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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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25-1615902
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1001 Air Brake Avenue
Wilmerding, PA
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15148
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(Address of principal executive offices)
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(Zip code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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(Do not check if smaller reporting company)
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Emerging growth company
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¨
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Smaller reporting company
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¨
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Class
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Outstanding at July 28, 2017
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Common Stock, $.01 par value per share
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95,984,443 shares
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|
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Page
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PART I—FINANCIAL INFORMATION
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II—OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 4.
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Item 6.
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Item 1.
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FINANCIAL STATEMENTS
|
|
Unaudited
|
|
|
||||
In thousands, except shares and par value
|
June 30,
2017 |
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December 31,
2016 |
||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
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$
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328,522
|
|
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$
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398,484
|
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Accounts receivable
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812,727
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|
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667,596
|
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||
Unbilled accounts receivable
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316,264
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|
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274,912
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|
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Inventories
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746,236
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|
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658,510
|
|
||
Deposit in escrow
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—
|
|
|
744,748
|
|
||
Other current assets
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141,060
|
|
|
123,381
|
|
||
Total current assets
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2,344,809
|
|
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2,867,631
|
|
||
Property, plant and equipment
|
975,599
|
|
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912,230
|
|
||
Accumulated depreciation
|
(427,757
|
)
|
|
(393,854
|
)
|
||
Property, plant and equipment, net
|
547,842
|
|
|
518,376
|
|
||
Other Assets
|
|
|
|
||||
Goodwill
|
2,343,608
|
|
|
2,078,765
|
|
||
Other intangibles, net
|
1,129,365
|
|
|
1,053,860
|
|
||
Other noncurrent assets
|
73,116
|
|
|
62,386
|
|
||
Total other assets
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3,546,089
|
|
|
3,195,011
|
|
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Total Assets
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$
|
6,438,740
|
|
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$
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6,581,018
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable
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$
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548,150
|
|
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$
|
530,211
|
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Customer deposits
|
373,361
|
|
|
256,591
|
|
||
Accrued compensation
|
146,537
|
|
|
145,324
|
|
||
Accrued warranty
|
130,782
|
|
|
123,190
|
|
||
Current portion of long-term debt
|
50,693
|
|
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129,809
|
|
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Other accrued liabilities
|
232,576
|
|
|
261,514
|
|
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Total current liabilities
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1,482,099
|
|
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1,446,639
|
|
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Long-term debt
|
1,934,604
|
|
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1,762,967
|
|
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Accrued postretirement and pension benefits
|
112,930
|
|
|
110,597
|
|
||
Deferred income taxes
|
287,377
|
|
|
245,680
|
|
||
Accrued warranty
|
13,976
|
|
|
15,802
|
|
||
Other long-term liabilities
|
23,383
|
|
|
22,508
|
|
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Total liabilities
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3,854,369
|
|
|
3,604,193
|
|
||
Commitments and contingent liabilities (Note 14)
|
|
|
|
||||
Equity
|
|
|
|
||||
Preferred stock, 1,000,000 shares authorized, no shares issued
|
—
|
|
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—
|
|
||
Common stock, $0.01 par value; 200,000,000 shares authorized:
|
|
|
|
||||
132,349,534 shares issued and 95,984,443 and 95,425,432 outstanding
|
|
|
|
||||
at June 30, 2017 and December 31, 2016, respectively
|
1,323
|
|
|
1,323
|
|
||
Additional paid-in capital
|
898,459
|
|
|
869,951
|
|
||
Treasury stock, at cost, 36,365,091 and 36,924,102 shares,
|
|
|
|
||||
at June 30, 2017 and December 31, 2016, respectively
|
(828,370
|
)
|
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(838,950
|
)
|
||
Retained earnings
|
2,679,995
|
|
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2,553,258
|
|
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Accumulated other comprehensive loss
|
(184,550
|
)
|
|
(379,605
|
)
|
||
Total Westinghouse Air Brake Technologies Corporation shareholders' equity
|
2,566,857
|
|
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2,205,977
|
|
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Noncontrolling interest
|
17,514
|
|
|
770,848
|
|
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Total equity
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2,584,371
|
|
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2,976,825
|
|
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Total Liabilities and Equity
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$
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6,438,740
|
|
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$
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6,581,018
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|
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Unaudited
|
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Unaudited
|
|
||||||||||||
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Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
||||||||||||
In thousands, except per share data
|
2017
|
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2016
|
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2017
|
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2016
|
|
||||||||
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|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
932,253
|
|
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$
|
723,601
|
|
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$
|
1,848,287
|
|
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$
|
1,495,632
|
|
|
Cost of sales
|
(658,290
|
)
|
|
(486,212
|
)
|
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(1,304,617
|
)
|
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(1,003,063
|
)
|
|
||||
Gross profit
|
273,963
|
|
|
237,389
|
|
|
543,670
|
|
|
492,569
|
|
|
||||
Selling, general and administrative expenses
|
(127,574
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)
|
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(80,610
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)
|
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(249,915
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)
|
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(170,361
|
)
|
|
||||
Engineering expenses
|
(23,338
|
)
|
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(18,029
|
)
|
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(46,802
|
)
|
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(35,982
|
)
|
|
||||
Amortization expense
|
(9,350
|
)
|
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(5,466
|
)
|
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(18,394
|
)
|
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(10,761
|
)
|
|
||||
Total operating expenses
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(160,262
|
)
|
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(104,105
|
)
|
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(315,111
|
)
|
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(217,104
|
)
|
|
||||
Income from operations
|
113,701
|
|
|
133,284
|
|
|
228,559
|
|
|
275,465
|
|
|
||||
Other income and expenses
|
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(15,420
|
)
|
|
(4,969
|
)
|
|
(33,132
|
)
|
|
(9,840
|
)
|
|
||||
Other income (expense), net
|
(1,552
|
)
|
|
(1,229
|
)
|
|
767
|
|
|
(1,075
|
)
|
|
||||
Income from operations before income taxes
|
96,729
|
|
|
127,086
|
|
|
196,194
|
|
|
264,550
|
|
|
||||
Income tax expense
|
(24,569
|
)
|
|
(36,601
|
)
|
|
(52,030
|
)
|
|
(79,902
|
)
|
|
||||
Net income
|
72,160
|
|
|
90,485
|
|
|
144,164
|
|
|
184,648
|
|
|
||||
Less: Net (gain) loss attributable to noncontrolling interest
|
(135
|
)
|
|
—
|
|
|
1,750
|
|
|
—
|
|
|
||||
Net income attributable to Wabtec shareholders
|
$
|
72,025
|
|
|
$
|
90,485
|
|
|
$
|
145,914
|
|
|
$
|
184,648
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings Per Common Share
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Wabtec shareholders
|
$
|
0.75
|
|
|
$
|
1.00
|
|
|
$
|
1.52
|
|
|
$
|
2.03
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Wabtec shareholders
|
$
|
0.75
|
|
|
$
|
1.00
|
|
|
$
|
1.52
|
|
|
$
|
2.02
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
95,641
|
|
|
89,846
|
|
|
95,370
|
|
|
90,832
|
|
|
||||
Diluted
|
96,284
|
|
|
90,559
|
|
|
96,071
|
|
|
91,628
|
|
|
|
Unaudited
|
|
Unaudited
|
|
||||||||||||
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
||||||||||||
In thousands
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Wabtec shareholders
|
$
|
72,025
|
|
|
$
|
90,485
|
|
|
$
|
145,914
|
|
|
$
|
184,648
|
|
|
Foreign currency translation gain (loss)
|
145,684
|
|
|
(42,330
|
)
|
|
195,079
|
|
|
(10,119
|
)
|
|
||||
Unrealized gain (loss) on derivative contracts
|
1,686
|
|
|
(716
|
)
|
|
3,379
|
|
|
(2,909
|
)
|
|
||||
Unrealized gain (loss) on pension benefit plans and post-retirement benefit plans
|
30
|
|
|
2,149
|
|
|
(3,044
|
)
|
|
(1,634
|
)
|
|
||||
Other comprehensive income (loss) before tax
|
147,400
|
|
|
(40,897
|
)
|
|
195,414
|
|
|
(14,662
|
)
|
|
||||
Income tax (expense) benefit related to components of
|
|
|
|
|
|
|
|
|
||||||||
other comprehensive income
|
(300
|
)
|
|
(352
|
)
|
|
(361
|
)
|
|
1,035
|
|
|
||||
Other comprehensive income (loss), net of tax
|
147,100
|
|
|
(41,249
|
)
|
|
195,053
|
|
|
(13,627
|
)
|
|
||||
Comprehensive income attributable to Wabtec shareholders
|
$
|
219,125
|
|
|
$
|
49,236
|
|
|
$
|
340,967
|
|
|
$
|
171,021
|
|
|
|
Unaudited
|
||||||
|
Six Months Ended
June 30, |
||||||
In thousands, except per share data
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
144,164
|
|
|
$
|
184,648
|
|
Adjustments to reconcile net income to cash (used for) provided by operations:
|
|
|
|
||||
Depreciation and amortization
|
51,051
|
|
|
33,093
|
|
||
Stock-based compensation expense
|
11,879
|
|
|
9,673
|
|
||
Loss on disposal of property, plant and equipment
|
525
|
|
|
378
|
|
||
Changes in operating assets and liabilities, net of acquisitions
|
|
|
|
||||
Accounts receivable and unbilled accounts receivable
|
(66,544
|
)
|
|
(2,171
|
)
|
||
Inventories
|
(48,406
|
)
|
|
(10,893
|
)
|
||
Accounts payable
|
(75,761
|
)
|
|
(13,757
|
)
|
||
Accrued income taxes
|
(23,025
|
)
|
|
2,913
|
|
||
Accrued liabilities and customer deposits
|
86,937
|
|
|
3,505
|
|
||
Other assets and liabilities
|
(94,523
|
)
|
|
6,587
|
|
||
Net cash (used for) provided by operating activities
|
(13,703
|
)
|
|
213,976
|
|
||
Investing Activities
|
|
|
|
||||
Purchase of property, plant and equipment
|
(38,425
|
)
|
|
(19,104
|
)
|
||
Proceeds from disposal of property, plant and equipment
|
471
|
|
|
165
|
|
||
Acquisitions of businesses, net of cash acquired
|
(114,175
|
)
|
|
(21,263
|
)
|
||
Release of deposit in escrow
|
23,548
|
|
|
—
|
|
||
Net cash used for investing activities
|
(128,581
|
)
|
|
(40,202
|
)
|
||
Financing Activities
|
|
|
|
||||
Proceeds from debt
|
745,035
|
|
|
230,000
|
|
||
Payments of debt
|
(680,145
|
)
|
|
(175,499
|
)
|
||
Purchase of treasury stock
|
—
|
|
|
(133,738
|
)
|
||
Proceeds from exercise of stock options and other benefit plans
|
2,679
|
|
|
651
|
|
||
Payment of income tax withholding on share-based compensation
|
(6,802
|
)
|
|
(9,006
|
)
|
||
Cash dividends ($0.20 and $0.16 per share for the six months
|
|
|
|
||||
ended June 30, 2017 and 2016, respectively)
|
(19,177
|
)
|
|
(14,565
|
)
|
||
Net cash provided by (used for) financing activities
|
41,590
|
|
|
(102,157
|
)
|
||
Effect of changes in currency exchange rates
|
30,732
|
|
|
5,127
|
|
||
(Decrease) Increase in cash
|
(69,962
|
)
|
|
76,744
|
|
||
Cash, beginning of period
|
398,484
|
|
|
226,191
|
|
||
Cash, end of period
|
$
|
328,522
|
|
|
$
|
302,935
|
|
In thousands
|
Foreign
currency
translation
|
|
Derivative
contracts
|
|
Pension and
post
retirement
benefit plans
|
|
Total
|
||||||||
Balance at December 31, 2016
|
$
|
(321,033
|
)
|
|
$
|
(2,957
|
)
|
|
$
|
(55,615
|
)
|
|
$
|
(379,605
|
)
|
Other comprehensive income (loss) before reclassifications
|
195,079
|
|
|
1,978
|
|
|
(4,029
|
)
|
|
193,028
|
|
||||
Amounts reclassified from accumulated other
|
|
|
|
|
|
|
|
||||||||
comprehensive income
|
—
|
|
|
843
|
|
|
1,184
|
|
|
2,027
|
|
||||
Net current period other comprehensive income (loss)
|
195,079
|
|
|
2,821
|
|
|
(2,845
|
)
|
|
195,055
|
|
||||
Balance at June 30, 2017
|
$
|
(125,954
|
)
|
|
$
|
(136
|
)
|
|
$
|
(58,460
|
)
|
|
$
|
(184,550
|
)
|
In thousands
|
Amount reclassified from
accumulated other
comprehensive income
|
|
Affected line item in the
Condensed Consolidated
Statements of Income
|
||
Amortization of defined pension and post retirement items
|
|
|
|
||
Amortization of initial net obligation and prior service cost
|
$
|
(422
|
)
|
|
Cost of sales
|
Amortization of net loss
|
1,240
|
|
|
Cost of sales
|
|
|
818
|
|
|
Income from Operations
|
|
|
(226
|
)
|
|
Income tax expense
|
|
|
$
|
592
|
|
|
Net income
|
|
|
|
|
||
Derivative contracts
|
|
|
|
||
Realized loss on derivative contracts
|
$
|
566
|
|
|
Interest expense, net
|
|
(149
|
)
|
|
Income tax expense
|
|
|
$
|
417
|
|
|
Net income
|
In thousands
|
Amount reclassified from
accumulated other
comprehensive income
|
|
Affected line item in the
Condensed Consolidated
Statements of Income
|
||
Amortization of defined pension and post retirement items
|
|
|
|
||
Amortization of initial net obligation and prior service cost
|
$
|
(844
|
)
|
|
Cost of sales
|
Amortization of net loss
|
2,480
|
|
|
Cost of sales
|
|
|
1,636
|
|
|
Income from Operations
|
|
|
(452
|
)
|
|
Income tax expense
|
|
|
$
|
1,184
|
|
|
Net income
|
|
|
|
|
||
Derivative contracts
|
|
|
|
||
Realized loss on derivative contracts
|
$
|
1,155
|
|
|
Interest expense, net
|
|
(312
|
)
|
|
Income tax expense
|
|
|
$
|
843
|
|
|
Net income
|
|
Foreign
currency translation |
|
Derivative
contracts |
|
Pension and
post retirement benefit plans |
|
Total
|
||||||||
Balance at December 31, 2015
|
$
|
(227,349
|
)
|
|
$
|
(2,987
|
)
|
|
$
|
(46,383
|
)
|
|
$
|
(276,719
|
)
|
Other comprehensive income (loss) before reclassifications
|
(10,119
|
)
|
|
(2,758
|
)
|
|
(2,293
|
)
|
|
(15,170
|
)
|
||||
Amounts reclassified from accumulated other
|
|
|
|
|
|
|
|
||||||||
comprehensive income
|
—
|
|
|
647
|
|
|
896
|
|
|
1,543
|
|
||||
Net current period other comprehensive (loss)
|
(10,119
|
)
|
|
(2,111
|
)
|
|
(1,397
|
)
|
|
(13,627
|
)
|
||||
Balance at June 30, 2016
|
$
|
(237,468
|
)
|
|
$
|
(5,098
|
)
|
|
$
|
(47,780
|
)
|
|
$
|
(290,346
|
)
|
In thousands
|
Amount reclassified from
accumulated other comprehensive income |
|
Affected line item in the
Condensed Consolidated Statements of Operations |
||
Amortization of defined pension and post retirement items
|
|
|
|
||
Amortization of initial net obligation and prior service cost
|
$
|
(422
|
)
|
|
Cost of sales
|
Amortization of net loss
|
971
|
|
|
Cost of sales
|
|
|
549
|
|
|
Income from Operations
|
|
|
(157
|
)
|
|
Income tax expense
|
|
|
$
|
392
|
|
|
Net income
|
|
|
|
|
||
Derivative contracts
|
|
|
|
||
Realized loss on derivative contracts
|
$
|
453
|
|
|
Interest expense, net
|
|
(130
|
)
|
|
Income tax expense
|
|
|
$
|
323
|
|
|
Net income
|
In thousands
|
Amount reclassified from
accumulated other comprehensive income |
|
Affected line item in the
Condensed Consolidated Statements of Operations |
||
Amortization of defined pension and post retirement items
|
|
|
|
||
Amortization of initial net obligation and prior service cost
|
$
|
(807
|
)
|
|
Cost of sales
|
Amortization of net loss
|
2,091
|
|
|
Cost of sales
|
|
|
1,284
|
|
|
Income from Operations
|
|
|
(388
|
)
|
|
Income tax expense
|
|
|
$
|
896
|
|
|
Net income
|
|
|
|
|
||
Derivative contracts
|
|
|
|
||
Realized loss on derivative contracts
|
$
|
927
|
|
|
Interest expense, net
|
|
(280
|
)
|
|
Income tax expense
|
|
|
$
|
647
|
|
|
Net income
|
•
|
On November 30, 2016, the Company acquired majority ownership of Faiveley Transport, after completing the purchase of the Faiveley family’s ownership interest under the terms of the Share Purchase Agreement, which directed the Company to pay
€100
per share of Faiveley Transport, payable between
25%
and
45%
in cash at the election of those shareholders and the remainder payable in Wabtec stock. The Faiveley family’s ownership
|
•
|
On February 3, 2017, the initial cash tender offer was closed, which resulted in the Company acquiring approximately
27%
of additional outstanding share capital and voting rights of Faiveley Transport for approximately
$411.8 million
in cash and
$25.2 million
in Wabtec stock. After the initial cash tender offer, the Company owned approximately
78%
of outstanding share capital and
76%
of voting rights.
|
•
|
On March 6, 2017, the final cash tender offer was closed, which resulted in the Company acquiring approximately
21%
of additional outstanding share capital and
22%
of additional outstanding voting rights of Faiveley Transport for approximately
$303.2 million
in cash and
$0.3 million
in Wabtec stock. After the final cash tender offer, the Company owned approximately
99%
of the share capital and
98%
of the voting rights of Faiveley Transport.
|
•
|
On March 21, 2017, a mandatory squeeze-out procedure was finalized, which resulted in the Company acquiring the Faiveley Transport shares not tendered in the offers for approximately
$17.5 million
in cash. This resulted in the Company owning
100%
of the share capital and voting rights of Faiveley Transport.
|
In thousands
|
|
|
||
Assets acquired
|
|
|
||
Cash and cash equivalents
|
|
$
|
178,318
|
|
Accounts receivable
|
|
445,164
|
|
|
Inventories
|
|
206,093
|
|
|
Other current assets
|
|
70,930
|
|
|
Property, plant, and equipment
|
|
156,885
|
|
|
Goodwill
|
|
1,256,855
|
|
|
Trade names
|
|
333,823
|
|
|
Customer relationships
|
|
255,354
|
|
|
Patents
|
|
1,201
|
|
|
Other noncurrent assets
|
|
165,167
|
|
|
Total assets acquired
|
|
3,069,790
|
|
|
Liabilities assumed
|
|
|
||
Current liabilities
|
|
805,728
|
|
|
Debt
|
|
409,899
|
|
|
Other noncurrent liabilities
|
|
347,348
|
|
|
Total liabilities assumed
|
|
1,562,975
|
|
|
Net assets acquired
|
|
$
|
1,506,815
|
|
•
|
On
April 5, 2017
, the Company acquired Thermal Transfer Corporation ("TTC"), a leading provider of heat transfer solutions for industrial applications, for a purchase price of approximately
$32.5 million
, net of cash acquired, resulting in preliminary goodwill of
$21.1 million
, all of which will be deductible for tax purposes.
|
•
|
On
March 14, 2017
, the Company acquired Aero Transportation Products ("ATP"), a manufacturer of engineered covering systems for hopper freight cars, for a purchase price of approximately
$65.3 million
, net of cash acquired, resulting in preliminary goodwill of
$41.0 million
, none of which will be deductible for tax purposes.
|
•
|
On
December 14, 2016
, the Company acquired Workhorse Rail LLC ("Workhorse"), a supplier of engineered freight car components mainly for the aftermarket, for a purchase price of approximately
$43.8 million
, net of cash acquired, resulting in preliminary goodwill of
$24.4 million
,
37.8%
of which will be deductible for tax purposes.
|
•
|
On
November 17, 2016
, the Company acquired the assets of Precision Turbo & Engine ("Precision Turbo"), a designer and manufacturer of high-performance, aftermarket turbochargers, wastegates, and heat exchangers for the automotive performance market, for a purchase price of approximately
$13.8 million
, net of cash acquired, resulting in preliminary goodwill of
$4.0 million
, all of which will be deductible for tax purposes.
|
•
|
On
May 5, 2016
, the Company acquired Unitrac Railroad Materials ("Unitrac"), a leading designer and manufacturer of railroad products and track work services, for a purchase price of approximately
$14.8 million
, net of cash acquired, resulting in goodwill of
$2.4 million
, all of which will be deductible for tax purposes.
|
•
|
On
August 1, 2016
, the Company acquired Gerken Group SA ("Gerken"), a manufacturer of specialty carbon and graphite products for rail and other industrial applications, for a purchase price of approximately
$62.8 million
, net of cash acquired, resulting in preliminary goodwill of
$17.5 million
, none of which will be deductible for tax purposes.
|
|
TTC
|
|
ATP
|
|
Workhorse
|
|
Precision Turbo
|
|
Gerken
|
|
Unitrac
|
||||||||||||
In thousands
|
April 5,
2017 |
|
March 14,
2017 |
|
December 14,
2016 |
|
November 17,
2016 |
|
August 1,
2016 |
|
May 5,
2016 |
||||||||||||
Current assets
|
$
|
3,746
|
|
|
$
|
11,679
|
|
|
$
|
9,137
|
|
|
$
|
4,146
|
|
|
$
|
32,706
|
|
|
$
|
11,476
|
|
Property, plant & equipment
|
5,909
|
|
|
5,354
|
|
|
0
|
|
|
1,346
|
|
|
7,667
|
|
|
1,768
|
|
||||||
Goodwill
|
21,122
|
|
|
41,036
|
|
|
24,373
|
|
|
3,959
|
|
|
17,470
|
|
|
2,442
|
|
||||||
Other intangible assets
|
11,800
|
|
|
22,100
|
|
|
19,400
|
|
|
5,200
|
|
|
30,560
|
|
|
1,230
|
|
||||||
Other assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,706
|
|
|
—
|
|
||||||
Total assets acquired
|
42,577
|
|
|
80,169
|
|
|
52,910
|
|
|
14,651
|
|
|
90,109
|
|
|
16,916
|
|
||||||
Total liabilities assumed
|
(10,066
|
)
|
|
(14,915
|
)
|
|
(9,083
|
)
|
|
(825
|
)
|
|
(27,262
|
)
|
|
(2,145
|
)
|
||||||
Net assets acquired
|
$
|
32,511
|
|
|
$
|
65,254
|
|
|
$
|
43,827
|
|
|
$
|
13,826
|
|
|
$
|
62,847
|
|
|
$
|
14,771
|
|
In thousands
|
Three Months Ended
June 30, 2017 |
|
Three Months Ended
June 30, 2016 |
|
Six Months Ended June 30, 2017
|
|
Six Months Ended June 30, 2016
|
||||||||
Net sales
|
$
|
932,467
|
|
|
$
|
1,055,212
|
|
|
$
|
1,859,619
|
|
|
$
|
2,210,418
|
|
Gross profit
|
274,027
|
|
|
325,658
|
|
|
546,492
|
|
|
674,222
|
|
||||
Net income attributable to Wabtec shareholders
|
72,061
|
|
|
107,574
|
|
|
146,971
|
|
|
223,661
|
|
||||
Diluted earnings per share
|
|
|
|
|
|
|
|
||||||||
As Reported
|
$
|
0.75
|
|
|
$
|
1.00
|
|
|
$
|
1.52
|
|
|
$
|
2.02
|
|
Pro forma
|
$
|
0.75
|
|
|
$
|
1.10
|
|
|
$
|
1.53
|
|
|
$
|
2.43
|
|
In thousands
|
June 30,
2017 |
|
December 31,
2016 |
||||
Raw materials
|
$
|
378,569
|
|
|
$
|
331,465
|
|
Work-in-progress
|
185,286
|
|
|
145,462
|
|
||
Finished goods
|
182,381
|
|
|
181,583
|
|
||
Total inventories
|
$
|
746,236
|
|
|
$
|
658,510
|
|
In thousands
|
Freight
Segment
|
|
Transit
Segment
|
|
Total
|
||||||
Balance at December 31, 2016
|
$
|
550,902
|
|
|
$
|
1,527,863
|
|
|
$
|
2,078,765
|
|
Adjustment to preliminary purchase allocation
|
2,556
|
|
|
77,299
|
|
|
79,855
|
|
|||
Acquisitions
|
62,158
|
|
|
4,999
|
|
|
67,157
|
|
|||
Foreign currency impact
|
5,660
|
|
|
112,171
|
|
|
117,831
|
|
|||
Balance at June 30, 2017
|
$
|
621,276
|
|
|
$
|
1,722,332
|
|
|
$
|
2,343,608
|
|
In thousands
|
June 30,
2017 |
|
December 31,
2016 |
||||
Patents, non-compete and other intangibles, net of accumulated
|
|
|
|
||||
amortization of $43,600 and $42,538
|
$
|
13,504
|
|
|
$
|
15,360
|
|
Customer relationships, net of accumulated amortization
|
|
|
|
||||
of $106,272 and $87,334
|
562,603
|
|
|
528,068
|
|
||
Total
|
$
|
576,107
|
|
|
$
|
543,428
|
|
Remainder of 2017
|
$
|
19,775
|
|
2018
|
36,983
|
|
|
2019
|
35,696
|
|
|
2020
|
34,174
|
|
|
2021
|
32,203
|
|
In thousands
|
June 30,
2017 |
|
December 31,
2016 |
||||
3.45% Senior Notes, due 2026, net of unamortized debt
issuance costs of $2,420 and $2,526 |
$
|
747,580
|
|
|
$
|
747,474
|
|
4.375% Senior Notes, due 2023, net of unamortized
discount and debt issuance costs of $1,562 and $1,690 |
248,438
|
|
|
248,310
|
|
||
Revolving Credit Facility, net of unamortized
debt issuance costs of $3,150 and $3,850 |
966,235
|
|
|
796,150
|
|
||
Schuldschein Loan
|
11,415
|
|
|
98,671
|
|
||
Other Borrowings
|
9,875
|
|
|
1,153
|
|
||
Capital Leases
|
1,754
|
|
|
1,018
|
|
||
Total
|
1,985,297
|
|
|
1,892,776
|
|
||
Less - current portion
|
50,693
|
|
|
129,809
|
|
||
Long-term portion
|
$
|
1,934,604
|
|
|
$
|
1,762,967
|
|
|
U.S.
|
|
International
|
||||||||||||
|
Three Months Ended
June 30, |
|
Three Months Ended
June 30, |
||||||||||||
In thousands, except percentages
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net periodic benefit cost
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
86
|
|
|
$
|
84
|
|
|
$
|
614
|
|
|
$
|
473
|
|
Interest cost
|
356
|
|
|
369
|
|
|
1,677
|
|
|
1,486
|
|
||||
Expected return on plan assets
|
(433
|
)
|
|
(519
|
)
|
|
(2,910
|
)
|
|
(2,405
|
)
|
||||
Net amortization/deferrals
|
248
|
|
|
229
|
|
|
685
|
|
|
620
|
|
||||
Curtailment loss recognized
|
—
|
|
|
—
|
|
|
—
|
|
|
240
|
|
||||
Net periodic benefit cost
|
$
|
257
|
|
|
$
|
163
|
|
|
$
|
66
|
|
|
$
|
414
|
|
|
U.S.
|
|
International
|
||||||||||||
|
Six Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In thousands, except percentages
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net periodic benefit cost
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
172
|
|
|
$
|
168
|
|
|
$
|
1,228
|
|
|
$
|
728
|
|
Interest cost
|
712
|
|
|
738
|
|
|
3,354
|
|
|
2,936
|
|
||||
Expected return on plan assets
|
(866
|
)
|
|
(1,038
|
)
|
|
(5,820
|
)
|
|
(5,286
|
)
|
||||
Net amortization/deferrals
|
496
|
|
|
458
|
|
|
1,370
|
|
|
1,055
|
|
||||
Curtailment loss recognized
|
—
|
|
|
—
|
|
|
—
|
|
|
240
|
|
||||
Net periodic benefit (credit) cost
|
$
|
514
|
|
|
$
|
326
|
|
|
$
|
132
|
|
|
$
|
(327
|
)
|
Assumptions
|
|
|
|
|
|
|
|
||||
Discount Rate
|
3.95
|
%
|
|
4.21
|
%
|
|
2.51
|
%
|
|
3.56
|
%
|
Expected long-term rate of return
|
4.95
|
%
|
|
5.70
|
%
|
|
4.93
|
%
|
|
5.81
|
%
|
Rate of compensation increase
|
3.00
|
%
|
|
3.00
|
%
|
|
2.54
|
%
|
|
3.10
|
%
|
|
U.S.
|
|
International
|
||||||||||||
|
Three Months Ended June 30,
|
|
Three Months Ended June 30,
|
||||||||||||
In thousands, except percentages
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net periodic benefit cost
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
7
|
|
|
$
|
7
|
|
Interest cost
|
88
|
|
|
97
|
|
|
24
|
|
|
25
|
|
||||
Net amortization/deferrals
|
(73
|
)
|
|
(105
|
)
|
|
(7
|
)
|
|
(9
|
)
|
||||
Net periodic benefit (credit) cost
|
$
|
16
|
|
|
$
|
(7
|
)
|
|
$
|
24
|
|
|
$
|
23
|
|
|
U.S.
|
|
International
|
||||||||||||
|
Six Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In thousands, except percentages
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net periodic benefit cost
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
14
|
|
|
$
|
14
|
|
Interest cost
|
176
|
|
|
194
|
|
|
48
|
|
|
50
|
|
||||
Net amortization/deferrals
|
(146
|
)
|
|
(210
|
)
|
|
(14
|
)
|
|
(18
|
)
|
||||
Net periodic (credit) benefit cost
|
$
|
32
|
|
|
$
|
(14
|
)
|
|
$
|
48
|
|
|
$
|
46
|
|
Assumptions
|
|
|
|
|
|
|
|
||||
Discount Rate
|
3.76
|
%
|
|
3.95
|
%
|
|
3.46
|
%
|
|
3.90
|
%
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Life
|
|
Aggregate
Intrinsic value
(in thousands)
|
|||||
Outstanding at December 31, 2016
|
1,098,823
|
|
|
$
|
35.39
|
|
|
4.3
|
|
$
|
52,332
|
|
Granted
|
64,507
|
|
|
87.05
|
|
|
|
|
287
|
|
||
Exercised
|
(120,577
|
)
|
|
22.21
|
|
|
|
|
7,388
|
|
||
Canceled
|
(471
|
)
|
|
83.14
|
|
|
|
|
4
|
|
||
Outstanding at June 30, 2017
|
1,042,282
|
|
|
40.09
|
|
|
4.3
|
|
53,581
|
|
||
Exercisable at June 30, 2017
|
851,494
|
|
|
31.93
|
|
|
3.6
|
|
50,722
|
|
|
Six Months Ended
June 30, |
||||
|
2017
|
|
2016
|
||
Dividend yield
|
0.23
|
%
|
|
0.26
|
%
|
Risk-free interest rate
|
2.17
|
%
|
|
1.47
|
%
|
Stock price volatility
|
23.4
|
%
|
|
26.9
|
%
|
Expected life (years)
|
5.0
|
|
|
5.0
|
|
|
Restricted
Stock
and Units
|
|
Incentive
Stock
Units
|
|
Weighted
Average Grant
Date Fair
Value
|
||||
Outstanding at December 31, 2016
|
396,295
|
|
|
424,750
|
|
|
$
|
72.18
|
|
Granted
|
151,655
|
|
|
155,575
|
|
|
86.64
|
|
|
Vested
|
(130,098
|
)
|
|
(153,271
|
)
|
|
70.05
|
|
|
Adjustment for incentive stock awards expected to vest
|
—
|
|
|
(26,586
|
)
|
|
69.74
|
|
|
Canceled
|
(4,103
|
)
|
|
(2,458
|
)
|
|
77.20
|
|
|
Outstanding at June 30, 2017
|
413,749
|
|
|
398,010
|
|
|
|
|
Three Months Ended
June 30, |
||||||
In thousands, except per share data
|
2017
|
|
2016
|
||||
Numerator
|
|
|
|
||||
Numerator for basic and diluted earnings per common
share - net income attributable
|
|
|
|
||||
to Wabtec shareholders
|
$
|
72,025
|
|
|
$
|
90,485
|
|
Less: dividends declared - common shares
and non-vested restricted stock
|
(9,605
|
)
|
|
(7,209
|
)
|
||
Undistributed earnings
|
62,420
|
|
|
83,276
|
|
||
Percentage allocated to common shareholders (1)
|
99.7
|
%
|
|
99.7
|
%
|
||
|
62,233
|
|
|
83,026
|
|
||
Add: dividends declared - common shares
|
9,576
|
|
|
7,189
|
|
||
Numerator for basic and diluted earnings per
common share
|
$
|
71,809
|
|
|
$
|
90,215
|
|
Denominator
|
|
|
|
||||
Denominator for basic earnings per common
share - weighted average shares
|
95,641
|
|
|
89,846
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Assumed conversion of dilutive stock-based
compensation plans
|
643
|
|
|
713
|
|
||
Denominator for diluted earnings per common share -
|
|
|
|
||||
adjusted weighted average shares and assumed conversion
|
96,284
|
|
|
90,559
|
|
||
Net income attributable to Wabtec
shareholders per common share
|
|
|
|
||||
Basic
|
$
|
0.75
|
|
|
$
|
1.00
|
|
Diluted
|
$
|
0.75
|
|
|
$
|
1.00
|
|
(1) Basic weighted-average common shares outstanding
|
95,641
|
|
|
89,846
|
|
Basic weighted-average common shares outstanding and
non-vested restricted stock expected to vest
|
95,917
|
|
|
90,101
|
|
Percentage allocated to common shareholders
|
99.7
|
%
|
|
99.7
|
%
|
|
Six Months Ended
June 30, |
||||||
In thousands, except per share data
|
2017
|
|
2016
|
||||
Numerator
|
|
|
|
||||
Numerator for basic and diluted earnings per common
share - net income attributable
|
|
|
|
||||
to Wabtec shareholders
|
$
|
145,914
|
|
|
$
|
184,648
|
|
Less: dividends declared - common shares
and non-vested restricted stock
|
(19,177
|
)
|
|
(14,565
|
)
|
||
Undistributed earnings
|
126,737
|
|
|
170,083
|
|
||
Percentage allocated to common shareholders (1)
|
99.7
|
%
|
|
99.7
|
%
|
||
|
126,357
|
|
|
169,573
|
|
||
Add: dividends declared - common shares
|
19,120
|
|
|
14,520
|
|
||
Numerator for basic and diluted earnings per
common share
|
$
|
145,477
|
|
|
$
|
184,093
|
|
Denominator
|
|
|
|
||||
Denominator for basic earnings per common
share - weighted average shares
|
95,370
|
|
|
90,832
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Assumed conversion of dilutive stock-based
compensation plans
|
701
|
|
|
796
|
|
||
Denominator for diluted earnings per common share -
|
|
|
|
||||
adjusted weighted average shares and assumed conversion
|
96,071
|
|
|
91,628
|
|
||
Net income attributable to Wabtec
shareholders per common share
|
|
|
|
||||
Basic
|
$
|
1.52
|
|
|
$
|
2.03
|
|
Diluted
|
$
|
1.52
|
|
|
$
|
2.02
|
|
(1) Basic weighted-average common shares outstanding
|
95,370
|
|
|
90,832
|
|
Basic weighted-average common shares outstanding and
non-vested restricted stock expected to vest
|
95,666
|
|
|
91,111
|
|
Percentage allocated to common shareholders
|
99.7
|
%
|
|
99.7
|
%
|
In thousands
|
2017
|
|
2016
|
||||
Balance at beginning of year
|
$
|
138,992
|
|
|
$
|
92,064
|
|
Warranty expense
|
15,961
|
|
|
17,853
|
|
||
Acquisitions
|
397
|
|
|
7,547
|
|
||
Warranty claim payments
|
(16,479
|
)
|
|
(20,422
|
)
|
||
Foreign currency impact/other
|
5,887
|
|
|
(696
|
)
|
||
Balance at June 30
|
$
|
144,758
|
|
|
$
|
96,346
|
|
In millions
|
|
Designated
|
|
Non-Designated
|
|
Total
|
||||||
Gross notional amount
|
|
$
|
886.9
|
|
|
$
|
292.4
|
|
|
$
|
1,179.3
|
|
|
|
|
|
|
|
|
||||||
Fair Value:
|
|
|
|
|
|
|
||||||
Other current assets
|
|
3.7
|
|
|
3.7
|
|
|
7.4
|
|
|||
Other current liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
$
|
3.7
|
|
|
$
|
3.7
|
|
|
$
|
7.4
|
|
|
|
|
Fair Value Measurements at June 30, 2017 Using
|
||||||||||||
In thousands
|
Total Carrying
Value at June 30, 2017 |
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Interest rate swap agreements
|
$
|
2,476
|
|
|
$
|
—
|
|
|
$
|
2,476
|
|
|
$
|
—
|
|
Total
|
$
|
2,476
|
|
|
$
|
—
|
|
|
$
|
2,476
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at December 31, 2016 Using
|
||||||||||||
In thousands
|
Total Carrying
Value at December 31, 2016 |
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Interest rate swap agreements
|
$
|
3,888
|
|
|
$
|
—
|
|
|
$
|
3,888
|
|
|
$
|
—
|
|
Total
|
$
|
3,888
|
|
|
$
|
—
|
|
|
$
|
3,888
|
|
|
$
|
—
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
In thousands
|
Carry
Value
|
|
Fair
Value
|
|
Carry
Value |
|
Fair
Value |
||||||||
Interest rate swap agreement
|
$
|
2,476
|
|
|
$
|
2,476
|
|
|
$
|
3,888
|
|
|
$
|
3,888
|
|
4.375% Senior Notes
|
248,438
|
|
|
266,308
|
|
|
248,310
|
|
|
260,265
|
|
||||
3.45% Senior Notes
|
747,580
|
|
|
742,808
|
|
|
747,474
|
|
|
719,273
|
|
In thousands
|
Freight
Segment
|
|
Transit
Segment
|
|
Corporate
Activities and
Elimination
|
|
Total
|
||||||||
Sales to external customers
|
$
|
344,828
|
|
|
$
|
587,425
|
|
|
$
|
—
|
|
|
$
|
932,253
|
|
Intersegment sales/(elimination)
|
10,139
|
|
|
6,073
|
|
|
(16,212
|
)
|
|
—
|
|
||||
Total sales
|
$
|
354,967
|
|
|
$
|
593,498
|
|
|
$
|
(16,212
|
)
|
|
$
|
932,253
|
|
Income (loss) from operations
|
$
|
63,337
|
|
|
$
|
59,222
|
|
|
$
|
(8,858
|
)
|
|
$
|
113,701
|
|
Interest expense and other, net
|
—
|
|
|
—
|
|
|
(16,972
|
)
|
|
(16,972
|
)
|
||||
Income (loss) from operations before income taxes
|
$
|
63,337
|
|
|
$
|
59,222
|
|
|
$
|
(25,830
|
)
|
|
$
|
96,729
|
|
In thousands
|
Freight
Segment
|
|
Transit
Segment
|
|
Corporate
Activities and
Elimination
|
|
Total
|
||||||||
Sales to external customers
|
$
|
397,067
|
|
|
$
|
326,534
|
|
|
$
|
—
|
|
|
$
|
723,601
|
|
Intersegment sales/(elimination)
|
13,616
|
|
|
4,106
|
|
|
(17,722
|
)
|
|
—
|
|
||||
Total sales
|
$
|
410,683
|
|
|
$
|
330,640
|
|
|
$
|
(17,722
|
)
|
|
$
|
723,601
|
|
Income (loss) from operations
|
$
|
92,317
|
|
|
$
|
52,146
|
|
|
$
|
(11,179
|
)
|
|
$
|
133,284
|
|
Interest expense and other, net
|
—
|
|
|
—
|
|
|
(6,198
|
)
|
|
(6,198
|
)
|
||||
Income (loss) from operations before income taxes
|
$
|
92,317
|
|
|
$
|
52,146
|
|
|
$
|
(17,377
|
)
|
|
$
|
127,086
|
|
In thousands
|
Freight
Segment
|
|
Transit
Segment
|
|
Corporate
Activities and
Elimination
|
|
Total
|
||||||||
Sales to external customers
|
$
|
692,774
|
|
|
$
|
1,155,513
|
|
|
$
|
—
|
|
|
$
|
1,848,287
|
|
Intersegment sales/(elimination)
|
19,226
|
|
|
11,759
|
|
|
(30,985
|
)
|
|
—
|
|
||||
Total sales
|
$
|
712,000
|
|
|
$
|
1,167,272
|
|
|
$
|
(30,985
|
)
|
|
$
|
1,848,287
|
|
Income (loss) from operations
|
$
|
134,732
|
|
|
$
|
108,370
|
|
|
$
|
(14,543
|
)
|
|
$
|
228,559
|
|
Interest expense and other, net
|
—
|
|
|
—
|
|
|
(32,365
|
)
|
|
(32,365
|
)
|
||||
Income (loss) from operations before income taxes
|
$
|
134,732
|
|
|
$
|
108,370
|
|
|
$
|
(46,908
|
)
|
|
$
|
196,194
|
|
In thousands
|
Freight
Segment |
|
Transit
Segment |
|
Corporate
Activities and Elimination |
|
Total
|
||||||||
Sales to external customers
|
$
|
839,736
|
|
|
$
|
655,896
|
|
|
$
|
—
|
|
|
$
|
1,495,632
|
|
Intersegment sales/(elimination)
|
19,424
|
|
|
5,783
|
|
|
(25,207
|
)
|
|
—
|
|
||||
Total sales
|
$
|
859,160
|
|
|
$
|
661,679
|
|
|
$
|
(25,207
|
)
|
|
$
|
1,495,632
|
|
Income (loss) from operations
|
$
|
198,991
|
|
|
$
|
97,156
|
|
|
$
|
(20,682
|
)
|
|
$
|
275,465
|
|
Interest expense and other, net
|
—
|
|
|
—
|
|
|
(10,915
|
)
|
|
(10,915
|
)
|
||||
Income (loss) from operations before income taxes
|
$
|
198,991
|
|
|
$
|
97,156
|
|
|
$
|
(31,597
|
)
|
|
$
|
264,550
|
|
|
Three Months Ended
June 30,
|
||||||
In thousands
|
2017
|
|
2016
|
||||
Specialty Products & Electronics
|
$
|
324,798
|
|
|
$
|
339,188
|
|
Transit Products
|
253,764
|
|
|
49,643
|
|
||
Brake Products
|
192,557
|
|
|
141,979
|
|
||
Remanufacturing, Overhaul & Build
|
126,556
|
|
|
156,981
|
|
||
Other
|
34,578
|
|
|
35,810
|
|
||
Total sales
|
$
|
932,253
|
|
|
$
|
723,601
|
|
|
Six Months Ended
June 30, |
||||||
In thousands
|
2017
|
|
2016
|
||||
Specialty Products & Electronics
|
$
|
639,863
|
|
|
$
|
717,457
|
|
Transit Products
|
512,182
|
|
|
98,438
|
|
||
Brake Products
|
373,016
|
|
|
293,885
|
|
||
Remanufacturing, Overhaul & Build
|
255,616
|
|
|
315,014
|
|
||
Other
|
67,610
|
|
|
70,838
|
|
||
Total sales
|
$
|
1,848,287
|
|
|
$
|
1,495,632
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Cash and cash equivalents
|
$
|
2,190
|
|
|
$
|
8,985
|
|
|
$
|
317,347
|
|
|
$
|
—
|
|
|
$
|
328,522
|
|
Receivables, net
|
71,773
|
|
|
209,518
|
|
|
847,700
|
|
|
—
|
|
|
1,128,991
|
|
|||||
Inventories
|
128,733
|
|
|
143,932
|
|
|
473,571
|
|
|
—
|
|
|
746,236
|
|
|||||
Current assets - other
|
36,231
|
|
|
3,925
|
|
|
100,904
|
|
|
—
|
|
|
141,060
|
|
|||||
Total current assets
|
238,927
|
|
|
366,360
|
|
|
1,739,522
|
|
|
—
|
|
|
2,344,809
|
|
|||||
Property, plant and equipment, net
|
50,700
|
|
|
134,047
|
|
|
363,095
|
|
|
—
|
|
|
547,842
|
|
|||||
Goodwill
|
25,275
|
|
|
565,154
|
|
|
1,753,179
|
|
|
—
|
|
|
2,343,608
|
|
|||||
Investment in subsidiaries
|
6,132,898
|
|
|
2,488,919
|
|
|
—
|
|
|
(8,621,817
|
)
|
|
—
|
|
|||||
Other intangibles, net
|
31,236
|
|
|
251,852
|
|
|
846,277
|
|
|
—
|
|
|
1,129,365
|
|
|||||
Other long term assets
|
31,634
|
|
|
6,273
|
|
|
35,209
|
|
|
—
|
|
|
73,116
|
|
|||||
Total assets
|
$
|
6,510,670
|
|
|
$
|
3,812,605
|
|
|
$
|
4,737,282
|
|
|
$
|
(8,621,817
|
)
|
|
$
|
6,438,740
|
|
Current liabilities
|
$
|
152,688
|
|
|
198,646
|
|
|
$
|
1,130,765
|
|
|
—
|
|
|
$
|
1,482,099
|
|
||
Inter-company
|
1,982,986
|
|
|
(1,918,583
|
)
|
|
(64,403
|
)
|
|
—
|
|
|
—
|
|
|||||
Long-term debt
|
1,765,868
|
|
|
36
|
|
|
168,700
|
|
|
—
|
|
|
1,934,604
|
|
|||||
Long-term liabilities - other
|
42,272
|
|
|
102,705
|
|
|
292,689
|
|
|
—
|
|
|
437,666
|
|
|||||
Total liabilities
|
3,943,814
|
|
|
(1,617,196
|
)
|
|
1,527,751
|
|
|
—
|
|
|
3,854,369
|
|
|||||
Shareholders' equity
|
2,566,856
|
|
|
5,431,033
|
|
|
3,190,785
|
|
|
(8,621,817
|
)
|
|
2,566,857
|
|
|||||
Non-controlling interest
|
—
|
|
|
(1,232
|
)
|
|
18,746
|
|
|
—
|
|
|
17,514
|
|
|||||
Total shareholders' equity
|
$
|
2,566,856
|
|
|
$
|
5,429,801
|
|
|
$
|
3,209,531
|
|
|
$
|
(8,621,817
|
)
|
|
$
|
2,584,371
|
|
Total Liabilities and Shareholders' Equity
|
$
|
6,510,670
|
|
|
$
|
3,812,605
|
|
|
$
|
4,737,282
|
|
|
$
|
(8,621,817
|
)
|
|
$
|
6,438,740
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Cash and cash equivalents
|
$
|
2,522
|
|
|
$
|
9,496
|
|
|
$
|
386,466
|
|
|
$
|
—
|
|
|
$
|
398,484
|
|
Receivables, net
|
79,041
|
|
|
202,779
|
|
|
660,688
|
|
|
—
|
|
|
942,508
|
|
|||||
Inventories
|
120,042
|
|
|
128,076
|
|
|
410,392
|
|
|
—
|
|
|
658,510
|
|
|||||
Current assets - other
|
52,576
|
|
|
(17,844
|
)
|
|
833,397
|
|
|
—
|
|
|
868,129
|
|
|||||
Total current assets
|
254,181
|
|
|
322,507
|
|
|
2,290,943
|
|
|
—
|
|
|
2,867,631
|
|
|||||
Property, plant and equipment, net
|
49,031
|
|
|
126,661
|
|
|
342,684
|
|
|
—
|
|
|
518,376
|
|
|||||
Goodwill
|
25,275
|
|
|
477,472
|
|
|
1,576,018
|
|
|
—
|
|
|
2,078,765
|
|
|||||
Investment in subsidiaries
|
5,388,613
|
|
|
1,325,150
|
|
|
—
|
|
|
(6,713,763
|
)
|
|
—
|
|
|||||
Other intangibles, net
|
31,897
|
|
|
204,512
|
|
|
817,451
|
|
|
—
|
|
|
1,053,860
|
|
|||||
Other long term assets
|
9,592
|
|
|
(1,914
|
)
|
|
54,708
|
|
|
—
|
|
|
62,386
|
|
|||||
Total assets
|
$
|
5,758,589
|
|
|
$
|
2,454,388
|
|
|
$
|
5,081,804
|
|
|
$
|
(6,713,763
|
)
|
|
$
|
6,581,018
|
|
Current liabilities
|
$
|
194,983
|
|
|
196,956
|
|
|
$
|
1,054,700
|
|
|
—
|
|
|
$
|
1,446,639
|
|
||
Inter-company
|
1,562,399
|
|
|
(1,848,777
|
)
|
|
286,378
|
|
|
—
|
|
|
—
|
|
|||||
Long-term debt
|
1,761,933
|
|
|
58
|
|
|
976
|
|
|
—
|
|
|
1,762,967
|
|
|||||
Long-term liabilities - other
|
33,298
|
|
|
74,977
|
|
|
286,312
|
|
|
—
|
|
|
394,587
|
|
|||||
Total liabilities
|
3,552,613
|
|
|
(1,576,786
|
)
|
|
1,628,366
|
|
|
—
|
|
|
3,604,193
|
|
|||||
Shareholders' equity
|
2,205,976
|
|
|
4,032,250
|
|
|
2,681,514
|
|
|
(6,713,763
|
)
|
|
2,205,977
|
|
|||||
Non-controlling interest
|
—
|
|
|
(1,076
|
)
|
|
771,924
|
|
|
—
|
|
|
770,848
|
|
|||||
Total shareholders' equity
|
$
|
2,205,976
|
|
|
$
|
4,031,174
|
|
|
$
|
3,453,438
|
|
|
$
|
(6,713,763
|
)
|
|
$
|
2,976,825
|
|
Total Liabilities and Shareholders' Equity
|
$
|
5,758,589
|
|
|
$
|
2,454,388
|
|
|
$
|
5,081,804
|
|
|
$
|
(6,713,763
|
)
|
|
$
|
6,581,018
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
137,708
|
|
|
$
|
250,065
|
|
|
$
|
576,967
|
|
|
$
|
(32,487
|
)
|
|
$
|
932,253
|
|
Cost of sales
|
(100,311
|
)
|
|
(159,789
|
)
|
|
(421,998
|
)
|
|
23,808
|
|
|
(658,290
|
)
|
|||||
Gross profit (loss)
|
37,397
|
|
|
90,276
|
|
|
154,969
|
|
|
(8,679
|
)
|
|
273,963
|
|
|||||
Total operating expenses
|
(32,954
|
)
|
|
(30,072
|
)
|
|
(97,236
|
)
|
|
—
|
|
|
(160,262
|
)
|
|||||
Income (loss) from operations
|
4,443
|
|
|
60,204
|
|
|
57,733
|
|
|
(8,679
|
)
|
|
113,701
|
|
|||||
Interest (expense) income, net
|
(18,732
|
)
|
|
2,251
|
|
|
1,061
|
|
|
—
|
|
|
(15,420
|
)
|
|||||
Other income (expense), net
|
(10,228
|
)
|
|
(617
|
)
|
|
9,293
|
|
|
—
|
|
|
(1,552
|
)
|
|||||
Equity earnings (loss)
|
96,944
|
|
|
38,206
|
|
|
—
|
|
|
(135,150
|
)
|
|
—
|
|
|||||
Pretax income (loss)
|
72,427
|
|
|
100,044
|
|
|
68,087
|
|
|
(143,829
|
)
|
|
96,729
|
|
|||||
Income tax expense
|
(402
|
)
|
|
124
|
|
|
(24,291
|
)
|
|
—
|
|
|
(24,569
|
)
|
|||||
Net income (loss)
|
72,025
|
|
|
100,168
|
|
|
43,796
|
|
|
(143,829
|
)
|
|
72,160
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
157
|
|
|
(292
|
)
|
|
—
|
|
|
(135
|
)
|
|||||
Net income (loss) attributable to Wabtec shareholders
|
$
|
72,025
|
|
|
$
|
100,325
|
|
|
$
|
43,504
|
|
|
$
|
(143,829
|
)
|
|
$
|
72,025
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss) attributable to Wabtec shareholders
|
$
|
72,921
|
|
|
$
|
100,326
|
|
|
$
|
189,707
|
|
|
$
|
(143,829
|
)
|
|
$
|
219,125
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
161,632
|
|
|
$
|
349,763
|
|
|
$
|
313,239
|
|
|
$
|
(101,033
|
)
|
|
$
|
723,601
|
|
Cost of sales
|
(118,079
|
)
|
|
(221,854
|
)
|
|
(210,033
|
)
|
|
63,754
|
|
|
(486,212
|
)
|
|||||
Gross profit (loss)
|
43,553
|
|
|
127,909
|
|
|
103,206
|
|
|
(37,279
|
)
|
|
237,389
|
|
|||||
Total operating expenses
|
(29,063
|
)
|
|
(30,596
|
)
|
|
(44,446
|
)
|
|
—
|
|
|
(104,105
|
)
|
|||||
(Loss) income from operations
|
14,490
|
|
|
97,313
|
|
|
58,760
|
|
|
(37,279
|
)
|
|
133,284
|
|
|||||
Interest (expense) income, net
|
(7,085
|
)
|
|
1,596
|
|
|
520
|
|
|
—
|
|
|
(4,969
|
)
|
|||||
Other income (expense), net
|
223
|
|
|
611
|
|
|
(2,063
|
)
|
|
—
|
|
|
(1,229
|
)
|
|||||
Equity earnings (loss)
|
108,929
|
|
|
46,120
|
|
|
—
|
|
|
(155,049
|
)
|
|
—
|
|
|||||
Pretax income (loss)
|
116,557
|
|
|
145,640
|
|
|
57,217
|
|
|
(192,328
|
)
|
|
127,086
|
|
|||||
Income tax expense
|
(26,074
|
)
|
|
(947
|
)
|
|
(9,580
|
)
|
|
—
|
|
|
(36,601
|
)
|
|||||
Net income (loss)
|
90,483
|
|
|
144,693
|
|
|
47,637
|
|
|
(192,328
|
)
|
|
90,485
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to Wabtec shareholders
|
$
|
90,483
|
|
|
$
|
144,693
|
|
|
$
|
47,637
|
|
|
$
|
(192,328
|
)
|
|
$
|
90,485
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss) attributable to Wabtec shareholders
|
$
|
90,182
|
|
|
$
|
144,691
|
|
|
$
|
6,691
|
|
|
$
|
(192,328
|
)
|
|
$
|
49,236
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
282,251
|
|
|
$
|
508,777
|
|
|
$
|
1,121,356
|
|
|
$
|
(64,097
|
)
|
|
$
|
1,848,287
|
|
Cost of sales
|
(199,262
|
)
|
|
(327,395
|
)
|
|
(825,964
|
)
|
|
48,004
|
|
|
(1,304,617
|
)
|
|||||
Gross profit (loss)
|
82,989
|
|
|
181,382
|
|
|
295,392
|
|
|
(16,093
|
)
|
|
543,670
|
|
|||||
Total operating expenses
|
(57,247
|
)
|
|
(59,944
|
)
|
|
(197,920
|
)
|
|
—
|
|
|
(315,111
|
)
|
|||||
Income (loss) from operations
|
25,742
|
|
|
121,438
|
|
|
97,472
|
|
|
(16,093
|
)
|
|
228,559
|
|
|||||
Interest (expense) income, net
|
(33,343
|
)
|
|
4,411
|
|
|
(4,200
|
)
|
|
—
|
|
|
(33,132
|
)
|
|||||
Other income (expense), net
|
2,854
|
|
|
(1,877
|
)
|
|
(210
|
)
|
|
—
|
|
|
767
|
|
|||||
Equity earnings (loss)
|
165,229
|
|
|
50,148
|
|
|
—
|
|
|
(215,377
|
)
|
|
—
|
|
|||||
Pretax income (loss)
|
160,482
|
|
|
174,120
|
|
|
93,062
|
|
|
(231,470
|
)
|
|
196,194
|
|
|||||
Income tax expense
|
(14,567
|
)
|
|
(17
|
)
|
|
(37,446
|
)
|
|
—
|
|
|
(52,030
|
)
|
|||||
Net income (loss)
|
145,915
|
|
|
174,103
|
|
|
55,616
|
|
|
(231,470
|
)
|
|
144,164
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
157
|
|
|
1,593
|
|
|
—
|
|
|
1,750
|
|
|||||
Net income (loss) attributable to Wabtec shareholders
|
$
|
145,915
|
|
|
$
|
174,260
|
|
|
$
|
57,209
|
|
|
$
|
(231,470
|
)
|
|
$
|
145,914
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss) attributable to Wabtec shareholders
|
$
|
147,668
|
|
|
$
|
174,261
|
|
|
$
|
250,508
|
|
|
$
|
(231,470
|
)
|
|
$
|
340,967
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
338,619
|
|
|
$
|
606,676
|
|
|
$
|
629,223
|
|
|
$
|
(78,886
|
)
|
|
$
|
1,495,632
|
|
Cost of sales
|
(247,160
|
)
|
|
(374,815
|
)
|
|
(430,159
|
)
|
|
49,071
|
|
|
(1,003,063
|
)
|
|||||
Gross profit (loss)
|
91,459
|
|
|
231,861
|
|
|
199,064
|
|
|
(29,815
|
)
|
|
492,569
|
|
|||||
Total operating expenses
|
(66,938
|
)
|
|
(62,948
|
)
|
|
(87,218
|
)
|
|
—
|
|
|
(217,104
|
)
|
|||||
(Loss) income from operations
|
24,521
|
|
|
168,913
|
|
|
111,846
|
|
|
(29,815
|
)
|
|
275,465
|
|
|||||
Interest (expense) income, net
|
(13,754
|
)
|
|
3,321
|
|
|
593
|
|
|
—
|
|
|
(9,840
|
)
|
|||||
Other income (expense), net
|
11,040
|
|
|
(3,870
|
)
|
|
(8,245
|
)
|
|
—
|
|
|
(1,075
|
)
|
|||||
Equity earnings (loss)
|
221,950
|
|
|
84,819
|
|
|
—
|
|
|
(306,769
|
)
|
|
—
|
|
|||||
Pretax income (loss)
|
243,757
|
|
|
253,183
|
|
|
104,194
|
|
|
(336,584
|
)
|
|
264,550
|
|
|||||
Income tax expense
|
(59,108
|
)
|
|
(1,947
|
)
|
|
(18,847
|
)
|
|
—
|
|
|
(79,902
|
)
|
|||||
Net income (loss)
|
184,649
|
|
|
251,236
|
|
|
85,347
|
|
|
(336,584
|
)
|
|
184,648
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to Wabtec shareholders
|
$
|
184,649
|
|
|
$
|
251,236
|
|
|
$
|
85,347
|
|
|
$
|
(336,584
|
)
|
|
$
|
184,648
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss) attributable to Wabtec shareholders
|
$
|
183,369
|
|
|
$
|
251,236
|
|
|
$
|
73,000
|
|
|
$
|
(336,584
|
)
|
|
$
|
171,021
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Net cash (used in) provided by operating activities
|
$
|
(3,939
|
)
|
|
$
|
63,758
|
|
|
$
|
(57,429
|
)
|
|
$
|
(16,093
|
)
|
|
$
|
(13,703
|
)
|
Net cash used in investing activities
|
(8,661
|
)
|
|
(105,498
|
)
|
|
(14,422
|
)
|
|
—
|
|
|
(128,581
|
)
|
|||||
Net cash provided by (used in) financing activities
|
12,268
|
|
|
41,229
|
|
|
(28,000
|
)
|
|
16,093
|
|
|
41,590
|
|
|||||
Effect of changes in currency exchange rates
|
—
|
|
|
—
|
|
|
30,732
|
|
|
—
|
|
|
30,732
|
|
|||||
Increase (decrease) in cash
|
(332
|
)
|
|
(511
|
)
|
|
(69,119
|
)
|
|
—
|
|
|
(69,962
|
)
|
|||||
Cash, beginning of period
|
2,522
|
|
|
9,496
|
|
|
386,466
|
|
|
—
|
|
|
398,484
|
|
|||||
Cash, end of period
|
$
|
2,190
|
|
|
$
|
8,985
|
|
|
$
|
317,347
|
|
|
$
|
—
|
|
|
$
|
328,522
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
(29,564
|
)
|
|
$
|
139,189
|
|
|
$
|
90,343
|
|
|
$
|
14,008
|
|
|
$
|
213,976
|
|
Net cash used in investing activities
|
(5,445
|
)
|
|
(19,799
|
)
|
|
(14,958
|
)
|
|
—
|
|
|
(40,202
|
)
|
|||||
Net cash (used in) provided by financing activities
|
41,157
|
|
|
(118,345
|
)
|
|
(10,961
|
)
|
|
(14,008
|
)
|
|
(102,157
|
)
|
|||||
Effect of changes in currency exchange rates
|
—
|
|
|
—
|
|
|
5,127
|
|
|
—
|
|
|
5,127
|
|
|||||
Increase (decrease) in cash
|
6,148
|
|
|
1,045
|
|
|
69,551
|
|
|
—
|
|
|
76,744
|
|
|||||
Cash, beginning of period
|
—
|
|
|
13,157
|
|
|
213,034
|
|
|
—
|
|
|
226,191
|
|
|||||
Cash, end of period
|
$
|
6,148
|
|
|
$
|
14,202
|
|
|
$
|
282,585
|
|
|
$
|
—
|
|
|
$
|
302,935
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended June 30,
|
||||||||||||
In thousands
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Foreign currency loss
|
$
|
(2,303
|
)
|
|
$
|
(1,530
|
)
|
|
$
|
(1,089
|
)
|
|
$
|
(1,368
|
)
|
Equity income
|
792
|
|
|
—
|
|
|
1,067
|
|
|
—
|
|
||||
Other miscellaneous (expense) income
|
(41
|
)
|
|
301
|
|
|
789
|
|
|
293
|
|
||||
Total other (expense) income, net
|
$
|
(1,552
|
)
|
|
$
|
(1,229
|
)
|
|
$
|
767
|
|
|
$
|
(1,075
|
)
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
On November 30, 2016, the Company acquired majority ownership of Faiveley Transport, after completing the purchase of the Faiveley family’s ownership interest under the terms of the Share Purchase Agreement, which directed the Company to pay
€100
per share of Faiveley Transport, payable between
25%
and
45%
in cash at the election of those shareholders and the remainder payable in Wabtec stock. The Faiveley family’s ownership interest acquired by the Company represented approximately
51%
of outstanding share capital and approximately
49%
of the outstanding voting shares of Faiveley Transport. Upon completion of the share purchase under the Share Purchase Agreement, Wabtec commenced a tender offer for the remaining publicly traded Faiveley Transport shares. The public shareholders had the option to elect to receive
€100
per share in cash or
1.1538
shares of Wabtec common stock per share of Faiveley Transport. The common stock portion of the consideration was subject to a cap on issuance of Wabtec common shares that was equivalent to the rates of cash and stock elected by the
51%
owners.
|
•
|
On February 3, 2017, the initial cash tender offer was closed, which resulted in the Company acquiring approximately
27%
of additional outstanding share capital and voting rights of Faiveley Transport for approximately
$411.8 million
in cash and
$25.2 million
in Wabtec stock. After the initial cash tender offer, the Company owned approximately
78%
of outstanding share capital and
76%
of voting rights.
|
•
|
On March 6, 2017, the final cash tender offer was closed, which resulted in the Company acquiring approximately
21%
of additional outstanding share capital and
22%
of additional outstanding voting rights of Faiveley Transport for approximately
$303.2 million
in cash and
$0.3 million
in Wabtec stock. After the final cash tender offer, the Company owned approximately
99%
of the share capital and
98%
of the voting rights of Faiveley Transport.
|
•
|
On March 21, 2017, a mandatory squeeze-out procedure was finalized, which resulted in the Company acquiring the Faiveley Transport shares not tendered in the offers for approximately
$17.5 million
in cash. This resulted in the Company owning
100%
of the share capital and voting rights of Faiveley Transport.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
In millions
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net sales
|
$
|
932,253
|
|
|
$
|
723,601
|
|
|
$
|
1,848,287
|
|
|
$
|
1,495,632
|
|
Cost of sales
|
(658,290
|
)
|
|
(486,212
|
)
|
|
(1,304,617
|
)
|
|
(1,003,063
|
)
|
||||
Gross profit
|
273,963
|
|
|
237,389
|
|
|
543,670
|
|
|
492,569
|
|
||||
Selling, general and administrative expenses
|
(127,574
|
)
|
|
(80,610
|
)
|
|
(249,915
|
)
|
|
(170,361
|
)
|
||||
Engineering expenses
|
(23,338
|
)
|
|
(18,029
|
)
|
|
(46,802
|
)
|
|
(35,982
|
)
|
||||
Amortization expense
|
(9,350
|
)
|
|
(5,466
|
)
|
|
(18,394
|
)
|
|
(10,761
|
)
|
||||
Total operating expenses
|
(160,262
|
)
|
|
(104,105
|
)
|
|
(315,111
|
)
|
|
(217,104
|
)
|
||||
Income from operations
|
113,701
|
|
|
133,284
|
|
|
228,559
|
|
|
275,465
|
|
||||
Interest expense, net
|
(15,420
|
)
|
|
(4,969
|
)
|
|
(33,132
|
)
|
|
(9,840
|
)
|
||||
Other (expense) income, net
|
(1,552
|
)
|
|
(1,229
|
)
|
|
767
|
|
|
(1,075
|
)
|
||||
Income from operations before income taxes
|
96,729
|
|
|
127,086
|
|
|
196,194
|
|
|
264,550
|
|
||||
Income tax expense
|
(24,569
|
)
|
|
(36,601
|
)
|
|
(52,030
|
)
|
|
(79,902
|
)
|
||||
Net income
|
72,160
|
|
|
90,485
|
|
|
$
|
144,164
|
|
|
$
|
184,648
|
|
||
Less: Net (gain) loss attributable to noncontrolling interest
|
(135
|
)
|
|
—
|
|
|
1,750
|
|
|
—
|
|
||||
Net income attributable to Wabtec shareholders
|
$
|
72,025
|
|
|
$
|
90,485
|
|
|
$
|
145,914
|
|
|
$
|
184,648
|
|
|
Three Months Ended June 30,
|
|||||||||
In thousands
|
2017
|
|
2016
|
|
Percent
Change |
|||||
Freight Segment Sales
|
$
|
344,828
|
|
|
$
|
397,067
|
|
|
(13.2
|
)%
|
Transit Segment Sales
|
587,425
|
|
|
326,534
|
|
|
79.9
|
%
|
||
Net sales
|
932,253
|
|
|
723,601
|
|
|
28.8
|
%
|
||
Income from operations
|
113,701
|
|
|
133,284
|
|
|
(14.7
|
)%
|
||
Net income attributable to Wabtec shareholders
|
72,025
|
|
|
90,485
|
|
|
(20.3
|
)%
|
In thousands
|
Freight
Segment |
|
Transit
Segment |
|
Total
|
||||||
Second Quarter 2016 Net Sales
|
$
|
397,067
|
|
|
$
|
326,534
|
|
|
$
|
723,601
|
|
Acquisitions
|
43,725
|
|
|
282,960
|
|
|
326,685
|
|
|||
Change in Sales by Product Line:
|
|
|
|
|
|
||||||
Specialty Products & Electronics
|
(46,601
|
)
|
|
(2,704
|
)
|
|
(49,305
|
)
|
|||
Remanufacturing, Overhaul & Build
|
(28,595
|
)
|
|
(6,166
|
)
|
|
(34,761
|
)
|
|||
Brake Products
|
(13,025
|
)
|
|
(1,148
|
)
|
|
(14,173
|
)
|
|||
Transit Products
|
—
|
|
|
(771
|
)
|
|
(771
|
)
|
|||
Other
|
(4,231
|
)
|
|
(64
|
)
|
|
(4,295
|
)
|
|||
Foreign exchange
|
(3,513
|
)
|
|
(11,215
|
)
|
|
(14,728
|
)
|
|||
Second Quarter 2017 Net Sales
|
$
|
344,827
|
|
|
$
|
587,426
|
|
|
$
|
932,253
|
|
|
Three Months Ended June 30, 2017
|
|||||||||||||||||||
In thousands
|
Freight
|
|
Percentage of
Sales |
|
Transit
|
|
Percentage of
Sales |
|
Total
|
|
Percentage of
Sales |
|||||||||
Material
|
$
|
127,373
|
|
|
36.9
|
%
|
|
$
|
247,737
|
|
|
42.2
|
%
|
|
$
|
375,110
|
|
|
40.2
|
%
|
Labor
|
53,220
|
|
|
15.4
|
%
|
|
83,435
|
|
|
14.2
|
%
|
|
136,655
|
|
|
14.7
|
%
|
|||
Overhead
|
52,504
|
|
|
15.2
|
%
|
|
79,037
|
|
|
13.5
|
%
|
|
131,541
|
|
|
14.1
|
%
|
|||
Other/Warranty
|
2,515
|
|
|
0.7
|
%
|
|
12,469
|
|
|
2.1
|
%
|
|
14,984
|
|
|
1.6
|
%
|
|||
Total cost of sales
|
$
|
235,612
|
|
|
68.2
|
%
|
|
$
|
422,678
|
|
|
72.0
|
%
|
|
$
|
658,290
|
|
|
70.6
|
%
|
|
Three Months Ended June 30, 2016
|
|||||||||||||||||||
In thousands
|
Freight
|
|
Percentage of
Sales |
|
Transit
|
|
Percentage of
Sales |
|
Total
|
|
Percentage of
Sales |
|||||||||
Material
|
$
|
149,908
|
|
|
37.8
|
%
|
|
$
|
130,808
|
|
|
40.1
|
%
|
|
$
|
280,716
|
|
|
38.8
|
%
|
Labor
|
43,700
|
|
|
11.0
|
%
|
|
43,643
|
|
|
13.4
|
%
|
|
87,343
|
|
|
12.1
|
%
|
|||
Overhead
|
64,661
|
|
|
16.3
|
%
|
|
46,257
|
|
|
14.2
|
%
|
|
110,918
|
|
|
15.3
|
%
|
|||
Other/Warranty
|
438
|
|
|
0.1
|
%
|
|
6,797
|
|
|
2.1
|
%
|
|
7,235
|
|
|
1.0
|
%
|
|||
Total cost of sales
|
$
|
258,707
|
|
|
65.2
|
%
|
|
$
|
227,505
|
|
|
69.8
|
%
|
|
$
|
486,212
|
|
|
67.2
|
%
|
|
Three Months Ended June 30,
|
||||||||||||
In thousands
|
2017
|
|
Percentage of
Sales |
|
2016
|
|
Percentage of
Sales |
||||||
Selling, general and administrative expenses
|
$
|
127,574
|
|
|
13.7
|
%
|
|
$
|
80,610
|
|
|
11.1
|
%
|
Engineering expenses
|
23,338
|
|
|
2.5
|
%
|
|
18,029
|
|
|
2.5
|
%
|
||
Amortization expense
|
9,350
|
|
|
1.0
|
%
|
|
5,466
|
|
|
0.8
|
%
|
||
Total operating expenses
|
$
|
160,262
|
|
|
17.2
|
%
|
|
$
|
104,105
|
|
|
14.4
|
%
|
|
Three Months Ended June 30,
|
|||||||||
In thousands
|
2017
|
|
2016
|
|
Percent
Change |
|||||
Freight Segment
|
$
|
45,881
|
|
|
$
|
44,464
|
|
|
3.2
|
%
|
Transit Segment
|
105,524
|
|
|
48,461
|
|
|
117.8
|
%
|
||
Corporate
|
8,857
|
|
|
11,180
|
|
|
(20.8
|
)%
|
||
Total operating expenses
|
160,262
|
|
|
104,105
|
|
|
53.9
|
%
|
|
Six Months Ended June 30,
|
||||||||||
In thousands
|
2017
|
|
2016
|
|
Percent
Change |
||||||
Freight Segment Sales
|
$
|
692,774
|
|
|
$
|
839,736
|
|
|
(17.5
|
)%
|
|
Transit Segment Sales
|
1,155,513
|
|
|
655,896
|
|
|
76.2
|
%
|
|||
Net sales
|
1,848,287
|
|
|
1,495,632
|
|
|
23.6
|
%
|
|||
Income from operations
|
228,559
|
|
|
275,465
|
|
|
(17.0
|
)%
|
|||
Net income attributable to Wabtec shareholders
|
145,914
|
|
|
184,648
|
|
184,648
|
|
(21.9
|
)%
|
In thousands
|
Freight
Segment |
|
Transit
Segment |
|
Total
|
||||||
First Six Months of 2016 Net Sales
|
$
|
839,736
|
|
|
$
|
655,896
|
|
|
$
|
1,495,632
|
|
Acquisitions
|
80,613
|
|
|
553,310
|
|
|
633,923
|
|
|||
Change in Sales by Product Line:
|
|
|
|
|
|
||||||
Specialty Products & Electronics
|
(122,563
|
)
|
|
(17,670
|
)
|
|
(140,233
|
)
|
|||
Remanufacturing, Overhaul, and Build
|
(61,592
|
)
|
|
(5,425
|
)
|
|
(67,017
|
)
|
|||
Brake Products
|
(30,649
|
)
|
|
(4,440
|
)
|
|
(35,089
|
)
|
|||
Transit Products
|
—
|
|
|
(3,164
|
)
|
|
(3,164
|
)
|
|||
Other
|
(7,675
|
)
|
|
1,280
|
|
|
(6,395
|
)
|
|||
Foreign exchange
|
(5,096
|
)
|
|
(24,274
|
)
|
|
(29,370
|
)
|
|||
First Six Months of 2017 Net Sales
|
$
|
692,774
|
|
|
$
|
1,155,513
|
|
|
$
|
1,848,287
|
|
|
Six Months Ended June 30, 2017
|
|||||||||||||||||||
In thousands
|
Freight
|
|
Percentage of
Sales |
|
Transit
|
|
Percentage of
Sales |
|
Total
|
|
Percentage of
Sales |
|||||||||
Material
|
$
|
265,771
|
|
|
38.4
|
%
|
|
$
|
494,846
|
|
|
42.8
|
%
|
|
$
|
760,617
|
|
|
41.2
|
%
|
Labor
|
92,205
|
|
|
13.3
|
%
|
|
159,572
|
|
|
13.8
|
%
|
|
251,777
|
|
|
13.6
|
%
|
|||
Overhead
|
109,791
|
|
|
15.8
|
%
|
|
160,371
|
|
|
13.9
|
%
|
|
270,162
|
|
|
14.6
|
%
|
|||
Other/Warranty
|
1,607
|
|
|
0.2
|
%
|
|
20,454
|
|
|
1.8
|
%
|
|
22,061
|
|
|
1.2
|
%
|
|||
Total cost of sales
|
$
|
469,374
|
|
|
67.7
|
%
|
|
$
|
835,243
|
|
|
72.3
|
%
|
|
$
|
1,304,617
|
|
|
70.6
|
%
|
|
Six Months Ended June 30, 2016
|
|||||||||||||||||||
In thousands
|
Freight
|
|
Percentage of
Sales |
|
Transit
|
|
Percentage of
Sales |
|
Total
|
|
Percentage of
Sales |
|||||||||
Material
|
$
|
319,340
|
|
|
38.0
|
%
|
|
$
|
273,932
|
|
|
41.8
|
%
|
|
$
|
593,272
|
|
|
39.7
|
%
|
Labor
|
91,137
|
|
|
10.9
|
%
|
|
81,236
|
|
|
12.4
|
%
|
|
172,373
|
|
|
11.5
|
%
|
|||
Overhead
|
127,974
|
|
|
15.2
|
%
|
|
94,233
|
|
|
14.4
|
%
|
|
222,207
|
|
|
14.9
|
%
|
|||
Other/Warranty
|
4,135
|
|
|
0.5
|
%
|
|
11,076
|
|
|
1.7
|
%
|
|
15,211
|
|
|
1.0
|
%
|
|||
Total cost of sales
|
$
|
542,586
|
|
|
64.6
|
%
|
|
$
|
460,477
|
|
|
70.3
|
%
|
|
$
|
1,003,063
|
|
|
67.1
|
%
|
|
Six Months Ended June 30,
|
||||||||||||
In thousands
|
2017
|
|
Percentage of
Sales |
|
2016
|
|
Percentage of
Sales |
||||||
Selling, general and administrative expenses
|
$
|
249,915
|
|
|
13.5
|
%
|
|
$
|
170,361
|
|
|
11.4
|
%
|
Engineering expenses
|
46,802
|
|
|
2.5
|
%
|
|
35,982
|
|
|
2.4
|
%
|
||
Amortization expense
|
18,394
|
|
|
1.0
|
%
|
|
10,761
|
|
|
0.7
|
%
|
||
Total operating expenses
|
$
|
315,111
|
|
|
17.0
|
%
|
|
$
|
217,104
|
|
|
14.5
|
%
|
|
Six Months Ended June 30,
|
|||||||||
In thousands
|
2017
|
|
2016
|
|
Percent
Change |
|||||
Freight Segment
|
$
|
88,668
|
|
|
$
|
95,274
|
|
|
(6.9
|
)%
|
Transit Segment
|
211,900
|
|
|
101,146
|
|
|
109.5
|
%
|
||
Corporate
|
14,543
|
|
|
20,684
|
|
|
(29.7
|
)%
|
||
Total operating expenses
|
$
|
315,111
|
|
|
$
|
217,104
|
|
|
45.1
|
%
|
|
Six Months Ended
June 30, |
||||||
In thousands
|
2017
|
|
2016
|
||||
Cash (used for) provided by:
|
|
|
|
||||
Operating activities
|
$
|
(13,703
|
)
|
|
$
|
213,976
|
|
Investing activities
|
(128,581
|
)
|
|
(40,202
|
)
|
||
Financing activities
|
41,590
|
|
|
(102,157
|
)
|
||
(Decrease)/increase in cash
|
$
|
(69,962
|
)
|
|
$
|
76,744
|
|
•
|
On February 3, 2017, the initial cash tender offer was closed, which resulted in the Company acquiring approximately
27%
of additional outstanding share capital and voting rights of Faiveley Transport for approximately
$411.8 million
in cash and
$25.2 million
in Wabtec stock. After the initial cash tender offer, the Company owned approximately
78%
of outstanding share capital and
76%
of voting rights.
|
•
|
On March 6, 2017, the final cash tender offer was closed, which resulted in the Company acquiring approximately
21%
of additional outstanding share capital and
22%
of additional outstanding voting rights of Faiveley Transport for approximately
$303.2 million
in cash and
$0.3 million
in Wabtec stock. After the final cash tender offer, the Company owned approximately
99%
of the share capital and
98%
of the voting rights of Faiveley Transport.
|
•
|
On March 21, 2017, a mandatory squeeze-out procedure was finalized, which resulted in the Company acquiring the Faiveley Transport shares not tendered in the offers for approximately
$17.5 million
in cash. This resulted in the Company owning
100%
of the share capital and voting rights of Faiveley Transport.
|
•
|
prolonged unfavorable economic and industry conditions in the markets served by us, including North America, South America, Europe, Australia, Asia and South Africa;
|
•
|
decline in demand for freight cars, locomotives, passenger transit cars, buses and related products and services;
|
•
|
reliance on major original equipment manufacturer customers;
|
•
|
original equipment manufacturers’ program delays;
|
•
|
demand for services in the freight and passenger rail industry;
|
•
|
demand for our products and services;
|
•
|
orders either being delayed, canceled, not returning to historical levels, or reduced or any combination of the foregoing;
|
•
|
consolidations in the rail industry;
|
•
|
continued outsourcing by our customers;
|
•
|
industry demand for faster and more efficient braking equipment;
|
•
|
fluctuations in interest rates and foreign currency exchange rates; or
|
•
|
availability of credit.
|
•
|
supply disruptions;
|
•
|
technical difficulties;
|
•
|
changes in operating conditions and costs;
|
•
|
increases in raw material costs;
|
•
|
successful introduction of new products;
|
•
|
performance under material long-term contracts;
|
•
|
labor relations;
|
•
|
the outcome of our existing or any future legal proceedings, including litigation involving our principal customers and any litigation with respect to environmental matters, asbestos-related matters, pension liabilities, warranties, product liabilities or intellectual property claims;
|
•
|
completion and integration of acquisitions, including the acquisition of Faiveley Transport; or
|
•
|
the development and use of new technology.
|
•
|
the actions of competitors.
|
•
|
political stability in relevant areas of the world;
|
•
|
future regulation/deregulation of our customers and/or the rail industry;
|
•
|
levels of governmental funding on transit projects, including for some of our customers;
|
•
|
political developments and laws and regulations, including those related to Positive Train Control; or
|
•
|
federal and state income tax legislation; and
|
•
|
the outcome of negotiations with partners, governments, suppliers, customers or others.
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 1A.
|
RISK FACTORS
|
Item 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Month
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Programs (1)
|
|
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Programs (1)
|
||||||
April 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
May 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
June 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Total quarter ended June 30, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
On February 9, 2016, the Board of Directors amended its stock repurchase authorization to
$350.0 million
of the Company’s outstanding shares. No time limit was set for the completion of the programs which conforms to the requirements under the 2016 Refinancing Credit Agreement, as well as the senior notes currently outstanding.
|
Item 4.
|
MINE SAFETY DISCLOSURES
|
Item 6.
|
EXHIBITS
|
4.1
|
Fifth Supplemental Indenture, dated April 28, 2017, by and among Westinghouse Air Brake Technologies Corporation, the subsidiary guarantors named therein and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017)
|
|
|
4.2
|
Sixth Supplemental Indenture, dated June 21, 2017, by and among Westinghouse Air Brake Technologies Corporate, the subsidiary guarantors named therein and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.10 to the Company's Registration Statement on Form S-4 filed on July 19, 2017) (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017)
|
|
|
10.1
|
First Amendment to Second Amended and Restated Refinancing Credit Agreement, dated as of April 19, 2017, by and among the Company, Wabtec Cooperatief UA, as borrowers, the subsidiary guarantors named therein, and the lenders party thereto and PNC Bank, National Association, as Administrative Agent
|
|
|
10.2
|
Westinghouse Air Brake Technologies Corporation 2011 Stock Incentive Plan (as amended restated effective May 20, 2017) (incorporated by reference to Annex A to the Company's Proxy Statement dated March 31, 2017)
|
|
|
10.3
|
Westinghouse Air Brake Technologies Corporation 1995 Non-Employee Directors' Fee and Stock Option Plan (as amended and restated effective May 10, 2017) (incorporated by reference to Annex B to the Company's Proxy Statement dated March 31, 2017)
|
|
|
31.1
|
Rule 13a-14(a) Certification of Chief Executive Officer.
|
|
|
31.2
|
Rule 13a-14(a) Certification of Chief Financial Officer.
|
|
|
32.1
|
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer.
|
|
|
101.INS
|
XBRL Instance Document.
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
|
|
|
|
By:
|
/s/ PATRICK D. DUGAN
|
|
Patrick D. Dugan,
|
|
Executive Vice President Finance and
Chief Financial Officer
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
|
|
|
DATE:
|
August 3, 2017
|
4.1
|
Fifth Supplemental Indenture, dated April 28, 2017, by and among Westinghouse Air Brake Technologies Corporation, the subsidiary guarantors named therein and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017)
|
|
|
4.2
|
Sixth Supplemental Indenture, dated June 21, 2017, by and among Westinghouse Air Brake Technologies Corporate, the subsidiary guarantors named therein and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.10 to the Company's Registration Statement on Form S-4 filed on July 19, 2017) (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017)
|
|
|
10.1
|
First Amendment to Second Amended and Restated Refinancing Credit Agreement, dated as of April 19, 2017, by and among the Company, Wabtec Cooperatief UA, as borrowers, the subsidiary guarantors named therein, and the lenders party thereto and PNC Bank, National Association, as Administrative Agent
|
|
|
10.2
|
Westinghouse Air Brake Technologies Corporation 2011 Stock Incentive Plan (as amended restated effective May 20, 2017) (incorporated by reference to Annex A to the Company's Proxy Statement dated March 31, 2017)
|
|
|
10.3
|
Westinghouse Air Brake Technologies Corporation 1995 Non-Employee Directors' Fee and Stock Option Plan (as amended and restated effective May 10, 2017) (incorporated by reference to Annex B to the Company's Proxy Statement dated March 31, 2017)
|
|
|
31.1
|
Rule 13a-14(a) Certification of Chief Executive Officer.
|
|
|
31.2
|
Rule 13a-14(a) Certification of Chief Financial Officer.
|
|
|
32.1
|
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer.
|
|
|
101.INS
|
XBRL Instance Document.
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
By:
|
/s/ Patrick D. Dugan
Name: Patrick D. Dugan Title: Executive Vice President and |
By:
|
/s/ Patrick D. Dugan
Name: Patrick D. Dugan Title: Vice President, Finance of each of the above |
By:
|
/s/ Keith P. Hildum
Name: Keith P. Hildum Title: Vice President and Treasurer |
By:
|
/s/ Patrick D. Dugan
Name: Patrick D. Dugan Title: Vice President and Treasurer |
By:
|
/s/ Raymond Delli Colli
Name: Raymond Delli Colli Title: Vice President |
BORROWERS:
|
WESTINGHOUSE AIR BRAKE TECHNOLOGIES CORPORATION
,
a Delaware corporation
By:
/s/Brian Kelly
(SEAL)
Name: Brian Kelly
Title: Treasurer and Vice President of Tax |
WABTEC COÖPERATIEF U.A.
,
a
coöperatieve vereniging met uitsluiting van aansprakelijkheid
under the laws of the Netherlands
By:
/s/ Patrick D. Dugan
(SEAL)
Name: Patrick D. Dugan
Title: Authorized Person |
GUARANTORS:
|
By:
|
|
/s/ RAYMOND T. BETLER
|
Name:
|
|
Raymond T. Betler
|
Title:
|
|
President and Chief Executive Officer
|
By:
|
|
/
S
/ P
ATRICK
D. D
UGAN
|
Name:
|
|
Patrick D. Dugan
|
Title:
|
|
Executive Vice President Finance and Chief Financial Officer
|
By:
|
|
/s/ R
AYMOND
T. B
ETLER
|
|
|
Raymond T. Betler
President and Chief Executive Officer
|
|
|
|
Date:
|
|
August 3, 2017
|
|
|
|
By:
|
|
/s/ P
ATRICK
D. D
UGAN
|
|
|
Patrick D. Dugan,
Executive Vice President Finance and Chief Financial Officer
|
Date:
|
|
August 3, 2017
|