SEC Comment Letter for FOSTER L B CO (FSTR) (CIK 0000352825) (FSTR) — Aug 23, 2007
FOSTER L B CO (FSTR) (CIK 0000352825)
Date: Aug. 23, 2007 · CIK: 0000352825 · Accession: 0000000000-07-041254
AI Filing Summary & Sentiment
File numbers found in text: 000-10436
Letter
May 31, 2007 Via U.S. Mail and Facsimile Mr. David Russo Chief Financial Officer L. B. Foster Company 415 Holiday Drive Pittsburgh, Pennsylvania 15220
Re: L. B. Foster Company Form 10-K for the year ended December 31, 2006 Filed March 15, 2007 File No. 000-10436
Dear Mr. Russo:
We have reviewed your May 10, 2007, re sponse letter and have the following comments. Where expanded or revised disclo sure is requested, you may comply with these comments in future filings unless an am endment has been reque sted, in which case all requested changes should be made in such amendment as well as in future filings. If you disagree, we will consider your explanation as to why our comments are inapplicable or a revision is unnecessary. We also ask you to provide us with supplemental information so we may better understand your disclosure. Please be as detailed as necessary in your explanation. We look forw ard to working with you in these respects and welcome any questions you may have about any aspect s of our review.
*******
Form 10-K for the year ended December 31, 2006
Liquidity and Capital Resources, page 22 1. With regard to our previous commen t number 2, we believe that, should you choose to continue to disclose debt as a percentage of total capitalization, you
Mr. David Russo L. B. Foster Company May 31, 2007 Page 2
should increase your discussion of why this percentage is meaningful and how it should be interpreted by investors. Please confirm that you will expand your disclosure accordingly.
Note 1. Summary of Significant Accounting Policies, page 35 2. We note your response to our previous comment number 5, including your reference to Note 7. We do not objec t to the disclosure of your specific accounting treatment of the investment in DM&E Railroad in Note 7. However, we believe that Note 1 should contain disclosure of your general accounting policy for investments, including the a pplicability of SFAS 115, or any other applicable accounting guidance, and how management determines whether a decrease in value of an investment has occurred which is other than temporary.
Note 7. Other Assets and Investments, page 42 3. We refer to your responses to our prev ious comment numbers 4 and 6 regarding your determination of the fair value of your investment in DM&E. You have stated that you are provided annual fina ncial statements of DM&E which you use, in addition to internally es timated cash flows, to a ssess the fair value of your investment. However, the information available publicly shows DM& E as a company that has been trying for many years to find funding for their Powder River Basin Project, with no success in obtaining either private or government sponsored funding due to uncertainty regarding their ability to repay the loan, thus making the future of this major projec t uncertain. Additi onally, DM&E appears to have had financial difficulties star ting prior to 1998, which were addressed only through an RRIF loan. As there is no financial information for DM&E available to the public, these facts are the only indications of the current financial condition of DM&E. Please provide speci fic evidence to support management’s assertion that the investment in DM&E, including recorded and unpaid dividends, is significantly more than the investment recorded in the financial statements. Also, as previously requested, please provi de us with a summary of the cash flow estimates used to determine the amount of dividend income recorded with respect to your investment in DM&E.
4. We refer to your response to our prev ious comment number 7 and your reasons for continuing to record dividend income from the DM&E. However, it still remains unclear why you continue to reco rd dividend income, as it seems that you may have no reasonable expectation of collecting this receivable in the foreseeable future. Based on the informa tion provided, it appears that, regardless of available cash flow, DM&E is currently strictly prohibited from paying cash dividends for an extended period of time. However, even before this restriction, DM&E had not paid any dividends in many years, and has given no indication that they intend to do so after the rest riction is lifted, as you state that they conserve their cash to invest in engineer ing studies and other costs related to the
Mr. David Russo L. B. Foster Company May 31, 2007 Page 3
proposed Powder River Basin Project. In addition, your concerns regarding the financial condition of DM&E have caused you to record less than the full value of the dividends. In this regard, your ba sis for continuing to record any dividend income remains unclear. As such, please provide evidence that collection of this dividend is reasonably assured. If such evidence is not available, consideration must be given to the guidance in SFA S 5 regarding the accrual of a loss contingency for the entire dividend receivable balance.
*******
As appropriate, please respond to thes e comments within 10 business days or tell us when you will provide us with a re sponse. If an amendment is required, you may wish to provide us with marked copies of th e amendment to expedite our review. Please ensure your response letter keys your res ponses to our comments and provides any requested supplemental information as this greatly facilitates our review. Please understand that we may have additional comm ents after reviewing your amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under the Securities Exchange Act of 1934 and th at they have provided all information investors require for an informed invest ment decision. Since the company and its management are in possession of all facts re lating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the staff of the Divi sion of Corporation Fi nance in our review of your filing or in response to our comments on your filing.
Mr. David Russo L. B. Foster Company May 31, 2007 Page 4
You may contact Kristin Shifflett at (202) 551-33 81 if you have questions regarding comments on the financia l statements and related matte rs. Please contact me at (202) 551-3211 with any other questions.
Sincerely,
David R. Humphrey
Branch Chief
Show Raw Text
Mail Stop 3561
May 31, 2007
Via U.S. Mail and Facsimile
Mr. David Russo
Chief Financial Officer
L. B. Foster Company
415 Holiday Drive
Pittsburgh, Pennsylvania 15220
Re: L. B. Foster Company
Form 10-K for the year ended December 31, 2006
Filed March 15, 2007
File No. 000-10436
Dear Mr. Russo:
We have reviewed your May 10, 2007, re sponse letter and have the following
comments. Where expanded or revised disclo sure is requested, you may comply with
these comments in future filings unless an am endment has been reque sted, in which case
all requested changes should be made in such amendment as well as in future filings. If
you disagree, we will consider your explanation as to why our comments are inapplicable
or a revision is unnecessary. We also ask you to provide us with supplemental information so we may better understand your disclosure. Please be as detailed as
necessary in your explanation. We look forw ard to working with you in these respects
and welcome any questions you may have about any aspect s of our review.
*******
Form 10-K for the year ended December 31, 2006
Liquidity and Capital Resources, page 22
1. With regard to our previous commen t number 2, we believe that, should you
choose to continue to disclose debt as a percentage of total capitalization, you
Mr. David Russo
L. B. Foster Company
May 31, 2007 Page 2
should increase your discussion of why this percentage is meaningful and how it
should be interpreted by investors. Please confirm that you will expand your
disclosure accordingly.
Note 1. Summary of Significant Accounting Policies, page 35
2. We note your response to our previous comment number 5, including your reference to Note 7. We do not objec t to the disclosure of your specific
accounting treatment of the investment in DM&E Railroad in Note 7. However,
we believe that Note 1 should contain disclosure of your general accounting
policy for investments, including the a pplicability of SFAS 115, or any other
applicable accounting guidance, and how management determines whether a decrease in value of an investment has occurred which is other than temporary.
Note 7. Other Assets and Investments, page 42
3. We refer to your responses to our prev ious comment numbers 4 and 6 regarding
your determination of the fair value of your investment in DM&E. You have stated that you are provided annual fina ncial statements of DM&E which you use,
in addition to internally es timated cash flows, to a ssess the fair value of your
investment. However, the information available publicly shows DM& E as a company that has been trying for many years to find funding for their Powder River Basin Project, with no success in obtaining either private or government
sponsored funding due to uncertainty regarding their ability to repay the loan, thus making the future of this major projec t uncertain. Additi onally, DM&E appears
to have had financial difficulties star ting prior to 1998, which were addressed
only through an RRIF loan. As there is no financial information for DM&E available to the public, these facts are the only indications of the current financial
condition of DM&E. Please provide speci fic evidence to support management’s
assertion that the investment in DM&E, including recorded and unpaid dividends,
is significantly more than the investment recorded in the financial statements. Also, as previously requested, please provi de us with a summary of the cash flow
estimates used to determine the amount of dividend income recorded with respect
to your investment in DM&E.
4. We refer to your response to our prev ious comment number 7 and your reasons
for continuing to record dividend income from the DM&E. However, it still
remains unclear why you continue to reco rd dividend income, as it seems that you
may have no reasonable expectation of collecting this receivable in the
foreseeable future. Based on the informa tion provided, it appears that, regardless
of available cash flow, DM&E is currently strictly prohibited from paying cash
dividends for an extended period of time. However, even before this restriction,
DM&E had not paid any dividends in many years, and has given no indication
that they intend to do so after the rest riction is lifted, as you state that they
conserve their cash to invest in engineer ing studies and other costs related to the
Mr. David Russo
L. B. Foster Company
May 31, 2007 Page 3
proposed Powder River Basin Project. In addition, your concerns regarding the
financial condition of DM&E have caused you to record less than the full value of
the dividends. In this regard, your ba sis for continuing to record any dividend
income remains unclear. As such, please provide evidence that collection of this
dividend is reasonably assured. If such evidence is not available, consideration
must be given to the guidance in SFA S 5 regarding the accrual of a loss
contingency for the entire dividend receivable balance.
*******
As appropriate, please respond to thes e comments within 10 business days or
tell us when you will provide us with a re sponse. If an amendment is required, you may
wish to provide us with marked copies of th e amendment to expedite our review. Please
ensure your response letter keys your res ponses to our comments and provides any
requested supplemental information as this greatly facilitates our review. Please
understand that we may have additional comm ents after reviewing your amendment and
responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision. Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the
filing;
staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.
Mr. David Russo
L. B. Foster Company
May 31, 2007 Page 4
You may contact Kristin Shifflett at (202) 551-33 81 if you have questions
regarding comments on the financia l statements and related matte rs. Please contact me at
(202) 551-3211 with any other questions.
Sincerely,
David R. Humphrey
Branch Chief