|
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
|
Delaware
|
25-1615902
|
(State or other jurisdiction
of incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
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1001 Air Brake Avenue
Wilmerding, PA
|
15148
|
(Address of principal executive offices)
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(Zip code)
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Large accelerated filer
|
x
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Accelerated filer
|
¨
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Non-accelerated filer
|
¨
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|
|
Emerging growth company
|
¨
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Smaller reporting company
|
¨
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Class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $.01 par value per share
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WAB
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New York Stock Exchange
|
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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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||
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Item 1.
|
FINANCIAL STATEMENTS
|
|
Unaudited
|
|
|
||||
In thousands, except shares and par value
|
March 31,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
512,870
|
|
|
$
|
580,908
|
|
Restricted cash
|
—
|
|
|
1,761,446
|
|
||
Accounts receivable
|
1,271,198
|
|
|
801,193
|
|
||
Unbilled accounts receivable
|
455,626
|
|
|
345,585
|
|
||
Inventories
|
1,947,220
|
|
|
844,886
|
|
||
Other current assets
|
194,223
|
|
|
115,649
|
|
||
Total current assets
|
4,381,137
|
|
|
4,449,667
|
|
||
Property, plant and equipment
|
2,133,778
|
|
|
1,036,550
|
|
||
Accumulated depreciation
|
(498,812
|
)
|
|
(472,813
|
)
|
||
Property, plant and equipment, net
|
1,634,966
|
|
|
563,737
|
|
||
Other Assets
|
|
|
|
||||
Goodwill
|
8,142,473
|
|
|
2,396,544
|
|
||
Other intangibles, net
|
4,364,021
|
|
|
1,129,880
|
|
||
Other noncurrent assets
|
555,308
|
|
|
109,406
|
|
||
Total other assets
|
13,061,802
|
|
|
3,635,830
|
|
||
Total Assets
|
$
|
19,077,905
|
|
|
$
|
8,649,234
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
1,187,261
|
|
|
$
|
589,449
|
|
Customer deposits
|
573,244
|
|
|
373,538
|
|
||
Accrued compensation
|
273,449
|
|
|
173,183
|
|
||
Accrued warranty
|
217,752
|
|
|
135,636
|
|
||
Current portion of long-term debt
|
321,308
|
|
|
64,099
|
|
||
Other accrued liabilities
|
681,421
|
|
|
310,785
|
|
||
Total current liabilities
|
3,254,435
|
|
|
1,646,690
|
|
||
Long-term debt
|
4,641,286
|
|
|
3,792,774
|
|
||
Accrued postretirement and pension benefits
|
96,533
|
|
|
95,446
|
|
||
Deferred income taxes
|
176,116
|
|
|
198,269
|
|
||
Accrued warranty
|
31,563
|
|
|
18,066
|
|
||
Other long-term liabilities
|
1,097,526
|
|
|
28,914
|
|
||
Total Liabilities
|
9,297,459
|
|
|
5,780,159
|
|
||
Commitments and contingencies (Note 16)
|
|
|
|
||||
Equity
|
|
|
|
||||
Convertible preferred stock, $0.01 par value; 1,000,000 shares authorized, 10,000 and no shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 500,000,000 shares authorized:
|
|
|
|
||||
198,131,716 and 132,349,534 shares issued and 162,817,600 and 96,614,946 outstanding
|
|
|
|
||||
at March 31, 2019 and December 31, 2018, respectively
|
1,981
|
|
|
1,323
|
|
||
Additional paid-in capital
|
7,796,270
|
|
|
914,568
|
|
||
Treasury stock, at cost, 35,314,116 and 35,734,588 shares,
|
|
|
|
||||
at March 31, 2019 and December 31, 2018, respectively
|
(807,214
|
)
|
|
(816,145
|
)
|
||
Retained earnings
|
3,005,809
|
|
|
3,021,968
|
|
||
Accumulated other comprehensive income (loss)
|
(309,000
|
)
|
|
(256,583
|
)
|
||
Total Westinghouse Air Brake Technologies Corporation shareholders' equity
|
9,687,846
|
|
|
2,865,131
|
|
||
Noncontrolling interest
|
92,600
|
|
|
3,944
|
|
||
Total Equity
|
9,780,446
|
|
|
2,869,075
|
|
||
Total Liabilities and Equity
|
$
|
19,077,905
|
|
|
$
|
8,649,234
|
|
|
Unaudited
|
||||||
|
Three Months Ended
March 31, |
||||||
In thousands, except per share data
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Net sales:
|
|
|
|
||||
Sales of goods
|
$
|
1,434,509
|
|
|
$
|
1,010,677
|
|
Sales of services
|
159,108
|
|
|
45,500
|
|
||
Total net sales
|
1,593,617
|
|
|
1,056,177
|
|
||
Cost of sales:
|
|
|
|
||||
Cost of goods
|
(1,073,571
|
)
|
|
(709,278
|
)
|
||
Cost of services
|
(131,029
|
)
|
|
(36,018
|
)
|
||
Total cost of sales
|
(1,204,600
|
)
|
|
(745,296
|
)
|
||
Gross profit
|
389,017
|
|
|
310,881
|
|
||
Operating expenses:
|
|
|
|
||||
Selling, general and administrative expenses
|
(259,723
|
)
|
|
(147,201
|
)
|
||
Engineering expenses
|
(34,545
|
)
|
|
(22,049
|
)
|
||
Amortization expense
|
(27,442
|
)
|
|
(10,352
|
)
|
||
Total operating expenses
|
(321,710
|
)
|
|
(179,602
|
)
|
||
Income from operations
|
67,307
|
|
|
131,279
|
|
||
Other income and expenses:
|
|
|
|
||||
Interest expense, net
|
(44,569
|
)
|
|
(20,284
|
)
|
||
Other (expense) income, net
|
(8,228
|
)
|
|
2,586
|
|
||
Income from operations before income taxes
|
14,510
|
|
|
113,581
|
|
||
Income tax expense
|
(18,523
|
)
|
|
(26,124
|
)
|
||
Net (loss) income
|
(4,013
|
)
|
|
87,457
|
|
||
Less: Net (gain) loss attributable to noncontrolling interest
|
(459
|
)
|
|
909
|
|
||
Net (loss) income attributable to Wabtec shareholders
|
(4,472
|
)
|
|
88,366
|
|
||
|
|
|
|
||||
Earnings Per Common Share
|
|
|
|
||||
Basic
|
|
|
|
||||
Net (loss) income attributable to Wabtec shareholders
|
$
|
(0.04
|
)
|
|
$
|
0.92
|
|
Diluted
|
|
|
|
||||
Net (loss) income attributable to Wabtec shareholders
|
$
|
(0.04
|
)
|
|
$
|
0.92
|
|
|
|
|
|
||||
Weighted average shares outstanding
|
|
|
|
||||
Basic
|
121,226
|
|
|
95,810
|
|
||
Diluted
|
121,226
|
|
|
96,371
|
|
|
Unaudited
|
|
||||||
|
Three Months Ended
March 31, |
|
||||||
In thousands
|
2019
|
|
2018
|
|
||||
|
|
|
|
|
||||
Net (loss) income attributable to Wabtec shareholders
|
$
|
(4,472
|
)
|
|
$
|
88,366
|
|
|
Foreign currency translation (loss) gain
|
(46,553
|
)
|
|
77,967
|
|
|
||
Unrealized (loss) gain on derivative contracts
|
(4,093
|
)
|
|
2,066
|
|
|
||
Unrealized loss on pension benefit plans and post-retirement benefit plans
|
(3,622
|
)
|
|
(430
|
)
|
|
||
Other comprehensive (loss) income before tax
|
(54,268
|
)
|
|
79,603
|
|
|
||
Income tax (benefit) expense related to components of
|
|
|
|
|
||||
other comprehensive income
|
1,851
|
|
|
(595
|
)
|
|
||
Other comprehensive (loss) income, net of tax
|
(52,417
|
)
|
|
79,008
|
|
|
||
Comprehensive (loss) income attributable to Wabtec shareholders
|
$
|
(56,889
|
)
|
|
$
|
167,374
|
|
|
|
Unaudited
|
||||||
|
Three Months Ended
March 31, |
||||||
In thousands, except per share data
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Operating Activities
|
|
|
|
||||
Net (loss) income
|
$
|
(4,013
|
)
|
|
$
|
87,457
|
|
Adjustments to reconcile net income to cash provided by operations:
|
|
|
|
||||
Depreciation and amortization
|
55,962
|
|
|
27,854
|
|
||
Stock-based compensation expense
|
8,526
|
|
|
5,696
|
|
||
Loss (gain) on disposal of property, plant and equipment
|
1,028
|
|
|
(24
|
)
|
||
Changes in operating assets and liabilities, net of acquisitions
|
|
|
|
||||
Accounts receivable and unbilled accounts receivable
|
(51,614
|
)
|
|
(66,347
|
)
|
||
Inventories
|
75,300
|
|
|
(50,755
|
)
|
||
Accounts payable
|
(116,375
|
)
|
|
32,096
|
|
||
Accrued income taxes
|
18,396
|
|
|
14,004
|
|
||
Accrued liabilities and customer deposits
|
(59,978
|
)
|
|
(1,529
|
)
|
||
Other assets and liabilities
|
104,106
|
|
|
(24,252
|
)
|
||
Net cash provided by operating activities
|
31,338
|
|
|
24,200
|
|
||
Investing Activities
|
|
|
|
||||
Purchase of property, plant and equipment
|
(29,720
|
)
|
|
(17,466
|
)
|
||
Proceeds from disposal of property, plant and equipment
|
786
|
|
|
7,898
|
|
||
Acquisitions of businesses, net of cash acquired
|
(2,710,714
|
)
|
|
(34,297
|
)
|
||
Net cash used for investing activities
|
(2,739,648
|
)
|
|
(43,865
|
)
|
||
Financing Activities
|
|
|
|
||||
Proceeds from debt
|
1,736,521
|
|
|
306,610
|
|
||
Payments of debt
|
(837,744
|
)
|
|
(266,347
|
)
|
||
Proceeds from exercise of stock options and other benefit plans
|
25
|
|
|
2,873
|
|
||
Payment of income tax withholding on share-based compensation
|
(4,125
|
)
|
|
(2,937
|
)
|
||
Cash dividends ($0.12 and $0.12 per share for the three months
|
|
|
|
||||
ended March 31, 2019 and 2018, respectively)
|
(11,687
|
)
|
|
(11,531
|
)
|
||
Net cash provided by financing activities
|
882,990
|
|
|
28,668
|
|
||
Effect of changes in currency exchange rates
|
(4,164
|
)
|
|
7,482
|
|
||
(Decrease) increase in cash
|
(1,829,484
|
)
|
|
16,485
|
|
||
Cash, cash equivalents and restricted cash beginning of period
|
2,342,354
|
|
|
233,401
|
|
||
Cash and cash equivalents end of period
|
$
|
512,870
|
|
|
$
|
249,886
|
|
|
|
Common
Stock |
|
Common
Stock |
|
Additional
Paid-in |
|
Treasury
Stock |
|
Treasury
Stock |
|
Retained
|
|
Accumulated
Other |
|
Non-controlling
|
|
|
||||||||||||||||
In thousands, except share and per share data
|
|
Shares
|
|
Amount
|
|
Capital
|
|
Shares
|
|
Amount
|
|
Earnings
|
|
Comprehensive Loss
|
|
Interest
|
|
Total
|
||||||||||||||||
Balance, December 31, 2017
|
|
132,349,534
|
|
|
1,323
|
|
|
906,616
|
|
|
(36,315,182
|
)
|
|
(827,379
|
)
|
|
2,773,300
|
|
|
(44,992
|
)
|
|
19,664
|
|
|
2,828,532
|
|
|||||||
Cash dividends ($0.12 dividend per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,531
|
)
|
|
—
|
|
|
—
|
|
|
(11,531
|
)
|
|||||||
Proceeds from treasury stock issued from the exercise of stock
options and other benefit plans, net of tax |
|
—
|
|
|
—
|
|
|
(4,511
|
)
|
|
193,013
|
|
|
3,222
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,289
|
)
|
|||||||
Stock based compensation
|
|
—
|
|
|
—
|
|
|
5,696
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,696
|
|
|||||||
Net income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88,366
|
|
|
—
|
|
|
(909
|
)
|
|
87,457
|
|
|||||||
Other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79,008
|
|
|
—
|
|
|
79,008
|
|
|||||||
Other owner changes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
356
|
|
|
356
|
|
|||||||
Balance, March 31, 2018
|
|
132,349,534
|
|
|
$
|
1,323
|
|
|
$
|
907,801
|
|
|
(36,122,169
|
)
|
|
$
|
(824,157
|
)
|
|
$
|
2,850,135
|
|
|
$
|
34,016
|
|
|
$
|
19,111
|
|
|
$
|
2,988,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance, December 31, 2018
|
|
132,349,534
|
|
|
1,323
|
|
|
914,568
|
|
|
(35,734,588
|
)
|
|
(816,145
|
)
|
|
3,021,968
|
|
|
(256,583
|
)
|
|
3,944
|
|
|
2,869,075
|
|
|||||||
Cash dividends ($0.12 dividend per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,687
|
)
|
|
—
|
|
|
—
|
|
|
(11,687
|
)
|
|||||||
Proceeds from treasury stock issued from the exercise of stock
options and other benefit plans, net of tax |
|
—
|
|
|
—
|
|
|
(14,446
|
)
|
|
420,472
|
|
|
8,931
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,515
|
)
|
|||||||
Stock based compensation
|
|
—
|
|
|
—
|
|
|
8,526
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,526
|
|
|||||||
Net (loss) income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,472
|
)
|
|
—
|
|
|
459
|
|
|
(4,013
|
)
|
|||||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52,417
|
)
|
|
—
|
|
|
(52,417
|
)
|
|||||||
Acquisition of General Electric Transportation
|
|
65,782,182
|
|
|
658
|
|
|
6,887,622
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86,765
|
|
|
6,975,045
|
|
|||||||
Other owner changes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,432
|
|
|
1,432
|
|
|||||||
Balance, March 31, 2019
|
|
198,131,716
|
|
|
$
|
1,981
|
|
|
$
|
7,796,270
|
|
|
(35,314,116
|
)
|
|
$
|
(807,214
|
)
|
|
$
|
3,005,809
|
|
|
$
|
(309,000
|
)
|
|
$
|
92,600
|
|
|
$
|
9,780,446
|
|
In thousands
|
Foreign
currency
translation
|
|
Derivative
contracts
|
|
Pension and
post
retirement
benefit plans
|
|
Total
|
||||||||
Balance at December 31, 2018
|
$
|
(202,204
|
)
|
|
$
|
(53
|
)
|
|
$
|
(54,326
|
)
|
|
$
|
(256,583
|
)
|
Other comprehensive income (loss) before reclassifications
|
(46,553
|
)
|
|
(3,111
|
)
|
|
(3,305
|
)
|
|
(52,969
|
)
|
||||
Amounts reclassified from accumulated other
|
|
|
|
|
|
|
|
||||||||
comprehensive income
|
—
|
|
|
—
|
|
|
552
|
|
|
552
|
|
||||
Net current period other comprehensive income (loss)
|
(46,553
|
)
|
|
(3,111
|
)
|
|
(2,753
|
)
|
|
(52,417
|
)
|
||||
Balance at March 31, 2019
|
$
|
(248,757
|
)
|
|
$
|
(3,164
|
)
|
|
$
|
(57,079
|
)
|
|
$
|
(309,000
|
)
|
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
|
$
|
(366
|
)
|
|
Other income (expense), net
|
Amortization of net loss
|
1,092
|
|
|
Other income (expense), net
|
|
|
726
|
|
|
Other income (expense), net
|
|
|
(174
|
)
|
|
Income tax expense
|
|
|
$
|
552
|
|
|
Net income
|
|
|
|
|
||
Derivative contracts
|
|
|
|
||
Realized loss on derivative contracts
|
$
|
—
|
|
|
Interest expense, net
|
|
—
|
|
|
Income tax expense
|
|
|
$
|
—
|
|
|
Net income
|
|
Foreign
currency translation |
|
Derivative
contracts |
|
Pension and
post retirement benefit plans |
|
Total
|
||||||||
Balance at December 31, 2017
|
$
|
5,063
|
|
|
$
|
4,015
|
|
|
$
|
(54,070
|
)
|
|
$
|
(44,992
|
)
|
Other comprehensive income (loss) before reclassifications
|
77,967
|
|
|
920
|
|
|
(847
|
)
|
|
78,040
|
|
||||
Amounts reclassified from accumulated other
|
|
|
|
|
|
|
|
||||||||
comprehensive income
|
—
|
|
|
448
|
|
|
520
|
|
|
968
|
|
||||
Net current period other comprehensive income (loss)
|
77,967
|
|
|
1,368
|
|
|
(327
|
)
|
|
79,008
|
|
||||
Balance at March 31, 2018
|
$
|
83,030
|
|
|
$
|
5,383
|
|
|
$
|
(54,397
|
)
|
|
$
|
34,016
|
|
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
|
$
|
(375
|
)
|
|
Other income (expense), net
|
Amortization of net loss
|
1,093
|
|
|
Other income (expense), net
|
|
|
718
|
|
|
Other income (expense), net
|
|
|
(198
|
)
|
|
Income tax expense
|
|
|
$
|
520
|
|
|
Net income
|
|
|
|
|
||
Derivative contracts
|
|
|
|
||
Realized loss on derivative contracts
|
$
|
679
|
|
|
Interest expense, net
|
|
(231
|
)
|
|
Income tax expense
|
|
|
$
|
448
|
|
|
Net income
|
In thousands
|
|
|
||
Assets acquired
|
|
|
||
Cash and cash equivalents
|
|
$
|
174,334
|
|
Accounts receivable
|
|
530,054
|
|
|
Inventories
|
|
1,179,439
|
|
|
Other current assets
|
|
64,464
|
|
|
Property, plant, and equipment
|
|
1,071,402
|
|
|
Goodwill
|
|
5,783,358
|
|
|
Trade names
|
|
50,000
|
|
|
Customer relationships
|
|
529,984
|
|
|
Intellectual property
|
|
1,219,968
|
|
|
Backlog
|
|
1,480,000
|
|
|
Other noncurrent assets
|
|
234,823
|
|
|
Total assets acquired
|
|
12,317,826
|
|
|
Liabilities assumed
|
|
|
||
Current liabilities
|
|
1,495,438
|
|
|
Contingent consideration
|
|
440,000
|
|
|
Other noncurrent liabilities
|
|
523,801
|
|
|
Total liabilities assumed
|
|
2,459,239
|
|
|
Net assets acquired
|
|
9,858,587
|
|
|
Noncontrolling interest
|
|
$
|
86,765
|
|
•
|
On
March 22, 2018
, the Company acquired Annax GmbH ("Annax"), a leading supplier of public address and passenger information systems for transit vehicles, for a purchase price of approximately
$28.7 million
, net of cash acquired, resulting in final goodwill of
$27.2 million
, none of which will be deductible for tax purposes.
|
|
Annax
|
||
In thousands
|
March 22,
2018 |
||
Current assets
|
$
|
32,831
|
|
Property, plant & equipment
|
674
|
|
|
Goodwill
|
27,188
|
|
|
Other intangible assets
|
11,715
|
|
|
Total assets acquired
|
72,408
|
|
|
Total liabilities assumed
|
(43,741
|
)
|
|
Net assets acquired
|
$
|
28,667
|
|
In thousands
|
Three Months Ended
March 31, 2019 |
|
Three Months Ended
March 31, 2018 |
||||
Net sales
|
$
|
2,079,771
|
|
|
$
|
1,881,724
|
|
Gross profit
|
543,480
|
|
|
553,681
|
|
||
Net income attributable to Wabtec shareholders
|
83,277
|
|
|
77,275
|
|
||
Diluted earnings per share
|
|
|
|
||||
As Reported
|
$
|
(0.04
|
)
|
|
$
|
0.92
|
|
Pro forma
|
$
|
0.44
|
|
|
$
|
0.41
|
|
In thousands
|
March 31,
2019 |
|
December 31,
2018 |
||||
Raw materials
|
$
|
822,178
|
|
|
$
|
465,873
|
|
Work-in-progress
|
435,565
|
|
|
154,485
|
|
||
Finished goods
|
689,477
|
|
|
224,528
|
|
||
Total inventories
|
$
|
1,947,220
|
|
|
$
|
844,886
|
|
In thousands
|
Freight
Segment
|
|
Transit
Segment
|
|
Total
|
||||||
Balance at December 31, 2018
|
$
|
713,391
|
|
|
$
|
1,683,153
|
|
|
$
|
2,396,544
|
|
Additions
|
5,783,358
|
|
|
—
|
|
|
5,783,358
|
|
|||
Foreign currency impact
|
(15,315
|
)
|
|
(22,114
|
)
|
|
(37,429
|
)
|
|||
Balance at March 31, 2019
|
$
|
6,481,434
|
|
|
$
|
1,661,039
|
|
|
$
|
8,142,473
|
|
In thousands
|
March 31,
2019 |
|
December 31,
2018 |
||||
Intellectual property, patents, non-compete and other intangibles, net of accumulated
|
|
|
|
||||
amortization of $51,127 and $42,446
|
$
|
2,697,919
|
|
|
$
|
15,328
|
|
Customer relationships, net of accumulated amortization
|
|
|
|
||||
of $168,774 and $158,533
|
1,041,551
|
|
|
531,761
|
|
||
Total
|
$
|
3,739,470
|
|
|
$
|
547,089
|
|
Remainder of 2019
|
$
|
191,746
|
|
2020
|
254,053
|
|
|
2021
|
253,908
|
|
|
2022
|
253,596
|
|
|
2023
|
253,258
|
|
In thousands
|
|
Contract Assets
|
||
Balance at beginning of year
|
|
$
|
345,585
|
|
Acquisitions
|
|
238,665
|
|
|
Recognized in current year
|
|
188,299
|
|
|
Reclassified to accounts receivable
|
|
(196,973
|
)
|
|
Foreign currency impact
|
|
(756
|
)
|
|
Balance at March 31, 2019
|
|
$
|
574,820
|
|
|
|
|
||
In thousands
|
|
Contract Liabilities
|
||
Balance at beginning of year
|
|
$
|
444,805
|
|
Acquisitions
|
|
274,054
|
|
|
Recognized in current year
|
|
205,272
|
|
|
Amounts in beginning balance reclassified to revenue
|
|
(204,388
|
)
|
|
Current year amounts reclassified to revenue
|
|
(6,421
|
)
|
|
Foreign currency impact
|
|
(424
|
)
|
|
Balance at March 31, 2019
|
|
$
|
712,898
|
|
|
Three Months Ended
March 31, |
||
(in thousands)
|
2019
|
||
Operating Lease Expense
|
$
|
13,397
|
|
Finance Lease Expense
|
|
||
Amortization of Leased Assets
|
271
|
|
|
Interest on Lease Liabilities
|
4
|
|
|
Short-term and Variable Lease Expense
|
105
|
|
|
Sublease Income
|
(138
|
)
|
|
Total
|
$
|
13,639
|
|
(in thousands)
|
Operating Leases
|
|
Finance
Leases
|
|
Total
|
||||||
Remaining 2019
|
$
|
38,094
|
|
|
$
|
278
|
|
|
$
|
38,372
|
|
2020
|
44,455
|
|
|
377
|
|
|
44,832
|
|
|||
2021
|
36,350
|
|
|
180
|
|
|
36,530
|
|
|||
2022
|
29,824
|
|
|
121
|
|
|
29,945
|
|
|||
2023
|
25,377
|
|
|
121
|
|
|
25,498
|
|
|||
Thereafter
|
106,069
|
|
|
348
|
|
|
106,417
|
|
|||
Total Lease Payments
|
280,169
|
|
|
1,425
|
|
|
281,594
|
|
|||
Less: Present Value Discount
|
(30,949
|
)
|
|
(5
|
)
|
|
(30,954
|
)
|
|||
Present Value Lease Liabilities
|
$
|
249,220
|
|
|
$
|
1,420
|
|
|
$
|
250,640
|
|
|
Three Months Ended
March 31, |
|
|
2019
|
|
Weighted-average remaining lease term (years)
|
|
|
Operating Leases
|
8.44
|
|
Finance Leases
|
5.68
|
|
Weighted-average discount rate
|
|
|
Operating Leases
|
3.00
|
%
|
Finance Leases
|
1.19
|
%
|
In thousands
|
March 31,
2019 |
|
December 31,
2018 |
||||
Floating Senior Notes, due 2021, net of unamortized debt
issuance costs of $2,904 and $3,204 |
$
|
497,096
|
|
|
$
|
496,796
|
|
4.150% Senior Notes, due 2024, net of unamortized debt
issuance costs of $6,703 and $7,043 |
743,297
|
|
|
742,957
|
|
||
4.70% Senior Notes, due 2028, net of unamortized debt
issuance costs of $10,076 and $10,343 |
1,239,924
|
|
|
1,239,657
|
|
||
3.45% Senior Notes, due 2026, net of unamortized debt
issuance costs of $1,661 and $1,718 |
748,339
|
|
|
748,282
|
|
||
4.375% Senior Notes, due 2023, net of unamortized
discount and debt issuance costs of $1,113 and $1,177 |
248,888
|
|
|
248,823
|
|
||
Revolving Credit Facility, net of unamortized
debt issuance costs of $2,865 and $3,138 |
1,226,903
|
|
|
338,112
|
|
||
Other Borrowings
|
258,147
|
|
|
42,246
|
|
||
Total
|
4,962,594
|
|
|
3,856,873
|
|
||
Less - current portion
|
321,308
|
|
|
64,099
|
|
||
Long-term portion
|
$
|
4,641,286
|
|
|
$
|
3,792,774
|
|
•
|
Floating Rate Senior Notes due 2021
-
The Company issued
$500.0 million
of Floating Rate Senior Notes due 2021 (the "Floating Rate Notes"). The Floating Rate Notes, which are non-callable for
one year
, were issued at
100%
of face value. Interest on the Floating Rate Notes accrues at a floating rate per annum equal to three-month Libor plus 105 basis points. The interest rate for the Floating Rate Notes for the initial interest period was the three-month Libor plus 105 basis points determined on September 12, 2018 and is payable quarterly on December 15, March 15, June 15, and September 15 of each year. The Company incurred
$3.5 million
of deferred financing costs related to the issuance of the Floating Rate Notes.
|
•
|
4.15% Senior Notes due 2024
-
The Company issued
$750.0 million
of
4.15%
Senior Notes due 2024 (the "2024 Notes"). The 2024 Notes were issued at
99.805%
of face value. Interest on the 2024 Notes accrues at a rate of
4.15%
per annum and is payable semi-annually on March 15 and September 15 of each year. The Company incurred
$7.4 million
of deferred financing costs related to the issuance of the 2024 Notes.
|
•
|
4.70% Senior Notes Due 2028
-
The Company issued
$1,250.0 million
of
4.70%
Senior Notes due 2028 (the "2028 Notes" and together with the Floating Rate Notes and 2024 Notes, the "Senior Notes"). The 2028 Notes were issued at
99.889%
of face value. Interest on the 2028 Notes accrues at a rate of
4.70%
per annum and is payable semi-annually on March 15 and September 15 of each year. The Company incurred
$10.6 million
of deferred financing costs related to the issuance of the 2028 Notes.
|
|
U.S.
|
|
International
|
||||||||||||
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
||||||||||||
In thousands, except percentages
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net periodic benefit cost
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
71
|
|
|
$
|
87
|
|
|
$
|
611
|
|
|
$
|
691
|
|
Interest cost
|
372
|
|
|
333
|
|
|
1,711
|
|
|
1,834
|
|
||||
Expected return on plan assets
|
(433
|
)
|
|
(445
|
)
|
|
(2,927
|
)
|
|
(3,466
|
)
|
||||
Net amortization/deferrals
|
207
|
|
|
243
|
|
|
641
|
|
|
554
|
|
||||
Net periodic benefit cost (credit)
|
$
|
217
|
|
|
$
|
218
|
|
|
$
|
36
|
|
|
$
|
(387
|
)
|
Assumptions
|
|
|
|
|
|
|
|
||||
Discount Rate
|
4.30
|
%
|
|
3.56
|
%
|
|
2.53
|
%
|
|
2.40
|
%
|
Expected long-term rate of return
|
5.35
|
%
|
|
5.15
|
%
|
|
5.01
|
%
|
|
5.10
|
%
|
Rate of compensation increase
|
3.00
|
%
|
|
3.00
|
%
|
|
2.60
|
%
|
|
2.60
|
%
|
|
U.S.
|
|
International
|
||||||||||||
|
Three Months Ended March 31,
|
|
Three Months Ended March 31,
|
||||||||||||
In thousands, except percentages
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net periodic benefit cost
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
8
|
|
Interest cost
|
89
|
|
|
81
|
|
|
20
|
|
|
26
|
|
||||
Net amortization/deferrals
|
(101
|
)
|
|
(76
|
)
|
|
(22
|
)
|
|
(4
|
)
|
||||
Net periodic benefit cost
|
$
|
(11
|
)
|
|
$
|
6
|
|
|
$
|
0
|
|
|
$
|
30
|
|
Assumptions
|
|
|
|
|
|
|
|
||||
Discount Rate
|
4.17
|
%
|
|
3.43
|
%
|
|
3.49
|
%
|
|
3.21
|
%
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual Life
|
|
Aggregate
Intrinsic value
(in thousands)
|
|||||
Outstanding at December 31, 2018
|
466,677
|
|
|
$
|
61.04
|
|
|
5.7
|
|
$
|
5,917
|
|
Granted
|
128,555
|
|
|
72.85
|
|
|
|
|
112
|
|
||
Exercised
|
(734
|
)
|
|
64.54
|
|
|
|
|
7
|
|
||
Canceled
|
(228
|
)
|
|
74.38
|
|
|
|
|
—
|
|
||
Outstanding at March 31, 2019
|
594,270
|
|
|
63.58
|
|
|
6.4
|
|
6,027
|
|
||
Exercisable at March 31, 2019
|
355,222
|
|
|
56.00
|
|
|
5.2
|
|
6,295
|
|
|
Three Months Ended
March 31, |
||||
|
2019
|
|
2018
|
||
Dividend yield
|
0.66
|
%
|
|
0.33
|
%
|
Risk-free interest rate
|
2.63
|
%
|
|
2.70
|
%
|
Stock price volatility
|
25.8
|
%
|
|
23.9
|
%
|
Expected life (years)
|
5.0
|
|
|
5.0
|
|
|
Restricted
Stock
and Units
|
|
Incentive
Stock
Units
|
|
Weighted
Average Grant
Date Fair
Value
|
||||
Outstanding at December 31, 2018
|
445,089
|
|
|
415,243
|
|
|
$
|
75.51
|
|
Granted
|
535,873
|
|
|
258,600
|
|
|
70.64
|
|
|
Vested
|
(105,651
|
)
|
|
(119,835
|
)
|
|
68.62
|
|
|
Adjustment for incentive stock awards expected to vest
|
—
|
|
|
18,398
|
|
|
81.20
|
|
|
Canceled
|
(6,733
|
)
|
|
(5,350
|
)
|
|
80.17
|
|
|
Outstanding at March 31, 2019
|
868,578
|
|
|
567,056
|
|
|
73.93
|
|
|
Three Months Ended
March 31, |
||||||
In thousands, except per share data
|
2019
|
|
2018
|
||||
Numerator
|
|
|
|
||||
Numerator for basic and diluted earnings per common
share - net income attributable
|
|
|
|
||||
to Wabtec shareholders
|
$
|
(4,472
|
)
|
|
$
|
88,366
|
|
Less: dividends declared - common shares
and non-vested restricted stock
|
(11,687
|
)
|
|
(11,531
|
)
|
||
Undistributed earnings
|
(16,159
|
)
|
|
76,835
|
|
||
Percentage allocated to common shareholders (1)
|
99.7
|
%
|
|
99.7
|
%
|
||
|
(16,111
|
)
|
|
76,604
|
|
||
Add: dividends declared - common shares
|
11,646
|
|
|
11,497
|
|
||
Numerator for basic and diluted earnings per
common share
|
$
|
(4,465
|
)
|
|
$
|
88,101
|
|
Denominator
|
|
|
|
||||
Denominator for basic earnings per common
share - weighted average shares
|
121,226
|
|
|
95,810
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Assumed conversion of dilutive stock-based
compensation plans
|
—
|
|
|
561
|
|
||
Denominator for diluted earnings per common share -
|
|
|
|
||||
adjusted weighted average shares and assumed conversion
|
121,226
|
|
|
96,371
|
|
||
Net income attributable to Wabtec
shareholders per common share
|
|
|
|
||||
Basic
|
$
|
(0.04
|
)
|
|
$
|
0.92
|
|
Diluted
|
$
|
(0.04
|
)
|
|
$
|
0.92
|
|
(1) Basic weighted-average common shares outstanding
|
121,226
|
|
|
95,810
|
|
Basic weighted-average common shares outstanding and
non-vested restricted stock expected to vest
|
121,565
|
|
|
96,091
|
|
Percentage allocated to common shareholders
|
99.7
|
%
|
|
99.7
|
%
|
In thousands
|
2019
|
|
2018
|
||||
Balance at beginning of year
|
$
|
153,702
|
|
|
$
|
153,063
|
|
Acquisitions
|
89,919
|
|
|
1,975
|
|
||
Warranty expense
|
34,627
|
|
|
11,677
|
|
||
Warranty claim payments
|
(27,841
|
)
|
|
(11,282
|
)
|
||
Foreign currency impact/other
|
(1,092
|
)
|
|
2,138
|
|
||
Balance at March 31
|
$
|
249,315
|
|
|
$
|
157,571
|
|
In millions
|
|
Designated
|
|
Non-Designated
|
|
Total
|
||||||
Gross notional amount
|
|
$
|
1,727.0
|
|
|
$
|
524.0
|
|
|
$
|
2,251.0
|
|
|
|
|
|
|
|
|
||||||
Fair Value:
|
|
|
|
|
|
|
||||||
Other current assets
|
|
$
|
4.3
|
|
|
$
|
—
|
|
|
$
|
4.3
|
|
Other current liabilities
|
|
—
|
|
|
(3.3
|
)
|
|
(3.3
|
)
|
|||
Total
|
|
$
|
4.3
|
|
|
$
|
(3.3
|
)
|
|
$
|
1.0
|
|
In millions
|
|
Designated
|
|
Non-Designated
|
|
Total
|
||||||
Gross notional amount
|
|
$
|
863.0
|
|
|
$
|
834.0
|
|
|
$
|
1,697.0
|
|
|
|
|
|
|
|
|
||||||
Fair Value:
|
|
|
|
|
|
|
||||||
Other current assets
|
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
1.3
|
|
Other current liabilities
|
|
(2.3
|
)
|
|
—
|
|
|
(2.3
|
)
|
|||
Total
|
|
$
|
(2.3
|
)
|
|
$
|
1.3
|
|
|
$
|
(1.0
|
)
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||
In thousands
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value |
|
Fair
Value |
||||
4.375% Senior Notes
|
248,888
|
|
|
250,108
|
|
|
248,823
|
|
|
254,218
|
|
3.45% Senior Notes
|
748,339
|
|
|
698,258
|
|
|
748,282
|
|
|
675,075
|
|
Floating Rate Notes 2021
|
497,096
|
|
|
500,495
|
|
|
496,796
|
|
|
497,425
|
|
4.15% Senior Notes
|
743,298
|
|
|
762,870
|
|
|
742,957
|
|
|
729,350
|
|
4.7% Senior Notes
|
1,239,924
|
|
|
1,267,750
|
|
|
1,239,657
|
|
|
1,179,625
|
|
In thousands
|
Freight
Segment
|
|
Transit
Segment
|
|
Corporate
Activities and
Elimination
|
|
Total
|
||||||||
Sales to external customers
|
$
|
876,434
|
|
|
$
|
717,183
|
|
|
$
|
—
|
|
|
$
|
1,593,617
|
|
Intersegment sales/(elimination)
|
16,704
|
|
|
6,122
|
|
|
(22,826
|
)
|
|
—
|
|
||||
Total sales
|
$
|
893,138
|
|
|
$
|
723,305
|
|
|
$
|
(22,826
|
)
|
|
$
|
1,593,617
|
|
Income (loss) from operations
|
$
|
75,210
|
|
|
$
|
58,933
|
|
|
$
|
(66,836
|
)
|
|
$
|
67,307
|
|
Interest expense and other, net
|
—
|
|
|
—
|
|
|
(52,797
|
)
|
|
(52,797
|
)
|
||||
Income (loss) from operations before income taxes
|
$
|
75,210
|
|
|
$
|
58,933
|
|
|
$
|
(119,633
|
)
|
|
$
|
14,510
|
|
In thousands
|
Freight
Segment
|
|
Transit
Segment
|
|
Corporate
Activities and
Elimination
|
|
Total
|
||||||||
Sales to external customers
|
$
|
379,554
|
|
|
$
|
676,623
|
|
|
$
|
—
|
|
|
$
|
1,056,177
|
|
Intersegment sales/(elimination)
|
12,002
|
|
|
3,889
|
|
|
(15,891
|
)
|
|
—
|
|
||||
Total sales
|
$
|
391,556
|
|
|
$
|
680,512
|
|
|
$
|
(15,891
|
)
|
|
$
|
1,056,177
|
|
Income (loss) from operations
|
$
|
69,623
|
|
|
$
|
68,083
|
|
|
$
|
(6,427
|
)
|
|
$
|
131,279
|
|
Interest expense and other, net
|
—
|
|
|
—
|
|
|
(17,698
|
)
|
|
(17,698
|
)
|
||||
Income (loss) from operations before income taxes
|
$
|
69,623
|
|
|
$
|
68,083
|
|
|
$
|
(24,125
|
)
|
|
$
|
113,581
|
|
|
Three Months Ended
March 31, |
||||||
In thousands
|
2019
|
|
2018
|
||||
Remanufacturing, Overhaul & Build
|
$
|
582,177
|
|
|
$
|
135,713
|
|
Specialty Products & Electronics
|
418,114
|
|
|
386,548
|
|
||
Transit Products
|
294,817
|
|
|
274,265
|
|
||
Brake Products
|
242,222
|
|
|
215,618
|
|
||
Other
|
56,287
|
|
|
44,033
|
|
||
Total sales
|
$
|
1,593,617
|
|
|
$
|
1,056,177
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Cash and cash equivalents
|
$
|
5,288
|
|
|
$
|
(38
|
)
|
|
$
|
507,620
|
|
|
$
|
—
|
|
|
$
|
512,870
|
|
Receivables, net
|
137,358
|
|
|
69,745
|
|
|
1,519,721
|
|
|
—
|
|
|
1,726,824
|
|
|||||
Inventories
|
139,550
|
|
|
62,766
|
|
|
1,744,904
|
|
|
—
|
|
|
1,947,220
|
|
|||||
Current assets - other
|
11,335
|
|
|
920
|
|
|
181,968
|
|
|
—
|
|
|
194,223
|
|
|||||
Total current assets
|
293,531
|
|
|
133,393
|
|
|
3,954,213
|
|
|
—
|
|
|
4,381,137
|
|
|||||
Property, plant and equipment, net
|
54,641
|
|
|
25,550
|
|
|
1,554,775
|
|
|
—
|
|
|
1,634,966
|
|
|||||
Goodwill
|
503,700
|
|
|
283,241
|
|
|
7,355,532
|
|
|
—
|
|
|
8,142,473
|
|
|||||
Investment in subsidiaries
|
16,575,061
|
|
|
5,258,593
|
|
|
—
|
|
|
(21,833,654
|
)
|
|
—
|
|
|||||
Other intangibles, net
|
28,924
|
|
|
77,924
|
|
|
4,257,173
|
|
|
—
|
|
|
4,364,021
|
|
|||||
Other long-term assets
|
26,262
|
|
|
6,772
|
|
|
522,274
|
|
|
—
|
|
|
555,308
|
|
|||||
Total assets
|
$
|
17,482,119
|
|
|
$
|
5,785,473
|
|
|
$
|
17,643,967
|
|
|
$
|
(21,833,654
|
)
|
|
$
|
19,077,905
|
|
Current liabilities
|
$
|
467,702
|
|
|
$
|
84,137
|
|
|
$
|
2,702,596
|
|
|
$
|
—
|
|
|
$
|
3,254,435
|
|
Inter-company
|
2,557,628
|
|
|
(1,458,674
|
)
|
|
(1,098,954
|
)
|
|
—
|
|
|
—
|
|
|||||
Long-term debt
|
4,387,180
|
|
|
—
|
|
|
254,106
|
|
|
—
|
|
|
4,641,286
|
|
|||||
Long-term liabilities - other
|
381,763
|
|
|
54,560
|
|
|
965,415
|
|
|
—
|
|
|
1,401,738
|
|
|||||
Total liabilities
|
7,794,273
|
|
|
(1,319,977
|
)
|
|
2,823,163
|
|
|
—
|
|
|
9,297,459
|
|
|||||
Shareholders' equity
|
9,672,846
|
|
|
7,105,450
|
|
|
14,743,204
|
|
|
(21,833,654
|
)
|
|
9,687,846
|
|
|||||
Non-controlling interest
|
15,000
|
|
|
—
|
|
|
77,600
|
|
|
—
|
|
|
92,600
|
|
|||||
Total shareholders' equity
|
$
|
9,687,846
|
|
|
$
|
7,105,450
|
|
|
$
|
14,820,804
|
|
|
$
|
(21,833,654
|
)
|
|
$
|
9,780,446
|
|
Total Liabilities and Shareholders' Equity
|
$
|
17,482,119
|
|
|
$
|
5,785,473
|
|
|
$
|
17,643,967
|
|
|
$
|
(21,833,654
|
)
|
|
$
|
19,077,905
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Cash and cash equivalents
|
$
|
1,782,682
|
|
|
$
|
(119
|
)
|
|
$
|
559,791
|
|
|
$
|
—
|
|
|
$
|
2,342,354
|
|
Receivables, net
|
106,815
|
|
|
61,513
|
|
|
978,450
|
|
|
—
|
|
|
1,146,778
|
|
|||||
Inventories
|
149,622
|
|
|
69,116
|
|
|
626,148
|
|
|
—
|
|
|
844,886
|
|
|||||
Current assets - other
|
11,884
|
|
|
690
|
|
|
103,075
|
|
|
—
|
|
|
115,649
|
|
|||||
Total current assets
|
2,051,003
|
|
|
131,200
|
|
|
2,267,464
|
|
|
—
|
|
|
4,449,667
|
|
|||||
Property, plant and equipment, net
|
51,551
|
|
|
24,755
|
|
|
487,431
|
|
|
—
|
|
|
563,737
|
|
|||||
Goodwill
|
25,275
|
|
|
283,241
|
|
|
2,088,028
|
|
|
—
|
|
|
2,396,544
|
|
|||||
Investment in subsidiaries
|
6,707,979
|
|
|
4,022,107
|
|
|
—
|
|
|
(10,730,086
|
)
|
|
—
|
|
|||||
Other intangibles, net
|
29,254
|
|
|
78,547
|
|
|
1,022,079
|
|
|
—
|
|
|
1,129,880
|
|
|||||
Other long-term assets
|
8,775
|
|
|
149
|
|
|
100,482
|
|
|
—
|
|
|
109,406
|
|
|||||
Total assets
|
$
|
8,873,837
|
|
|
$
|
4,539,999
|
|
|
$
|
5,965,484
|
|
|
$
|
(10,730,086
|
)
|
|
$
|
8,649,234
|
|
Current liabilities
|
$
|
264,630
|
|
|
$
|
91,004
|
|
|
$
|
1,291,056
|
|
|
$
|
—
|
|
|
$
|
1,646,690
|
|
Inter-company
|
1,947,504
|
|
|
(1,436,222
|
)
|
|
(511,282
|
)
|
|
—
|
|
|
—
|
|
|||||
Long-term debt
|
3,779,627
|
|
|
—
|
|
|
13,147
|
|
|
—
|
|
|
3,792,774
|
|
|||||
Long-term liabilities - other
|
16,945
|
|
|
48,714
|
|
|
275,036
|
|
|
—
|
|
|
340,695
|
|
|||||
Total liabilities
|
6,008,706
|
|
|
(1,296,504
|
)
|
|
1,067,957
|
|
|
—
|
|
|
5,780,159
|
|
|||||
Shareholders' equity
|
2,865,131
|
|
|
5,836,503
|
|
|
4,893,583
|
|
|
(10,730,086
|
)
|
|
2,865,131
|
|
|||||
Non-controlling interest
|
—
|
|
|
—
|
|
|
3,944
|
|
|
—
|
|
|
3,944
|
|
|||||
Total shareholders' equity
|
$
|
2,865,131
|
|
|
$
|
5,836,503
|
|
|
$
|
4,897,527
|
|
|
$
|
(10,730,086
|
)
|
|
$
|
2,869,075
|
|
Total Liabilities and Shareholders' Equity
|
$
|
8,873,837
|
|
|
$
|
4,539,999
|
|
|
$
|
5,965,484
|
|
|
$
|
(10,730,086
|
)
|
|
$
|
8,649,234
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
193,066
|
|
|
$
|
128,803
|
|
|
$
|
1,327,249
|
|
|
$
|
(55,501
|
)
|
|
$
|
1,593,617
|
|
Cost of sales
|
(157,650
|
)
|
|
(82,015
|
)
|
|
(998,019
|
)
|
|
33,084
|
|
|
(1,204,600
|
)
|
|||||
Gross profit
|
35,416
|
|
|
46,788
|
|
|
329,230
|
|
|
(22,417
|
)
|
|
389,017
|
|
|||||
Total operating expenses
|
(97,540
|
)
|
|
(15,321
|
)
|
|
(208,849
|
)
|
|
—
|
|
|
(321,710
|
)
|
|||||
Income from operations
|
(62,124
|
)
|
|
31,467
|
|
|
120,381
|
|
|
(22,417
|
)
|
|
67,307
|
|
|||||
Interest (expense) income, net
|
(41,646
|
)
|
|
3,478
|
|
|
(6,401
|
)
|
|
—
|
|
|
(44,569
|
)
|
|||||
Other income (expense), net
|
20,333
|
|
|
(2,485
|
)
|
|
(26,076
|
)
|
|
—
|
|
|
(8,228
|
)
|
|||||
Equity earnings
|
91,482
|
|
|
79,759
|
|
|
—
|
|
|
(171,241
|
)
|
|
—
|
|
|||||
Pretax income
|
8,045
|
|
|
112,219
|
|
|
87,904
|
|
|
(193,658
|
)
|
|
14,510
|
|
|||||
Income tax (expense) benefit
|
(12,517
|
)
|
|
—
|
|
|
(6,006
|
)
|
|
—
|
|
|
(18,523
|
)
|
|||||
Net income
|
(4,472
|
)
|
|
112,219
|
|
|
81,898
|
|
|
(193,658
|
)
|
|
(4,013
|
)
|
|||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(459
|
)
|
|
—
|
|
|
(459
|
)
|
|||||
Net income attributable to Wabtec shareholders
|
$
|
(4,472
|
)
|
|
$
|
112,219
|
|
|
$
|
81,439
|
|
|
$
|
(193,658
|
)
|
|
$
|
(4,472
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income attributable to Wabtec shareholders
|
$
|
(4,472
|
)
|
|
$
|
112,219
|
|
|
$
|
29,022
|
|
|
$
|
(193,658
|
)
|
|
$
|
(56,889
|
)
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Net Sales
|
$
|
161,301
|
|
|
$
|
301,706
|
|
|
$
|
641,663
|
|
|
$
|
(48,493
|
)
|
|
$
|
1,056,177
|
|
Cost of sales
|
(118,658
|
)
|
|
(179,090
|
)
|
|
(488,233
|
)
|
|
40,685
|
|
|
(745,296
|
)
|
|||||
Gross profit
|
42,643
|
|
|
122,616
|
|
|
153,430
|
|
|
(7,808
|
)
|
|
310,881
|
|
|||||
Total operating expenses
|
(35,627
|
)
|
|
(37,327
|
)
|
|
(106,648
|
)
|
|
—
|
|
|
(179,602
|
)
|
|||||
Income from operations
|
7,016
|
|
|
85,289
|
|
|
46,782
|
|
|
(7,808
|
)
|
|
131,279
|
|
|||||
Interest (expense) income, net
|
(20,394
|
)
|
|
2,301
|
|
|
(2,191
|
)
|
|
—
|
|
|
(20,284
|
)
|
|||||
Other income (expense), net
|
8,729
|
|
|
(2,469
|
)
|
|
(3,674
|
)
|
|
—
|
|
|
2,586
|
|
|||||
Equity earnings
|
106,698
|
|
|
28,720
|
|
|
—
|
|
|
(135,418
|
)
|
|
—
|
|
|||||
Pretax income
|
102,049
|
|
|
113,841
|
|
|
40,917
|
|
|
(143,226
|
)
|
|
113,581
|
|
|||||
Income tax expense
|
(13,682
|
)
|
|
1,194
|
|
|
(13,636
|
)
|
|
—
|
|
|
(26,124
|
)
|
|||||
Net income
|
88,367
|
|
|
115,035
|
|
|
27,281
|
|
|
(143,226
|
)
|
|
87,457
|
|
|||||
Less: Net income attributable to noncontrolling interest
|
—
|
|
|
215
|
|
|
694
|
|
|
—
|
|
|
909
|
|
|||||
Net income attributable to Wabtec shareholders
|
$
|
88,367
|
|
|
$
|
115,250
|
|
|
$
|
27,975
|
|
|
$
|
(143,226
|
)
|
|
$
|
88,366
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income attributable to Wabtec shareholders
|
$
|
88,649
|
|
|
$
|
115,250
|
|
|
$
|
106,701
|
|
|
$
|
(143,226
|
)
|
|
$
|
167,374
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Net cash (used for) provided by operating activities
|
$
|
(118,411
|
)
|
|
$
|
24,140
|
|
|
$
|
148,026
|
|
|
$
|
(22,417
|
)
|
|
$
|
31,338
|
|
Net cash provided by (used for) investing activities
|
6,898,021
|
|
|
(1,601
|
)
|
|
(9,636,068
|
)
|
|
—
|
|
|
(2,739,648
|
)
|
|||||
Net cash (used for) provided by financing activities
|
(8,557,004
|
)
|
|
(22,458
|
)
|
|
9,440,035
|
|
|
22,417
|
|
|
882,990
|
|
|||||
Effect of changes in currency exchange rates
|
—
|
|
|
—
|
|
|
(4,164
|
)
|
|
—
|
|
|
(4,164
|
)
|
|||||
(Decrease) increase in cash
|
(1,777,394
|
)
|
|
81
|
|
|
(52,171
|
)
|
|
—
|
|
|
(1,829,484
|
)
|
|||||
Cash, cash equivalents, and restricted cash beginning of period
|
1,782,682
|
|
|
(119
|
)
|
|
559,791
|
|
|
—
|
|
|
2,342,354
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
5,288
|
|
|
$
|
(38
|
)
|
|
$
|
507,620
|
|
|
$
|
—
|
|
|
$
|
512,870
|
|
In thousands
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Elimination
|
|
Consolidated
|
||||||||||
Net cash (used for) provided by operating activities
|
$
|
(9,439
|
)
|
|
$
|
50,789
|
|
|
$
|
(9,342
|
)
|
|
$
|
(7,808
|
)
|
|
$
|
24,200
|
|
Net cash (used for) provided by investing activities
|
(1,759
|
)
|
|
(3,693
|
)
|
|
(38,413
|
)
|
|
—
|
|
|
(43,865
|
)
|
|||||
Net cash provided by (used for) financing activities
|
22,973
|
|
|
(49,808
|
)
|
|
47,695
|
|
|
7,808
|
|
|
28,668
|
|
|||||
Effect of changes in currency exchange rates
|
—
|
|
|
—
|
|
|
7,482
|
|
|
—
|
|
|
7,482
|
|
|||||
Increase (decrease) in cash
|
11,775
|
|
|
(2,712
|
)
|
|
7,422
|
|
|
—
|
|
|
16,485
|
|
|||||
Cash, cash equivalents and restricted cash, beginning of period
|
933
|
|
|
4,802
|
|
|
227,666
|
|
|
—
|
|
|
233,401
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
12,708
|
|
|
$
|
2,090
|
|
|
$
|
235,088
|
|
|
$
|
—
|
|
|
$
|
249,886
|
|
|
Three Months Ended
March 31, |
||||||
In thousands
|
2019
|
|
2018
|
||||
Foreign currency (loss) gain
|
$
|
(12,682
|
)
|
|
$
|
(1,032
|
)
|
Equity income
|
929
|
|
|
629
|
|
||
Expected return on pension assets/amortization
|
3,376
|
|
|
3,023
|
|
||
Other miscellaneous expense (income)
|
149
|
|
|
(34
|
)
|
||
Total other (expense) income, net
|
$
|
(8,228
|
)
|
|
$
|
2,586
|
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
March 31, |
|||||||||
In thousands
|
2019
|
|
2018
|
|
Percent Change
|
|||||
Net sales:
|
|
|
|
|
|
|||||
Sales of goods
|
$
|
1,434,509
|
|
|
$
|
1,010,677
|
|
|
41.9
|
%
|
Sales of services
|
159,108
|
|
|
45,500
|
|
|
249.7
|
%
|
||
Total net sales
|
1,593,617
|
|
|
1,056,177
|
|
|
50.9
|
%
|
||
Cost of sales:
|
|
|
|
|
|
|||||
Cost of goods
|
(1,073,571
|
)
|
|
(709,278
|
)
|
|
51.4
|
%
|
||
Cost of services
|
(131,029
|
)
|
|
(36,018
|
)
|
|
263.8
|
%
|
||
Total cost of sales
|
(1,204,600
|
)
|
|
(745,296
|
)
|
|
61.6
|
%
|
||
Gross profit
|
389,017
|
|
|
310,881
|
|
|
25.1
|
%
|
||
Operating expenses:
|
|
|
|
|
|
|||||
Selling, general and administrative expenses
|
(259,723
|
)
|
|
(147,201
|
)
|
|
76.4
|
%
|
||
Engineering expenses
|
(34,545
|
)
|
|
(22,049
|
)
|
|
56.7
|
%
|
||
Amortization expense
|
(27,442
|
)
|
|
(10,352
|
)
|
|
165.1
|
%
|
||
Total operating expenses
|
(321,710
|
)
|
|
(179,602
|
)
|
|
79.1
|
%
|
||
Income from operations
|
67,307
|
|
|
131,279
|
|
|
(48.7
|
)%
|
||
Other income and expenses:
|
|
|
|
|
|
|||||
Interest expense, net
|
(44,569
|
)
|
|
(20,284
|
)
|
|
119.7
|
%
|
||
Other (expense) income, net
|
(8,228
|
)
|
|
2,586
|
|
|
(418.2
|
)%
|
||
Income from operations before income taxes
|
14,510
|
|
|
113,581
|
|
|
(87.2
|
)%
|
||
Income tax expense
|
(18,523
|
)
|
|
(26,124
|
)
|
|
(29.1
|
)%
|
||
Net (loss) income
|
(4,013
|
)
|
|
87,457
|
|
|
(104.6
|
)%
|
||
Less: Net (gain) loss attributable to noncontrolling interest
|
(459
|
)
|
|
909
|
|
|
(150.5
|
)%
|
||
Net (loss) income attributable to Wabtec shareholders
|
(4,472
|
)
|
|
88,366
|
|
|
(105.1
|
)%
|
In thousands
|
Freight
Segment |
|
Transit
Segment |
|
Total
|
||||||
First Quarter 2018 Net Sales
|
$
|
379,554
|
|
|
$
|
676,623
|
|
|
$
|
1,056,177
|
|
Acquisitions
|
494,976
|
|
|
14,748
|
|
|
509,724
|
|
|||
Change in Sales by Product Line:
|
|
|
|
|
|
||||||
Brake Products
|
292
|
|
|
97,675
|
|
|
97,967
|
|
|||
Specialty Products & Electronics
|
9,242
|
|
|
(9,211
|
)
|
|
31
|
|
|||
Remanufacturing, Overhaul & Build
|
(171
|
)
|
|
(1,635
|
)
|
|
(1,806
|
)
|
|||
Transit Products
|
—
|
|
|
(12,283
|
)
|
|
(12,283
|
)
|
|||
Other
|
(56
|
)
|
|
2,063
|
|
|
2,007
|
|
|||
Foreign exchange
|
(7,403
|
)
|
|
(50,797
|
)
|
|
(58,200
|
)
|
|||
First Quarter 2019 Net Sales
|
$
|
876,434
|
|
|
$
|
717,183
|
|
|
$
|
1,593,617
|
|
|
Three Months Ended March 31,
|
|||||||||
In thousands
|
2019
|
|
2018
|
|
Percent Change
|
|||||
Net sales:
|
|
|
|
|
|
|||||
Sales of goods
|
$
|
729,161
|
|
|
$
|
345,863
|
|
|
110.8
|
%
|
Sales of services
|
147,273
|
|
|
33,691
|
|
|
337.1
|
%
|
||
Total net sales
|
876,434
|
|
|
379,554
|
|
|
130.9
|
%
|
||
Cost of sales:
|
|
|
|
|
|
|||||
Cost of goods
|
(547,988
|
)
|
|
(230,238
|
)
|
|
138.0
|
%
|
||
Cost of services
|
(122,060
|
)
|
|
(26,741
|
)
|
|
356.5
|
%
|
||
Total cost of sales
|
(670,048
|
)
|
|
(256,979
|
)
|
|
160.7
|
%
|
||
|
|
|
|
|
|
|||||
Gross profit
|
206,386
|
|
|
122,575
|
|
|
68.4
|
%
|
||
|
|
|
|
|
|
|||||
Operating expenses
|
(131,176
|
)
|
|
(52,952
|
)
|
|
147.7
|
%
|
||
|
|
|
|
|
|
|||||
Income from operations ($)
|
75,210
|
|
|
69,623
|
|
|
8.0
|
%
|
||
Income from operations (%)
|
8.6
|
%
|
|
18.3
|
%
|
|
|
|
Three Months Ended March 31,
|
|||||||||
In thousands
|
2019
|
|
2018
|
|
Percent Change
|
|||||
|
|
|
|
|
|
|||||
Net sales
|
$
|
717,183
|
|
|
$
|
676,623
|
|
|
6.0
|
%
|
Cost of sales
|
(534,552
|
)
|
|
(488,317
|
)
|
|
9.5
|
%
|
||
Gross profit
|
182,631
|
|
|
188,306
|
|
|
(3.0
|
)%
|
||
|
|
|
|
|
|
|||||
Operating expenses
|
(123,698
|
)
|
|
(120,223
|
)
|
|
2.9
|
%
|
||
|
|
|
|
|
|
|||||
Income from operations ($)
|
58,933
|
|
|
68,083
|
|
|
(13.4
|
)%
|
||
Income from operations (%)
|
8.2
|
%
|
|
10.1
|
%
|
|
|
|
Three Months Ended
March 31, |
||||||
In thousands
|
2019
|
|
2018
|
||||
Cash provided by (used for):
|
|
|
|
||||
Operating activities
|
$
|
31,338
|
|
|
$
|
24,200
|
|
Investing activities
|
(2,739,648
|
)
|
|
(43,865
|
)
|
||
Financing activities
|
882,990
|
|
|
28,668
|
|
||
(Decrease)/increase in cash
|
$
|
(1,829,484
|
)
|
|
$
|
16,485
|
|
•
|
Floating Rate Senior Notes due 2021
-
The Company issued
$500.0 million
of Floating Rate Senior Notes due 2021 (the "Floating Rate Notes"). The Floating Rate Notes, which are non-callable for
one year
, were issued at
100%
of face value. Interest on the Floating Rate Notes accrues at a floating rate per annum equal to three-month Libor plus 105 basis points. The interest rate for the Floating Rate Notes for the initial interest period was the three-month Libor plus 105 basis points determined on September 12, 2018 and is payable quarterly on December 15, March 15, June 15, and September 15 of each year. The Company incurred
$3.5 million
of deferred financing costs related to the issuance of the Floating Rate Notes.
|
•
|
4.15% Senior Notes due 2024
-
The Company issued
$750.0 million
of
4.15%
Senior Notes due 2024 (the "2024 Notes"). The 2024 Notes were issued at
99.805%
of face value. Interest on the 2024 Notes accrues at a rate of
4.15%
per annum and is payable semi-annually on March 15 and September 15 of each year. The Company incurred
$7.4 million
of deferred financing costs related to the issuance of the 2024 Notes.
|
•
|
4.70% Senior Notes Due 2028
-
The Company issued
$1,250.0 million
of
4.70%
Senior Notes due 2028 (the "2028 Notes" and together with the Floating Rate Notes and 2024 Notes, the "Senior Notes"). The 2028 Notes were issued at
99.889%
of face value. Interest on the 2028 Notes accrues at a rate of
4.70%
per annum and is payable semi-annually on March 15 and September 15 of each year. The Company incurred
$10.6 million
of deferred financing costs related to the issuance of the 2028 Notes.
|
•
|
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 and GE Transportation; or
|
•
|
the development and use of new technology;
|
•
|
the actions of competitors; or
|
•
|
the outcome of negotiations with partners, suppliers, customers or others;
|
•
|
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 governments.
|
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)
|
||||||
January 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
137,824
|
|
|
February 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
137,824
|
|
March 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
137,824
|
|
Total quarter ended March 31, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
137,824
|
|
(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
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
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 and
Chief Financial Officer
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
|
|
|
DATE:
|
May 9, 2019
|
a)
|
Date of Termination
. Executive’s employment with the Company terminated for Good Reason effective as of February 12, 2019 (the “
Date of Termination
”). Both parties agree that the requirement to supply a notice of termination for Good Reason (as defined in the Employment Agreement or otherwise) has been waived or satisfied as of the date hereof. In addition, Executive resigns, effective as of the Date of Termination, from his position as a Director of the Company and Chief Operating Officer of the Company, and, effective on or prior to the Date of Termination, from all other positions Executive holds as an officer, director or employee of the Company or any of its subsidiaries and affiliates. Executive will execute such other documents and take such other actions as may be necessary or reasonably requested by the Company or any of its subsidiaries or affiliates to effectuate or memorialize the resignation of such positions,
with any such requests to be made before the Date of Termination to the extent reasonably practicable.
|
b)
|
Severance Benefits
. In consideration for Executive’s (i) execution of this Separation Agreement, (ii) execution, no earlier than the Date of Termination and no later than 52 days following the Date of Termination, of the release of claims attached hereto as
Exhibit A
(the “
Release
”), and (iii) non-revocation of the Release, (x) for purposes of the Employment Agreement, Company and Executive agree that Executive’s termination of employment from the Company constitutes a termination of employment for Good Reason entitling Executive to the payments under Section 4(a) of the Employment Agreement, and (y) Executive will receive the payments and benefits as specified on the attached
Exhibit B
and the Consulting Agreement in the attached
Exhibit C
, all subject to applicable tax withholding (collectively, the “
Severance Benefits
”). A lump-sum cash payment of 270,000 Euros (the “
Cash Payment
”) and the Severance Benefits are in full satisfaction of all payment obligations of the Company and its subsidiaries under the Employment Agreement, the Company 2011 Stock Incentive Plan (as amended or amended and restated from time to time, the “
Equity Plan
”), the Company Long Term Incentive Plan and other compensation arrangements of the Company and its subsidiaries, including but not limited to, Executive’s positions with any of the Company’s subsidiaries in France.
|
c)
|
Faiveley Transport Shares
. The parties acknowledge that Executive currently owns 10,000 shares of stock issued by Faiveley Transport, a subsidiary of the Company, (the “
Faiveley Transport Shares
”), and that Executive has the right to sell the Faiveley Transport Shares to the Company at a defined price of 103.96 Euros per share (the “
Faiveley Transport Share Price
”). Executive shall sell the Faiveley Transport Shares to the Company, and the Company shall purchase the Faiveley Transport Shares from
|
d)
|
Consulting Agreement
. Executive and the Company agree to enter into the Consulting Agreement, attached hereto as
Exhibit C
, effective as of the Date of Termination.
|
e)
|
Non-Disparagement
. Executive agrees that he shall not talk about or otherwise communicate to any third parties in a malicious, disparaging or defamatory manner regarding the Company or its past or present employees, officers, directors, managers, board members, stockholders, subsidiaries, successors, and anyone acting on its or their joint or several behalf (the “
Company Parties
”), or any aspect of his employment with the Company or its subsidiaries. Further, Executive shall not make or authorize to be made any written or oral statement that may disparage or damage the reputation of the Company or the Company Parties. Similarly, the Company agrees that it shall use its best efforts to cause its executive officers, directors, members of the Executive Office and Group Executives (the “
Company Individuals
”) to refrain from talking about or otherwise communicating to any third parties in a malicious, disparaging or defamatory manner regarding Executive. Company shall indemnify Executive for any economic damages caused to him as a result of any Company Individual who communicates in writing or orally about Executive in an intentionally or recklessly malicious, disparaging or defamatory manner.
|
f)
|
Indemnification Obligation
. The Company shall indemnify Executive, including, but not limited to, advancing expenses as provided in the Company’s By-Laws, to the maximum extent permitted under applicable law for acts taken within the scope of his employment and his service as an officer or director of the Company or any of its subsidiaries or affiliates. To the extent that the Company obtains coverage under a director and officer indemnification policy, Executive will be entitled to such coverage on a basis that is no less favorable than the coverage provided to any other officer or director of the Company.
|
g)
|
Company Property
. Executive affirms that he has, or will have within a reasonable time after the Date of Termination, returned to the Company in reasonable working order all Company Property, as described more fully below. “Company Property” includes Company (or its subsidiary)-owned or leased motor vehicles, equipment, supplies and
|
h)
|
Acknowledgements
. Nothing in this Separation Agreement prevents Executive from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations. Furthermore, no Company policy or individual agreement between the Company and Executive shall prevent Executive from providing information to government authorities regarding possible legal violations, participating in investigations, testifying in proceedings regarding the Company’s past or future conduct, engaging in any future activities protected under the whistleblower statutes administered by any government agency (e.g., the Equal Employment Opportunity Commission, National Labor Relations Board, Securities and Exchange Commission, etc.) or receiving a monetary award from a government-administered whistleblower award program for providing information directly to a government agency. The Company nonetheless asserts and does not waive its attorney-client privilege over any information appropriately protected by such privilege.
|
i)
|
Nature of Agreement
. This Separation Agreement, including any documents executed pursuant to paragraph (a) of the Separation Agreement contains the entire agreement between the Company (including its subsidiaries) and Executive regarding Executive’s departure from the Company. This Separation Agreement may not be altered, modified, waived or amended except by a written document signed by a duly authorized representative of the Company and Executive. The headings in this document are for reference only and shall not in any way affect the meaning or interpretation of this Separation Agreement.
|
j)
|
Choice of Law
. Except as expressly provided in an Exhibit hereto with respect to such Exhibit, this Separation Agreement will be governed by and construed in accordance with the laws of the state of New York, without giving effect to any choice of law or conflicting provision or rule (whether of the state of New York or any other jurisdiction) that would cause the laws of any jurisdiction other than the state of New York to be applied. In furtherance of the foregoing, the internal law of the state of New York will control the interpretation and construction of this Separation Agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.
|
1.
|
Within 30 days after the Date of Termination, the Company shall pay to Executive a lump sum cash amount equal to U.S. $________, which reflects the sum of (a) Executive’s annual Base Salary of U.S. $900,000 through the Date of Termination to the extent not heretofore paid, in full satisfaction of Section 4(a)(i)(A) of the Employment Agreement; and (b) Executive’s accrued vacation pay through February 12, 2019, in full satisfaction of Section 4(a)(i)(D) of the Employment Agreement. Within 30 days after the Date of Termination, Executive shall submit to the Company his business expenses that are reimbursable under the Employment Agreement, and the Company shall pay to Executive, in U.S. dollars, a lump sum cash amount equal to those expenses, in full satisfaction of Section 4(a)(i)(B) of the Employment Agreement. In December, 2018, the Company pre-paid to Executive a lump sum cash payment in the amount of U.S. $900,000 in respect of his Annual Bonus for 2018. The Company represents that, in the exercise of good faith, it has calculated the performance of the Company in 2018 such that Executive is entitled to be paid the $900,000 already paid and no additional amount in connection with his Annual Bonus for 2018. Thus, this payment is in full satisfaction of Section 4(a)(i)(C) of the Employment Agreement. Executive and the Company agree that Executive is not entitled to any additional amounts with respect to his Annual Bonus for 2018.
|
2.
|
On March 30, 2019, the Company shall pay to Executive a lump sum cash amount equal to U.S. $3,600,000, in full satisfaction of Section 4(a)(ii) of the Employment Agreement.
|
3.
|
At such time as the Company pays annual bonuses to senior executives of the Company for calendar year 2019 (and paid by December 31, 2019 to the extent reasonably possible), the Company shall pay to Executive, in U.S. dollars, in full satisfaction of Section 4(a)(iii) of the Employment Agreement, a lump sum cash amount equal to the product obtained by multiplying (A) the full year bonus that Executive would have earned pursuant to the Employment Agreement
had Executive remained employed through the end of 2019 based on the degree of satisfaction of the applicable performance targets (but assuming target performance with respect to any subjective criteria), by (B) a fraction, the numerator of which is the total number of days that have elapsed from January 1, 2019 through the Date of Termination and the denominator of which is 365.
|
4.
|
With respect to the performance units of the Company granted to Executive on February 7, 2017 and February 6, 2018 (collectively, the “
Performance Units
”), Executive will be entitled to receive, at such time that the Performance Units would otherwise be paid under the terms of the applicable award agreement and the Equity Plan governing such Performance Units, a lump-sum cash payment in U.S. dollars equal to the product of (A) the total number of Performance Units Executive would have earned based on actual performance assuming Executive remained employed through the end of the applicable performance cycle, multiplied by (B) a fraction, the numerator of which is the total number of days that have elapsed during the applicable performance period through February 29, 2019 and the denominator of which is 1095, multiplied by (C) the Fair Market Value (as defined in the Equity Plan) of a share of Common Stock (as defined in the Equity Plan) as of the payment date designated by the Board of Directors of the Company for payment of performance units to all other performance unit award holders with respect to the applicable performance period.
In determining the number and value of Performance Units that Executive will receive, the Company agrees that the Executive will not be treated any worse than the other top five executives at the Company with respect to any factors
|
5.
|
With respect to the restricted stock units of the Company granted to Executive under the Equity Plan and applicable award agreement (collectively, the “
Restricted Stock Units
”), Executive will receive a lump sum cash payment in U.S. dollars equal to the Fair Market Value (as defined in the Equity Plan) as of May 1, 2019 of 35,183 Restricted Stock Units, with payment to be made by May 6, 2019.
|
6.
|
For the avoidance of any doubt, (a) the first and second sentence of Section 2.4 of the Equity Plan will not apply to any award granted under the Equity Plan that the Company has issued or may issue to Executive, including but not limited to the Performance Units that Executive has, will and/or may receive, any performance units that Executive has previously received, the Restricted Stock Units, and any shares of the Company previously issued to Executive, and (b) clause (iv) in the last sentence of Section 2.4 of the Equity Plan refers solely to the Wabtec Corporation 2013 Recoupment Policy.
|
7.
|
If Executive dies before all payments due to Executive under the Separation Agreement or this
Exhibit B
have been paid, the amounts remaining due shall be paid to his surviving spouse who is Alexandra Rambaud-Measson (or, if none, his estate), at the same time such amounts would have otherwise been paid to Executive.
|
8.
|
With respect to Executive’s taxes for calendar years 2018, 2019 and 2020, the Company will, at Executive’s request, arrange for Executive (or his estate if he has died) to obtain tax planning advice and tax return preparation services from Deloitte pursuant to preexisting arrangements for expatriate personnel whose primary work location is at the Company’s headquarters. Any such services for tax returns related to calendar years 2018, 2019 and 2020 will be provided between the Date of Termination and December 31, 2022.
|
9.
|
The Company will, consistent with its relocation policy as in effect from time to time, reimburse Executive for all reasonable and customary relocation expenses incurred by Executive prior to February 1, 2020 in connection with Executive’s relocation to Germany. Executive shall provide the Company with appropriate documentation relating to expenses incurred in connection with Executive’s relocation within 30 days after incurring such expense, and the Company will provide such reimbursement within 30 days after Executive submits such documentation, but in any event by March 15, 2020.
|
10.
|
The Company will reimburse Executive for the cost of a business class round trip flight from Berlin, Germany to Pittsburgh, Pennsylvania, for both Executive and his wife, to be completed in 2019. Executive shall provide the Company with appropriate documentation of the expense of such flight within 30 days after incurring such expense, and the Company will provide such reimbursement within 30 days after Executive submits such documentation.
|
11.
|
Payments due to Executive under this
Exhibit B
after March 15, 2019 shall be made to Executive’s bank account in Germany (Commerzbank) unless otherwise directed by Executive, provided that Executive provides the Company with 3 days’ advance written notice of such direction. The current wire instructions for Executive’s bank account at Commerzbank are as follows:
|
(A)
|
enter into or engage in any business which competes with the Company’s business;
|
(B)
|
solicit customers, business, patronage or orders for, or sell, any products or services in competition with, or for any business that competes with, the Company’s business;
|
(C)
|
divert, entice or otherwise take away any customers, business, patronage or orders of the Company or attempt to do so; or
|
(D)
|
promote or assist, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the Company’s business.
|
By:
|
Name: Scott. E. Wahlstrom Title: Executive Vice President, Human Resources |
a)
|
Date of Termination
. Executive’s employment with the Company will terminate effective as of July 1, 2019 (the “
Date of Termination
”). Executive shall resign, effective as of the Date of Termination, from his position as President and Chief Executive Officer of the Company and from all other positions Executive holds as an officer, director or employee of the Company or any of its subsidiaries and affiliates. Executive will promptly execute such documents and take such actions as may be necessary or reasonably requested by the Company or any of its subsidiaries or affiliates to effectuate or memorialize the resignation of such positions.
|
b)
|
Severance Benefits
. In consideration for Executive’s (i) execution of this Transition Agreement, (ii) continuing employment with the Company through the Date of Termination, (iii) execution, on the Date of Termination, of the release of claims attached hereto as
Exhibit A
(the “
Release
”), (iv) non-revocation of the Release, and (v) compliance with the post-employment restrictions set forth in Section 11 of the Employment Agreement, as modified by this Transition Agreement, Executive will receive the payments and benefits as specified on the attached
Exhibit B
, subject to applicable tax withholding (collectively, the “
Severance Benefits
”). Notwithstanding the foregoing, if Executive dies prior to the Date of Termination, the Severance Benefits shall vest and be paid pursuant to
Exhibit B
to Executive’s surviving spouse or, if Executive has no surviving spouse, Executive’s estate, at the same time and in such amounts as otherwise would have been received by Executive; provided Executive’s surviving spouse or the executor of Executive’s estate, as applicable, executes, and does not revoke, the Release (with such changes thereto as the Company deems necessary to reflect that Executive’s surviving spouse or the executor of Executive’s estate, as applicable, and not Executive, is executing such Release). The Severance Benefits are in full satisfaction of all payment obligations of the Company and its subsidiaries under the Employment Agreement, the Company 2011 Stock Incentive Plan (as amended or amended and restated from time to time, the “
Equity Plan
”), the Company Long Term Incentive Plan and other compensation arrangements of the Company and its subsidiaries.
|
c)
|
Transition Period
. From the Effective Date through the Date of Termination or, if earlier, the date of Executive’s death or voluntary resignation (the “
Transition Period
”), Executive shall continue to be paid his current base salary and receive his current employee benefits. During the Transition Period, Executive may only be terminated by the Company for Cause. For purposes of this Transition Agreement, “
Cause
” is defined as (i) Executive’s willful and repeated failure to perform his duties (other than any such failure resulting from incapacity due to physical or mental illness); (ii) Executive’s willful engagement in dishonesty, illegal conduct, or gross misconduct, which is, in each case, materially injurious to the Company; (iii) Executive’s embezzlement, misappropriation, or fraud, whether or not related to Executive’s employment with the Company; (iv) Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude, if such felony or other crime is work-related, materially impairs Executive’s ability to perform services for the Company or results in material reputational or financial harm to the Company; or (v) any material failure by Executive to comply with the Company’s written polices or rules. No act or failure to act on the part of Executive shall be considered “willful” unless it is done, or omitted to be done, by Executive in bad faith or without reasonable belief that Executive’s action or omission was in the best interests of the Company. For purposes of this Transition Agreement, termination of Executive’s employment will not be deemed to be for Cause unless and until the Company delivers to Executive a written notice of the conduct that the Company finds constitutes Cause. Except for Cause that by its nature cannot reasonably be expected to be cured, Executive will have ten (10) business days from the delivery of written notice by the Company within which to cure the Cause.
|
d)
|
Non-Disparagement
. Executive agrees that he shall not talk about or otherwise communicate to any third parties in a malicious, disparaging or defamatory manner regarding the Company or its past or present officers, directors, board members, affiliates, parent entities, subsidiaries, administrators, successors, and assigns (the “
Company Parties
”), or any aspect of his employment with the Company or its subsidiaries. The Company agrees that it shall use its best efforts and take all reasonable measures to cause its officers and directors to refrain from talking about or otherwise communicating to any third parties in a malicious, disparaging or defamatory manner regarding Executive. Further, Executive shall not make or authorize to be made any written or oral statement that may disparage or damage the reputation of the Company or the Company Parties, and the Company shall use its best efforts and take all reasonable measures to cause its officers and directors to not make or authorize to be made any written or oral statement that may disparage or damage Executive’s reputation.
|
e)
|
Post-Employment Restrictive Covenants
. Executive reaffirms that Executive’s post-employment restrictions set forth in Section 11 of the Employment Agreement expressly survive termination of Executive’s employment, will remain in full force and effect notwithstanding the termination of Executive’s employment, and are hereby incorporated by reference into this Transition Agreement; provided, however, that Sections 11(c) and 11(d) of the Employment Agreement are hereby amended by replacing the phrase “a period of one year”, in each instance where it appears therein, with “a period of twenty four (24) months.” For the avoidance of doubt, this amendment shall not affect any references in Section 11(d) to the phrase “one year period preceding Executive’s separation from the Company”. Executive acknowledges that breach of any post-employment restrictive covenant in the Employment Agreement, as modified by this Transition Agreement, will constitute a breach of this Transition Agreement. Executive recognizes the legitimate business interests of the Company in protecting its goodwill or other business interests and represents that the post-employment restrictions outlined in the Employment Agreement, as modified herein, do not unduly restrict or curtail his legitimate efforts to earn a livelihood in light of the substantial consideration Executive will receive. The covenants in Section 2.4 of the Equity Plan and any non-competition, non-solicitation (employee or customer) or non-interference covenants in any Award (as defined in the Equity Plan) agreement will continue to apply to Executive after the Date of Termination, but the covenants set forth in the first two sentences of Section 2.4 of the Equity Plan and any non-competition, non-solicitation (employee or customer) or non-interference covenants in any Award agreement will cease to apply to Executive after July 1, 2021.
|
f)
|
Indemnification Obligation
. The Company reaffirms its obligations set forth in Section 5(g) of the Employment Agreement.
|
g)
|
Company Property
. Executive affirms that he has, or will have within a reasonable time after the Date of Termination, returned to the Company in reasonable working order all Company Property, as described more fully below. “
Company Property
” includes equipment, supplies and documents of the Company or any subsidiary of the Company. Such documents may include but are not limited to customer lists, financial statements, cost data, price lists, invoices, forms, passwords, electronic files and media, mailing lists, contracts, reports, manuals, personnel files, correspondence, business cards, drawings, employee lists or directories, lists of vendors, photographs, maps, surveys, and the like, including copies, notes or compilations made therefrom, whether such documents are embodied on “hard copies” or contained on computer disk or any other medium. Executive further agrees that he will not retain any copies or duplicates of any such Company Property.
|
h)
|
Future Cooperation
. Executive agrees that, for a period of 24 months following the Date of Termination, he will fully cooperate with the Company in effecting an orderly transition of his duties and in ensuring that the business of the Company is conducted in a professional, positive and competent manner including, without limitation, by making himself available to answer questions posed by the Company. Executive agrees that he shall, without any additional compensation, respond to reasonable requests for information from the Company regarding matters that may arise in the Company’s business. Executive further agrees to fully and completely cooperate with the Company, its advisors and its legal counsel with respect to any litigation that is pending against the Company and any claim or action that may be filed against the Company in the future. Such cooperation shall include making himself available at reasonable times and places for interviews, reviewing documents, testifying in a deposition or a legal or administrative proceeding, and providing advice to the Company in preparing defenses to any pending or potential future claims against the Company. Executive and the Company shall use reasonable and appropriate diligence to schedule such cooperation with due regard for Executive’s then existing professional and personal commitments. The Company agrees to pay/reimburse Executive for his reasonable out-of-pocket expenses incurred as a result of his cooperation with the Company.
|
i)
|
Acknowledgements
. Nothing in this Transition Agreement prevents Executive from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations. Furthermore, no Company policy or individual agreement between the Company and Executive shall prevent Executive from providing information to government authorities regarding possible legal violations, participating in investigations, testifying in proceedings regarding the Company’s past or future conduct, engaging in any future activities protected under the whistleblower statutes administered by any government agency (e.g., the Equal Employment Opportunity Commission, National Labor Relations Board, Securities and Exchange Commission, etc.) or receiving a monetary award from a government-administered whistleblower award program for providing information directly to a government agency. The Company nonetheless asserts and does not waive its attorney-client privilege over any information appropriately protected by such privilege.
|
j)
|
Nature of Agreement
. This Transition Agreement contains the entire agreement between the Company (including its subsidiaries) and Executive regarding Executive’s departure from the Company, except that the post-employment covenants of Executive contained in the Employment Agreement, the Equity Plan and in any Award agreements, in each case as modified by this Transition Agreement, will remain in full force and effect. This Transition Agreement may not be altered, modified, waived or amended except by a written document signed by a duly authorized representative of the Company and Executive. The headings in this document are for reference only and shall not in any way affect the meaning or interpretation of this Transition Agreement.
|
k)
|
Choice of Law
. This Transition Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to any choice of law or conflicting provision or rule (whether of the Commonwealth of Pennsylvania or any other jurisdiction) that would cause the laws of any jurisdiction other than the Commonwealth of Pennsylvania to be applied. In furtherance of the foregoing, the internal law of the Commonwealth of Pennsylvania will control the interpretation and construction of this Transition Agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. Further, to the extent that Executive or the Company is required to initiate legal action to enforce any right or obligation under this Transition Agreement, Executive and the Company agree that any such litigation shall be filed and determined by the United States District Court for the Western District of Pennsylvania or the Court of Common Pleas for Allegheny County;
and both Executive and the Company consent to the exclusive personal jurisdiction of such courts.
|
(a)
|
Claims of breach of contract, whether express, implied or implied-in-fact, promissory estoppel, wrongful discharge, retaliatory discharge, interference with contractual relations or prospective economic advantage or violation of any duties of good faith and fair dealing;
|
(b)
|
Claims for salary, bonus compensation, incentive compensation, commissions, deferred compensation, premium payments, overtime compensation, stock rights, stock options, vacation, paid time off, sick leave, family leave, medical leave, fringe benefits or remuneration of any kind arising out of or relating to Executive’s employment by the Company up through the Date of Termination;
|
(c)
|
Claims under or pursuant to the Americans with Disabilities Act, as amended, the Age Discrimination in Employment Act, as amended (the “
ADEA
”), Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Equal Pay Act, United States Presidential Executive Orders 11246 and 11375, 42 U.S.C. § 1981, as amended, the Family and Medical Leave Act, the Sarbanes-Oxley Act, the Worker Adjustment and Retraining Notification Act, the Genetic Information Nondiscrimination Act, and the Fair Labor Standards Act (including Claims for salary, bonus compensation, commissions, deferred compensation or remuneration of any kind), as well as any other federal law, statute, ordinance, rule, regulation or executive order relating to employment and/or discrimination in employment, and/or any Claims to attorneys’ fees or costs under such statutes and laws
;
|
(d)
|
Claims under the Pennsylvania Human Relations Act, 43 PA. CONS. STAT. §§ 951 – 963, the Pennsylvania Minimum Wage Act, 43 PA. CONS. STAT. §§333.101 -333.115, the Pennsylvania Wage Payment and Collection Law, 43 PA. CONS. STAT. § 260.1 et seq., and any other Claims under any Pennsylvania statutes, as well as any other state or local law, statute, ordinance, rule, regulation or executive order relating to employment and/or discrimination in employment, and/or any Claims to attorneys’ fees or costs under such statutes and laws;
|
(e)
|
Claims for intentional torts, negligence, negligent or intentional infliction of emotional distress, personal, emotional or physical injury, fraud, defamation, libel, slander, misrepresentation, violation of public policy, invasion of privacy, or any other statutory or common law tort theory of recovery; and
|
(f)
|
Claims arising under the Employee Retirement Income Security Act of 1974, as amended (“
ERISA
”), or pertaining to ERISA-regulated benefits, including any claims for severance pay, welfare benefits, unvested retirement benefits or other remuneration or benefits of any kind or character.
|
(a)
|
Executive understands that state and federal laws, including the AGE DISCRIMINATION IN EMPLOYMENT ACT, prohibit employment discrimination based upon age, sex, race, color, national origin, ethnicity, religion, or disability. Executive further understands and agrees that, by signing this Release, Executive agrees to waive any and all such claims and releases the Company from any and all such claims.
|
(b)
|
Executive acknowledges that Executive has been advised in writing to consult with an attorney and has been provided with a reasonable opportunity to consult with an attorney concerning the terms and conditions of this Release prior to signing this Release, which contains a general release and waiver of claims.
|
(c)
|
Executive acknowledges that the Severance Benefits being provided to Executive pursuant to the terms of the Transition Agreement constitute benefits to which Executive otherwise would not be entitled, and that Executive has been provided with adequate and valuable consideration for signing this Release.
|
(d)
|
Executive acknowledges that Executive has at least TWENTY-ONE (21) DAYS after receiving this Release to consider whether to sign this Release.
|
(e)
|
Executive acknowledges that, in the event that Executive signs this Release, Executive has another SEVEN (7) DAYS to revoke it. To revoke this Release, Executive must deliver a written notice of revocation to Mr. Scott E. Wahlstrom, Executive Vice President-Human Resources, Wabtec Corp., 1001 Air Brake Avenue, Wilmerding, Pennsylvania 15148, prior to 5 PM Eastern Time on the seventh day after signing this Release. THIS RELEASE
SHALL NOT BECOME EFFECTIVE UNTIL AFTER THE EXPIRATION OF THIS SEVEN (7) DAY PERIOD.
|
1.
|
On January 2, 2020, the Company shall pay to Executive a lump sum cash amount equal to $5,000,000, which equals two times the sum of (a) Executive’s annual Base Salary of $1,250,000 and (b) Executive’s target bonus amount for fiscal year 2018, which was $1,250,000.
|
2.
|
Executive shall be entitled to continue participation in the Company’s healthcare plan for a period of 24 months following the Date of Termination. During such period, the Company will pay the same portion of Executive’s premiums as it pays for similarly situated active employees, and such premiums paid with respect to Executive will be treated as taxable to Executive in accordance with applicable law. Executive’s continued eligibility to participate in the Company’s healthcare plan following the Date of Termination will count towards, and run concurrently with, the Company’s obligation to provide Executive with COBRA continuation coverage under Section 4980B of the Internal Revenue Code and Sections 601-607 of the Employee Retirement Income Security Act of 1974, as amended.
|
3.
|
The nonstatutory stock options granted to Executive on February 10, 2015, February 9, 2016, February 7, 2017, February 6, 2018 and March 6, 2019 (itemized below) shall be fully vested and exercisable as of June 30, 2019, and shall, in accordance with Section 5.8(b) of the Equity Plan, be exercisable at any time prior to July 1, 2020.
|
Date of Grant
|
Total Number of Unexercised Shares Subject to the Stock Option as of the Effective Date
|
Total Number of Unvested Shares Subject to the Stock Option as of the Effective Date
|
February 10, 2015
|
2,750
|
0
|
February 9, 2016
|
8,050
|
4,025
|
February 7, 2017
|
7,875
|
5,250
|
February 6, 2018
|
14,000
|
10,500
|
March 6, 2019
|
14,000
|
14,000
|
Total
|
46,675
|
33,775
|
4.
|
The shares of common stock of the Company subject to Restricted Stock Agreements granted to Executive on February 9, 2016, December 13, 2016, February 7, 2017, February 6, 2018 and March 6, 2019 (itemized below) shall be fully vested as of June 30, 2019.
|
Date of Grant
|
Total Number of Unvested Shares Subject to the Restricted Stock Award as of the Effective Date
|
February 9, 2016
|
4,025
|
December 13, 2016
|
10,000
|
February 7, 2017
|
5,250
|
February 6, 2018
|
10,500
|
March 6, 2019
|
10,000
|
March 6, 2019
|
14,000
|
Total
|
53,775
|
5.
|
With respect to the performance units of the Company granted to Executive on February 7, 2017, February 6, 2018 and March 6, 2019 (itemized below) (collectively, the “
Performance Units
”), Executive will be entitled to receive, at such time that the Performance Units would otherwise be paid under the terms of the applicable award agreement and the Equity Plan governing such Performance Units, a number of shares of common stock of the Company equal to the product of (A) the total number of Performance Units Executive would have earned based on actual performance assuming Executive remained employed through the end of the applicable performance cycle (or, if a Section 11 Event (as defined in the Equity Plan) occurs prior to the end of the applicable performance cycle, the total number that would have been considered earned under the applicable award agreement as a result of the Section 11 Event), multiplied by (B) a fraction (the “
Proration Fraction
”), the numerator of which is the total number of whole months that have elapsed during the applicable performance period through the Date of Termination and the denominator of which is 36.
|
Date of Grant
|
Total Number of Performance Units Subject to the Award at Target Level
|
Proration Fraction
|
February 7, 2017
|
15,000
|
30/36
|
February 6, 2018
|
20,000
|
18/36
|
March 6, 2019
|
20,000
|
6/36
|
Total
|
55,000
|
|
6.
|
If Executive dies before all payments due to Executive under this Transition Agreement have been paid, the amounts remaining due shall be paid to his surviving spouse (or, if none, his estate), at the same time such amounts would have otherwise been paid to Executive.
|
Annual Base Salary
|
$1,000,000 per year
|
Bonus
|
Rafael Santana (“
Executive
”) will participate in the Wabtec Executive Bonus Plan with a target annual incentive payment equal to 100% of Executive’s annual base salary and a maximum annual incentive payment equal to 225% of Executive’s annual base salary. Such bonus will be based on the overall financial performance of Westinghouse Air Brake Technologies Corporation (the “
Company
”) and Executive’s personal performance and will be subject to approval by the Board of Directors of the Company (the “
Board
”).
|
Annual Equity Awards
|
Subject to approval by the Compensation Committee of the Board, the Company will issue Executive annual equity awards with an aggregate grant date value equal to a minimum of approximately $2,000,000 each year.
|
Benefits
|
Until February 25, 2020, Executive will receive the same level of employee benefits comparable in the aggregate to the benefits Executive received immediately prior to February 25, 2019. Thereafter, Executive will be eligible to participate in the standard benefit plans offered to employees of the Company generally.
|
Severance
|
In the event Executive’s employment is terminated by the Company for reasons other than cause (which shall mean (a) the willful and continued failure by Executive to substantially perform his duties to the Company; (b) the willful or grossly negligent engaging by Executive in misconduct which is materially injurious to the Company, monetarily or otherwise; or (c) the conviction of Executive for any felony or charge of moral turpitude) before December 1, 2020, Executive will receive a severance payment equal to twenty-four months’ base salary and 150% of his target bonus. In the event Executive’s employment is terminated by the Company for reasons other than cause after December 1, 2020, Executive will receive a severance payment equal to twenty-four months’ base salary and 100% of his target bonus. In addition, Executive will retain any equity that is vested, which will include pro-rated participation in the three-year long-term incentive plans of the Company. Executive would also have the right to terminate employment and receive the severance described above in the case of (i) diminution of Executive’s duties, authority level or responsibilities; (ii) Executive being required to report to any person other than the Chairman of the Company; (iii) reduction of Executive’s annual compensation; or (iv) a change of control or ownership of the Company.
|
Relocation
|
Executive will be based at the Company’s Corporate Headquarters in Pittsburgh, Pennsylvania. The Company will provide relocation services, and Executive will relocate to the Pittsburgh area.
|
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 and Chief Financial Officer
|
By:
|
|
/s/ R
AYMOND
T. B
ETLER
|
|
|
Raymond T. Betler
President and Chief Executive Officer
|
|
|
|
Date:
|
|
May 9, 2019
|
|
|
|
By:
|
|
/s/ P
ATRICK
D. D
UGAN
|
|
|
Patrick D. Dugan,
Executive Vice President and Chief Financial Officer
|
Date:
|
|
May 9, 2019
|