of 1986 (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
11
L. B. Foster Company
Retirement Savings Plan for
Non-Union Hourly Employees
EIN: 25-1324733 Plan Number: 012
Schedule H, Line 4(i)--Schedule of Assets
(Held at End of Year)
December 31, 2001
Identity of Issue, Borrower, Shares Fair Market
Lessor, or Similar Party Description of Investment Held Value
- ----------------------------------------------------------------------------------------------------------------
Fidelity Investments*:
Magellan Fund Equities 2,593 $ 270,248
Equity Income Fund Equities 334 16,288
Growth and Income Fund Equities 6,540 244,478
Government Income Fund Government obligations 7,990 79,662
Asset Manager Fund Equities, money market, bonds 2,242 34,747
Freedom 2010 Equity funds, fixed income funds 8 105
Freedom 2020 Equity funds, fixed income funds 41 517
Freedom 2030 Equity funds, fixed income funds 14 179
Freedom 2040 Equity funds, fixed income funds 13 98
Managed Income Fund Guaranteed investment contracts 12,909 12,909
Retirement Government Money Market Government obligations, money
Fund market securities 456,162 456,162
Spartan U.S. Equity Index Fund Equities 1,527 62,065
Janus Worldwide Fund Equities 2,734 119,880
Credit Suisse Emerging Growth Fund Equities 651 17,559
- ----------------------------------------------------------------------------------------------------------------
Total mutual funds 1,314,897
Outstanding participant loans Participant loans, interest rates
ranging from 5.5% to 9.5%,
various maturities ranging from
1 year to 20 years 73,240
- ----------------------------------------------------------------------------------------------------------------
$ 1,388,137
================================================================================================================
*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
Retirement Savings Plan for
Non-Union Hourly Employees
-----------------------------------
(Name of Plan)
June 27, 2002 By:/s/Stan L. Hasselbusch
-----------------------------------
Stan L. Hasselbusch
President and
Chief Executive Officer