2 unchanged sentences
To the Stockholders and the Board of Directors of L.B.
−Removed: Foster Company and Subsidiaries
+Added: Foster Company
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of L.B.
−Removed: Foster Company and Subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2021, and the related notes and financial statement schedule listed in the Index at Item 15 (a) (collectively referred to as the “consolidated financial statements”).
+Added: Foster Company and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at Item 15 (a) (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with U.S.
16 unchanged sentences
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Revenue recognition – contract estimates to complete
+Added: Revenue recognition – contract estimates
Description of the Matter As explained in Notes 1 and 4 to the consolidated financial statements, revenue is recognized when the Company satisfies its performance obligations under a contract.
1 unchanged sentence
Revenue under these long-term agreements is generally recognized over time either using an input measure based upon the proportion of actual costs incurred to estimated total project costs or an input measure based upon actual labor costs as a percentage of estimated total labor costs, depending upon which measure the Company believes best depicts the Company’s performance to date under the terms of the contract.
+Added: For the year ended December 31, 2022, the Company recorded $67.1 million of over time input method revenue within net sales on its consolidated statement of operations.
Accounting for these long-term agreements involves the use of various techniques to estimate total revenues and costs.
Contract estimates are based on various assumptions to project the outcome of future events that may span several years.
−Removed: These assumptions include, among other things, labor productivity, cost and availability of materials, and timing of funding by customers.
+Added: These assumptions include, among other things, labor costs, sub-contractor costs, material costs, and total collections from the customer.
Significant changes in the above estimates could impact the timing and amount of revenue and profitability of the Company’s long-term contracts.
−Removed: Auditing these estimates requires subjective auditor judgment because of the significant management judgment necessary to develop the estimated total project costs and labor costs at completion due to the size and identified risks for each contract.
+Added: Auditing these estimates requires auditor judgment because of the significant management judgment necessary to develop the estimated assumptions at completion due to the size and identified risks for each contract.
How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of relevant internal controls over the Company’s process relating to the determination of estimates for long-term projects.
−Removed: For example, we evaluated the design and tested the operating effectiveness of controls over management’s review of the current status of long-term projects, accumulation of costs incurred and costs remaining to complete.
−Removed: To test the total estimates to complete for contracts, our audit procedures included, among others, obtaining an understanding of the contract, evaluating the consistency of estimated costs with the initial budget, and comparing the composition of costs to date with the composition of the costs in the estimates to complete for a sample of contracts.
−Removed: We also performed a retrospective review of management’s cost estimates for a sample of completed contracts by comparing initial estimates with the actual historical data to assess management’s ability to estimate.
−Removed: Income Tax – valuation allowances on deferred tax assets
−Removed: Description of the Matter As explained in Notes 1 and 14 to the consolidated financial statements, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.
−Removed: The Company makes judgments regarding the future realization of deferred tax assets and a valuation allowance must be provided for those assets which it is more likely than not (a likelihood of more than 50%) that some portion or all of the assets will not be realized.
−Removed: The Company evaluates positive and negative evidence regarding the recoverability of deferred tax assets.
−Removed: The determination of whether the positive evidence outweighs the negative evidence and the quantification of the valuation allowance requires the Company to make estimates and judgments of future financial results.
−Removed: At December 31, 2021, the Company had total deferred tax assets of $44.5 million, net of $3.3 million of valuation allowances.
−Removed: Auditing the Company’s assertion that it was more likely than not that the deferred tax assets would be realized and the related measurement of the valuation allowance was complex due to the highly judgmental nature of the projections of future sources and amounts of taxable income, which rely on significant assumptions, such as the timing of future reversals of existing temporary differences, assessing the impact of tax planning strategies, and making projections of future taxable income.
−Removed: Certain of these significant assumptions are forward looking and could be materially affected by future market or economic conditions.
−Removed: How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s process to assess the realizability of the deferred tax assets and measurement of the valuation allowances, including controls over management’s review of the significant assumptions described above.
−Removed: To test the realizability of the deferred tax assets and measurement of the valuation allowances, our audit procedures included, among others, evaluating the methodologies used, the significant assumptions for each type of evidence discussed above, and testing the completeness and accuracy of the underlying data used by the Company in its analysis.
−Removed: For example, as part of our evaluation of management’s significant assumptions, we involved our tax professionals to assist in our evaluation of the relevant tax laws and regulations in the various jurisdictions, including considering whether the estimated future sources of taxable income were of the appropriate character to utilize the deferred tax assets in the relevant time period.
−Removed: We evaluated the cumulative income or loss positions of the Company’s various jurisdictions, assessed management’s model of estimated future reversals of existing temporary differences and evaluated the Company’s forecasts of future profits for the purposes of assessing the reasonableness of the Company’s estimated future taxable income.
−Removed: We also compared the forecast of future taxable income with other forecasted financial information prepared by the Company and performed sensitivity analyses of the significant assumptions to evaluate the changes in realizability of deferred tax assets that would result from changes in the assumptions.
−Removed: In addition, we evaluated the Company’s income tax disclosures related to the matters described above.
+Added: For example, we evaluated the design and tested the operating effectiveness of controls over management’s review of the current status of long-term projects, accumulation of costs incurred, costs remaining to complete and total contract value.
+Added: To test the total estimates for long term contracts, our audit procedures included, among others, obtaining an understanding of the contract, evaluating the consistency of estimated costs with the initial budget, and understanding margin changes throughout the life of the contract.
+Added: We also performed a retrospective review of management’s estimates for a sample of completed contracts by comparing initial estimates with the actual historical data to assess management’s ability to estimate.
+Added: Valuation of goodwill for the Rail Technologies and Precast Concrete Products Reporting Units
+Added: Description of the Matter At December 31, 2022, the Company had $30.7 million of goodwill on its consolidated balance sheet.
+Added: As more fully described in Notes 1 and 5 to the consolidated financial statements, during 2022, weakened economic conditions, unfavorable changes in foreign exchange rates, and recent increases in the cost of certain materials, labor, and other inflation-related pressures unfavorably impacted the financial results.
+Added: Because of these challenging market conditions, the Company was required to perform a quantitative test of goodwill for these reporting units.
+Added: Significant assumptions used in the Company’s fair value estimate included revenue growth, EBITDA contribution, and market participant assumptions.
+Added: Auditing the goodwill test was complex, as it included estimating the fair value of the reporting units.
+Added: In particular, the fair value estimates are sensitive to the significant assumptions named above, which are affected by expected future market or economic conditions.
+Added: How We Addressed the Matter in Our Audit
+Added: We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s goodwill impairment review process, including controls over management’s review of the valuation model and the significant assumptions underlying the fair value determination, as described above.
+Added: To test the fair value of the reporting unit, our audit procedures included, among others, involving our valuation specialists to assist in assessing the valuation methodologies utilized by the Company and its valuation expert and testing the significant assumptions and underlying data used by the Company.
+Added: We compared the significant assumptions used by management to historical performance and other relevant factors.
+Added: We performed sensitivity analyses of significant assumptions to evaluate the changes in fair values that would result from changes in the assumptions.
+Added: We reviewed the reconciliation of the fair value of the reporting units to the market capitalization of the Company and assessed the resulting control premium.
/s/ Ernst & Young LLP
28 unchanged sentences
Other accrued liabilities 16,192 13,757
−Removed: Current liabilities of discontinued operations (Note 3) — 330
Total current liabilities 103,111 86,194
31 unchanged sentences
Amortization expense (Note 5) 6,144 5,836
−Removed: Operating profit 4,471 15,633
+Added: Goodwill and long-lived assets impairment charges (Note 5) 8,016 —
+Added: Operating (loss) income ( 7,206 ) 4,471
Interest expense - net 3,340 2,956
Other income - net (Note 19) ( 1,550 ) ( 3,075 )
−Removed: Income from continuing operations before income taxes 4,590 13,982
−Removed: Income tax expense (benefit) (Note 14) 1,119 ( 11,841 )
−Removed: Income from continuing operations 3,471 25,823
+Added: (Loss) income before income taxes ( 8,996 ) 4,590
+Added: Income tax expense (Note 14) 36,681 1,119
+Added: Net (loss) income ( 45,677 ) 3,471
Net loss attributable to noncontrolling interest ( 113 ) ( 83 )
−Removed: Income from continuing operations attributable to L.B.
+Added: Net (loss) income attributable to L.B.
Foster Company ( 45,564 ) 3,554
Discontinued operations:
−Removed: Income (loss) from discontinued operations before income taxes 72 ( 23,979 )
−Removed: Income tax benefit (Note 14) — ( 5,738 )
−Removed: Income (loss) from discontinued operations (Note 3) 72 ( 18,241 )
−Removed: Net income attributable to L.B.
+Added: Income from discontinued operations before income taxes — 72
+Added: Income tax expense (Note 14) — —
+Added: Income from discontinued operations — 72
+Added: Net (loss) income attributable to L.B.
Foster Company $ ( 45,564 ) $ 3,626
−Removed: Basic earnings (loss) per common share:
+Added: Basic (loss) earnings per common share:
From continuing operations $ ( 4.25 ) $ 0.33
From discontinued operations — 0.01
−Removed: Basic earnings per common share (Note 13) $ 0.34 $ 0.72
−Removed: Diluted earnings (loss) per common share:
+Added: Basic (loss) earnings per common share (Note 13) $ ( 4.25 ) $ 0.34
+Added: Diluted (loss) earnings per common share:
From continuing operations $ ( 4.25 ) $ 0.33
From discontinued operations — 0.01
−Removed: Diluted earnings per common share (Note 13) $ 0.34 $ 0.71
+Added: Diluted (loss) earnings per common share (Note 13) $ ( 4.25 ) $ 0.34
The accompanying notes are an integral part of these Consolidated Financial Statements.
FOSTER COMPANY AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
+Added: CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
Year Ended December 31,
−Removed: Net income from continuing operations $ 3,471 $ 25,823
−Removed: Other comprehensive income (loss), net of tax:
+Added: Net (loss) income from continuing operations $ ( 45,677 ) $ 3,471
+Added: Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment ( 5,639 ) ( 920 )
−Removed: Unrealized gain (loss) on cash flow hedges, net of tax expense (benefit) of $ 44 and $( 277 ), respectively
+Added: Unrealized gain on cash flow hedges, net of tax expense of $ 0 and $ 44 , respectively
Cash flow hedges reclassified to earnings, net of tax expense of $ 0 and $ 235 , respectively
−Removed: Pension and post-retirement benefit plans benefit (expense), net of tax expense (benefit) of $ 422 and $( 325 ), respectively
−Removed: 1,436 ( 1,070 )
−Removed: Reclassification of pension liability adjustments to earnings, net of tax expense of $ 19 and $ 9 , respectively*
−Removed: Total comprehensive income from continuing operations 4,876 25,738
+Added: Pension and post-retirement benefit plans benefit, net of tax benefit of $ 357 and $ 422 , respectively
+Added: Reclassification of pension liability adjustments to earnings, net of tax expense of $ 6 and benefit of $ 19 , respectively*
+Added: Total comprehensive (loss) income from continuing operations ( 47,997 ) 4,876
Less comprehensive loss attributable to noncontrolling interest:
2 unchanged sentences
Amounts attributable to noncontrolling interest ( 98 ) ( 101 )
−Removed: Comprehensive income from continuing operations attributable to L.B.
+Added: Comprehensive (loss) income from continuing operations attributable to L.B.
Foster Company $ ( 47,899 ) $ 4,977
6 unchanged sentences
CASH FLOWS FROM OPERATING ACTIVITIES:
−Removed: Income from continuing operations $ 3,471 $ 25,823
−Removed: Adjustments to reconcile net income to cash (used in) provided by continuing operating activities:
+Added: (Loss) income from continuing operations $ ( 45,677 ) $ 3,471
+Added: Adjustments to reconcile net (loss) income to cash (used in) provided by continuing operating activities:
Deferred income taxes 35,785 139
1 unchanged sentence
Amortization 6,144 5,836
+Added: Asset impairments 8,016 —
Equity income in nonconsolidated investment ( 74 ) ( 7 )
−Removed: Loss on sales and disposals of property, plant, and equipment 51 47
−Removed: Loss on derivative — 273
+Added: (Gain) loss on sales and disposals of property, plant, and equipment ( 177 ) 51
Stock-based compensation 2,380 1,945
−Removed: Gain on asset divestiture ( 2,741 ) —
+Added: Loss (gain) on asset divestiture 214 ( 2,741 )
Change in operating assets and liabilities:
3 unchanged sentences
Other current assets 3,555 367
−Removed: Prepaid income tax 106 ( 9,108 )
Other noncurrent assets ( 2,136 ) 158
5 unchanged sentences
Other liabilities 1,342 ( 307 )
−Removed: Net cash (used in) provided by continuing operating activities ( 810 ) 20,549
+Added: Net cash used in continuing operating activities ( 10,576 ) ( 810 )
Net cash used in discontinued operating activities — ( 253 )
2 unchanged sentences
Capital expenditures on property, plant, and equipment ( 7,633 ) ( 4,620 )
−Removed: Acquisition ( 229 ) ( 1,156 )
+Added: Acquisitions, net of cash acquired ( 57,852 ) ( 229 )
Proceeds from asset divestiture 8,800 22,707
Capital contributions to nonconsolidated investment — ( 66 )
−Removed: Net cash provided by (used in) continuing investing activities 17,822 ( 10,319 )
−Removed: Net cash provided by discontinued investing activities — 2,278
+Added: Net cash (used in) provided by continuing investing activities ( 56,418 ) 17,822
CASH FLOWS FROM FINANCING ACTIVITIES:
4 unchanged sentences
Investment of noncontrolling interest — 969
−Removed: Net cash used in continuing financing activities ( 13,904 ) ( 15,277 )
−Removed: Net cash used in discontinued financing activities — ( 19 )
+Added: Net cash provided by (used in) continuing financing activities 60,240 ( 13,904 )
Effect of exchange rate changes on cash and cash equivalents ( 736 ) ( 47 )
−Removed: Net increase (decrease) in cash and cash equivalents 2,808 ( 6,614 )
+Added: Net (decrease) increase in cash and cash equivalents ( 7,490 ) 2,808
Cash and cash equivalents at beginning of period 10,372 7,564
2 unchanged sentences
Interest paid $ 2,701 $ 2,615
−Removed: Income taxes paid $ 1,491 $ 2,625
+Added: Income taxes (received) paid $ ( 5,007 ) $ 1,491
The accompanying notes are an integral part of these Consolidated Financial Statements.
10 unchanged sentences
Balance, December 31, 2020 $ 111 $ 44,583 $ 165,107 $ ( 12,703 ) $ ( 20,268 ) $ — $ 176,830
−Removed: Net income — — 7,582 — — — 7,582
−Removed: Other comprehensive loss, net of tax:
+Added: Net income (loss) — — 3,626 — — ( 83 ) 3,543
+Added: Other comprehensive income, net of tax:
Pension liability adjustment — — — — 1,491 — 1,491
5 unchanged sentences
Stock-based compensation — 1,945 — — — — 1,945
+Added: Investment of noncontrolling interest — — — — 619 619
Balance, December 31, 2021 111 43,272 168,733 ( 10,179 ) ( 18,845 ) 518 183,610
−Removed: Net income — — 3,626 — — ( 83 ) 3,543
−Removed: Other comprehensive income, net of tax:
+Added: Net loss — — ( 45,564 ) — — ( 113 ) ( 45,677 )
+Added: Other comprehensive loss, net of tax:
Pension liability adjustment — — — — 1,405 — 1,405
5 unchanged sentences
Stock-based compensation — 2,380 — — — — 2,380
−Removed: Investment of noncontrolling interest — — — — — 619 619
Balance, December 31, 2022 $ 111 $ 41,303 $ 123,169 $ ( 6,240 ) $ ( 21,165 ) $ 420 $ 137,598
9 unchanged sentences
The Company utilizes the equity method of accounting for companies where its ownership is less than or equal to 50% and significant influence exists.
−Removed: Foster Company (“Company”) is a global solutions provider of engineered, manufactured products and services that builds and supports infrastructure.
+Added: Foster Company (together with its subsidiaries, the “Company”) is a global technology solutions provider of engineered, manufactured products and services that builds and supports infrastructure.
The Company’s innovative engineering and product development solutions address the safety, reliability, and performance needs of its customers’ most challenging requirements.
3 unchanged sentences
The Rail segment is comprised of several manufacturing and distribution businesses that provide a variety of products and services for freight and passenger railroads and industrial companies throughout the world.
−Removed: The Precast segment is composed of three precast concrete manufacturing facilities across the United States (“U.S.”) providing engineered precast concrete solutions.
+Added: The Precast segment is composed of five precast concrete manufacturing facilities across the United States (“U.S.”) providing engineered precast concrete solutions.
The Steel Products and Measurement segment is composed of fabricated bridge, protective coating, threading, and precision measurement offerings across North America.
−Removed: On September 24, 2021, the Company completed the sale of its Piling Products division for $ 23,902 in total expected proceeds.
+Added: On June 21, 2022, the Company acquired the stock of Skratch Enterprises Ltd.
+Added: (“Skratch”) for $ 7,402 , which is inclusive of deferred payments withheld by the Company of $ 1,228 , to be paid over the next five years or utilized to satisfy post-closing working capital adjustments or indemnity claims under the purchase agreement.
+Added: Skratch has been included in the Company’s Technology Services and Solutions business unit within the Rail segment.
+Added: On August 1, 2022 the Company divested the assets of its Track Components business for $ 7,795 in cash proceeds, subject to indemnification obligations and working capital adjustments.
+Added: The Track Components business was reported in the Rail Products business unit within the Rail segment.
+Added: On August 12, 2022, the Company acquired the operating assets of VanHooseCo Precast LLC (“VanHooseCo”) for $ 52,146 , net of cash acquired at closing, subject to the finalization of net working capital adjustments.
+Added: An amount equal to $ 2,500 of the purchase price was deposited into an escrow account to cover breaches of representations and warranties.
+Added: VanHooseCo has been included in the Company’s Precast segment.
+Added: On September 24, 2021, the Company completed the sale of its Piling Products business for $ 23,902 in total proceeds.
The Company retained all pre-closing receivables and liabilities associated with the division.
−Removed: The sale included substantially all inventory held by the Company associated with the division, as well as the related fixed assets.
−Removed: The Piling Products division was included in the Fabricated Steel Products business unit within the Steel Products and Measurement reporting segment.
+Added: The sale included substantially all inventory associated with the division, as well as the related fixed assets.
+Added: The Piling Products business was included in the Fabricated Steel Products business unit within the Steel Products and Measurement segment.
Use of estimates
8 unchanged sentences
Cash and cash equivalents held in non-domestic accounts were $ 2,012 and $ 6,168 as of December 31, 2022 and 2021, respectively.
−Removed: Included in non-domestic cash equivalents are investments in bank term deposits of approximately $ 18 as of December 31, 2021 and 2020.
−Removed: The carrying amounts approximated fair value due to the short maturity of the instruments.
+Added: Accounts Receivable
+Added: Trade receivables are carried at their estimated collectible amounts.
+Added: Trade credit is generally extended on a short-term basis;
+Added: thus trade receivables do not bear interest.
+Added: Credit is extended based upon an evaluation of the customer’s financial condition and, while collateral is not required, the Company periodically receives surety bonds that guarantee payment.
+Added: Credit terms are consistent with industry standards and practices.
Inventory is valued at the lower of average cost or net realizable value.
Slow-moving inventory is reviewed and adjusted regularly, based upon product knowledge, physical inventory observation, inventory turnover, and the age of the inventory.
−Removed: Inventory contains product costs, including inbound freight, direct labor, overhead costs relating to the manufacturing and distribution of products, and absorption costs representing the excess manufacturing or production costs over the amounts charged to the cost of sales or services.
+Added: Inventory contains product costs, including materials, inbound freight, direct labor, overhead costs relating to the manufacturing and distribution
+Added: of products, and absorption costs representing the excess manufacturing or production costs over the amounts charged to the cost of sales or services.
Property, plant, and equipment
4 unchanged sentences
The Company recognizes an impairment loss if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value.
−Removed: There were no property, plant, and equipment impairments recorded for the years ended December 31, 2021 and 2020.
+Added: There were no material property, plant, and equipment impairments recorded for the years ended December 31, 2022 and 2021.
Maintenance, repairs, and minor renewals are charged to operations as incurred.
2 unchanged sentences
Allowance for credit losses
−Removed: On January 1, 2020, the Company adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326):
−Removed: Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), and all the related amendments using the modified retrospective approach, which did not result in any changes to the previously reported financial information.
−Removed: The updates related to ASU 2016-13 were applied to assets held as of January 1, 2020.
−Removed: In accordance with adoption of the new standard, the Company evaluated and revised its policies surrounding the allowance for credit losses for trade receivables and contract assets.
−Removed: The Company established the allowance for credit losses by calculating the amount to reserve based on the age of a given trade receivable and considering historical collection patterns and bad debt expense experience, in addition to any other relevant subjective adjustments to individual receivables made by management.
−Removed: The Company also considered current and expected future market and other conditions.
−Removed: Trade receivables are pooled within the calculation based on a range of ages, which appropriately groups receivables of similar credit risk together.
−Removed: The established reserve thresholds to calculate the allowance for credit loss are based on and supported by historic collection patterns and bad debt expense incurred by the Company, as well as the expectation that collection patterns and bad debt expense will continue to adhere to patterns observed in recent years, which was formed based on trends observed as well as current and expected future conditions, including the estimated effects of the COVID-19 pandemic.
−Removed: Management maintains high-quality credit review practices as well as positive customer relationships that further mitigate credit risk.
−Removed: Management monitors and reviews the contributing factors to the Company’s reserve, and makes any appropriate revisions as they become necessary.
+Added: The Company established the allowance for credit losses by calculating the amount to reserve based on the age of a given trade receivable and considering historical collection patterns, bad debt expense experience, current and expected market conditions, and any other relevant subjective adjustments as needed.
+Added: Trade receivables are pooled within the calculation based on a range of ages, grouping receivables of similar credit risk together.
+Added: Reserve thresholds to calculate the allowance for credit loss are based on historic collection patterns, bad debt expense incurred, and expected future trends of collections.
+Added: Management maintains high-quality credit review practices and positive customer relationships that mitigate credit risks.
+Added: The Company’s reserves are regularly reviewed and revised as necessary.
Reserves for uncollectible accounts are recorded as part of “Selling and administrative expenses” in the Consolidated Statements of Operations.
+Added: The Company has also established policies regarding allowance for credit losses associated with contract assets, which includes standalone reserve assessments for its long term, complex contracts as needed as well as detailed regular review and updates to contract margins, progress, and value.
+Added: A standard reserve threshold is applied contract assets related to short term, less complex contracts.
+Added: Management also regularly reviews collection patterns and future expected collections and makes necessary revisions to allowance for credit losses related to contract assets.
Goodwill and other intangible assets
6 unchanged sentences
The Company performs its annual impairment tests in the fourth quarter.
−Removed: The Company’s fourth quarter 2021 annual test included the assessment of qualitative factors to determine whether it was more likely than not that the fair value of each reporting unit is less than its carrying value.
−Removed: The qualitative assessment encompassed a review of events and circumstances specific to each reporting unit with goodwill, as well as specific to the entity as a whole.
−Removed: The Company’s qualitative assessment considered, among other things, factors such as macroeconomic conditions, industry and market considerations, including changes in the Company’s stock price and market multiples, projected financial performance, cost factors, changes in carrying values, and other relevant factors.
−Removed: Considering the totality of the qualitative factors assessed, based on the weight of evidence, no circumstances existed that would indicate it was more likely than not that goodwill was impaired.
−Removed: There was no goodwill impairment recognized during the years ended December 31, 2021 and 2020.
−Removed: The Company continues to monitor the recoverability of the long-lived assets associated with certain reporting units of the Company and the long-term financial projections of the businesses.
−Removed: Sustained declines in the markets the Company serves may result in future long-lived asset impairment.
+Added: The Company’s fourth quarter 2022 annual test included the assessment of a quantitative analysis to determine whether it was more likely than not that the fair value of each reporting unit is less than its carrying value.
+Added: The quantitative assessment considers fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
+Added: The Company’s quantitative analysis considered and evaluated each of the three traditional approaches to value:
+Added: the income approach, the market approach, and the asset approach.
+Added: The Company primarily relied on the discounted cash flow method within the income approach to value the reporting units.
+Added: Any impairment charges are based on both historic and future expected business results that no longer support the carrying value of the reporting unit.
+Added: The Company also monitors the recoverability of the long-lived assets associated with certain reporting units of the Company and the long-term financial projections of the businesses to assess for asset impairment.
The Company has no indefinite-lived intangible assets.
1 unchanged sentence
All intangible assets are amortized over their estimated useful lives.
−Removed: There were no definite-lived intangible asset impairments during the years ended December 31, 2021 and 2020.
Environmental remediation and compliance
5 unchanged sentences
Reserves are periodically reviewed throughout the year and adjusted to reflect current remediation progress, prospective estimates of required activity, and other factors that may be relevant, including changes in technology or regulations.
−Removed: See Note 18 for additional information regarding the Company’s outstanding environmental and litigation reserves.
Revenue recognition
2 unchanged sentences
Deferred revenue consists of customer billings or payments received for which the revenue recognition criteria have not yet been met as well as contract liabilities (billings in excess of costs) on over time contracts.
−Removed: Advance payments from customers typically relate to contracts for which the Company has significantly fulfilled its
−Removed: obligations, but due to the Company’s continuing involvement with the project, revenue is precluded from being recognized until the performance obligation is met for the customer.
−Removed: See Note 4 for additional information.
+Added: Advance payments from customers typically relate to contracts for which the Company has significantly fulfilled its obligations, but due to the Company’s continuing involvement with the project, revenue is precluded from being recognized until the performance obligation is met for the customer.
Product warranty
4 unchanged sentences
As of December 31, 2022 and 2021, the product warranty reserve was $ 870 and $ 1,042 , respectively.
−Removed: See Note 18 for additional information regarding the product warranty.
Income taxes are accounted for under the asset and liability method.
4 unchanged sentences
The Company makes judgments regarding the recognition of deferred tax assets and the future realization of these assets.
−Removed: As prescribed by the FASB’s Accounting Standards Codification (“ASC”) 740, “Income Taxes” and applicable guidance, valuation allowances must be provided for those deferred tax assets for which it is more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized.
+Added: As prescribed by the FASB’s ASC 740, “Income Taxes” and applicable guidance, valuation allowances must be provided for those deferred tax assets for which it is more likely than not (a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized.
The guidance requires the Company to evaluate positive and negative evidence regarding the recoverability of deferred tax assets.
12 unchanged sentences
The translation adjustment is accumulated as a separate component of “Accumulated other comprehensive loss” within the Consolidated Balance Sheets.
−Removed: Foreign currency transaction gains and losses are included in “Other income or expense.” For the years ended December 31, 2021 and 2020, foreign currency transaction loss of $ 452 and a gain of $ 32 , respectively, were included in “Other income - net” in the Consolidated Statements of Operations.
+Added: Foreign currency transaction gains and losses are included in “Other income or expense.” For the years ended December 31, 2022 and 2021, foreign currency transaction loss of $ 434 and $ 452 , respectively, were included in “Other income - net” in the Consolidated Statements of Operations.
Research and development
1 unchanged sentence
For the years ended December 31, 2022 and 2021, research and development expenses were $ 2,219 and $ 2,233 , respectively, and were principally related to the Company’s friction management and railroad monitoring system products within the Rail segment.
−Removed: Reclassifications
−Removed: Certain accounts in the prior year consolidated financial statements have been reclassified for comparative purposes principally to conform to the presentation in the current year period, including the changes in business segments and contract assets.
Recently issued accounting guidance
−Removed: In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848):
+Added: In March 2020, the FASB issued Accounting Standards Update 2020-04, “Reference Rate Reform (Topic 848):
Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying U.S.
GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued.
−Removed: The amendments are effective for all entities as of March 12, 2020 through December 31, 2022.
−Removed: The Company is currently evaluating the impacts of the provisions of ASU 2020-04 on its financial condition, results of operations, and cash flows.
+Added: The amendments are effective for all
+Added: entities as of March 12, 2020 through December 31, 2022.
+Added: The Company did not identify any material impact from the provision of ASU 2020-04 on its financial condition, results of operations, and cash flows.
Business Segments
The Company is a global solutions provider of engineered, manufactured products and services that builds and supports infrastructure.
−Removed: The Company’s innovative engineering and product development solutions inspire the safety, reliability, and performance of its customers’ challenging requirements.
+Added: The Company’s innovative engineering and product development solutions address the safety, reliability, and performance needs of its customers’ challenging requirements.
The Company maintains locations in North America, South America, Europe, and Asia where it markets its products and services primarily through an internal sales force.
−Removed: Effective for the quarter and year ended December 31, 2021, the Company implemented operational changes in how its Chief Operating Decision Maker (“CODM”) manages its businesses, including resource allocation and operating decisions.
−Removed: The changes are due in part to a holistic reassessment performed focused on Company strategy, which was supported by an external advisory firm.
−Removed: As a result of these changes, the Company now has three reporting segments, representing the individual businesses that are run separately under the new structure.
−Removed: The Company’s new reportable segments are:
+Added: The Company has three reporting segments:
the Rail, Technologies, and Services segment, the Precast Concrete Products segment, and the Steel Products and Measurement segment.
−Removed: The segments represent components of the Company (a) that engage in activities from which revenue is generated and expenses are incurred;
−Removed: (b) whose operating results are regularly reviewed by the CODM, who makes decisions about resources to be allocated to the segments, and (c) for which discrete financial information is available.
+Added: The Company’s segments represent components of the Company (a) that engage in activities from which revenue is generated and expenses are incurred, (b) whose operating results are regularly reviewed by the Chief Operating Decision Maker (“CODM”), who uses such information to make decisions about resources to be allocated to the segments, and (c) for which discrete financial information is available.
Operating segments are evaluated on their segment profit contribution to the Company’s consolidated results.
The Company considers the aggregation of operating segments into reporting segments based on nature of offerings, nature of production services, the type or class of customer for products and services, methods used to distribute products and services, and economic and regulatory environment conditions.
−Removed: The Company’s Rail, Technologies, and Services reporting segment is the aggregation of the Rail Products and Friction Management and the Technology Services and Solutions operating segments, which was evaluated based on the factors outlined above.
+Added: The Company’s Rail, Technologies, and Services reporting segment is the aggregation of the Rail Products and Global Friction Management and the Technology Services and Solutions operating segments, which was evaluated based on the factors outlined above.
The Rail, Technologies, and Services reporting segment engineers, manufactures, and assembles friction management products and railway wayside data collection, application systems, railroad condition monitoring systems and equipment, wheel impact load detection systems, management systems, and provides services for these products.
1 unchanged sentence
In addition, the Rail, Technologies, and Services segment provides controls, display, and telecommunication contract management solutions for the transit, control room, and customer information and display sectors to enhance safety, operational efficiency, and customer experience.
+Added: On June 21, 2022, the Company acquired the stock of Skratch, located in Telford, United Kingdom, which offers a single-point supply solution model for clients, and enabling large scale deployments of its intelligent digital signage solutions.
+Added: Skratch’s service offerings include design, prototyping and proof of concept, hardware and software, logistics and warehousing, installation, maintenance, content management, and managed monitoring.
+Added: Skratch has been included in the Company’s Technology Services and Solutions business unit within the Rail, Technologies, and Services segment.
+Added: Additionally, on August 1, 2022, the Company divested its Track Components business located in St-Jean-sur-Richelieu, Quebec, Canada, which resulted in a pre-tax loss of $ 467 .
+Added: Results of the Track Components business are included in the Company’s Rail Products business unit within the Rail, Technologies, and Services segment.
The Company’s Precast Concrete Products segment produces precast concrete buildings and a variety of specialty precast concrete products for use in several infrastructure end markets, including transportation and general infrastructure.
−Removed: Precast concrete buildings are primarily used as restrooms, concession stands, and protective storage buildings in national, state, and municipal parks, while other precast products include sound walls, burial vaults, bridge beams, box culverts, septic tanks, and other custom pre-stressed products.
+Added: Precast concrete buildings are primarily used as restrooms, concession stands, and protective storage buildings in national, state, and municipal parks, while other precast products include sound walls, bridge beams, box culverts, septic tanks, and other custom pre-stressed products.
+Added: On August 12, 2022, the Company acquired the operating assets of VanHooseCo, a privately-held business headquartered in Loudon, Tennessee, specializing in precast concrete walls, water management products, and traditional precast products for the industrial, commercial, and residential infrastructure markets and has been included in the Precast Concrete Products segment.
The Company’s Steel Products and Measurement segment sells bridge decking, bridge railing, structural steel fabrications, expansion joints, bridge forms and other products for highway construction and repair.
1 unchanged sentence
Lastly, this segment provides pipe coatings for oil and gas pipelines and utilities, precision measurement systems for the oil and gas market.
−Removed: On September 24, 2021, the Company completed the sale of its Piling Products division.
−Removed: The Company retained all pre-closing receivables and liabilities associated with the division.
+Added: On September 24, 2021, the Company completed the sale of its Piling Products business.
+Added: The Company retained all pre-closing receivables and liabilities associated with the business.
The sale included substantially all inventory and fixed assets held by the Company associated with the division.
−Removed: Results of the Piling Products division are included in the Company’s Steel Products and Measurement segment.
+Added: Results of the Piling Products business were included in the Company’s Steel Products and Measurement segment.
Segment profit from operations includes allocated corporate operating expenses.
−Removed: Operating expenses related to corporate headquarter functions were allocated to each segment based on headcount, revenue contribution, or time spent supporting business units within the segments, as appropriate for the type of function.
+Added: Operating expenses related to corporate headquarter functions were allocated to each segment based on segment headcount, revenue contribution, or activity of the business units within the segments, based on the corporate activity type provided to the segment.
The expense allocation excludes certain corporate costs that are separately managed from the segments.
1 unchanged sentence
Management believes the allocation of corporate operating expenses provides an accurate presentation of how the segments utilize corporate support activities.
−Removed: This provides the CODM a meaningful segment profitability information to support operating decisions and the allocation of resources.
+Added: This provides the CODM meaningful segment profitability information to support operating decisions and the allocation of resources.
The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies found in Note 1.
−Removed: The Company has restated segment information for the historical periods presented herein to conform to the current presentation.
−Removed: This change in segment presentation does not affect the Company’s consolidated statements of income, balance sheets, or statements of cash flows.
The operating results and assets of the Company’s reportable segments were as follows as of and for the year ended December 31, 2022:
5 unchanged sentences
The operating results and assets of the Company’s reportable segments were as follows as of and for the year ended December 31, 2021:
−Removed: Net Sales Segment Operating Profit Segment Assets Depreciation/Amortization Expenditures for Long-Lived Assets
+Added: Net Sales Segment Operating Profit (Loss) Segment Assets Depreciation/Amortization Expenditures for Long-Lived Assets
Rail, Technologies, and Services $ 299,749 $ 14,165 $ 171,608 $ 6,089 $ 1,081
10 unchanged sentences
Corporate expense and other unallocated charges ( 9,528 ) ( 8,837 )
−Removed: Income from continuing operations before income taxes $ 4,590 $ 13,982
+Added: (Loss) income from continuing operations before income taxes $ ( 8,996 ) $ 4,590
Total segment assets $ 335,225 $ 278,725
−Removed: Unallocated corporate assets and discontinued operations 63,870 71,391
+Added: Unallocated corporate assets 30,085 63,870
Assets $ 365,310 $ 342,595
1 unchanged sentence
Total segment depreciation/amortization $ 13,284 $ 12,543
−Removed: Other 1,344 1,357
+Added: Corporate depreciation/amortization 1,495 1,344
Depreciation/amortization $ 14,779 $ 13,887
1 unchanged sentence
Total segment expenditures for long-lived assets $ 4,318 $ 3,600
−Removed: Other expenditures for long-lived assets 1,020 675
+Added: Corporate expenditures for long-lived assets 3,315 1,020
Expenditures for long-lived assets $ 7,633 $ 4,620
9 unchanged sentences
United Kingdom 1,533 1,668
+Added: Other 855 430
Total property, plant, and equipment - net $ 85,344 $ 58,222
The following table summarizes the Company’s sales by major product and service line for the years ended December 31:
−Removed: Rail Products and Friction Management $ 248,237 $ 231,726
+Added: Rail Products and Global Friction Management $ 255,713 $ 248,237
Technology Services and Solutions 44,879 51,512
7 unchanged sentences
Total net sales $ 497,497 $ 513,620
−Removed: Discontinued Operations
−Removed: On September 4, 2020, the Company completed the sale of its upstream oil and gas Test and Inspection Services business.
−Removed: Proceeds from the sale were $ 4,000 and resulted in a loss of $ 10,034 net of tax.
−Removed: The Company has reflected the results of operations of the Test and Inspection Services business as discontinued operations in the Consolidated Financial statements for all periods presented.
−Removed: The Test and Inspection Services business was historically included in the legacy Tubular and Energy segment, whose remaining divisions are now included as part of the Steel Products and Measurement segment.
−Removed: The following table provides the net sales and losses from discontinued operations for the periods presented:
+Added: Acquisitions and Divestitures
+Added: Skratch Enterprises Ltd.
+Added: On June 21, 2022, the Company acquired the stock of Skratch for $ 7,402 , which is inclusive of deferred payments withheld by the Company of $ 1,228 , to be paid over the next five years or utilized to satisfy post-closing working capital adjustments or indemnity claims under the purchase agreement.
+Added: Located in Telford, United Kingdom, Skratch offers a single-point supply solution model for clients, and enables large scale deployments of its intelligent digital signage solutions.
+Added: Skratch’s service offerings include design, prototyping and proof of concept, hardware and software, logistics and warehousing, installation, maintenance, content management, and managed monitoring.
+Added: Skratch has been included in the Company’s Technology Services and Solutions business unit within the Rail, Technologies, and Services segment.
+Added: VanHooseCo Precast LLC
+Added: On August 12, 2022, the Company acquired the operating assets of VanHooseCo, a privately-held business headquartered in Loudon, Tennessee specializing in precast concrete walls, water management products, and traditional precast products for the industrial, commercial, and residential infrastructure markets.
+Added: The Company acquired VanHooseCo for $ 52,146 , net of cash acquired at closing, subject to the finalization of net working capital adjustments.
+Added: An amount equal to $ 2,500 of the purchase price was deposited in an escrow account in order to cover breaches of representations and warranties.
+Added: The acquisition agreement includes two employment agreements whereby principals have the ability to earn up to an additional $ 1,000 dependent upon the successful completion of the principals’ employment agreements.
+Added: VanHooseCo has been included in the Company’s Precast Concrete Products segment.
+Added: Acquisition Summary
+Added: Each transaction was accounted for under the acquisition method of accounting under U.S.
+Added: GAAP which requires an acquiring entity to recognize, with limited exceptions, all of the assets acquired and liabilities assumed in a transaction at fair value as of the
+Added: acquisition date.
+Added: Goodwill primarily represents the value paid for each acquisition’s enhancement to the Company’s product and service offerings and capabilities, as well as a premium payment related to the ability to control the acquired assets, as well as the assembled workforce provided.
+Added: Acquisition costs for the year ended December 31, 2022 were $ 2,043 and were recognized as part of the Company’s selling and administrative expenses.
+Added: VanHooseCo contributed net sales of $ 17,788 and operating profit of $ 1,555 to the Company’s consolidated results for the period from August 12, 2022 through December 31, 2022.
+Added: The table below summarizes the Company’s results as though the VanHooseCo acquisition had been completed on January 1, 2022.
+Added: Certain of VanHooseCo’s historical amounts were reclassified to conform to the Company’s financial presentation of operations, which included recording inventory and property, plant, and equipment at fair market value, to establish intangible assets, to remove deferred compensation expense, and to include interest expense for the additional borrowings.
+Added: The following unaudited pro forma information is provided for informational purposes only and does not represent what consolidated results of operations would have been had the VanHooseCo acquisition occurred on January 1, 2021 nor are they necessarily indicative of future consolidated results of operations.
Net sales $ 522,997 $ 540,359
−Removed: Income (loss) from discontinued operations 72 ( 10,807 )
−Removed: Income tax benefit — 2,600
−Removed: Loss on the sale of discontinued operations — ( 13,172 )
−Removed: Income tax benefit on the sale of discontinued operations — 3,138
−Removed: Loss from discontinued operations $ 72 $ ( 18,241 )
+Added: Net (loss) income attributable to L.B.
+Added: Foster Company ( 44,564 ) 2,223
+Added: Diluted (loss) earnings per share
+Added: As reported $ ( 4.25 ) $ 0.33
+Added: Pro forma $ ( 4.16 ) $ 0.21
+Added: The following table summarizes estimated fair values of the assets acquired and liabilities assumed at the date of the VanHooseCo and Skratch acquisitions:
+Added: Allocation of purchase price VanHooseCo Skratch
+Added: Current assets, net of cash acquired on the acquisition date $ 11,138 $ 1,129
+Added: Property, plant, and equipment 30,410 174
+Added: Goodwill 8,221 5,549
+Added: Other intangibles 5,442 1,750
+Added: Liabilities assumed ( 3,065 ) ( 1,200 )
+Added: Total $ 52,146 $ 7,402
+Added: The following table summarizes estimates of the fair values of the VanHooseCo and Skratch identifiable intangible assets acquired:
+Added: VanHooseCo Skratch
+Added: Identifiable intangible assets Weighted Average
+Added: Period In Years Net
+Added: Amount Weighted Average
+Added: Period In Years Net
+Added: Non-compete agreements 0 $ — 1 $ 27
+Added: Customer relationships 5 3,578 3 1,349
+Added: Trademarks and trade names 10 1,537 10 374
+Added: Favorable lease 6 327 0 —
+Added: Total $ 5,442 $ 1,750
+Added: The Company made an allocation of the purchase price for the VanHooseCo and Skratch acquisitions as of the acquisition date based on its understanding of the fair value of the acquired assets and assumed liabilities.
+Added: These fair value measurements are classified as Level 3 in the fair value hierarchy.
+Added: See Note 16 for a description of the fair value hierarchy.
+Added: Due to the timing of the acquisitions, values shown in the table above are preliminary.
+Added: If new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement recognized for assets or liabilities assumed, the Company will retrospectively adjust the amounts recognized as of the acquisition date.
+Added: Divestiture Summary
+Added: On August 1, 2022, the Company divested its Track Components business located in St-Jean-sur-Richelieu, Quebec, Canada.
+Added: Cash proceeds from the transaction were $ 7,795 , subject to indemnification obligations and working capital adjustments, resulting in a pre-tax loss of $ 467 .
+Added: The Track Components business was reported in the Rail Products business unit within the Rail, Technologies, and Services segment.
+Added: On September 24, 2021, the Company executed the sale of its Piling Products division for $ 23,902 in total proceeds resulting in a pre-tax gain of $ 3,230 .
+Added: The Piling Products division was included in the Fabricated Steel Products business unit within the Steel Products and Measurement segment.
The Company’s revenues are comprised of product and service sales, including products and services provided under long-term agreements with its customers.
All revenue is recognized when the Company satisfies its performance obligations under the contract, either implicit or explicit, by transferring the promised product or rendering a service to its customer either when or as its customer obtains control of the product or as the service is rendered.
−Removed: A performance obligation is a promise in a contract to transfer a distinct
−Removed: product or render a specific service to a customer.
+Added: A performance obligation is a promise in a contract to transfer a distinct product or render a specific service to a customer.
A contract’s transaction price is allocated to each distinct performance obligation.
6 unchanged sentences
Over time revenue is primarily comprised of transit infrastructure projects within the Rail segment, precast concrete buildings within the Precast Concrete Products segment, and long-term bridge projects within the Fabricated Steel Products division and custom precision metering systems within the Coatings and Measurement division in the Steel Products and Measurement segment.
−Removed: Revenue from products or services provided to customers over time accounted for 29.9 % and 29.4 % of revenue for the years ended December 31, 2021 and 2020, respectively.
Revenue under these long-term agreements is generally recognized over time either using an input measure based upon the proportion of actual costs incurred to estimated total project costs or an input measure based upon actual labor costs as a percentage of estimated total labor costs, depending upon which measure the Company believes best depicts the Company’s performance to date under the terms of the contract.
−Removed: Revenue recognized over time using an input measure was $ 100,787 and $ 101,160 for the years ended December 31, 2021 and 2020, respectively.
A certain portion of the Company’s revenue recognized over time under these long-term agreements is recognized using an output method, specifically units delivered, based upon certain customer acceptance and delivery requirements.
−Removed: Revenue recognized over time using an output measure was $ 52,844 and $ 44,860 for the years ended December 31, 2021 and 2020, respectively.
−Removed: As of December 31, 2021 and 2020, the Company had contract assets of $ 36,179 and $ 37,843 , respectively, within the Consolidated Balance Sheets.
−Removed: As of December 31, 2021 and 2020, the Company had contract liabilities of $ 3,235 and $ 1,324 , respectively, that were recorded in “Deferred revenue” within the Consolidated Balance Sheets.
+Added: The Company records contract liabilities in “Deferred revenue” within the Consolidated Balance Sheets.
+Added: Deferred revenue of $ 19,452 and $ 13,411 as of December 31, 2022 and 2021, respectively, consisted of customer billings or payments received for which the revenue recognition criteria had not yet been met as well as contract liabilities (billings in excess of costs) on over time revenue projects.
+Added: For the years ended December 31, 2022 and 2021, revenue recognized over time was as follows:
+Added: Year Ended December 31, Percentage of Total Net Sales
+Added: Year Ended December 31,
+Added: 2022 2021 2022 2021
+Added: Over time input method $ 67,116 $ 100,787 13.5 % 19.6 %
+Added: Over time output method 68,794 52,844 13.8 10.3
+Added: Total over time sales $ 135,910 $ 153,631 27.3 % 29.9 %
Accounting for these long-term agreements involves the use of various techniques to estimate total revenues and costs.
3 unchanged sentences
The nature of these long-term agreements may give rise to several types of variable consideration, such as claims, awards, and incentive fees.
−Removed: Historically, these amounts of variable consideration have not been considered significant.
Contract estimates may include additional revenue for submitted contract modifications if there exists an enforceable right to the modification, the amount can be reasonably estimated, and its realization is probable.
1 unchanged sentence
These amounts are generally included in the contract’s transaction price and are allocated over the remaining performance obligations.
−Removed: Changes in judgments related to the estimates above could impact the timing and amount of revenue recognized and, accordingly, the timing and amount of associated income.
+Added: Changes in judgments related to the estimates above, customer disputes, or changes in contract terms could impact the timing and amount of revenue recognized and, accordingly, the timing and amount of associated income.
In the event that a contract loss becomes known, the entire amount of the estimated loss is recognized in the Consolidated Statements of Operations.
−Removed: In accordance with adoption of ASU 2016-13, the Company evaluated and revised its policies relating to the allowance for credit losses as they pertain to contract assets.
−Removed: as these balances will ultimately flow to the Company's accounts receivable.
−Removed: In addition to contract-specific provisions for which reserves were historically established as a result of the Company’s contract review process, management also elected to implement a standard credit loss provision over any remaining contract assets considered to have a similar low risk of credit loss.The development of these estimates is based on historic collection trends, accuracy of estimates within contract margin reporting, as well as the expectation that collection patterns, margin reporting, and bad debt expense will continue to adhere to patterns observed in recent years.
−Removed: These expectations were formed based on trends observed as well as current and expected future conditions.
−Removed: Management monitors and reviews the contributing factors to the Company’s reserve, and makes any appropriate revisions as they become necessary.
The majority of the Company’s revenue is from products transferred and services rendered to customers at a point in time, which is inherent in all major product and service categories.
Point in time revenue accounted for 72.7 % and 70.1 % of revenue for the years ended December 31, 2022 and 2021, respectively.
−Removed: The Company recognizes revenue at the point in time in which the customer obtains control of the product or service, which is generally when product title passes to the customer upon shipment or the service has been rendered to the customer.
+Added: The Company recognizes revenue at the point in time in which the customer
+Added: obtains control of the product or service, which is generally when product title passes to the customer upon shipment or the service has been rendered to the customer.
In limited cases, title does not transfer upon shipment and revenue is not recognized until the customer has received the products at a designated physical location.
10 unchanged sentences
The timing of revenue recognition, billings, and cash collections results in billed receivables, costs in excess of billings (contract assets), and billings in excess of costs (contract liabilities), included in deferred revenue on the Consolidated Balance Sheets.
−Removed: Significant changes in contract assets during the year ended December 31, 2021 and 2020 included transfers to receivables from contract assets recognized at the beginning of the period of $ 24,501 and $ 27,126 , respectively.
−Removed: Significant changes in contract liabilities during the year ended December 31, 2021 and 2020 included increases of $ 3,245 and $ 803 , respectively, due to billings in excess of costs, excluding amounts recognized as revenue during the period.
−Removed: Contract liabilities were reduced due to revenue recognized during the year ended December 31, 2021 and 2020 of $ 917 and $ 3,784 , respectively, which were included in the contract liabilities at the beginning of each period.
−Removed: Deferred revenue of $ 13,411 and $ 7,144 as of December 31, 2021 and 2020, respectively, consisted of customer billings or payments received for which the revenue recognition criteria had not yet been met as well as contract liabilities (billings in excess of costs) on over time revenue projects.
−Removed: As of December 31, 2021 and 2020, contract liabilities, recorded within “Deferred revenue,” was $ 3,235 and $ 1,324 , respectively.
+Added: As of December 31, 2022 and 2021, the Company's contract asset balances were $ 33,613 and $ 36,179 , respectively, with significant changes during the year due to transfers of contract assets to receivables of $ 15,018 and $ 24,501 , respectively.
+Added: As of December 31, 2022 and 2021, contract liabilities, recorded within deferred revenue, were $ 6,781 and $ 3,245 , respectively.
Advanced payments from customers typically relate to contracts with respect to which the Company has significantly fulfilled its obligations, but due to the Company’s continuing involvement with the project, revenue is not recognized until title, ownership, and risk of loss have passed to the customer.
+Added: Significant changes in contract liabilities during the year ended December 31, 2022 and 2021 included increases of $ 2,910 and $ 3,245 , respectively, due to billings in excess of costs, excluding amounts recognized as revenue during the period.
+Added: During the years ended December 31, 2022 and 2021, contract liabilities were reduced due to revenue recognized of $ 2,665 and $ 917 , respectively, from contract liability balances.
As of December 31, 2022, the Company had approximately $ 272,251 of remaining performance obligations, which is also referred to as backlog.
11 unchanged sentences
Foreign currency translation impact ( 178 ) — — ( 178 )
+Added: Impairment charges — — ( 3,011 ) ( 3,011 )
Balance as of December 31, 2022:
$ 19,948 $ 10,785 $ — $ 30,733
+Added: In conjunction with our annual goodwill impairment test performed during the fourth quarter of 2022, the Company determined it was necessary to perform a quantitative test for impairment of goodwill due to weakened economic conditions, unfavorable changes in foreign exchange rates, and recent increases in the cost of certain materials, labor, and other inflation-related pressures unfavorably impacted the financial results.
+Added: The Company determined the implied fair values of its reporting units by using Level 3 unobservable inputs, which incorporated assumptions that we believe would be a reasonable market participant’s view in a hypothetical purchase, to develop the discounted cash flows of the respective reporting units.
+Added: Significant Level 3 inputs included estimates of future revenue growth, gross margin, and earnings before interest, taxes, depreciation, and amortization (“EBITDA”).
+Added: The results of the test indicated that the
+Added: Fabricated Bridge Products reporting unit’s respective fair value was less than its carrying value.
+Added: All other reporting units that maintain goodwill adequately exceeded their carrying value and were not subject to impairment.
+Added: However, headroom in the Rail Technologies and Precast Concrete Products reporting units indicate that should results or future projections diverge from current expectations, the reporting units could be subject to future impairment.
+Added: As a result of the procedures performed as outlined above, the Company impaired 100 % of goodwill held in the Fabricated Bridge reporting unit in the fourth quarter of 2022, resulting in a non-cash pre-tax impairment charge of $ 3,011 .
As of December 31, 2022 and 2021, the components of the Company’s intangible assets were as follows:
4 unchanged sentences
Amortization Net
+Added: Non-compete agreements 1 $ 27 $ ( 16 ) $ 11
Patents 10 330 ( 187 ) 143
2 unchanged sentences
Technology 14 32,201 ( 25,827 ) 6,374
+Added: Favorable lease 6 327 ( 23 ) 304
$ 68,002 $ ( 44,171 ) $ 23,831
11 unchanged sentences
Amortization expense for the years ended December 31, 2022 and 2021 were $ 6,144 and $ 5,836 , respectively.
−Removed: During the year ended December 31, 2020, certain fully amortized intangible assets of $ 1,232 related to non-compete agreements were eliminated from gross intangible assets and accumulated amortization.
+Added: During the year ended December 31, 2022, the Company’s gross carrying value of customer relationships and technology intangible assets were reduced by $ 5,448 and $ 471 , respectively, and the net carrying amount of customer relationships and technology intangible assets were reduced by $ 2,869 and $ 7 , respectively, as a result of the August 1, 2022 disposition of the Track Components business.
Estimated annual amortization expense for the years ending December 31, 2023 and thereafter is as follows:
1 unchanged sentence
2028 and thereafter 7,191
+Added: During the year ended December 31, 2022, management performed a recoverability test on a reporting unit for which there was an indication that it was more likely that not that the carrying value of the long-lived asset group would not be recoverable.
+Added: The results of this test concluded that the long-lived assets associated with the Company’s Precision Measurement Products and Systems business based in Willis, TX, which resides in the Steel Products and Measurement segment, had carrying values in excess of their fair value.
+Added: Based on third party valuation and appraisal reports, the Company developed a reasonable fair value of the long-lived assets for this reporting unit.
+Added: As a result of the analysis and valuation exercises performed, in the fourth quarter of 2022, the Company recorded $ 4,883 in non-cash, pre-tax impairment charges associated with the reporting unit’s intangible assets, equal to 100% of their carrying value.
+Added: Impairment was inclusive of $ 3,828 , $ 394 , and $ 661 related to customer relationships, trade name, and developed technology, respectively.
Accounts Receivable
3 unchanged sentences
Accounts receivable - net $ 82,455 $ 55,911
−Removed: On January 1, 2020, the Company adopted ASU 2016-13 and all the related amendments using the modified retrospective approach, which did not result in any changes to the previously reported financial information.
−Removed: The updates related to ASU 2016-13 were applied to assets held as of January 1, 2020.
−Removed: In accordance with adoption of the new standard, the Company evaluated and revised its policies surrounding the allowance for credit losses for trade receivables.
−Removed: The Company established the allowance for credit losses by calculating the amount to reserve based on the age of a given trade receivable and considering historical collection patterns and bad debt expense experience, in addition to any other relevant subjective adjustments to individual receivables made by management.
−Removed: The Company also considered current and expected future market and other conditions.
−Removed: Trade receivables are pooled within the calculation based on a range of ages, which appropriately groups receivables of similar credit risk together.
−Removed: The established reserve thresholds to calculate the allowance for credit loss are based on and supported by historic collection patterns and bad debt expense incurred by the Company, as well as the expectation that collection patterns and bad debt expense will continue to adhere to patterns observed in recent years, which was formed based on trends observed as well as current and expected
−Removed: future conditions.
−Removed: Management maintains high-quality credit review practices as well as positive customer relationships that further mitigate credit risk.
−Removed: Management monitors and reviews the contributing factors to the Company’s reserve, and makes any appropriate revisions as they become necessary.
−Removed: The Company’s adoption of ASU 2016-13 did not require material changes to the allowance for credit losses and no adjustment was recorded to opening retained earnings as of January 1, 2020.
−Removed: Changes in reserves for uncollectible accounts are recorded as part of “Selling and administrative expenses” in the Consolidated Statements of Operations, and were income of $ 87 , and expense of $ 365 for the years ended December 31, 2021 and 2020, respectively.
+Added: Changes in reserves for uncollectible accounts are recorded as part of “Selling and administrative expenses” in the Consolidated Statements of Operations, and were an expense of $ 382 and income of $ 87 for the years ended December 31, 2022 and 2021, respectively.
The following table sets forth the Company’s allowance for credit losses:
4 unchanged sentences
December 31, 2022 $ 813
−Removed: The Company’s customers are principally in the rail, transportation, heavy civil, agricultural, energy, commercial, and residential infrastructure sectors.
−Removed: As of December 31, 2021 and 2020, trade receivables, net of allowance for credit losses, from customers were as follows:
−Removed: Rail, Technologies, and Services $ 34,827 $ 33,960
−Removed: Precast Concrete Products 10,809 11,119
−Removed: Steel Products and Measurement 10,275 13,133
−Removed: Trade accounts receivable - net $ 55,911 $ 58,212
−Removed: Credit is extended based upon an evaluation of the customer’s financial condition and, while collateral is not required, the Company periodically receives surety bonds that guarantee payment.
−Removed: Credit terms are consistent with industry standards and practices.
Inventory is valued at average cost or net realizable value, whichever is lower.
4 unchanged sentences
Inventories - net $ 75,721 $ 62,871
−Removed: On September 24, 2021, the Company executed the sale of its Piling Products division for $ 23,902 in total expected proceeds.
−Removed: The sale included substantially all inventory held by the Company associated with the division.
−Removed: The Piling Products division was included in the Fabricated Steel Products business unit within the Steel Products and Measurement business segment.
Property, Plant, and Equipment
9 unchanged sentences
Depreciation expense, including amortization of assets under finance leases, for the years ended December 31, 2022 and 2021 amounted to $ 8,635 and $ 8,051 , respectively.
−Removed: There were no material asset impairments recorded for the year ended December 31, 2021.
−Removed: On September 24, 2021, the Company executed the sale of its Piling Products division for $ 23,902 in total expected proceeds.
−Removed: The Company retained all pre-closing receivables and liabilities associated with the division.
−Removed: The sale included substantially all fixed assets held by the Company associated with the division.
−Removed: The Piling Products division was included in the Fabricated Steel Products business unit within the Steel Products and Measurement business segment.
+Added: There were no material property, plant, and equipment impairments recorded for the year ended December 31, 2022 and 2021.
The Company determines if an arrangement is a lease at its inception.
34 unchanged sentences
Total lease cost $ 2,902 $ 2,869
−Removed: The cash flow components of the leases were as follows for the year ended December 31, 2021 and 2020:
+Added: The cash flow components of the leases were as follows for the years ended December 31, 2022 and 2021:
Year Ended December 31,
30 unchanged sentences
On August 13, 2021, the Company, its domestic subsidiaries, and certain of its Canadian and United Kingdom subsidiaries (collectively, the “Borrowers”), entered into the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) with PNC Bank, N.A., Citizens Bank, N.A., Wells Fargo Bank, National Association, Bank of America, N.A., and BMO Harris Bank, National Association.
−Removed: The Credit Agreement modifies the prior revolving credit facility, as amended, on more favorable terms and extends the maturity date from April 30, 2024 to August 13, 2026.
+Added: The Credit Agreement, as amended, modifies the prior revolving credit facility, as amended, on terms more favorable to the Company and extends the maturity date from April 30, 2024 to August 13, 2026.
The Credit Agreement provides for a five-year , revolving credit facility that permits aggregate borrowings of the Borrowers up to $ 130,000 (a $ 15,000 increase over the previous commitment) with a sublimit of the equivalent of $ 25,000 U.S.
−Removed: dollars that is available to the Canadian and United Kingdom borrowers in the aggregate.
+Added: dollars that is available to the Canadian and United Kingdom
+Added: borrowers in the aggregate.
The Credit Agreement’s incremental loan feature permits the Company to increase the available commitments under the facility by up to an additional $ 50,000 subject to the Company’s receipt of increased commitments from existing or new lenders and the satisfaction of certain conditions.
1 unchanged sentence
Additionally, the equity interests in each of the loan parties, other than the Company, and the equity interests held by each loan party in their subsidiaries, will be pledged to the lenders as collateral for the lending obligations.
−Removed: Borrowings under the Credit Agreement will bear interest at rates based upon either the base rate or LIBOR rate plus applicable margins.
−Removed: Applicable margins are dictated by the ratio of the Company’s total net indebtedness to the Company’s consolidated EBITDA for four trailing quarters, as defined in the Credit Agreement.
−Removed: The base rate is the highest of (a) the Overnight Bank Funding
−Removed: Rate plus 50 basis point, (b) the Prime Rate, or (c) the Daily LIBOR rate plus 100 basis point so long as the Daily LIBOR Rate is offered, ascertainable, and not unlawful (each as defined in the Credit Agreement).
−Removed: The base rate and LIBOR rate spreads range from 25 to 125 basis points and 125 to 225 basis points, respectively.
+Added: Prior to the Credit Agreement's amendment on August 12, 2022, borrowings under the Credit Agreement were subject to interest at rates based upon either the base rate or LIBOR rate plus applicable margins.
+Added: Applicable margins were dictated by the ratio of the Company’s total net indebtedness to the Company’s consolidated EBITDA for four trailing quarters, as defined in the Credit Agreement.
+Added: The base rate was the highest of (a) the Overnight Bank Funding Rate plus 50 basis points, (b) the Prime Rate, or (c) the Daily LIBOR rate plus 100 basis points so long as the Daily LIBOR Rate is offered, ascertainable, and not unlawful (each as defined in the Credit Agreement).
+Added: The base rate and LIBOR rate spreads ranged from 25 to 125 basis points and 125 to 225 basis points, respectively.
The Credit Agreement includes two financial covenants:
−Removed: (a) Maximum Gross Leverage Ratio, defined as the Company’s consolidated Indebtedness (as defined in the Credit Agreement) divided by the Company’s consolidated EBITDA, which must not exceed (i) 3.25 to 1.00 for all testing periods other than during an Acquisition Period (as defined in the Credit Agreement), and (ii) 3.50 to 1.00 for all testing periods occurring during an Acquisition Period, and (b) Minimum Consolidated Fixed Charge Coverage Ratio, defined as the Company’s consolidated EBITDA divided by the Company’s Fixed Charges (as defined in the Credit Agreement), which must be more than 1.05 to 1.00.
+Added: (a) Maximum Gross Leverage Ratio, defined as the Company’s consolidated Indebtedness (as defined in the Credit Agreement) divided by the Company’s consolidated EBITDA, which must not exceed (i) 3.25 to 1.00 for all testing periods other than during an Acquisition Period, and (ii) 3.50 to 1.00 for all testing periods occurring during an Acquisition Period (as defined in the Credit Agreement), and (b) Minimum Consolidated Fixed Charge Coverage Ratio, defined as the Company’s consolidated EBITDA divided by the Company’s Fixed Charges (as defined in the Credit Agreement), which must be more than 1.05 to 1.00.
The Credit Agreement permits the Company to pay dividends and make distributions and redemptions with respect to its stock provided no event of default or potential default (as defined in the Credit Agreement) has occurred prior to or after giving effect to the dividend, distribution, or redemption.
5 unchanged sentences
Other restrictions exist at all times including, but not limited to, limitations on the Company’s sale of assets and the incurrence by either the Borrowers or the non-borrower subsidiaries of the Company of other indebtedness, guarantees, and liens.
−Removed: As of December 31, 2021, the Company was in compliance with the covenants in the Credit Agreement.
−Removed: Prior to entering into the current agreement outlined above, on June 26, 2020, the Borrowers entered into the First Amendment (the “First Amendment”) to its Third Amended and Restated Credit Agreement.
−Removed: The First Amendment provided for a revolving credit facility to permit aggregate borrowings of the Borrowers up to $ 120,000 with a sublimit of the equivalent of $ 25,000 U.S.
−Removed: dollars that were available to the Canadian and United Kingdom borrowers in the aggregate, and repaid and terminated the outstanding term loan by drawing funds on the revolving credit facility.
−Removed: The First Amendment provided additional $ 5,000 annual reductions to the revolving credit facility beginning on December 31, 2020 through the maturity of the facility on April 30, 2024.
−Removed: As of December 31, 2021 and 2020, the Company had outstanding letters of credit of approximately $ 544 and $ 949 , respectively, and had net available borrowing capacity of $ 98,356 and $ 69,274 , respectively.
+Added: On August 12, 2022, the Company entered into a second amendment to its Credit Agreement (the “Second Amendment”) to obtain approval for the VanhooseCo acquisition and temporarily modify certain financial covenants to accommodate the transaction.
+Added: The Second Amendment permitted the Company to acquire the operating assets of VanHooseCo and modified the Maximum Gross Leverage Ratio covenant through June 30, 2023 to accommodate the transaction.
+Added: The Second Amendment also added an additional tier to the pricing grid and provided for the conversion from LIBOR-based to SOFR-based borrowings.
+Added: Borrowings under the Credit Agreement as amended, will bear interest at rates based upon either the base rate or SOFR rate plus applicable margins.
+Added: Applicable margins are dictated by the ratio of the Company’s total net indebtedness to the Company’s consolidated EBITDA for four trailing quarters, as defined in the Credit Agreement.
+Added: The base rate is the highest of (a) the Overnight Bank Funding Rate plus 50 basis points, (b) the Prime Rate, or (c) the Daily Simple SOFR rate plus 100 basis points so long as the Daily Simple SOFR rate is offered, ascertainable, and not unlawful (each as defined in the Credit Agreement).
+Added: The base rate and LIBOR rate spreads range from 25 to 150 basis points and 125 to 250 basis points, respectively.
+Added: As of December 31, 2022, the Company was in compliance with the covenants in the Credit Agreement, as amended.
+Added: As of December 31, 2022 and 2021, the Company had outstanding letters of credit of approximately $ 619 and $ 544 , respectively, and had net available borrowing capacity of $ 37,814 and $ 98,356 , respectively, subject to covenant restrictions.
+Added: The maturity date of the facility is August 13, 2026.
Stockholders’ Equity
13 unchanged sentences
Pension and post-retirement benefit plan adjustments $ ( 1,112 ) $ ( 2,517 )
−Removed: Unrealized income (loss) on interest rate swap contracts 68 ( 766 )
+Added: Unrealized income on interest rate swap contracts 1,982 68
Foreign currency translation adjustments ( 22,035 ) ( 16,396 )
5 unchanged sentences
(Share amounts in thousands)
−Removed: The following table sets forth the computation of basic and diluted earnings (loss) per common share for the years ended December 31, 2021 and 2020:
+Added: The following table sets forth the computation of basic and diluted (loss) earnings per common share for the years ended December 31, 2022 and 2021:
Year Ended December 31,
−Removed: Numerator for basic and diluted earnings (loss) per common share:
−Removed: Income from continuing operations attributable to L.B.
+Added: Numerator for basic and diluted (loss) earnings per common share:
+Added: Net (loss) income from continuing operations attributable to L.B.
Foster Company $ ( 45,564 ) $ 3,554
−Removed: Income (loss) from discontinued operations 72 ( 18,241 )
−Removed: Net income attributable to L.B.
+Added: Income from discontinued operations — 72
+Added: Net (loss) income attributable to L.B.
Foster Company $ ( 45,564 ) $ 3,626
5 unchanged sentences
Denominator for diluted earnings per common share - adjusted weighted average shares outstanding and assumed conversions 10,720 10,752
−Removed: Basic earnings from continuing operations per common share $ 0.33 $ 2.45
−Removed: Basic earnings (loss) from discontinued operations per common share 0.01 ( 1.73 )
−Removed: Basic earnings per common share $ 0.34 $ 0.72
−Removed: Diluted earnings from continuing operations per common share $ 0.33 $ 2.42
−Removed: Diluted earnings (loss) from discontinued operations per common share 0.01 ( 1.71 )
−Removed: Diluted earnings per common share $ 0.34 $ 0.71
−Removed: There were no anti-dilutive shares for the years ended December 31, 2021 and 2020.
−Removed: Income from continuing operations before income taxes, as shown in the accompanying Consolidated Statements of Operations, includes the following components for the years ended December 31, 2021 and 2020:
+Added: Basic (loss) earnings from continuing operations per common share $ ( 4.25 ) $ 0.33
+Added: Basic earnings from discontinued operations per common share — 0.01
+Added: Basic (loss) earnings per common share $ ( 4.25 ) $ 0.34
+Added: Diluted (loss) earnings from continuing operations per common share $ ( 4.25 ) $ 0.33
+Added: Diluted earnings from discontinued operations per common share — 0.01
+Added: Diluted (loss) earnings per common share $ ( 4.25 ) $ 0.34
+Added: There were 75 anti-dilutive shares for the year ended December 31, 2022.
+Added: (Loss) i ncome from continuing operations before income taxes, as shown in the accompanying Consolidated Statements of Operations, includes the following components for the years ended December 31, 2022 and 2021:
Year Ended December 31,
1 unchanged sentence
Foreign ( 3,922 ) 1,818
−Removed: Income from continuing operations, before income taxes $ 4,590 $ 13,982
+Added: (Loss) income from continuing operations, before income taxes $ ( 8,996 ) $ 4,590
Significant components of the provision for income taxes for the years ended December 31, 2022 and 2021 were as follows:
8 unchanged sentences
Total deferred 35,785 139
−Removed: Total income tax expense (benefit) $ 1,119 $ ( 11,841 )
+Added: Total income tax expense $ 36,681 $ 1,119
The reconciliation of income tax computed at statutory rates to income tax expense for the years ended December 31, 2022 and 2021 is as follows:
6 unchanged sentences
Tax benefits related to disposition of the Test and Inspection Services business — — ( 2,130 ) ( 46.4 )
−Removed: taxation of foreign income, net of tax credits 32 0.7 621 4.4
Income tax credits ( 261 ) 2.9 ( 227 ) ( 4.9 )
−Removed: Nondeductible executive compensation 17 0.4 132 0.9
Change in income tax rates 176 ( 2.0 ) 379 8.3
2 unchanged sentences
Other 100 ( 1.1 ) 89 1.9
−Removed: Total income tax expense (benefit) / Effective rate $ 1,119 24.4 % $ ( 11,841 ) ( 84.7 ) %
+Added: Total income tax expense / Effective rate $ 36,681 ( 407.7 ) % $ 1,119 24.4 %
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2022 and 2021 were as follows:
10 unchanged sentences
Interest deduction carryforward 775 161
+Added: Capitalized research expenditures 1,292 —
Other 644 767
5 unchanged sentences
Depreciation ( 9,434 ) ( 6,919 )
−Removed: Inventory § 481(a) adjustment — ( 1,027 )
+Added: Unrealized income on interest rate swap contracts ( 472 ) —
Unremitted earnings of foreign subsidiaries ( 625 ) ( 220 )
1 unchanged sentence
Total deferred tax liabilities ( 13,500 ) ( 11,032 )
−Removed: Net deferred tax assets $ 33,489 $ 34,396
−Removed: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act of 2020 (“CARES Act”) was enacted in response to the COVID-19 pandemic.
−Removed: The CARES Act contains several corporate income tax provisions, including providing for a five-year carryback of net operating losses (“NOL”) generated in tax years 2018 through 2020, removing the 80% taxable income limitation on utilization of those NOLs if carried back to prior tax years or utilized in tax years beginning before 2021, making remaining alternative minimum tax (“AMT”) credits immediately refundable, and temporarily relaxing the interest deductibility rules by raising the adjusted taxable income limitation from 30% to 50% for tax years 2019 and 2020.
−Removed: As of December 31, 2021, the Company has recorded an income tax receivable of $ 8,500 to reflect expected tax refunds of federal taxes paid within the five year NOL carryback period.
+Added: Net deferred tax (liabilities) assets $ ( 3,085 ) $ 33,489
A valuation allowance is required to be established or maintained when, based on currently available information and other factors, it is more likely than not that all or a portion of a deferred tax asset will not be realized.
The Company has considered all available evidence, both positive and negative, in assessing the need for a valuation allowance in each jurisdiction.
−Removed: As of December 31, 2021, the positive evidence considered in evaluating U.S.
−Removed: deferred tax assets included cumulative domestic financial income over the three-year period ended December 31, 2021, as well as the composition and reversal patterns of existing taxable and deductible temporary differences between financial reporting and tax.
−Removed: Based on its evaluation, the Company believed it was appropriate to rely on forecasted future taxable income to support its U.S.
−Removed: deferred tax assets.
−Removed: The amount of deferred tax assets considered realizable;
−Removed: however, could be adjusted if negative evidence outweighs additional subjective evidence such as the Company’s projections for growth.
−Removed: As of December 31, 2021, the Company has a federal NOL carryforward of $ 90,321 , which is limited to 80% of taxable income annually, but may be carried forward indefinitely.
+Added: The Company has reported cumulative financial losses in recent years, which is a significant piece of negative evidence that typically limits a Company’s ability to consider more subjective forms of evidence.
+Added: Although many of our deferred tax assets have indefinite carryforward periods, we determined it was not appropriate to place significant weight on forecasted income in future periods given the subjective nature of such forecasts and our cumulative losses in recent years.
+Added: A valuation allowance of $ 40,601 was recorded at December 31, 2022 to recognize only the amount of deferred tax assets more likely than not to be realized.
+Added: The amount of deferred tax assets considered realizable, however, could be adjusted if objective negative evidence in the form of cumulative financial losses is no longer present, and additional weight is given to subjective evidence such as our projections for growth.
+Added: As of December 31, 2022, the Company had a federal Net Operating Loss (“NOL”) carryforward of $ 96,034 , which is limited to 80% of taxable income annually, but may be carried forward indefinitely.
The Company also has federal research tax credit carryforwards in the amount of $ 1,531 that will expire at various times from 2036 through 2042.
−Removed: The Company believes it is more likely than not that the tax benefits from the federal loss carryforwards and research tax credit carryforwards will be realized.
+Added: Based on information available as of December 31, 2022, the Company believes it is more likely than not that the tax benefits from the federal loss carryforwards and research tax credit carryforwards will not be realized.
+Added: In recognition of this risk, we have provided a full valuation allowance against deferred tax assets related to federal NOL and research tax credit carryforwards at December 31, 2022.
As of December 31, 2022 and 2021, the tax benefit of NOL carryforwards available for state income tax purposes was $ 9,574 and $ 9,643 , respectively.
Many state NOL carryforwards will expire in various years through 2042, while some may be carried forward indefinitely.
−Removed: The Company believes it is more likely than not that a portion of the tax benefit from state operating loss carryforwards will not be realized.
−Removed: In recognition of this risk, the Company has provided a valuation allowance of $ 2,430 , net of federal benefit, against deferred tax assets related to state operating loss carryforwards as of December 31, 2021.
+Added: Based on information available as of December 31, 2022, the Company believes it is more likely than not that the tax benefit from state operating loss carryforwards will not be realized.
+Added: In recognition of this risk, the Company has provided a full valuation allowance against deferred tax assets related to state operating loss carryforwards as of December 31, 2022.
As of December 31, 2022, the Company has NOL carryforwards in certain foreign jurisdictions of $ 5,068 , which may be carried forward indefinitely.
The foreign jurisdictions have incurred cumulative financial losses over the three-year period ended December 31, 2022 and have projected future taxable losses.
−Removed: The Company believes it is more likely than not that the tax benefit from these loss carryforwards will not be realized.
+Added: Based on information available as of December 31, 2022, the Company
+Added: believes it is more likely than not that the tax benefit from these loss carryforwards will not be realized.
In recognition of this risk, it has provided a valuation allowance of $ 948 , collectively, against deferred tax assets in foreign jurisdictions as of December 31, 2022.
−Removed: The determination to record or not record a valuation allowance involves management judgment, based on the consideration of positive and negative evidence available at the time of the assessment.
+Added: The determination to record or not record a valuation allowance involves managements’ judgment, based on the consideration of positive and negative evidence available at the time of the assessment.
Management will continue to assess the realization of its deferred tax assets based upon future evidence, and may record adjustments to valuation allowances against deferred tax assets in future periods, as appropriate, that could materially impact net income.
−Removed: Each quarter, management reviews operations and liquidity needs in each jurisdiction to assess the Company’s intent to reinvest foreign earnings outside of the U.S.
−Removed: As of December 31, 2021, management determined that cash balances of its Canadian and United Kingdom subsidiaries exceeded projected capital needs by $ 4,400 .
−Removed: Management does not intend for such amounts to be permanently reinvested outside of the U.S.
−Removed: and has therefore accrued foreign withholding taxes of $ 220 as of December 31, 2021.
−Removed: It is management’s intent and practice to indefinitely reinvest other undistributed earnings outside of the U.S.
+Added: Each quarter, management reviews operations and liquidity needs in each jurisdiction to assess the Company’s intent to reinvest foreign earnings outside of the United States.
+Added: As of December 31, 2022, management determined that a portion of the Company’s outside basis differences in its foreign subsidiaries would not be indefinitely reinvested outside of the United States.
+Added: The Company has accrued foreign withholding taxes of $ 625 related to $ 12,500 of outside basis differences in its foreign subsidiaries that are not indefinitely reinvested as of December 31, 2022.
+Added: It is management’s intent and practice to indefinitely reinvest all other undistributed earnings outside of the United States.
Determination of the amount of any unrecognized deferred income tax liability associated with these undistributed earnings is not practicable because of the complexities of the hypothetical calculation.
20 unchanged sentences
Shares issued as a result of vested stock-based compensation generally will be from previously issued shares that have been reacquired by the Company and held as treasury stock or authorized but previously unissued common stock.
−Removed: As of December 31, 2021, the Company had stock awards issued pursuant to the 2006 Omnibus Incentive Plan, as amended and restated in May 2018 (“Omnibus Plan”).
−Removed: The Omnibus Plan allows for the issuance of 2,058,000 shares of common stock through the granting of stock options or stock awards (including performance units convertible into stock) to key employees and directors at no less than 100% of fair market value on the date of the grant.
−Removed: The Omnibus Plan provides for the granting of “nonqualified options” with a duration of not more than ten years from the date of grant.
−Removed: The Omnibus Plan also provides that, unless otherwise set forth in the option agreement, stock options are exercisable in installments of up to 25 % annually beginning one year from the date of grant.
−Removed: No stock options have been granted under the Omnibus Plan and, as such, there was no stock-based compensation expense related to stock options recorded in 2021 and 2020.
+Added: As of December 31, 2022, the Company had stock awards issued pursuant to the Omnibus Plan and the Equity and Incentive Plan.
+Added: The Omnibus Plan allowed for the issuance of 2,058,000 shares of common stock through the granting of stock options or stock awards (including performance units convertible into stock) to key employees and directors at no less than 100% of fair market value on the date of the grant.
+Added: The Equity and Incentive Plan allows for the issuance of 854,077 shares of common stock, which includes 765,000 shares that were authorized under the Equity and Incentive Compensation Plan and 89,077 shares remaining available for the Omnibus Incentive Plan, through the granting of stock options or stock awards (including performance units and restricted stock units convertible into stock) to key employees and directors at no less than 100% of fair market value on the date of the grant.
+Added: The total number of shares of common stock available for issuance, including shares that were forfeited, cancelled, expired, settled for cash, or unearned under the Omnibus Plan, were available for awards under the Equity and Incentive Plan as of its approval date.
+Added: The Omnibus Plan and Equity and Incentive Plan provide for the granting of “nonqualified options” with a duration of not more than ten years from the date of grant.
+Added: The Omnibus Plan and Equity and Incentive Plan also provide that, unless otherwise set forth in the option agreement, stock options are exercisable in installments of up to 25 % annually beginning one year from the date of grant.
+Added: No stock options have been granted under the Omnibus Plan or Equity and Incentive Plan and, as such, there was no stock-based compensation expense related to stock options recorded in 2022 and 2021.
Non-Employee Director Fully-Vested and Restricted Stock Awards
−Removed: Prior to May 2018, non-employee directors were awarded fully-vested shares of the Company’s common stock on each date the non-employee directors were elected at the annual shareholders’ meeting to serve as directors.
−Removed: Since May 2018, such annual equity awards have been subject to a one-year vesting requirement.
−Removed: During the quarter ended June 30, 2017, the Nomination and Governance Committee and Board of Directors jointly approved the Deferred Compensation Plan for Non-Employee Directors under the Omnibus
−Removed: Plan, which permits non-employee directors of the Company to defer receipt of earned cash and/or stock compensation for service on the Board.
−Removed: The non-employee directors were granted a total of 35,255 and 50,316 restricted shares and fully-vested for the years ended December 31, 2021 and 2020, respectively.
+Added: Since May 2018, non-employee directors have been awarded shares of the Company’s common stock on each date the non-employee directors were elected at the annual shareholders’ meeting to serve as directors, subject to a one-year vesting requirement.
+Added: During the quarter ended June 30, 2017, the Nomination and Governance Committee and Board of Directors jointly approved the Deferred Compensation Plan for Non-Employee Directors under the Omnibus Plan and, by amendment, under the Equity and Incentive Compensation Plan, which permits non-employee directors of the Company to defer receipt of earned cash and/or stock compensation for service on the Board.
+Added: During 2022 and 2021, the non-employee directors were granted a total of 45,840 and 35,255 restricted shares, respectively, which fully-vested as of December 31, 2022 and 2021, respectively.
Compensation expense recorded by the Company related to such awards to non-employee directors was approximately $ 697 and $ 650 for the years ended December 31, 2022 and 2021, respectively.
During 2022, 5,730 deferred share units were allotted to the accounts of the non-employee directors pursuant to the Deferred Compensation Plan for Non-Employee Directors.
−Removed: The weighted average fair value of all the fully-vested and restricted stock grants awarded was $ 17.87 and $ 12.79 per share for the years ended December 31, 2021 and 2020, respectively.
+Added: The weighted average fair value of all the restricted stock grants awarded was $ 13.09 and $ 17.87 per share for the years ended December 31, 2022 and 2021, respectively.
Restricted Stock Awards and Performance Unit Awards
Under the Omnibus Plan, the Company grants certain employees restricted stock and performance unit awards.
−Removed: The forfeitable restricted stock awards granted prior to March 2015 generally time-vest after a four-year period, and those granted subsequent to March 2015 generally time-vest ratably over a three-year period, unless indicated otherwise by the underlying restricted stock award agreement.
−Removed: Performance unit awards are offered annually under separate three-year long-term incentive programs.
+Added: The forfeitable restricted stock awards granted subsequent to March 2015 generally time-vest ratably over a three-year period, unless indicated otherwise by the underlying restricted stock award agreement.
+Added: Performance unit awards are offered annually under separate three-year long-term incentive programs, unless indicated otherwise by the underlying performance unit award agreement.
Performance units are subject to forfeiture and will be converted into common stock based upon the Company’s performance relative to performance measures and conversion multiples as defined in the underlying program.
18 unchanged sentences
Performance units are subject to forfeiture and are converted into common stock of the Company based upon the Company’s performance relative to performance measures and conversion multiples as defined in the underlying plan.
+Added: Commencing in 2022, Performance Stock Units may be earned annually during each year of the three year program and converted into restricted stock units which settle in common stock at the end of each three year period.
Performance Stock Units are adjusted to the Company’s expected performance target attainment, while the weighted average aggregate grant date fair value in the above table is based upon achieving 100% of the performance targets as defined in the underlying plan.
−Removed: In February 2021, under the 2006 Omnibus Incentive Plan, the Company established a performance-based incentive stock award retention program to incentivize and retain key personnel during the COVID-19 pandemic by driving stock price.
+Added: In June 2022, under the Equity and Incentive Plan, the Company approved the Strategy Transformation Plan performance-based incentive stock award to incentivize key personnel for the strategic transformation of the Company.
+Added: Under the four-year program, participants shall be eligible for a performance stock unit award of Company common stock with 50 % of the shares earned based on the achievement of EBITDA Margin and 50 % of the shares earned based on the Company’s stock price.
+Added: In February 2021, under the Omnibus Plan, the Company established a performance-based incentive stock award retention program to incentivize and retain key personnel during the COVID-19 pandemic by driving stock price.
Under this five-year program, participants have the opportunity to earn up to 3,333 shares of Company common stock.
6 unchanged sentences
The Company determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants.
−Removed: The fair values are based on assumptions that market participants would use when pricing an
−Removed: asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations.
+Added: The fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations.
The fair value hierarchy is based on whether the inputs to valuation techniques are observable or unobservable.
10 unchanged sentences
Where appropriate, the description includes details of the key inputs to the valuations and any significant assumptions.
−Removed: Cash equivalents.
−Removed: Included within “Cash and cash equivalents” are investments in non-domestic term deposits.
+Added: Cash equivalents - Included within “Cash and cash equivalents” are investments in non-domestic term deposits.
The carrying amounts approximate fair value because of the short maturity of the instruments.
−Removed: LIBOR-Based interest rate swaps .
−Removed: 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 and $ 20,000 effective February 2017 and March 2022, respectively.
+Added: SOFR-based interest rate swaps - To reduce the impact of interest rate changes on outstanding variable-rate debt, the Company amended and entered into forward-starting SOFR-based interest rate swaps, with notional values totaling $ 20,000 and $ 20,000 effective August 12, 2022 and August 31, 2022, respectively.
The fair value of the interest rate swaps is based on market-observable forward interest rates and represents the estimated amount that the Company would pay to terminate the agreements.
As such, the swap agreements are classified as Level 2 within the fair value hierarchy.
−Removed: As of December 31, 2021 and December 31, 2020, the interest rate swaps were recorded in “Other accrued liabilities” within the Condensed Consolidated Balance Sheets.
+Added: As of December 31, 2022 and December 31, 2021, the interest rate swaps were recorded in “ Other current assets ” when the interest rate swaps’ fair market value are in an asset position and “Other accrued liabilities” when in a liability position within our Consolidated Balance Sheets.
The following assets and liabilities of the Company were measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820, “Fair Value Measurement” (“ASC 820”) as of December 31, 2022 and 2021:
11 unchanged sentences
Total liabilities $ — $ — $ — $ — $ 159 $ — $ 159 $ —
−Removed: The $ 20,000 interest rate swaps that become effective March 2022 are accounted for as cash flow hedges and the objective of the hedges is to offset the expected interest variability on payments associated with the interest rate on our debt.
+Added: The $ 20,000 interest rate swaps that became effective August 2022 are accounted for as cash flow hedges and the objective of the hedges is to offset the expected interest variability on payments associated with the interest rate on our debt.
The gains and losses related to the interest rate swaps are reclassified from “Accumulated other comprehensive loss” in our Condensed Consolidated Balance Sheets and included in “Interest expense - net” in our Condensed Consolidated Statements of Operations as the interest expense from our debt is recognized.
−Removed: Prior to the third quarter of 2020, the Company accounted for the $ 50,000 of interest rate swaps that became effective February 2017 as cash flow hedges and the objective of the hedges is to offset the expected interest variability on payments associated with the interest rate on its debt.
−Removed: In the third quarter of 2020, the Company dedesignated the cash flow hedges and now accounts for the $ 50,000 interest rate swaps on a mark-to-market basis with changes in fair value recorded in current period earnings.
−Removed: In connection with this dedesignation, the Company froze the balances recorded in “Accumulated other comprehensive loss” at June 30, 2020 and reclassifies balances to earnings as the underlying physical transactions occur, unless it is no longer probable that the physical transaction will occur at which time the related gains deferred in Other Comprehensive Income will be immediately recorded in earnings.
−Removed: The gains and losses related to the interest rate swaps are reclassified from “Accumulated other comprehensive loss” in the Condensed Consolidated Balance Sheets and included in “Interest expense - net” in the Condensed Consolidated Statements of Operations as the interest expense from the Company’s debt is recognized.
+Added: The Company accounted for $ 50,000 of interest rate swaps that became effective February 2017 as cash flow hedges.
+Added: In the third quarter of 2020, the Company dedesignated the cash flow hedges and accounted for the $ 50,000 interest rate swaps on a mark-to-market basis with changes in fair value recorded in current period earnings.
+Added: In connection with this dedesignation, the Company froze the balances recorded in “Accumulated other comprehensive loss” at June 30, 2020 and reclassified balances to earnings as the
+Added: underlying physical transactions occurred, unless it was no longer probable that the physical transaction would occur at which time the related gains deferred in Other Comprehensive Income would be immediately recorded in earnings.
+Added: The gains and losses related to the interest rate swaps were reclassified from “Accumulated other comprehensive loss” in the Consolidated Balance Sheets and included in “Interest expense - net” in the Consolidated Statements of Operations as the interest expense from the Company’s debt was recognized.
+Added: These interest rate swaps expired February 2022.
For the year ended December 31, 2022 and 2021, the Company recognized interest expense of $ 71 and $ 958 , respectively, from interest rate swaps.
10 unchanged sentences
The Company’s policy is to contribute at least the required minimum in accordance with the funding standards of ERISA.
−Removed: The Company maintains two defined contribution plans for its employees in Canada, as well as a post-retirement benefit plan.
+Added: The Company maintains one defined contribution plans for its employees in Canada.
In the United Kingdom, the Company maintains two defined contribution plans and a defined benefit plan, which is frozen.
5 unchanged sentences
Interest cost 194 172
−Removed: Actuarial (gain) loss ( 319 ) 813
+Added: Actuarial gain ( 1,544 ) ( 319 )
Benefits paid ( 424 ) ( 426 )
2 unchanged sentences
Fair value of assets at beginning of year $ 4,767 $ 4,459
−Removed: Actual gain on plan assets 434 197
+Added: Actual (loss) gain on plan assets ( 1,007 ) 434
Employer contribution 456 300
72 unchanged sentences
Interest cost 135 109
−Removed: Actuarial (gain) loss ( 825 ) 996
+Added: Actuarial gain ( 2,221 ) ( 825 )
Benefits paid ( 1,424 ) ( 302 )
3 unchanged sentences
Fair value of assets at beginning of year $ 8,409 $ 7,975
−Removed: Actual gain (loss) on plan assets 522 453
+Added: Actual (loss) gain on plan assets ( 742 ) 522
Employer contribution 319 336
4 unchanged sentences
Amounts recognized in the consolidated balance sheets consist of:
−Removed: Other long-term liabilities $ ( 726 ) $ ( 2,290 )
+Added: Other assets (long-term liabilities) $ 1,074 $ ( 726 )
Amounts recognized in accumulated other comprehensive loss consist of:
−Removed: Net loss $ 837 $ 2,247
+Added: Net (gain) loss $ ( 1,425 ) $ 837
Prior service cost 90 127
2 unchanged sentences
Year Ended December 31,
−Removed: Components of net periodic benefit cost:
+Added: Components of net periodic benefit (gain) cost:
Interest cost $ 135 $ 109
2 unchanged sentences
Recognized net actuarial loss 13 165
−Removed: Net periodic pension cost $ 46 $ 289
+Added: Net periodic pension (gain) cost $ ( 93 ) $ 46
The weighted average assumptions in the following table represent the rates used to develop the actuarial present value of the projected benefit obligation for the year listed and also the net periodic benefit cost for the following year.
30 unchanged sentences
Other Post-Retirement Benefit Plan
−Removed: The Company’s operation near Montreal, Quebec, Canada, maintains a post-retirement benefit plan, which provides retiree life insurance, health care benefits, and, for a closed group of employees, dental care.
−Removed: Retiring employees with a minimum of 10 years of service are eligible for the plan benefits.
−Removed: The plan is not funded.
−Removed: Cost of benefits earned by employees is charged to expense as services are rendered.
+Added: On August 1, 2022, the Company divested its Track Components business, located in St-Jean-sur-Richelieu, Quebec, Canada, which included the post retirement benefit plan, which provided retiree life insurance, health care benefits, and, for a closed group of employees, dental care.
The expense related to this plan was not material for 2022 or 2021.
−Removed: The accrued benefit obligation was $ 856 and $ 932 as of December 31, 2021 and 2020, respectively.
−Removed: This obligation is recognized within “Other long-term liabilities” on the Consolidated Balance Sheets.
−Removed: Benefit payments anticipated for 2022 are not material.
+Added: The accrued benefit obligation was $ 856 as of December 31, 2021 and is recognized within “Other long-term liabilities” on the Consolidated Balance Sheets.
The weighted average assumptions in the following table represent the rates used to develop the actuarial present value of the projected benefit obligation for the year listed and also the net periodic benefit cost for the following year.
−Removed: Year Ended December 31,
Discount rate 3.1 %
Weighted average health care trend rate 4.7 %
−Removed: The weighted average health care rate is assumed to trend downward to an ultimate rate of 4.0 % in 2040.
Defined Contribution Plans
−Removed: The Company sponsors six defined contribution plans for hourly and salaried employees across its domestic and international facilities.
+Added: The Company sponsors five defined contribution plans for hourly and salaried employees across its domestic and international facilities.
The following table summarizes the expense associated with the contributions made to these plans.
6 unchanged sentences
The Company is subject to product warranty claims that arise in the ordinary course of its business.
−Removed: For certain manufactured products, the Company maintains a product warranty accrual that is adjusted on a monthly basis as a percentage of cost of sales.
−Removed: This product warranty accrual is periodically adjusted based on the identification or resolution of known individual product warranty claims.
+Added: For certain manufactured products, the Company maintains a product warranty accrual, which is adjusted on a monthly basis as a percentage of cost of sales.
+Added: In addition, the product warranty accrual is adjusted periodically based on the identification or resolution of known individual product warranty claims.
The following table sets forth the Company’s product warranty accrual:
4 unchanged sentences
Balance as of December 31, 2022 $ 870
−Removed: On March 13, 2019, the Company and its subsidiary, CXT Incorporated entered into a Settlement Agreement (the “Settlement Agreement”) with Union Pacific Railroad (“UPRR”) to resolve litigation in the matter of Union Pacific Railroad Company v.
+Added: On March 13, 2019, the Company and its subsidiary, CXT Incorporated ("CXT"), entered into a Settlement Agreement (the “Settlement Agreement”) with Union Pacific Railroad Company ("UPRR") to resolve the pending litigation in the matter of Union Pacific Railroad Company v.
Foster Company and CXT Incorporated , Case No.
CI 15-564, in the District Court for Douglas County, Nebraska.
−Removed: Under the Settlement Agreement, the Company and CXT will pay UPRR the aggregate amount of $ 50,000 without pre-judgment interest, beginning with a $ 2,000 immediate payment, and with the remaining $ 48,000 paid in installments over a six-year period commencing on March 13, 2019 through December 2024 pursuant to a Promissory Note.
−Removed: Additionally, commencing in January 2019 and through December 2024, UPRR agreed to purchase from the Company and its subsidiaries and affiliates, a cumulative total
−Removed: amount of $ 48,000 of products and services, targeting $ 8,000 of annual purchases per year beginning with 2019 per letters of intent under the Settlement Agreement.
+Added: Under the Settlement Agreement, the Company and CXT will pay UPRR the aggregate amount of $ 50,000 without pre-judgment interest, which began with a $ 2,000 immediate payment, and with the remaining $ 48,000 paid in installments over a six-year period commencing on the effective date of the Settlement Agreement through December 2024 pursuant to a Promissory Note.
+Added: Additionally, commencing in January 2019 and through December 2024, UPRR agreed to purchase and has been purchasing from the Company and its subsidiaries and affiliates, a cumulative total amount of $ 48,000 of products and services, targeting $ 8,000 of annual purchases per year beginning March 13, 2019 per letters of intent under the Settlement Agreement.
+Added: During the third quarter of 2021, in connection with the Company’s divestiture of its Piling Products division, the targeted annual purchases per year have been reduced to
+Added: $ 6,000 for 2021 through 2024.
The Settlement Agreement also includes a mutual release of all claims and liability regarding or relating to all CXT pre-stressed concrete railroad ties with no admission of liability and dismissal of the litigation with prejudice.
−Removed: During the third quarter of 2021, in connection with the Company’s divestiture of its Piling Products division, the targeted annual purchases per year have been reduced to $ 6,000 for 2021 through 2024.
The expected payments under the UPRR Settlement Agreement for the year ending December 31, 2023 and thereafter were as follows:
13 unchanged sentences
The Company’s efforts to comply with environmental regulations may have an adverse effect on its future earnings.
−Removed: On June 5, 2017, a General Notice Letter was received from the U.S.
−Removed: Environmental Protection Agency (“EPA”) indicating that the Company may be a potentially responsible party (“PRP”) regarding the Portland Harbor Superfund Site cleanup along with numerous other companies.
+Added: On June 5, 2017, a General Notice Letter was received from the United States Environmental Protection Agency (“EPA”) indicating that the Company may be a potentially responsible party (“PRP”) regarding the Portland Harbor Superfund Site cleanup along with numerous other companies.
More than 140 other companies received such a notice.
The Company and a predecessor owned and operated a facility near the harbor site for a period prior to 1982.
−Removed: The net present value and undiscounted costs of the selected remedy throughout the harbor site are estimated by the EPA to be approximately $ 1.1 billion and $ 1.7 billion, respectively, and the active remedial work is expected to take as long as 13 years to complete.
+Added: The net present value and undiscounted costs of the selected remedy throughout the harbor site are estimated by the EPA to be approximately $ 1.1 billion and $ 1.7 billion, respectively, and the remedial work is expected to take as long as 13 years to complete.
+Added: These costs may increase given that the remedy will not be initiated or completed for several years.
The Company is reviewing the basis for its identification by the EPA and the nature of the historic operations of a Company predecessor near the site.
−Removed: Additionally, the Company executed a PRP agreement to participate in a private allocation process among almost 100 PRPs in a working group whose work began in 2008 and whose work is ongoing.
−Removed: The Company cannot predict the ultimate impact of these proceedings because of the large number of PRPs involved throughout the harbor site, the degree of contamination of various wastes, varying environmental impacts throughout the harbor site, the scarcity of data related to the facility once operated by the Company and a predecessor, and the speculative nature of the remediation costs.
+Added: Additionally, the Company executed a PRP agreement which provides for a private allocation process among almost 100 PRPs in a working group whose work is ongoing and involves a process that will ultimately conclude a proposed allocation of liability for cleanup of the site and various sub-areas.
+Added: The Company does not have any individual risk sharing agreements in place with respect to the site, and was only associated with the site from 1976 to when it purchased the stock of a company whose assets it sold in 1982 and which was dissolved in 1994.
+Added: On March 26, 2020, the EPA issued a Unilateral Administrative Order to two parties requiring them to perform remedial design work for that portion of the Harbor Superfund Site that includes the area closest to the facility;
+Added: the Company was not a recipient of this Unilateral Administrative Order.
+Added: The Company cannot predict the ultimate impact of these proceedings because of the large number of PRPs involved throughout the harbor site, the size and extent of the site, the degree of contamination of various wastes, varying environmental impacts throughout the harbor site, the scarcity of data related to the facility once operated by the Company and a predecessor, potential comparative liability between the allocation parties and regarding non-participants, and the speculative nature of the remediation costs.
Based upon information currently available, management does not believe that the Company’s alleged PRP status regarding the Portland Harbor Superfund Site or other compliance with the present environmental protection laws will have a material adverse effect on the financial condition , results of operations, cash flows, competitive position, or capital expenditures of the Company.
+Added: As more information develops and the allocation process is completed, and given the resolution factors like those described above, an unfavorable resolution could have a material adverse effect.
+Added: As of December 31, 2022 and December 31, 2021, the Company maintained environmental reserves approximating $ 2,472 and $ 2,519 , respectively.
The following table sets forth the Company’s undiscounted environmental obligation:
4 unchanged sentences
Balance as of December 31, 2022 $ 2,472
−Removed: As a result of the September 4, 2020 sale of the Test and Inspection Services business, environmental obligations of $ 3,460 were removed from the Company’s liability as of December 31, 2020.
−Removed: Other (Income) Expense
−Removed: The following table summarizes the Company’s other (income) expense for the years ended December 31, 2021 and 2020.
+Added: The following table summarizes the Company’s other income for the years ended December 31, 2022 and 2021.
Gain on Piling Products division asset sale (a) $ ( 489 ) $ ( 2,741 )
−Removed: Disbursement from an unconsolidated partnership (b) — ( 1,874 )
−Removed: Loss on Precast Concrete Products segment relocation and closure activities (c) — 673
−Removed: Foreign currency losses (gains) 452 ( 32 )
+Added: Insurance proceeds (b) ( 790 ) —
+Added: Loss on the sale of Track Components (c) 467 —
+Added: Costs recovered from environmental cleanup activities (d) ( 325 ) —
+Added: Foreign currency losses 434 452
Other ( 847 ) ( 786 )
1 unchanged sentence
On September 27, 2021, the Company announced it completed the sale of its Piling Products division to J.D.
−Removed: Fields & Company, Inc., resulting in a pretax gain of $ 2,741 in 2021.
−Removed: In the second quarter of 2020, the Company received a non-recurring disbursement of $ 1,874 from an unconsolidated partnership.
−Removed: During the fourth quarter of 2019, the Company announced and commenced the relocation and closure of the Spokane, WA concrete products facility and the subsequent relocation to Boise, ID, which was completed during the first quarter of 2020.
−Removed: This activity resulted in expense of $ 673 in 2020, within the Precast Concrete Products segment.
+Added: Fields & Company, Inc., resulting in a pre-tax gain of $ 489 and $ 2,741 in 2022 and 2021, respectively.
+Added: In 2022, the Company received $ 790 in insurance proceeds.
+Added: On August 1, 2022, the Company divested the assets of its rail spikes and anchors track components business located in St-Jean-sur-Richelieu, Quebec, Canada, resulting in a pre-tax loss of $ 467 in 2022.
+Added: In 2022, the Company received $ 325 to recover costs associated with environmental cleanup activities in a formerly leased property in Magnolia, TX.
+Added: Subsequent Events
+Added: During the first quarter of 2023, the Company’s Board of Directors authorized the repurchase of up to $ 15,000 of the Company’s common stock in open market transactions through February 2026.
+Added: Repurchases are limited to up to $ 5,000 in any trailing 12-month period, with unused amounts carrying forward to future periods through the end of the authorization.
+Added: Any repurchases will be subject to the Company’s liquidity, including availability of borrowings and covenant compliance under its revolving credit facility, and other capital needs of the business.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.