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Item 9A. Controls and Procedures

2025-03-07 compared with 2024-03-06 · 73 added, 49 removed, 187 unchanged (39% of the section changed)

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Foster Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a–15(e) under the Securities Exchange Act of 1934, as amended (“the Exchange Act”) as of the end of the period covered by this report.

Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the end of the period covered by this report.

Managements’ Report on Internal Control Over Financial Reporting

Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, due to a material weakness in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of December 31, 2024.

Management's Report on Internal Control Over Financial Reporting

The management of L.B.

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Accordingly, even effective controls can provide only reasonable assurance with respect to financial statement preparation and presentation.

There were no significant changes in internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Foster Company’s management assessed the effectiveness of the Company’s internal control over financial reporting, including the 2022 acquisitions of VanHooseCo and Skratch, as of December 31, 2023.

In making this assessment, management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control -

Integrated Framework (2013 Framework).

Based on this assessment, management concluded that the Company maintained effective internal control over financial reporting as of December 31, 2023.

Ernst & Young LLP, the independent registered public accounting firm that also audited the Company’s consolidated financial statements, has issued an attestation report on the Company’s internal control over financial reporting.

Ernst & Young’s attestation report on the Company’s internal control over financial reporting appears in Part II, Item 8 of this Annual Report on Form 10-K and is incorporated herein by reference.

Our management, including the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024.

In making this assessment, management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013 Framework).

Based on that evaluation, including the existence of the material weakness, discussed herein, the Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was not effective as of December 31, 2024.

Material Weakness in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim Consolidated Financial Statements will not be prevented or detected on a timely basis.

We have identified the following material weakness in internal control over financial reporting as of December 31, 2024.

As discussed in our Amended 10-K and our Quarterly Reports on Form 10-Q/A for the quarters ended March 31, 2024 and June 30, 2024, the Company concluded it did not design effective controls related to the accounting for, and disclosure of, non-recurring complex transactions.

This material weakness resulted in an immaterial error in the Company's previously issued Consolidated Statement of Operations included in the Original Form 10-K for the year ended December 31, 2023, and a material error in the Company’s previously issued Unaudited Condensed Consolidated Financial Statements, which errors were subsequently corrected in the above mentioned amendments for the fiscal period ending December 31, 2023 and the quarterly periods ending March 31, 2024 and June 30, 2024.

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Management's Remediation Efforts

In response to the material weakness described above, with the oversight of the Audit Committee of our Board of Directors, the Company will conduct more thorough and diligent accounting research and, when necessary, engage third-parties to assist with the accounting for, and disclosure of, non-recurring complex transactions.

The remediation efforts are intended both to address the identified material weakness and to enhance our overall internal control environment.

The Company is committed to continuous improvement of its internal control over financial reporting and will continue to diligently review and enhance its internal controls, as necessary.

The Company cannot be assured that the measures we have taken to date, or that we may take in the future, will be sufficient to remediate the material weakness we identified or avoid future material weaknesses.

Accordingly, there could continue to be a reasonable possibility that a material misstatement of our consolidated financial statements would not be prevented or detected on a timely basis.

Changes in Internal Control Over Financial Reporting

Other than the material weakness described above, there were no changes to our “internal control over financial reporting” (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year ended December 31, 2024, and that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Report of Independent Registered Public Accounting Firm

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Foster Company and subsidiaries’ internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, L.B.

Foster Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, 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, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated March 6, 2024 expressed an unqualified opinion thereon.

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, L.B.

Foster Company and subsidiaries’ (the Company) has not maintained effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management has identified a material weakness related to the design of controls related to the accounting for, and disclosure of, non-recurring complex transactions.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, 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, 2024, and the related notes and financial statement schedule listed in the Index at Item 15 (a)(2).

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated March 7, 2025, which expressed an unqualified opinion thereon.

Basis for Opinion

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March 7, 2025

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OTHER INFORMATION

Trading Arrangements

None of the Company's directors or “officers,” as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), adopted , modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K, during the Company's fiscal quarter ended December 31, 2024.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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The information required by this Item regarding the directors of the Company is incorporated herein by reference to the information included in the Company’s definitive Proxy Statement for the 2025 Annual Meeting of Stockholders (the “Proxy Statement”) under the caption “Election of Directors.”

The information required by this Item regarding the executive officers of the Company is set forth in Part I of this Annual Report on Form 10-K under the caption “Executive Officers of the Registrant” and is incorporated herein by reference.

The information required by this Item regarding the executive officers of the Company is set forth in Part I of this Annual Report on Form 10-K under the caption “Information about our Executive Officers” and is incorporated herein by reference.

The information required by this Item regarding compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to the information included in the Proxy Statement under the caption “Section 16(a) Beneficial Reporting Compliance,” if applicable.

The information required by this Item regarding our Code of Ethics is set forth in Part I of this Annual Report on Form 10-K under the caption “Code of Ethics” and is incorporated herein by reference.

The information required by this Item regarding our audit committee and the audit committee financial expert(s) is incorporated herein by reference to the information included in the Proxy Statement under the caption “Corporate Governance - Board Committees - Audit Committee.”

The information required by this Item regarding our insider trading policy is incorporated herein by reference to the information included in the Proxy Statement under the captions “Insider Trading Policy” and “Anti-Hedging and Anti-Pledging Policy.”

The information required by this Item regarding our nomination and governance committee, audit committee and the audit committee financial expert(s) is incorporated herein by reference to the information included in the Proxy Statement under the caption “Corporate Governance - Board Committees.”

EXECUTIVE COMPENSATION

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Equity Compensation Plans

Under the 2006 Omnibus Incentive Plan, as amended and restated in May 2018 (“Omnibus Plan”), and continuing under the 2022 Equity and Incentive Compensation Plan (“Equity and Incentive Plan”) approved by shareholders on June 2, 2022, since May 2018, at each annual meeting of shareholders, where non-employee directors were elected or reelected, as part of their compensation, the non-employee members of the Board of Directors (“Board”) have received annual awards of forfeitable restricted shares subject to a one-year vesting requirement from the date of the grant.

Under the 2006 Omnibus Incentive Plan, as amended and restated in May 2018 (“Omnibus Plan”), and continuing under the 2022 Equity and Incentive Compensation Plan (“Equity and Incentive Compensation Plan”) approved by shareholders on June 2, 2022, as Amended and Restated on May 23, 2024, since May 2018, at each annual meeting of shareholders, where non-employee directors were elected or reelected, as part of their compensation, the non-employee members of the Board of Directors (“Board”) have received annual awards of forfeitable restricted shares subject to a one-year vesting requirement from the date of the grant.

Prior to that date, such directors received fully-vested shares.

1 unchanged sentence

Commencing in 2020 and ending in December 2021, in addition to the annual restricted stock award, those non-employee directors serving on the Board Strategy Committee were awarded restricted shares on an annual basis subject to a one-year vesting requirement from the date of grant until that committee was disbanded in 2021.

During 2023, there were no non-employee directors who elected the option to receive fully-vested shares of the Company’s common stock in lieu of director cash compensation.

Through December 31, 2023, there were approximately 352,000 fully vested shares issued under the Omnibus Plan to all non-employee directors who were serving at the time of grant or on the date of vesting of the underlying award.

During 2024, a non-employee director has elected to receive fully vested stock in lieu of cash compensation.

Through December 31, 2024, there were approximately 355,000 and 85,000 fully vested shares issued under the Omnibus Plan and Equity and Incentive Plan, respectively, to all non-employee directors who were serving at the time of grant or on the date of vesting of the underlying award.

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, as amended and restated effective December 1, 2022 pursuant to the 2022 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.

As of December 31, 2023, approximately 12,000 deferred share units were allotted to the accounts of non-employee directors pursuant to the Deferred Compensation Plan for Non-Employee Directors.

The Company grants eligible employees restricted stock and performance unit awards under the Omnibus Plan and Equity and Incentive Plans.

The forfeitable restricted stock awards generally time-vest ratably over a three-year period, unless indicated otherwise in the underlying restricted stock award agreement.

As of December 31, 2024, no deferred share units were allotted to the accounts of non-employee directors pursuant to the Deferred Compensation Plan for Non-Employee Directors.

The Company grants eligible employees restricted stock and performance unit awards under the Omnibus Plan and Equity and Incentive Compensation Plans.

The forfeitable restricted stock awards generally time-vest ratably over a three-year period, unless

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indicated otherwise in the underlying restricted stock award agreement.

Performance unit awards are offered annually under separate three-year long-term incentive programs.

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The values of the shares withheld were $1,429 and $315 in 2024 and 2023, respectively.

The information required by this Item with respect to the tabular disclosure under Item 201(d) of Regulation S-K is incorporated herein by reference to the information included in the Proxy Statement under the caption “Securities Authorized for Issuance Under Equity Compensation Plans.”

The information required by this Item regarding the beneficial ownership of the Company is incorporated herein by reference to the information included in the Proxy Statement under the caption “Stock Ownership.”

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The information required by this Item regarding principal accountant fees and services is incorporated herein by reference to information included in the Proxy Statement under the caption “Independent Registered Public Accounting Firm Fees.”

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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023.

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023 and 2022.

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024 and 2023.

Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023.

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(1) 2023 consists primarily of adjustments related to unrealized income on interest rate swap contracts.

2024 consists primarily of adjustments related to foreign currency translation.

FORM 10-K SUMMARY

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We have elected not to include such summary information.

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INDEX TO EXHIBITS

All exhibits are incorporated herein by reference:

Exhibit Number Description

2.1 Asset Purchase Agreement between L.B.

Foster Company and J.D.

Fields & Company, Inc.

dated September 24, 2021, is incorporated herein by reference to Exhibit 2.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, File no.

0-10436, filed on November 3, 2021.

2.2 Asset Purchase Agreement between VanHooseCo Precast, LLC and CXT Incorporated.

dated August 12, 2022, is incorporated herein by reference to Exhibit 2.1 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, File no.

0-10436, filed on November 8, 2022.

3.1 Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, File No.

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0-10436, filed on May 2, 2018.

10.9 ** Amended and Restated 2006 Omnibus Incentive Plan, effective as of May 24, 2018, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report o n Form 10-Q for the quarter ended June 30, 2018, File no.

10.9 ** Amended and Restated 2006 Omnibus Incentive Plan, effective as of May 24, 2018, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, File no.

0-10436, filed on July 31, 2018.

10.11 ** 2021 Executive Annual Incentive Compensation Plan, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report o n Form 10-Q for the quarter ended March 31, 2021, File no.