# Foster L B Co: Form 10-Q for the period ended Jun 30, 2017

- Company: [Foster L B Co](/companies/fstr.md) (CIK 352825)
- Form: 10-Q
- Filed: 2017-08-04
- Accepted by EDGAR: Aug 4, 2017, 11:54 ET
- Period: 2017-06-30
- Accession: 0000352825-17-000012
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/352825/000035282517000012/lbfosterco10-qq22017.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/352825/000035282517000012/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2017-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Cost of revenue | 3 months, 2017-04-01 to 2017-06-30 | $117.1m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2017-01-01 to 2017-06-30 | $214.6m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2017-04-01 to 2017-06-30 | $27.7m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2017-01-01 to 2017-06-30 | $49.0m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2017-04-01 to 2017-06-30 | $20.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2017-01-01 to 2017-06-30 | $39.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2017-04-01 to 2017-06-30 | $8.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2017-01-01 to 2017-06-30 | $10.7m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2017-04-01 to 2017-06-30 | $2.2m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2017-01-01 to 2017-06-30 | $4.3m | us-gaap:InterestExpense |
| Income tax | 3 months, 2017-04-01 to 2017-06-30 | $475.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2017-01-01 to 2017-06-30 | $906.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2017-04-01 to 2017-06-30 | $3.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2017-01-01 to 2017-06-30 | $602.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2017-04-01 to 2017-06-30 | $0.29 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2017-01-01 to 2017-06-30 | $0.06 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2017-04-01 to 2017-06-30 | $0.29 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2017-01-01 to 2017-06-30 | $0.06 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2017-04-01 to 2017-06-30 | 10,483,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2017-01-01 to 2017-06-30 | 10,527,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2017-01-01 to 2017-06-30 | $29.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2017-01-01 to 2017-06-30 | $4.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2017-01-01 to 2017-06-30 | $0 | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2017-01-01 to 2017-06-30 | $97.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2017-06-30 | $35.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2017-06-30 | $204.9m | us-gaap:AssetsCurrent |
| Total assets | at 2017-06-30 | $393.0m | us-gaap:Assets |
| Current liabilities | at 2017-06-30 | $99.5m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2017-06-30 | $137.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 46,323 characters.

### (Dollars in thousands, except share data)

### Forward-Looking Statements

*This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Many of the forward-looking statements are located in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Sentences containing words such as “believe,” “intend,” “plan,” “may,” “expect,” “should,” “could,” “anticipate,” “estimate,” “predict,” “project,” or their negatives, or other similar expressions of a future or forward-looking nature generally should be considered forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q may concern, among other things, L.B. Foster Company’s (the “Company”) expectations relating to our strategy, goals, projections, and plans regarding our financial position, liquidity, capital resources and results of operations; the outcome of litigation and product warranty claims; decisions regarding our strategic growth initiatives, market position, and product development; all of which are based on current estimates that involve inherent risks and uncertainties. The Company has based these forward-looking statements on current expectations and assumptions about future events. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks and uncertainties, most of which are difficult to predict and many of which are beyond the Company’s control. The Company cautions readers that various factors could cause the actual results of the Company to differ materially from those indicated by forward-looking statements. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: environmental matters, including any costs associated with any remediation and monitoring; a resumption of the economic slowdown we have experienced the previous two years in the markets we serve; the risk of doing business in international markets; our ability to effectuate our strategy, including cost reduction initiatives, and our ability to effectively integrate acquired businesses and realize anticipated benefits; costs of and impacts associated with shareholder activism; a decrease in freight or passenger rail traffic; the timeliness and availability of materials from our major suppliers, including the impact on our access to supplies of customer preferences as to the origin of such supplies, such as customer’s concerns about conflict minerals; labor disputes; our ability to extend the term of the lease for our Birmingham, Alabama facility, which expired on July 31, 2017, and any such costs associated with such extension; the continuing effective implementation of an enterprise resource planning system; changes in current accounting estimates and their ultimate outcomes; the adequacy of internal and external sources of funds to meet financing needs, including our ability to negotiate any additional necessary amendments to our credit agreement; the Company’s ability to manage its working capital requirements and indebtedness; domestic and international taxes; foreign currency fluctuations; inflation; economic conditions and regulatory changes caused by the United Kingdom’s pending exit from the European Union; sustained declines in energy prices; a lack of state or federal funding for new infrastructure projects; increased domestic and foreign government regulation; an increase in manufacturing or material costs; the ultimate number of concrete ties that will have to be replaced pursuant to the previously disclosed product warranty claim of the Union Pacific Railroad (“UPRR”) and an overall resolution of the related contract claims as well as the possible costs associated with the outcome of the lawsuit filed by the UPRR; the loss of future revenues from current customers; and risks inherent in litigation. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, actual outcomes could vary materially from those indicated. Significant risks and uncertainties that may affect the operations, performance, and results of the Company’s business and forward-looking statements include, but are not limited to, those set forth under Item 1A, “Risk Factors,” and elsewhere in our Annual Report on Form 10-K and our other periodic filings with the Securities and Exchange Commission.*

*The forward-looking statements in this report are made as of the date of this report and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by the federal securities laws.*

### General Overview

L.B. Foster Company (the “Company”) is a leading manufacturer and distributor of products and services for the transportation and energy infrastructure with locations in North America and Europe. The Company is comprised of three business segments: Rail Products and Services, Construction Products, and Tubular and Energy Services.

### Quarter-to-date Results

The segment gross profit measures presented within Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") tables constitute non-GAAP financial measures disclosed by management to provide investors and other users information to evaluate the performance of the Company’s segments on a more comparable basis to market trends and peers. The exclusion of significant cost allocations to the reportable segments:

- Allows users to understand the operational performance of our reportable segments;
- Provides greater comparability to other registrants with similar businesses and avoids possible non-comparability at the reportable segment pre-tax profit level resulting from our specific corporate cost allocations; and
- Facilitates a clearer, market-based perspective on the strength or weakness of our reportable segments in their markets to better aid in investment decisions.

In addition, these non-GAAP financial measures have historically been key metrics utilized by segment managers to monitor selling prices and quantities as well as production and service costs to better evaluate key profitability drivers and trends that may develop due to industry and competitive conditions.

| Three months ended June 30, 2017 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total |
| --- | ---: | ---: | ---: | ---: |
| Reportable Segment Profit (Loss) | $3,977 | $4,551 | $(17) | $8,511 |
| Segment and Allocated Selling & Administrative | 9,179 | 4,437 | 4,451 | 18,067 |
| Amortization Expense | 872 | 37 | 786 | 1,695 |
| Asset Impairments | — | — | — | — |
| Non-GAAP Segment Gross Profit | $14,028 | $9,025 | $5,220 | $28,273 |
| Three months ended June 30, 2016 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total |
| Reportable Segment (Loss) Profit | $(25,168) | $3,944 | $(102,983) | $(124,207) |
| Segment and Allocated Selling & Administrative | 10,728 | 4,909 | 4,320 | 19,957 |
| Amortization Expense | 988 | 38 | 1,763 | 2,789 |
| Asset Impairments | 28,342 | — | 100,596 | 128,938 |
| Non-GAAP Segment Gross Profit | $14,890 | $8,891 | $3,696 | $27,477 |

24

| Net Sales: | Three Months Ended June 30, 2017 2016 | Percent of Total Net Sales Three Months Ended June 30, 2017 2016 | Percent Increase/ (Decrease) 2017 vs. 2016 |
| --- | ---: | ---: | ---: |
| Rail Products and Services | $69,347 $67,503 | 47.9% 49.6% | 2.7% |
| Construction Products | 45,465 40,348 | 31.4 29.7 | 12.7 |
| Tubular and Energy Services | 30,048 28,143 | 20.7 20.7 | 6.8 |
| Total net sales | $144,860 $135,994 | 100.0% 100.0% | 6.5% |
|  |  | Non-GAAP / Reported Gross Profit Percentage | Percent Increase/ (Decrease) |
|  | Three Months Ended | Three Months Ended |  |
|  | June 30, | June 30, |  |
|  | 2017 2016 | 2017 2016 | 2017 vs. 2016 |
| Gross Profit: |  |  |  |
| Non-GAAP Rail Products and Services | $14,028 $14,890 | 20.2% 22.1% | (5.8)% |
| Non-GAAP Construction Products | 9,025 8,891 | 19.9 22.0 | 1.5 |
| Non-GAAP Tubular and Energy Services | 5,220 3,696 | 17.4 13.1 | 41.2 |
| Non-GAAP Segment gross profit | 28,273 27,477 |  |  |
| LIFO (expense) income | (192) 452 | (0.1) 0.3 | (142.5) |
| Other | (345) (116) | (0.2) (0.1) | 197.4 |
| Total gross profit | $27,736 $27,813 | 19.1% 20.5% | (0.3)% |
|  |  |  | Percent Increase/ (Decrease) |
|  |  | Percent of Total Net Sales |  |
|  | Three Months Ended | Three Months Ended |  |
|  | June 30, | June 30, |  |
|  | 2017 2016 | 2017 2016 | 2017 vs. 2016 |
| Expenses: |  |  |  |
| Selling and administrative expenses | $20,578 $23,317 | 14.2% 17.1% | (11.7)% |
| Amortization expense | 1,695 2,789 | 1.2 2.1 | (39.2) |
| Asset impairments | — 128,938 | — 94.8 | (100.0) |
| Interest expense | 2,181 1,652 | 1.5 1.2 | 32.0 |
| Interest income | (54) (52) | — — | 3.8 |
| Equity in (income) loss of nonconsolidated investments | (145) 487 | (0.1) 0.4 | (129.8) |
| Other (income) expense | (18) 107 | — 0.1 | (116.8) |
| Total expenses | $24,237 $157,238 | 16.7% 115.6% | (84.6)% |
| Income (loss) before income taxes | $3,499 $(129,425) | 2.4% (95.2)% | 102.7% |
| Income tax expense (benefit) | 475 (37,429) | 0.3 (27.5) | 101.3 |
| Net income (loss) | $3,024 $(91,996) | 2.1% (67.6)% | 103.3% |

25

### Second Quarter 2017 Compared to Second Quarter 2016 – Company Analysis

Net sales of $144,860 for the period ended June 30, 2017 increased by $8,866, or 6.5%, compared to the prior year quarter. The change was attributable to increases of 12.7%, 6.8%, and 2.7%, in Construction Products, Tubular and Energy Services, and Rail Products and Services, respectively.

Gross profit margin for the quarter ended June 30, 2017 was 19.1% or 140 basis points (“bps”) lower than the prior year quarter. The decrease was due to reductions of 210 bps and 190 bps, in Construction Products and Rail Products and Services, respectively. These reductions were partially offset by an increase of 430 bps within the Tubular and Energy Services segment.

Selling and administrative expenses decreased by $2,739 or 11.7% from the prior year. The decrease was primarily driven by personnel and discretionary spending reductions of $2,141 as well as reduced litigation costs related to the Union Pacific Railroad ("UPRR") matter of $479.

Amortization decreased $1,094, or 39.2%, as a result of the June 1, 2016 interim intangible asset impairment test, which was finalized during the three months ended September 30, 2016, resulting in a $59,786 impairment of definite-lived intangible assets. During the quarter ended June 30, 2016, the Company recorded total non-cash asset impairments of $128,938 from goodwill, definite-lived intangible assets, and property, plant, and equipment.

Interest expense, net of interest income, increased by $527, or 32.9%, as a result of the increase in interest rates on outstanding debt. Other income increased $125, or 116.8%, which primarily related to a loss on a sale of assets during the three months ended June 30, 2016.

The Company’s effective income tax rate for the three-month period ended June 30, 2017 was 13.6%, compared to 28.9% in the prior year quarter. For the three months ended June 30, 2017, the Company recorded a tax provision of $475, compared to a tax benefit of $37,429 in the three months ended June 30, 2016. Due to the full valuation allowance on our domestic deferred tax assets, the Company’s tax provision for the three months ended June 30, 2017 does not reflect any tax benefit for domestic pretax losses, and is primarily comprised of taxes related to our Canadian and United Kingdom operations.

Net income for the second quarter of 2017 was $3,024, or $0.29 per diluted share, compared to a net loss of $91,996, or $8.96 per diluted share, in the prior year quarter. The following table provides a reconciliation of the GAAP earnings per share value to the non-GAAP adjusted earnings1 per share value for the three-month periods ended June 30, 2017 and 2016:

*(Unaudited)*

| Adjusted Diluted Earnings (Loss) Per Share Reconciliation | Three Months Ended June 30, 2017 | 2016 |
| --- | ---: | ---: |
| Net income (loss), as reported | $3,024 | $(91,996) |
| Asset impairments, net of tax benefits of $38,038 | — | 90,900 |
| Adjusted net income (loss) | $3,024 | $(1,096) |
| Average number of common shares outstanding - Diluted | 10,483 | 10,263 |
| Diluted earnings (loss) per common share, as reported | $0.29 | $(8.96) |
| Diluted earnings (loss) per common share, as adjusted | $0.29 | $(0.11) |

*1 All results in this Quarterly Report that exclude asset impairment charges are non-GAAP measures used for management reporting purposes. Management believes that these measures provide useful information to investors because they will assist investors in evaluating earnings performance on a comparable year-over-year basis.*

### Results of Operations – Segment Analysis

### Rail Products and Services

|  | Three Months Ended June 30, 2017 | 2016 | Increase 2017 vs. 2016 | Percent Increase 2017 vs. 2016 |
| --- | ---: | ---: | ---: | ---: |
| Net Sales | $69,347 | $67,503 | $1,844 | 2.7% |
| Segment Profit (Loss) | $3,977 | $(25,168) | $29,145 | 115.8% |
| Segment Profit (Loss) Percentage | 5.7% | (37.3)% | 43.0% | 115.3% |

#### Second Quarter 2017 Compared to Second Quarter 2016

Rail Products and Services segment sales increased $1,844, or 2.7%, compared to the prior year period. The sales increase was primarily driven domestically by our Allegheny Rail Products business, who saw increased demand in insulated joints from Class 1 railroads. Also, our Concrete Ties business began production and shipment on large orders received in the prior quarter. Internationally, our Canadian and European Rail Technologies businesses experienced volume related increases in sales.

The Rail Products and Services segment profit increased by $29,145 to 5.7% of net sales. The increase was primarily attributable to a reduction in selling and administrative expenses of $1,185, or 13.7%, and 2016 impairment charges of $28,342 related to Rail Technologies goodwill.

During the current quarter, the Rail Products and Services segment had a decrease in new orders of 10.4% compared to the prior year period, while backlog was $78,460 at June 30, 2017, an increase of 25.4%, compared to $62,580 at June 30, 2016. The Company is encouraged by positive trends signaling a recovering market as we exit the quarter, but expect a sales decline in our domestic distribution businesses as compared to the prior year.

### Construction Products

|  | Three Months Ended June 30, 2017 | 2016 | Increase 2017 vs. 2016 | Percent Increase 2017 vs. 2016 |
| --- | ---: | ---: | ---: | ---: |
| Net Sales | $45,465 | $40,348 | $5,117 | 12.7% |
| Segment Profit | $4,551 | $3,944 | $607 | 15.4% |
| Segment Profit Percentage | 10.0% | 9.8% | 0.2% | 2.0% |

#### Second Quarter 2017 Compared to Second Quarter 2016

Construction Products segment sales increased $5,117, or 12.7%, compared to the prior year period. The increase related to Piling and Fabricated Bridge businesses of $5,275 and $2,021, respectively. The increase in Piling was primarily due to increased sheet piling sales during the quarter. Fabricated Bridge saw favorable sales in the current quarter due to several projects, including the continuation of the Peace Bridge project. This was offset by a reduction in Precast Concrete Products of $2,179.

The Construction Products segment profit increased $607 to 10.0% of net sales. The increase related to a reduction in selling and administrative expenses of $298, or 9.8%, and corporate allocation expenses of $177, or 9.5%.

During the quarter, the Construction Products segment had a decrease in new orders of 22.1% compared to the prior year period. The decrease related to the Fabricated Bridge business, which booked the $15,000 Peace Bridge order during the three months ended June 30, 2016. This was partially offset by increased new orders of 28.3% and 7.8% for our Piling and Precast Concrete Products businesses. Ending backlog in the Construction segment increased 13.4% to $75,540 from the prior year period.

### Tubular and Energy Services

|  | Three Months Ended June 30, 2017 | 2016 | Increase 2017 vs. 2016 | Percent Increase 2017 vs. 2016 |
| --- | ---: | ---: | ---: | ---: |
| Net Sales | $30,048 | $28,143 | $1,905 | 6.8% |
| Segment Loss | $(17) | $(102,983) | $102,966 | 100.0% |
| Segment Loss Percentage | (0.1)% | (365.9)% | 365.8% | 100.0% |

#### Second Quarter 2017 Compared to Second Quarter 2016

Tubular and Energy Services segment sales increased $1,905, or 6.8%, compared to the prior year period. The increase related to $4,987 and $4,399 from Test and Inspection Services and Protective Coatings businesses, respectively, partially offset by a $7,436 decrease in Precision Measurement Systems sales. The quarter showed increased new well count and demand within the upstream oil and gas market but was negatively impacted by weaker demand in our Precision Measurement Systems business.

Tubular and Energy Services segment loss decreased by $102,966, or 100.0%, compared to the prior year quarter. The quarter was favorably impacted by a reduction in amortization expense of $977 from the 2016 long-lived intangible asset impairment. The prior year was negatively affected by impairment charges of $100,596 for the three months ended June 30, 2016. Non-GAAP gross profit increased $1,524, or 41.2%, over the prior year period, due to Protective Coatings and Test and Inspection Services dilution of cost from increased sales volumes.

The Tubular and Energy Services segment had an increase in new orders of 26.1% compared to the prior year period. Orders for Protective Coatings and Test and Inspection Services increased 338.3% and 96.6%, respectively. The increase in orders was partially offset by a 34.4% reduction from our Precision Measurement Systems business. While the upstream oil and gas market continued to show signs of recovery in the current period, consistent with historical cycles, we expect our measurement midstream business to lag our upstream business.

On July 31, 2017, the lease at our Birmingham, Alabama facility expired. Management is actively in discussions with the landlord regarding the renewal of this lease and the Company maintains production obligations with the landlord, who is our primary customer, through October, 2017. The Company may incur costs associated with the lease renewal.

### Year-to-date Results

The segment gross profit measures presented within the MD&A tables constitute non-GAAP financial measures disclosed by management to provide investors and other users information to evaluate the performance of the Company’s segments on a more comparable basis to market trends and peers. The exclusion of significant cost allocations to the reportable segments:

- Allows users to understand the operational performance of our reportable segments;
- Provides greater comparability to other registrants with similar businesses and avoids possible non-comparability at the reportable segment pre-tax profit level resulting from our specific corporate cost allocations; and
- Facilitates a clearer, market-based perspective on the strength or weakness of our reportable segments in their markets to better aid in investment decisions.

In addition, these non-GAAP financial measures have historically been key metrics utilized by segment managers to monitor selling prices and quantities as well as production and service costs to better evaluate key profitability drivers and trends that may develop due to industry and competitive conditions.

| Six months ended June 30, 2017 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total |
| --- | ---: | ---: | ---: | ---: |
| Reportable Segment Profit (Loss) | $5,466 | $5,770 | $(525) | $10,711 |
| Segment and Allocated Selling & Administrative | 17,950 | 9,214 | 8,375 | 35,539 |
| Amortization Expense | 1,807 | 75 | 1,572 | 3,454 |
| Asset Impairments | — | — | — | — |
| Non-GAAP Segment Gross Profit | $25,223 | $15,059 | $9,422 | $49,704 |
| Six months ended June 30, 2016 | Rail Products and Services | Construction Products | Tubular and Energy Services | Total |
| Reportable Segment (Loss) Profit | $(24,427) | $4,392 | $(104,910) | $(124,945) |
| Segment and Allocated Selling & Administrative | 22,928 | 9,998 | 8,601 | 41,527 |
| Amortization Expense | 1,988 | 75 | 3,992 | 6,055 |
| Asset Impairments | 28,342 | — | 100,596 | 128,938 |
| Non-GAAP Segment Gross Profit | $28,831 | $14,465 | $8,279 | $51,575 |

29

| Net Sales: | Six Months Ended June 30, 2017 2016 | Percent of Total Net Sales Six Months Ended June 30, 2017 2016 | Percent Increase/ (Decrease) 2017 vs. 2016 |
| --- | ---: | ---: | ---: |
| Rail Products and Services | $125,827 $131,795 | 47.7% 50.3% | (4.5)% |
| Construction Products | 82,787 72,228 | 31.4 27.5 | 14.6 |
| Tubular and Energy Services | 54,948 58,281 | 20.9 22.2 | (5.7) |
| Total net sales | $263,562 $262,304 | 100.0% 100.0% | 0.5% |
|  |  | Non-GAAP / Reported Gross Profit Percentage | Percent Increase/ (Decrease) |
|  | Six Months Ended | Six Months Ended |  |
|  | June 30, | June 30, |  |
|  | 2017 2016 | 2017 2016 | 2017 vs. 2016 |
| Gross Profit: |  |  |  |
| Non-GAAP Rail Products and Services | $25,223 $28,831 | 20.0% 21.9% | (12.5)% |
| Non-GAAP Construction Products | 15,059 14,465 | 18.2 20.0 | 4.1 |
| Non-GAAP Tubular and Energy Services | 9,422 8,279 | 17.1 14.2 | 13.8 |
| Non-GAAP Segment gross profit | 49,704 51,575 |  |  |
| LIFO (expense) income | (181) 525 | (0.1) 0.2 | (134.5) |
| Other | (535) (327) | (0.2) (0.1) | 63.6 |
| Total gross profit | $48,988 $51,773 | 18.6% 19.7% | (5.4)% |
|  |  |  | Percent Increase/ (Decrease) |
|  |  | Percent of Total Net Sales |  |
|  | Six Months Ended | Six Months Ended |  |
|  | June 30, | June 30, |  |
|  | 2017 2016 | 2017 2016 | 2017 vs. 2016 |
| Expenses: |  |  |  |
| Selling and administrative expenses | $39,805 $46,134 | 15.1% 17.6% | (13.7)% |
| Amortization expense | 3,454 6,055 | 1.3 2.3 | (43.0) |
| Asset impairments | — 128,938 | — 49.2 | (100.0) |
| Interest expense | 4,289 2,822 | 1.6 1.1 | 52.0 |
| Interest income | (110) (107) | — — | 2.8 |
| Equity in loss of nonconsolidated investments | 55 683 | — 0.3 | (91.9) |
| Other (income) expense | (13) 822 | — 0.3 | (101.6) |
| Total expenses | $47,480 $185,347 | 18.0% 70.7% | (74.4)% |
| Income (loss) before income taxes | $1,508 $(133,574) | 0.6% (50.9)% | 101.1% |
| Income tax expense (benefit) | 906 (38,746) | 0.3 (14.8) | 102.3 |
| Net income (loss) | $602 $(94,828) | 0.2% (36.2)% | 100.6% |

30

### First Six Months of 2017 Compared to First Six Months of 2016 – Company Analysis

Net sales of $263,562 for the period ended June 30, 2017 increased by $1,258, or 0.5%, compared to the prior year period. The change was attributable to an increase of 14.6% in Construction Products segment sales. This increase was partially offset by decreases of 5.7% and 4.5%, in the Tubular and Energy Services and Rail Products and Services segments, respectively.

Gross profit margin for the six months ended June 30, 2017 was 18.6% or 110 bps lower than the prior year period. The decrease was due to a reduction of 190 bps and 180 bps, in Rail Products and Services and Construction Products, respectively. These reductions were partially offset by an increase of 290 bps within the Tubular and Energy Services segment.

Selling and administrative expenses decreased by $6,329 or 13.7% from the prior year. All three segments experienced decreases which were primarily driven by personnel and discretionary spending reductions of $4,948 and reduced litigation costs related to the UPRR matter of $951.

Amortization decreased $2,601, or 43.0%, as a result of the June 1, 2016 interim intangible asset impairment test, which was finalized during the three months ended September 30, 2016, resulting in a $59,786 impairment of definite-lived intangible assets. During the six months ended June 30, 2016, the Company recorded total non-cash asset impairments of $128,938 from goodwill, definite-lived intangible assets, and property, plant, and equipment.

Interest expense, net of interest income, increased by $1,464, or 53.9%, as a result of the increase in interest rates on outstanding debt. Other income increased $835, or 101.6%, which primarily related to the impact of a weaker U.S. dollar relative to the Canadian dollar in the six months ended June 30, 2017 and a loss on the sale of assets in the prior year period.

The Company’s effective income tax rate for the six months ended June 30, 2017 was 60.1%, compared to 29.0% in the prior year period. For the first six months ended June 30, 2017, the Company recorded a tax provision of $906, compared to a tax benefit of $38,746 in the six months ended June 30, 2016. Due to the full valuation allowance on our domestic deferred tax assets, the Company’s tax provision for the six months ended June 30, 2017 does not reflect any tax benefit for domestic pretax losses, and is primarily comprised of taxes related to our Canadian and United Kingdom operations.

Net income for the first six months of 2017 was $602, or $0.06 per diluted share, compared to a net loss of $94,828, or $9.25 per diluted share, in the prior year period. The following table provides a reconciliation of the GAAP earnings per share value to the non-GAAP adjusted earnings1 per share value for the six-month periods ended June 30, 2017 and 2016:

*(Unaudited)*

| Adjusted Diluted Earnings (Loss) Per Share Reconciliation | Six Months Ended June 30, 2017 | 2016 |
| --- | ---: | ---: |
| Net income (loss), as reported | $602 | $(94,828) |
| Asset impairments, net of tax benefits of $38,038 | — | 90,900 |
| Adjusted net income (loss) | $602 | $(3,928) |
| Average number of common shares outstanding - Diluted | 10,527 | 10,248 |
| Diluted earnings (loss) per common share, as reported | $0.06 | $(9.25) |
| Diluted earnings (loss) per common share, as adjusted | $0.06 | $(0.38) |

*1 All results in this Quarterly Report that exclude asset impairment charges are non-GAAP measures used for management reporting purposes. Management believes that these measures provide useful information to investors because they will assist investors in evaluating earnings performance on a comparable year-over-year basis.*

### Results of Operations – Segment Analysis

### Rail Products and Services

|  | Six Months Ended June 30, 2017 | 2016 | (Decrease)/Increase 2017 vs. 2016 | Percent (Decrease)/Increase 2017 vs. 2016 |
| --- | ---: | ---: | ---: | ---: |
| Net Sales | $125,827 | $131,795 | $(5,968) | (4.5)% |
| Segment Profit (Loss) | $5,466 | $(24,427) | $29,893 | 122.4% |
| Segment Profit Percentage | 4.3% | (18.5)% | 22.8% | 123.2% |

#### First Six Months of 2017 Compared to First Six Months of 2016

Rail Products and Services segment sales decreased $5,968, or 4.5%, compared to the prior year period. The reduction in sales is primarily related to a decrease in our domestic businesses of $11,168, or 11.0%. The sales declines were primarily volume driven by the domestic freight rail and transit markets. Our domestic rail distribution business was unfavorably impacted by both volume and pricing compared to the prior year period. This was partially offset by increases in our foreign Rail Technologies divisions of $6,118 or 18.2%.

The Rail Products and Services segment profit increased by $29,893 to 4.3% of net sales. The increase was primarily attributable to a reduction in selling and administrative expenses of $3,383, or 18.6%, and 2016 impairment charges of $28,342 related to Rail Technologies goodwill. This was partially offset by a decline in non-GAAP gross profit of $3,608, or 12.5%, which was primarily related to volume reductions and product mix within domestic transit products as well as pricing declines in our distribution business in the current year.

During the current year, the Rail Products and Services segment had an increase in new orders of 22.4% compared to the prior year period. The increase impacted each of the three business units within the segment and grew the backlog balance to $78,460 at June 30, 2017, a 25.4% increase over the prior year. The Company is encouraged by positive signs from order activity and resulting backlog after the first six months of 2017. While new orders for domestic Rail Distribution have risen year over year, annual sales will decline due to lower price per ton sold.

### Construction Products

|  | Six Months Ended June 30, 2017 | 2016 | Increase 2017 vs. 2016 | Percent Increase 2017 vs. 2016 |
| --- | ---: | ---: | ---: | ---: |
| Net Sales | $82,787 | $72,228 | $10,559 | 14.6% |
| Segment Profit | $5,770 | $4,392 | $1,378 | 31.4% |
| Segment Profit Percentage | 7.0% | 6.1% | 0.9% | 14.8% |

#### First Six Months of 2017 Compared to First Six Months of 2016

Construction Products segment sales increased $10,559, or 14.6%, compared to the prior year period. The increase related to Piling and Fabricated Bridge businesses of $8,460 and $5,017, respectively. The increase in Piling was primarily due to demand in the sheet piling product line. Fabricated Bridge continued to have favorable sales in the current year due to several projects, including the continuation of the Peace Bridge project. This was offset by a reduction in Precast Concrete Products of $2,772.

The Construction Products segment profit increased $1,378 to 7.0% of net sales. The increase related to a reduction in allocated expenses of $511, or 13.4%, as well as a reduction in selling and administrative expenses of $273, or 4.4%. Non-GAAP gross profit increase of $594, or 4.1%, which was attributable to Fabricated Bridge and Piling primarily due to in the increased volume within the period.

During the period, the Construction Products segment had a decrease in new orders of 7.5% compared to the prior year period. Prior year Fabricated Bridge orders included the $15,000 Peace Bridge project. Piling and Precast Concrete Products businesses saw increases in new orders of 20.8% and 10.8%, respectively. Piling had favorable orders from its sheet piling products, while Precast Concrete Products saw an increase in building orders from state agencies. The Construction Products segment had backlog at June 30, 2017 of $75,540, a 13.4% increase over the prior year.

### Tubular and Energy Services

|  | Six Months Ended June 30, 2017 | 2016 | (Decrease)/Increase 2017 vs. 2016 | Percent (Decrease)/Increase 2017 vs. 2016 |
| --- | ---: | ---: | ---: | ---: |
| Net Sales | $54,948 | $58,281 | $(3,333) | (5.7)% |
| Segment Loss | $(525) | $(104,910) | $104,385 | 99.5% |
| Segment Profit Percentage | (1.0)% | (180.0)% | 179.0% | 99.4% |

#### First Six Months of 2017 Compared to First Six Months of 2016

Tubular and Energy Services segment sales decreased $3,333, or 5.7%, compared to the prior year period. The decrease related to $13,624 from Precision Measurement Systems, partially offset by an increase in Test and Inspection Services and Protective Coatings sales of $7,840 and $2,907, respectively. The period showed increased new well count and demand within the upstream oil and gas market, but was negatively impacted by weaker demand in our Precision Measurement Systems business.

Tubular and Energy Services segment loss decreased by $104,385, or 99.5%, compared to the prior year period. The period was favorably impacted by a reduction in amortization expense of $2,420 from the 2016 definite-lived intangible asset impairment. The prior period was also negatively affected by impairment charges of $100,596 for the six months ended June 30, 2016. Non-GAAP gross profit increase of $1,143, or 13.8%, was primarily due to increases in Test and Inspection Services and Protective Coatings businesses of $2,545 and $888, respectively. This increase was partially offset by a reduction in non-GAAP gross profit from Precision Measurement Systems of $2,572.

The Tubular and Energy Services segment had an increase in new orders of 28.6% compared to the prior year period. Orders for Protective Coatings and Test and Inspection Services increased 208.9% and 95.8%, respectively. While the upstream oil and gas market showed signs of recovery in the current period, consistent with historical cycles, we expect our measurement midstream business to continue to lag our upstream business.

On July 31, 2017, the lease at our Birmingham, Alabama facility expired. Management is actively in discussions with the landlord regarding the renewal of this lease and the Company maintains production obligations with the landlord, who is our primary customer, through October, 2017. The Company may incur costs associated with the lease renewal.

### Other

#### Segment Backlog

Total Company backlog is summarized by business segment in the following table for the periods indicated:

|  | Backlog June 30, 2017 | December 31, 2016 | June 30, 2016 |
| --- | ---: | ---: | ---: |
| Rail Products and Services | $78,460 | $62,743 | $62,580 |
| Construction Products | 75,540 | 71,954 | 66,633 |
| Tubular and Energy Services | 22,023 | 12,759 | 20,033 |
| Total Backlog | $176,023 | $147,456 | $149,246 |

While a considerable portion of our business is backlog-driven, certain product lines within the Rail Products and Services and Tubular and Energy Services segments are not driven by backlog and therefore have insignificant levels throughout the year.

#### Warranty

As of June 30, 2017, the Company maintained a total product warranty reserve of $9,168 for its estimate of all potential product warranty claims. Of this total, $7,584 reflects the current estimate of the Company’s exposure for potential concrete tie warranty claims. While the Company believes this is a reasonable estimate of its potential exposure related to identified concrete tie warranty matters, the Company may incur future charges associated with new customer claims or further development of information of existing customer claims. Thus, there can be no assurance that future potential costs pertaining to warranty claims will not have a material impact on the Company’s results of operations and financial condition. See Note 13 Commitments and Contingent Liabilities of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for additional information.

### Liquidity and Capital Resources

Total debt was $137,984 and $159,565 as of June 30, 2017 and December 31, 2016, respectively, and was primarily comprised of borrowings on our revolving credit facility and term loan.

Our need for liquidity relates primarily to working capital requirements for operations, capital expenditures, joint venture capital obligations, debt service obligations, and share repurchases as authorized by the Board of Directors and as permitted under the Second Amended and Restated Credit Agreement dated March 13, 2015.

The change in cash and cash equivalents for the periods ended June 30 are as follows:

|  | June 30, 2017 | 2016 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $29,921 | $6,555 |
| Net cash used by investing activities | (4,454) | (4,877) |
| Net cash used by financing activities | (21,678) | (2,315) |
| Effect of exchange rate changes on cash and cash equivalents | 1,305 | 130 |
| Net increase (decrease) in cash and cash equivalents | $5,094 | $(507) |

#### Cash Flow from Operating Activities

During the current 2017 period, cash flows provided by operating activities were $29,921 compared to $6,555 during the prior year period. For the six months ended June 30, 2017, income and adjustments to income from operating activities provided $11,053 compared to $10,617 in the 2016 period. Working capital and other assets and liabilities provided $18,868 in the current period compared to a use of $4,062 in the prior year period. During the six months ended June 30, 2017, the Company received $9,946 and $1,827 from our 2016 and 2015 federal income tax refunds, respectively.

The Company’s calculation for days sales outstanding at June 30, 2017 was 49 days compared to 53 days at December 31, 2017, and we believe our receivables portfolio is strong.

#### Cash Flow from Investing Activities

Capital expenditures for the six months ended June 30, 2017 and 2016 were $4,597 and $5,070. The current year expenditures relate to trackside rail lubricator units installed as part of a new long-term service contract and, to a lesser extent, general plant and operational improvements. Expenditures for the six months ended June 30, 2016 related to the Birmingham, AL inside diameter coating line upgrade and application development of the Company’s new enterprise resource planning system. The Company also loaned $575 to our joint venture, LB Pipe & Coupling Products, LLC (“LB Pipe JV”), as of June 30, 2016.

#### Cash Flow from Financing Activities

During the six months ended June 30, 2017, the Company had a decrease in outstanding debt of $21,581, primarily related to payments against the revolving credit facility as well as applying $9,946 federal income tax refund and quarterly principle payments against the term loan. During the six months ended June 30, 2016, the Company had a decrease in outstanding debt of $385, primarily related to payments against the revolving credit facility. Treasury stock acquisitions represent income tax withholdings from employees in connection with the vesting of restricted stock awards. Cash outflows related to dividends were $829 for the six-month periods ended June 30, 2016.

#### Financial Condition

As of June 30, 2017, we had $35,457 in cash and cash equivalents and a domestic credit facility with $48,958 of net availability while we had $137,984 in total debt. We believe this liquidity will provide the flexibility to operate the business in a prudent manner, and continue to service our revolving credit facility and term loan.

Our cash management priority continues to be short-term maturities and the preservation of our principal balances. Approximately $33,536 of our cash and cash equivalents was held in non-domestic bank accounts, and, under current law, the foreign cash would be subject to U.S. federal income taxes less applicable foreign tax credits upon repatriation.

On November 7, 2016, the Company, its domestic subsidiaries, and certain of its Canadian subsidiaries entered into the Second Amendment (the “Second Amendment”) to the Second Amended and Restated Credit Agreement dated March 13, 2015 and as amended by the First Amendment dated June 29, 2016 (the “Amended and Restated Credit Agreement”), with PNC Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., Citizens Bank of Pennsylvania, and Branch Banking and Trust Company. This Second Amendment modified the Amended and Restated Credit Agreement, which had a maximum revolving credit line of $275,000.

The Second Amendment reduced the permitted revolving credit borrowings to $195,000 and provides for additional term loan borrowings of $30,000 (the “Term Loan”). The Term Loan is subject to quarterly straight line amortization until fully paid off upon the final payment on January 1, 2020. Furthermore, certain matters, including excess cash flow, asset sales, and equity issuances, trigger mandatory prepayments to the Term Loan. Term Loan borrowings will not be available to draw upon once they have been repaid. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Second Amendment or Amended and Restated Credit Agreement, as applicable.

The Second Amendment further provides for modifications to the financial covenants as defined in the Amended and Restated Credit Agreement. The Second Amendment calls for the elimination of the Maximum Leverage Ratio covenant through the quarter ended June 30, 2018. After that period, the Maximum Gross Leverage Ratio covenant will be reinstated to require a maximum ratio of 4.25 Consolidated Indebtedness to 1.00 Gross Leverage for the quarter ended September 30, 2018, and 3.75 to 1.00 for all periods thereafter until the maturity date of the credit facility. The Second Amendment also includes a Minimum Last Twelve Months EBITDA (as defined by the Amendment) covenant (“Minimum EBITDA”). For the quarter ending December 31, 2016 through the quarter ending June 30, 2017, the Minimum EBITDA must be at least $18,500. During the second quarter ended June 30, 2017, the rolling 12-month EBITDA calculation, as defined by the Amended and Restated Credit Agreement, was $26,188. For each quarter thereafter, through the quarter ended June 30, 2018, the Minimum EBITDA requirement will increase by various increments. At June 30, 2018, the Minimum EBITDA requirement will be $31,000. After the quarter ended June 30, 2018, the Minimum EBITDA covenant will be eliminated through the maturity of the Amended and Restated Credit Agreement. The Second Amendment also includes a Minimum Fixed Charge Coverage Ratio covenant. The covenant represents the ratio of the Company’s fixed charges to the last twelve months of EBITDA, and is required to be a minimum of 1.00 to 1.00 through the quarter ended December 31, 2017 and 1.25 to 1.00 for each quarter thereafter through the maturity of the credit facility. The final financial covenant included in the Second Amendment is a Minimum Liquidity covenant which calls for a minimum of $25,000 in undrawn availability on the revolving credit loan at all times through the quarter ended June 30, 2018.

The Second Amendment includes several changes to certain non-financial covenants, as defined in the Amended and Restated Credit Agreement. Through the maturity date of the loan, the Company is now prohibited from making any future acquisitions.

The limitation on permitted annual distributions of dividends or redemptions of the Company’s stock has been decreased from $4,000 to $1,700. The aggregate limitation on loans to and investments in non-loan parties was decreased from $10,000 to $5,000. Furthermore, the limitation on asset sales has been decreased from $25,000 annually with a carryover of up to $15,000 from the prior year to $25,000 in the aggregate through the maturity date of the credit facility.

The Second Amendment provides for the elimination of the three lowest tiers of the pricing grid that had previously been defined in the First Amendment. Upon execution of the Second Amendment through the quarter ended March 31, 2018, the Company will be locked into the highest tier of the pricing grid, which provides for pricing of the prime rate plus 225 basis points on base rate loans and the applicable LIBOR rate plus 325 basis points on euro rate loans. For each quarter after March 31, 2018 and through the maturity date of the credit facility, the Company’s position on the pricing grid will be governed by a Minimum Net Leverage ratio, which is the ratio of Consolidated Indebtedness less cash on hand in excess of $15,000 to EBITDA. If, after March 31, 2018, the Minimum Net Leverage ratio positions the Company on the lowest tier of the pricing grid, pricing will be the prime rate plus 150 basis points on base rate loans or the applicable LIBOR rate plus 250 basis points on euro rate loans.

To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company entered into forward starting LIBOR-based interest rate swaps with notional values totaling $50,000. The swaps became effective on February 28, 2017 at which point they effectively convert a portion of the debt from variable to fixed-rate borrowings during the term of the swap contract. At June 30, 2017, the swap liability was $405 compared to $334 as of December 31, 2016.

### Critical Accounting Policies

The Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States. When more than one accounting principle, or method of its application, is generally accepted, management selects the principle or method that, in its opinion, is appropriate in the Company’s specific circumstances. Application of these accounting principles requires management to reach opinions regarding estimates about the future resolution of existing uncertainties. As a result, actual results could differ from these estimates. In preparing these financial statements, management has reached its opinions regarding the best estimates and judgments of the amounts and disclosures included in the financial statements giving due regard to materiality. There have been no material changes in the Company’s critical accounting policies or estimates since December 31, 2016. A summary of the Company’s critical accounting policies and estimates is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

### Off-Balance Sheet Arrangements

The Company’s off-balance sheet arrangements include operating leases, purchase obligations, and standby letters of credit. A schedule of the Company’s required payments under financial instruments and other commitments as of December 31, 2016 is included in the “Liquidity and Capital Resources” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There were no material changes to these off-balance sheet arrangements during the current quarter. These arrangements provide the Company with increased flexibility relative to the utilization and investment of cash resources.

## Market risk

As filed, 2,369 characters.

### Interest Rate Risk

The Company is exposed to risks that increases in interest rates may adversely affect funding costs associated with its variable-rate debt. To reduce the impact of interest rate changes on a portion of this variable-rate debt, the Company entered into forward starting interest rate swap agreements which effectively convert a portion of the debt from a variable to a fixed-rate borrowing during the term of the swap contracts. See Note 9 Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for additional information.

For the six months ended June 30, 2017, a 1% change in the interest rate for variable rate debt as of June 30, 2017 would increase or decrease interest expense by approximately $707.

The Company does not purchase or hold any derivative financial instruments for trading purposes. It does enter into interest rate hedges to reduce the risk in the variability of interest rate fluctuations. At contract inception, the Company designates its derivative instruments as hedges. The Company recognizes all derivative instruments on the balance sheet at fair value. Fluctuations in the fair values of derivative instruments designated as cash flow hedges are recorded in accumulated other comprehensive income and reclassified into earnings within other income as the underlying hedged items affect earnings. To the extent that a change in a derivative does not perfectly offset the change in value of the interest rate being hedged, the ineffective portion is recognized in earnings immediately.

As of June 30, 2017 and December 31, 2016, the Company recorded a current liability of $405 and $334, respectively, related to its LIBOR-based interest rate swap agreements.

### Foreign Currency Exchange Rate Risk

The Company is subject to exposures to changes in foreign currency exchange rates. The Company manages its exposure to changes in foreign currency exchange rates on firm sale and purchase commitments by entering into foreign currency forward contracts. The Company’s risk management objective is to reduce its exposure to the effects of changes in exchange rates on these transactions over the duration of the transactions. The Company did not engage in foreign currency hedging transactions during the six-month periods ended June 30, 2017.

## Controls and procedures

As filed, 2,425 characters.

### Evaluation of Disclosure Controls and Procedures

L.B. Foster Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Accounting Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2017. Based upon that evaluation, the Chief Executive Officer and Chief Accounting Officer concluded that the Company’s disclosure controls and procedures were effective such that the information required to be disclosed by the Company in reports filed under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to management, including the chief executive officer, chief financial officer, or person performing such functions, as appropriate to allow timely decisions regarding disclosure.

### Changes in Internal Control Over Financial Reporting

There were no changes in our “internal control over financial reporting” (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the six months ended June 30, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company is currently evaluating the impact that Accounting Standards Update 2014-09, "Revenue from Contracts with Customers (Topic 606)" will have on our internal control over financial reporting at the January 1, 2018 adoption date.

### Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

### PART II. OTHER INFORMATION

### (Dollars in thousands, except share data)

## Risk factors

As filed, 774 characters.

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016. You should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on March 8, 2017, which could materially affect our business, financial condition, financial results, or future performance. The risks described in our Annual Report on Form 10-K and quarterly reports on Form 10-Q are not the only risks facing the Company. Additional risks and uncertainties not currently known or that we currently deem to be immaterial may also materially affect our business, financial condition, and/or results of operations.

Filed Aug 4, 2017.
Source: SEC EDGAR, the filing index for accession 0000352825-17-000012. Last ingested by Listed: Nov 4, 2026, 19:02 ET. No prices; not investment advice.